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die  irottttdati0n$ 

Of  our  American  jurisprudence  are  presented 
in  the  leading  cases  determined  during  the 
fij'st  century  of  our  national  life  in 

®;fx^  American  Uecisions^ 

1760-1869-100  volumes. 

Of  our  American  law  during  the  last  two  de- 
cades is  shown  in  the  enormous  number  of 
intej'csting  cases  re-reported  in 

®:f|^  American  ^^port$^ 

1869-1886-60  volumes. 

Current  Illustrations 

Of  the  growth  and  application  of  the  oUl 
foundation  principles  ai-e  given  in  the  most 
convenient,  useful,  and  reliable  manner  in  the 

SVm^tican  State  JJeports^ 

From  1886.     Six  volumes  per  year. 

Constitute  a  coviplete  chain  of  authorities  from 
the  heginning,  to  go  on  until  the  millennium, 
when  there  will  he  no  further  need  for  law  or 
lawyers. 


133 

THE  lo^^ 

AMEiiicAX  State  Reports 

SOUTENIE    VOLUME. 

•     A  SELECTION  OF 

CASES  AND   NOTES 

OF    GENERAL    VALUE    AND    AUTHORITY, 

SELECTED,     REPORTED    AND 

ANNOTATED. 


BY 

A.   C.    KREEAIAX 

AND    II  IS    ASSOCIATE    EDITORS. 

TAKEN  FROM  THE  FIRST  THIRTY-TWO   YOLUMES   OF 

AMERICAN  STATE  REPORTS  TO  ILLUSTRATE 

THE    SALIENT    CHARACTERISTICS 

OF  THAT  SEIHES. 


SAN    FRANCISCO: 
BANCROFT-WHITNEY   COMPANY 

1803. 


Copyright,  1893, 
By    BANCEOFT-WHITNEY    COMPANY. 


PREFACE 

OR 

STATEMEE^T    OF    FACTS. 


Cases  1886-1893.  The  cases  selected  and  re-reported 
in  the  thirty-two  volumes  of  American  State  Reports 
cover  all  the  important  questions  of  general  value  that 
have  come  before  the  several  State  Supreme  Courts  dur- 
ing the  last  eight  years. 

Notes  For  the  Brief-makek.  In  no  other  law  book 
or  set  of  law  books  can  be  found  such  practical  and  orig- 
inal editorial  work.  Mr.  Freeman  and  his  assistants  do 
not  consult  text-books,  rely  upon  digests  nor  in  any  way 
depend  upon  the  work  of  others,  but  go  directly  to  the 
cases  and  dig  out  their  material,  hence  the  value  and 
importance  of  these  notes  to  brief -makers. 

STATE  REPORTS,    PUBLIC   LIBRARIES,    PERIODICAL 
REPORTERS. 

The  purchase  of  eighty  volumes  per  year  of  official 
state  reports  is  not  economical  or  desirable  except  for 
great  or  public  libraries.  Consulting  the  bar  or  public 
libraries  involves  an  expenditure  of  time  and  absence 
from  the  office  which  men  of  good  business  cannot  afford; 
these  facts,  together  with  the  enormous  bulk  of  matter 
issued  by  the  periodical  reporters,  make  it  necessary  for  a 
man  whose  time  is  limited  or  valuable  to  resort  to  labor- 
saving  tools  and  make  our  system  of  Selectj:d  and 
Annotated  Cases  a  necessity. 

BRIEF-MAKEPvS. 

No  man  who  has  gained  a  large  practice  can  do  all  his 
own   work.     He  must  em-ploj^  brief-makers  either  regu- 


vi  Preface  or  Statement  of  Facts. 

larly  or  in  special  cases,  and  even  then  must  verify  their 
work.  The  cases  and  notes  in  this  series  will  enable  the 
brief-maker  to  do  his  work  more  accurately,  more  quickly 
and  more  economically  and  will  enable  the  chief  to  veiify 
the  work  readily,  or  in  a  majority  of  instances  to  do  him- 
self what,  Avithout  these  aids,  he  would  have  to  entrust 
to  others. 

THE   advantages   OF     ANNOTATION. 

A  full  law  library  of  all  the  American  and  English  reports 
cannot  take  the  place  of  this  series.  Kent's  Comment- 
aries, Blackstone's  Commentaries,  Greenleaf  on  Evidence, 
Parsons  on  Contracts,  Pomeroy's  Equity  Jurisprudence 
and  other  great  text-books  are  of  no  more  value  to  the 
lawyer  of  great  practice  on  the  subjects  treated  than  is 
our  own  series  of  selected  and  annotated  cases. 

PRINCIPLES    OF    THE    LAW. 

The  principles  of  the  law  which  underlie  the  determin- 
ation of  all  cases  have  been  settled  in  the  courts  of  last 
resort  in  nearly  all  our  States.  There  is  therefore  less 
occasion  to  know  what  any  writer  thinks  the  law  ought 
to  be.  These  principles  have  been  reiterated  by  the 
courts  in  the  language  of  Greenleaf,  Story  and  Bisliox), 
not  because  of  any  authority  which  those  names  gave  the 
words,  but  because  they  were  accurate  statements, 
brought  conveniently  to  hand  by  the  advocate  ;  and  the 
subsequent  authority  of  said  w^ords  was  derived,  not 
from  their  original  utterance,  but  from  the  fact  that  they 
were  adopted  by  the  courts. 

The  lawyer  who  has  frequent  occasion  to  consult  the 
reports  will  be  surprised  to  note,  if  he  has  not  already 
discovered,  the  difference  in  regard  to  the  contents  of 
the  earlier  and  the  later  rejoorts.  The  principles  were 
settled  some  time  ago,  and  we  have  now  for  the  most 
part  applications  and  illustrations  of  them.  Questions 
of  negligence  occupy  very  large  space  in  our  reports. 
Interpretation  of  words  in  contracts,  wills,  statutes,  etc., 
form  an  unusual  proportion.  To  such  an  extent  is  this 
true,    that  there  is  great  need  of  law  dictionaries  con- 


Preface  or  Statement  of  Facts.  vii 

structed  on  entirely  different  models,  and  composed  of 
entirely  different  material,  which  shall  give  the  defini- 
tion, explanation,  and  limitation  of  living,  active  words 
in  our  law,  rather  than  those  which  were  dead  letters  a 
century  ago. 

national   law. 

Our  law  is  becoming  more  and  more  national  and  hom- 
ogeneous. Decisions  of  the  newer  States  are  more  and 
more  recognized  and  cited  in  the  older  jurisdictions ; 
those  of  the  mother  country  less  and  less  relied  upon. 
The  time  when  a  lawyer  was  familiar  with  all  the  deci- 
sions of  his  own  State,  and  only  those,  is  past ;  famili- 
arity with  all  decisions  of  all  the  States  is  impossible, 
hence  the  necessity  of  selection. 

The  preservation  of  all  determinations  of  our  courts 
has  its  value  to  the  jurist,  as  Mr.  Bishop  designates  him, 
and  to  the  historian  as  well,  just  as  evil,  error,  and  sin 
have  their  mysterious  mission  in  human  life  and  morals ; 
but  the  student  and  the  practitioner  find  life  too  short 
for  endless  investigation  and  research.  Unable  to  wade 
through  the  entire  mass,  they  seek  eagerly  the  aid  of 
those  who  have  selected  the  best,  and  noted  and  esti- 
mated  the   value   of  that   which   is   cognate. 


TABLE 

OF 

OASES    AJSTD    ISrOTES 

IN  THIS  SOUVENIR  VOLUME. 


CRAWFORD  V.  SPENCER,  1  Am.  St.  Rep.,  745-766. 
[93  Missouri,  498.] 
Contracts  for  Sales  to  be  Delivered  in  the  Future. 

Note  of  14  pages  on  Wagering  contracts,  considered  as 
follows  : 
Stock-jobbing  acts  and  other  statutes. 
Vendor  need  not  own  property 
Wagering  contracts  for  sale  are  void. 
Intention  of  parties  the  criterion. 
Form  of  contract  does  not  control. 
Evidence  of  illegality  —  burden  of  proof. 
Broker's  right  to  commission  and  advances. 

BELL  V.  HUDSON,  2  Am.  St.  Rep.,  791-808. 

[73  Cai.IFOKNIA,  3a5.] 

Partnership  Accounting  —  Stale  Claim. 

Note  of  13  pages,  considered  as  follows  : 
Stale  claims. 

Laches  and  acquiescence  distinguished. 
Specific  performance. 
Agents. 

Parent  and  child. 
Members  of  the  same  family. 
Guardian  and  ward. 
Judgments. 
That  demand    is  stale,    cannot   be    availed    of    against  the 

government. 
The  rule  governing  trusts. 
Fraud. 

Knowledge  is  material. 
Accounts. 


X  Table  ok  Cases  and  Notes. 

Injunctions. 

Patents. 

Stale  demands  in  regard  to  land. 

Deeds  and  agreements. 

Admiralty. 

Excuses. 

Pleading  and  practice,  etc. ,  etc. 

WHITWORTII  V.  THOxMAS,  3  Am.  St.  Rep.,  725-745. 
[SS  Alabama,  ;j08.] 
Sale  of  Chattels  in  Specie. 

Note  of  18  pages,  considered  as  follows  : 

Recriminatory  fraud. 

Executed  and  executory  contracts. 

Right  of  executor  or  administrator  to  impeach  or  defend  ok 

ground  of  fraud. 
Exceptions. 
Miscellaneous  cases  collated. 

THOMPSON  V.  RENO  SAVINGS  BANK,   3    Am.   St.   Rep.^ 

797-873. 

[19  Nevada,  103.] 
Corporations  —  Stockholders. 

Note  of  67  pages,  classified  as  follows  : 

Liability  of  stockholders  to  creditors  of  corporations  for 
corporate  debts. 

No  common  law  liability  to  creditors  for  unpaid  subscrip- 
tions. 

Unpaid  subscriptions  wlien  due  and  payable  are  subject  to 
garnishment  by  creditors. 

Mandamus  by  corporate  creditoi-s  to  compel  officers  of  cor- 
porations to  make  call. 

Unpaid  subscriptions  constitute,  in  equity,  trust  fund  for 
benefit  of  ci-editors. 

Equitable  jurisdiction  to  compel  payment  of  unpaid  sub- 
scriptions or  to  make  calls. 

Creditor  must  exhaust  legal  remedies  against  corporation 
before  proceeding  in  equity  against  stockholders  for 
unpaid  subscriptions. 

Judgment  against  corporation  is  conclusive  in  creditor's  suit 
to  reach  unpaid  subscriptions. 

Parties  to  bill  in  equity. 

Decree  in  equitable  suits. 

Liability  only  extends  to  unpaid  subscriptions. 

Payment  of  shares,  how  made  —  full  paid  shares. 

Withdrawal  and  release  of  stockholders  and  forfeiture  of 
stock  as  affecting  liability  for  unpaid  subscriptions. 


Table  of  Cases  and  Notes.  xi 

Conditions  limiting  or  relieving  liability  of  subscribers  for 
unpaid  subscriptions. 

Fraud  and  mistake  as  affecting  stockholder's  liability  for 
unpaid  subscriptions. 

Stockholders  cannot  set  off  debts  due  them  by  insolvent  cor- 
porations wlien  sued  for  unpaid  subscriptions. 

Stockholders  are  estopped  from  attacking  validity  of  corpor- 
ate organization,  etc..  in  suits  to  compel  payment  of 
unpaid  subscription. 

Statute  of  limitations  does  not  run  against  creditor's  claims 
for  unpaid  subscriptions  until  call  is  made  or  corpor- 
ation ceases  to  be  going  concern. 

Miscellaneous  defences  in  suit  against  stockholders  to  reach 
unpaid  subscriptions. 

Who  are  stockholders,  liable  to  ci'editors  for  unpaid  subscrip- 
tions. 

Powers  of  assignees  for  benefit  of  creditors  or  assignees  in 
bankruptcy  and  of  receivers  with  respect  to  unpaid 
subscriptions. 

Stockholders  are  not  individually  liable  at  common  law  for 
debts  of  corporation. 

Liability  for  debts  of  corporation  can  be  imposed  upon 
stockholders  as  such  only  by  constitutions,  charters 
or  statutes. 

Statutes  imposing  liability  whether  strictly  or  liberally  con- 
strued. 

Extent  in  general  of  individual  liability  for  debts  of  corpor- 
ation. 

Nature  of  statutory  liability  of  stockholders  for  corporate 
debts. 

IIow  statutory  liability  of  stockholders  for  corporate  debts 
is  enforced. 

Parties  in  actions  to  enforce  statutory  liability  of  stockholders 
for  corporate  debts. 

Judgment  against  corporation,  whether  conclusive  in  action 
to  enforce  stockholder's  statutory  liability. 

Who  are  stockholders  personally  liable  for  corporate  debts. 

Legislative  power  to  impose,  repeal  or  modify  statutory 
liability  of  stockholders. 

Statutory  liability  of  stockholders  for  corporate  debts, 
whether  may  be  enforced  outside  of  State  in  which 
corporation  is  organized. 

Survival  of  statutory  liability  for  corporate  debts  against 
decedent  stockholder's  personal  representative. 

Priority  of  creditor  first  suing  stockholder  to  enforce  stat- 
utory liability  for  corporate  debts. 

Actions  by  stockholder  against  otiier  stockholders  —  contri- 
bution. 


xii  Table  of  Cases  and  Notes. 

stockholder's  right  to  set  off  debt  due  him  by  corporation,  in 
action  to  enforce  his  statutory  liability. 

Estoppels  in  actions  to  enforce  statutory  liabilities  of  stock- 
holders for  corporate  debts. 

Statute  of  limitations  in  actions  to  enforce  stockholder's  stat- 
utory liability. 

Stockholder's  discharge  in  bankruptcy  as  affecting  statutory 
liability  for  corporate  debts. 

HUTZLER  BROTHERS  v.  PHILLIPS,  4  Am.  St.  Rep.,  687-708. 

[26  South  Carolina,  136.] 
Mortgage,  Equitable  Mortgage. 

Note  of  13  pages,  considered  as  follows : 
What  constitutes  equitable  mortgage. 
Deposit  of  title  deeds. 
Conditional  sale. 
Agi'eement  to  give  mortgage. 
Defective  mortgage. 
Assignment  of  rents  and  profits. 
Assignment  of  contract  of  purchase. 
Lien  for  unpaid  purchase  money. 
Registry  acts. 
Deed  absolute  in  form. 

PEOPLE  V.  O'BRIEN,  7  Am.  St.  Rep.,  684-72G. 
[Ill  New  York,  l.] 

Corporations,  Dissolution  of. 

Note  of  10  pages,  considered  as  follovi-s  : 
Effect  of  dissolution  of  corporation. 
What  franchises,  rights  and  contracts  survive  dissolution. 

CENTRAL  UNION  TELEPHONE  CO.  v.   FALLY,  10  Am. 
St.  Rep.,  114-136. 

[118  Indiana,  194.] 
Telephone. 

Note  of  9  pages  on  Law  of  the  Telephone. 

BEDELL  V.  HERRING,  11  Am.  St.  Rep.,  307-336. 
[77  California,  572.] 
Promissory  Notes. 

Note  of  17  pages,  considered  as  follows : 
Bona  fide  holder  takes  instrument  unaffected  by  fraud  in  its 

origin. 
Instruments  put  in  circulation  in  violation  of  instructions  or 

conditions. 
Instruments  so    executed    tliat    a    portion  thereof  may  be 

detached  or  altered. 
Instruments  mistakenly  executed  under  false  representations. 


Table  of  Cases  and  Notes.  xiii 

Amount  of  recovery  by  bona  fide  holder  against  defrauded 

maker  or  indorser. 
Rights  of  transferee  from  bona  fide  holder. 
Burden  of  proof  as  to  bona  fide  ownership, 

HAGERMAN  v.  BUCHANAN,  14  Am.  St.  Rep.,  732-754. 
[45  New  Jersey  Equity,  292.[ 
Voluntary  Conveyance. 

Note  of  16  pages,  classified  as  follows  : 
What  transfers  are  voluntary. 
What  creditors  may  attack  a  voluntary  transfer  as  fraudulent. 

McAllister  v.  Detroit  free  press,  15  Am.  st.  Rep., 

318-369. 

[7(3  Michigan,  338.] 
Libel. 

Note  of  76  pages  on  Ne-vrspaper  libel. 

PEOPLE'S  BANK   v.    FRANKLIN   BANK,  17  Am.  St.  Rep., 

884-899. 

[88  Tennessee,  299.] 
Banks  and  Banking. 

Note  of  10  pages,  cousidei'ed  as  follows  : 

Rights   and  remedies  of  the  several  parties  when  a  forged 

check  has  been  paid  —  general  rule. 
Exceptions  to  the  rule. 
Dissent  from  the  doctrine  of  the  exception. 
Fate  of  the  exception  in  Pennsylvania. 
Limitations  and  modification  of  the  exception. 
The  exception  not  generally  applicable  to  raised  or  altered 

checks  or  di-aft. 
IVIoney  paid  upon  indorsement  or  check   on  draft  may  be 

recovered  back. 
Negligence  in  filling  up  check,  efi'ect  of. 
Certification   of  check,  effect  of,    on  rights  of  bank  paying 

forged  check. 
Notice  of  forgery  and  demand  for  restitution,  when  to   be 

given  or  made. 

BEACH  V.  MILLER,  17  Am.  St.  Rep.,  291-308. 
[130  Illinois,  KJS.] 
Insolvent  Corporation,  Right  of  Directors. 
Note  of  11  pages,  considered  as  follows  : 
Director  and  corporation,  transactions  between. 

COTTRILL  V.  KRUM,  18  Am.  St.  Rep.,  549-5G3; 

[100  MlSSOUKI,  397.] 

False  Representations. 

Note  of  9  pages,  considei'ed  as  follows  : 
Actions  to  recover  for  false  representation. 


xiv  Tai?le  of  Cases  and  Notes. 

Benefit  to  party  making  false  representation  not  necessary  to 

liability. 
Representation  must  be  false  at  time  it  is  made. 
False  representations  may  be  by  acts  as  well  as  words. 
Suppression  of  the  truth  equivalent  to  false  representations. 
Opinion,  whether  constitutes  legal  representations. 
Representations  by  vendor  as  to  value  of  property. 
Promise  is  not  representation. 
Misrepresentations  of  law  not  ground  of  action. 
Representation  must  be  of  material  fact. 
Not  necessary  that  it  should  have  been  sole  inducement. 
Representations    must    be   made   with   knowledge  of  their 

falsity. 
Intent  to  deceive  essential  to  maintain  action. 
Representations  must  have  been  i-elied  upon. 
Damage  must  be  proved  to  sustain  action. 
Measure  of  damages. 
Waiver  of  right. 

CRATG  V.  VAN  BERBER,  18  Am.  St.  Rep.,  569-724. 
[100  Missouri,  584.] 
Infants. 

Note  of  150  pages,  classified  as  follows  : 

Contracts  of  infants. 

Void  and  voidable. 

Statutory  regulation. 

Deeds  of  conveyance. 

Deeds  of  infants /e?Jies  covert. 

Purchases  of  real  property. 

Mortgages  of  real  property. 

Leases,  liability  for  rent. 

Mechanics'  liens. 

Marriage  settlements. 

Sales,  exchanges  and  assignments  of  personal  property. 

Warranties  in  sales  and  exchanges  of  personal  property. 

Chattel  mortgages. 

Assignments  for  benefit  of  creditors. 

Purchases  of  personal  property. 

Trading  contracts  —  bankruptcy  of  infant. 

Partnership  agreements  and  transactions. 

Lending  and  borrowing  of  money. 

Bills  and  notes. 

Interest. 

Sealed  contracts,  generally. 

Accounts  stated. 

Suretyship. 

Shareholder  in  corporations. 

Arbitration. 

Contracts  to  marry. 


Table  of  Cases  and  Notes.  xv 

Gifts. 

Delegation  of  authority. 

Infant's  concealment  or  misrepresentation  as  to  age. 

Emancipation. 

Contracts  entered  into  pursuant  to  statutes. 

Enlistment. 

Act  which  infant  would  liave  been  compelled  by  law  to  do. 

Necessaries  —  the  general  rule. 

Express  contracts  for  necessaries. 

Implied  contracts  for  necessaries. 

Necessaries  must  have  been  procured  at  instance  of  infant. 

Circumstances  of  infant's  being  already  supplied  with  neces- 
saries—  presumption. 

Test  as  to  what  are  necessaries. 

Question  of  necessaries,  whether  of  fact  or  law. 

Burden  of  proof  as  to  necessaries. 

Illustrations  of  what  fnay  be  necessaries. 

Liability  for  money  borrowed  or  ad%'anced  for  necessaries. 

Disaffirmance. 

Disaffirmance  of  part  of  transaction. 

Disaffirmance  is  not  a  fraudulent  act. 

Disaffirmance  as  against  subsequent  bona  fide  purchaser. 

Disaffirmance  of  previous  deed  where  subsequent  grantee 
has  notice  thereof. 

Disaffirmance  is  question  of  intention  to  be  indicated  by 
some  positive  act. 

Act  of  disaffirmance,  whether  required  to  be  of  equal  solem- 
nity as  act  disaffirmed. 

Notice  of  disaffirmance. 

Execution  of  a  second  deed,  mortgage  ox*  lease. 

Disaffirmance  bj'  suit. 

Disaffirmance  by  plea  of  infancy. 

Disaffirmance  during  minority  of  jiersonal  contracts  and  con- 
cerning personalty. 

Disaffirmance  during  minority  of  deeds,  leases  and  mortgages. 

Disaffirmance  of  contracts  in  general  within  reasonable  time 
after  reaching  full  age. 

Disaffirmance  of  deeds  within  reasonable  time  after  reaching 
full  age. 

Disaffirmance  of  deeds  of  infant,  femes  covert,  after  reaching 
full  age. 

Consequences  of  disaffirmance. 

Infant's  rights  in  general  on  disaffirmance  of  contract. 

Infant's  right  to  recover  back  money  paid  by  him  on  dis- 
affirmance. 

Adult's  right  to  recover  back  consideration  from  infant  on 
disaffirmance. 

Infant's  obligation  to  restore  consideration  on  disaffirmance. 

Who  may  take  advantage  of  infancy. 


xvi  Table  of  Cases  and  Notes. 

Ratification—  what  contracts  of  infants  may  be  ratified. 

Nature  and  effect  of  ratification. 

Suit  should  be  brought  on  the  contract  ratified. 

Ratification  after  suit  is  brought. 

Ratification  cannot  be  made  until  full  age. 

Who  may  ratify. 

Ratification  is  question  of  intention. 

Ratification,  whether  must  have  been  made  with  knowledge 

of  non-liability. 
How  ratification  may  be  made. 

New  consideration  is  not  required  to  a  valid  ratification. 
Ratification,  whethev  must  be  in  writing. 
Ratification  of  contri  3ts,  executory  on  infant's  part  by  new 

promises  or  acknowledgments. 
Ratification  of  deeds,  leases  and  mortgages. 
Ratification  by  bringing  suit. 
Ratification  by  accepting  consideration. 
Ratification  by  sale  or  conveyance  of  property  purchased. 
Ratification  by  various  miscellaneous  acts. 
Torts  of  infants  connected  with  contracts. 

ALSTON  V.  HAWKINS,  18  Am.  St.  Rep.,  874-888. 

[105  North  Carolina,  3.] 

Payment. 

Note  of  10  pages,  on   Presumption   of  payment   from 
lapse  of  time. 

TYLER  V.  HERRING,  19  Am.  St.  Rep.,  263-297. 
[67  Mississippi,  169.] 
Trustee's  sale. 

Note  of  31  pages,  on  Sales   and  conveyances  by  trus- 
tees. 

LADD  V.  CITY  OF  BOSTON,  21  Am.  St.  Rep.,  481-508. 

[151  Massachusetts,  585.] 

Easements. 

Note  of  24  pages,  on  Covenants  restricting  the  use  of 
land. 

CHAMBERLAIN  v.  DUNLOP,  22  Am.  St.  Rep.,  807-815. 

[126  New  York,  45.] 

Lease. 

Note  of  5  pages,  classified  as  follows  : 

When  and  how  contract  continues  obligatory  and  enforceable 

after  death  of  contractor. 
No  distinction  between  liability  for  breaches  of  decedent's 

contracts  before  and  after  his  death. 


Table  of  Cases  and  Notes.  xvii 

Personal  representative  bound  to  complete  decedent's  con- 
tracts. 

Contracts  of  personal  nature  determined  by  death  of  con- 
tractor. 

Contract  to  marry  extinguished  by  death  of  promisor. 

Contract  of  guaranty  not  terminated  by  death  of  guarantor. 

Contract  of  suretyship  not  terminated  by  death  of  surety. 

Contract  of  joint  obligor  terminated  by  his  death. 

Personal  representatives  not  bound  by  proposals  of  decedent. 

MORRILL  V.  MORRILL,  23  Am.  St.  Rep.,  Oo-llO. 

[20  Oregon,  90.] 

Judgment. 

Note  of  16  pages  on  the  subject  of  Collateral  attacks  on 
judgments. 

BOLLING  V.  KIRBY,  24  Am.  St.  Rep.  789-811). 

fOO  Alabama,  215.] 

Conversion. 

Note  of  25  pages,  classified  as  follows  : 

Conversion  of  personalty  sufficient  to  sustain  trover  —  defini- 
tion. 

Conversion  by  selling  chattels  of  another. 

Conversion  by  sale  not  made  pursuant  to  agent's,  bailee's  or 
ofl[icer's  authority. 

Conversion  by  vendee  of  property  sold  without  authority. 

Conversion  though  no  sale  is  made. 

Conversion  by  words  alone. 

Illustrations  showing  various  modes  of  conversion. 

Conversion  by  delivering  chattels  to  one  not  their  owner. 

Delivery  of  chattels  to  one  found  in  possession  of  them. 

Conversion  by  abetting  and  encouraging  —  a  wrong  doer. 

Intent  of  wrong  doer,  when  material. 

Demand  and  refusal  as  evidence  of  conversion. 

Demand  and  refusal,  when  essential  to  conversion. 

Negligence  or  non-feasance  cannot  support  a  charge  of  con- 
version. 

Restoration  of  property  converted,  whether  owner  may  be 
required  to  accept. 

Restoration  accepted  by  owner  mitigates  damages. 

Agent's  or  servant's  liability  for  conversion. 

Agent,  when  guilty  of  coverting  chattels  of  his  princii)al. 

Bailee,  when  guilty  of  conversion. 

Common  carriers, when  guilty  of  conversion. 

Mortgagor  or  mortgagee,  conversion  of  chattels  by. 

Co-tenant,  when  guilty  of  conversion. 

Personalty  which  may  be  converted. 

(6) 


xviii  Table  of  Cases  and  Notes. 

STATE  V.  GOODWILL,  25  Am.  St.  Rep.,  863-890. 
[33  West  Virginia,  1V9.] 

Constitutional   Law,    Equal   Rights    Employers   and   Em- 
ployees. 
Note  of  20  pages  on  the  Fourteenth  Amendment  of  the 
U.  S.  Constitution,  classified  as  follows  : 
Original  purpose  of  the  fourteenth  amendment. 
Privileges  and  immunities  of  citizens. 
Who  are  protected  by  the  fourteenth  amendment. 
Corporations  to  what  extent  protected. 
Retrospective  effect. 

Burdens  and  restrictions  founded  on  race. 
The  libertj'  of  each  person  and  his  right  to  acquire  and  retain 

property. 
General  scope  of  the  fourteenth  amendment. 
Special  privileges  and  rules  of  law. 
Jurors. 

Restrictions  on  pursuit  of  lawful  business. 
Arbitrary  tests,  what  are,  illustration  of. 
The  liberty  of  making  contracts. 
Police  power  and  the  fourteenth  amendment. 
Local  and  special  legislation. 
Taxation. 

Judicial  proceedings. 
Establishing  markets  and  otherwise  regulating  the  modes 

and  places  of  doing  business. 
Rules  and  restrictions  to  prevent  imposition  and  fraud. 
Fixing  rates  to  be  charged  for  services. 
Regulations  and  restrictions  to  promote  and  secure  the  public 

health  and  safety. 
Statutes  regulating  the  practice  of  dentistiy  and  medicine. 
Statutes  restricting  the  sale  of  intoxicating  liquors. 

IIOSS  V.  IIIXON,  20  Am.  St.  Rep.,  123-164. 

[40  Kansas,  550.] 

Malicious  Prosecution. 

Note  of  38  pages  on  Malicious  prosecution  of  criminal 

charges  classified  as  follows  : 
Nature  and  essentials  of  the  action. 
What  prosecutions  will  support  the  action. 
Who  may  be  held  liable. 
Termination  of  prosecution. 
Probable  cause,  what  is. 
Belief  of  the  accuser. 
Advice  of  attorney. 
Malice. 
Plaintiff's  pleadings. 


Table  of  Cases  and  Notes.  xix 

Answer. 

Evidence. 

Damages. 

PEOPLE  V  WEMPLE,  27  Am.  St.  Rep.,  542-568. 

[131  New  York,  64.] 

Taxation  of  Corporations. 

Note  of  23  pages  on  Interstate  commerce,  constitution- 
ality of  State  regulations,  classified  as  follows  : 

Constitutional  provisions. 

Concurrent  authority  of  congress  and  of  the  Stite  legislatures. 

What  is  commerce. 

Commerce,  when  begins  so  as  to  protect  subjects  of. 

Original  packages. 

Navigation  —  rivers,  obstruction  of. 

Rivers,  improvements,  charging  tolls  for  use  of. 

Ferries. 

"Wharfage  fees. 

Tonnage,  what  forbidden  as  a  charge  upon. 

Pilots  and  their  charges. 

Discrimination  in  favor  of  the  products  or  manufacturers  of  a 

State. 
Restriction  upon  transportation. 
The  regulation  of  common  carriers. 
Taxes  on  subjects  of  commerce. 
Taxes,  when  may  be  levied  on  subjects  or  instrumentalities 

of  commerce. 
•Licenses  which  State  may  enact. 
Licences,  discrimination  in  favor  of  State  products. 
License  fee  exacted  of  interstate  commerce. 
The  police  power  and  interstate  commerce. 
Health,  regulations  to  secure  and  protect. 
The  enactment  of  quarantine  laws. 
Statutes  forbidding  the  manufacture  and  sale  of  intoxicating 

liquors. 
Commerce  within  the  State. 

CHESAPEAKE   &   POTOMAC   TELEPHONE   CO.    v.    MAC- 
KENZIE, 28  Am.  St.  Rep.,  219-236. 

(74  Maryland,  36.) 

Telephone  Poles  in  Public  Streets. 

Note  of  8  pages,  classified  as  follows: 

Poles,  erection  of  without  authority. 
Legislative  power  to  authorize  use  of  highways. 
Compensation,  whether  legislature  may  deprive  land-owner 
of  right  to. 


XX  Table  of  Cases  and  Notes. 

Cases  holding  that  abutting  owner  is  not  entitled  to  addi- 
tional compensation. 

Cases  iiolding  abutting  owner  entitled  to  additional  compen- 
sation. 

Invasion  of  private  property  is  unlawful  and  may  be  enjoined. 

Electric-car  poles  and  wires  on  streets  and  highways  not  an 
additional  servitude. 

GODDARD  V.    INEIABITANTS   OF   HARPSWELL,  30  Am. 
St.  Rep.,  373-413. 

(84  Maine,  499.) 

Municipal  Corporations,  Liability  of. 

Note  of  37  pages  on  The  liabilities  of  cities  for   negli- 
gence of  officers,  classified  as  follows: 

Genei-al  test  of  municipal  liability. 

Liable  in  respect  to  municipal  duties  only. 

Classification  of  cases  of  non-liability. 

Plan  of  work,  error  in. 

Classification  of  cases  of  non-liability  tliough  duty  is  not 
discretionary. 

Public  duties,  liability  in  discbarge  of. 

Public  duties  voluntarily  assumed. 

Public  duties  imposed  by  municipal  charters. 

Public  streets,  cases  holding  duty  in  respect  to  is  public  and 
not  municiiial. 

Public  streets,  cases  affirming  municipal  liability  for  negli- 
gence in  respect  to. 

Public  streets,  defect  in  plan  of  improvement. 

Public  streets,  negligence  and  not  injury  is. the  test  of 
liabilitj'. 

In  grading  of  a  street. 

Watercourses,  grading  streets  so  as  to  interfere  with. 

Surface  waters,  interference  with  by  grading  streets. 

The  throwing  of  surface  water  upon  lands. 

The  liability  of  a  municipality  for  a  nuisance. 

Schools  and  school  property. 

Fire  department. 

Water  works. 

Police  department. 

Jails,  almshouses,  hospitals,  etc. 

If  a  city  has  property  or  engages  in  an  undertaking,  the 
object  of  which  is  profit. 

Wharves,  piers,  etc. ,  negligence  in  management  of. 

Test  of  liability  is,  was  the  duty  municipal  ? 

Torts,  generally.  « 

Torts,  ultra  vires. 

Unlawful  acts  which  are  not  ultra  vires. 

Wrongful  acts  not  authorized  by  the  municipality. 

Contractors,  liability  for. 


Table  of  Cases  and  Notes.  xxi 

IN  BE   HESS'  WILL,  31  Am.  St.  Rep.,  665-691. 

(48  Minnesota,  504.) 

Wills. 

Note  upou  t]ie  subject  of  Undue  influence  as  affecting 
validity  of  wills,  classified  as  follows  : 
No  precise  test  possible. 
General  definftioiis. 
Free  agency  must  be  destroyed. 
Must  be  directed  towards  the  execution  of  the  will. 
Whether  the  iuflueuce  must  be  unlawful. 
Influence  of  kinship. 
Influence  of  illicit  relations. 
Arguments,  pursuasion,  importunity. 
Prejudices  and  aversions. 
Improper  influence. 
Misrepresentation  and  like  artifices. 
Burden  of  proof  and  presvimption. 
Secrecy  in  the  execution  of  the  will. 
Evidence  and  the  amount  of  evidence. 
Inferi'ed  from  circumstances. 
Declaration  of  testator,  when  admissible. 
May  affect  only  part  of  the  will. 

ALTOONA  SECOND  NATIONAL  BANK  y.  DUNN,  31  Am. 
St.  Rep.,  742-757. 

(151  Pennsylvania  State,  338.) 

Negotiable  Instruments. 

Note  of   13  pages  on    the    subject    of  Accommodation 
paper,  classified  as  follows  : 
Nature  of  contract. 
Liability  of  maker  or  endorser. 
Pledge  as  collateral  security  or  in  payment. 
Misappropriation. 

Fraudulent  diversion  of  accommodation  paper. 
Rights  of  accommodation,  makers  and  endorsers. 
Accommodation  paper  by  corporation. 
By  agent. 
By  partners. 

GRIGGS   V.  DAY,  32  Am.  St.  Rep.,  704-731. 

(136  New  York,  153.) 

Collatera  l  Securities. 

Note  of  21  pages,  classified  as  follows  : 
Collateral  securities,  definition  of. 
Title  of  the  holder. 
Holder  is  ranked  as  a  purchaser. 
Taken  to  secure  pre-existing  debt. 
Rights  of  holder  are  restricted  to  his  interests. 


xxii  Table  of  Cases  and  Notes. 

Rights  of  holder  of  stock. 

The  creditors  of  the  pledgee  have  no  legal  right  to  object  to 

pledge. 
Purpose  for  which  collateral  may  be  held. 
Duties  of  holder  of  collateral. 
The  liabilities  of  holder  of  collateral. 
Unlawful  or  unauthorized  use  of  collateral. 
Measure  of  damages  for  the  conversion  of  collateral. 
Remedies  against  third  persons. 
Remedies  by  suit  on  the  principal  debt. 
Remedies  on  choses  in  action. 
Remedies  by  foreclosure. 
Pledgee's  remedy  by  sale. 


AMERICAN  STATE  REPORTS. 

\"oi.    I,    I'a'.i  s    :  I.")   "lit. 

CRAWFORD  ;.   SPENCER. 
Sales  for  Future  Delivery — Wagering  Contracts. 


April,  1887.]  Crawford  v.  Spencer.  745 

Crawford  v.  Spencer. 

[92  Missouri,  4J8.J 

Sale  of  Goods  to  be  Delivered  in  Future  is  valid,  though  there  is  aa 
option  as  to  the  time  of  delivery,  and  the  seller  has  no  means  of  getting 
them  but  to  go  into  the  market  and  buy.  But  if,  under  guise  of  such 
contract,  valid  on  its  face,  the  real  purpose  and  intention  is  merely  to 
speculate  in  the  rise  or  fall  of  prices,  and  the  goods  are  not  to  be  deliv- 
ered, but  the  difiference  between  the  contract  and  the  market  price  only 
paid,  the  transaction  is  a  wager,  and  the  contract  void. 

To  Render  Contract  for  Sale  of  Goods  to  be  delivered  in  future  void 
as  a  wagering  contract,  it  is  not  enough  that  one  party  only  intended  a 
speculation  in  prices;  it  must  be  shown  that  both  parties  did  not  intend 
a  delivery  of  the  subject-matter,  but  contemplated  and  intended  only  a 
settlement  of  the  difference  between  the  contract  and  the  market  price. 

Broker  may  Negotiate  Contract  for  Sale  of  goods  to  be  delivered  in 
future,  without  being  privy  to  an  illegal  intent  of  the  principals,  render- 
ing it  void;  and  being  innocent,  he  has  a  meritorious  ground  for  the  re- 
covery of  compensation  for  services  and  advances. 

When  Broker  is  Privy  to  Unlawful  Design  of  Parties  to  a  contract 
for  the  sale  of  goods,  to  be  delivered  in  future,  and  brings  them  together 
for  the  purpose  of  entering  into  the  illegal  agreement,  he  is  particeps 
crmiuLs,  and  cannot  recover  for  services  rendered  or  losses  incurred  by 
himself  on  behalf  of  either  in  forwarding  the  transaction. 

Wagering  Contract  for  Future  Sales  is  not  within  the  provisions  of  the 
Missouri  criminal  statutes,  making  gambling  notes  void  in  the  hands  of 
the  holder;  therefore  a  note  based  on  such  contract  is  not  void  in  the 
hands  of  an  indorsee  before  maturity,  simply  because  based  upon  such 
consideration. 

Note  Based  upon  Illegal  Wagering  Contract  assigned  as  collateral, 
with  an  extension  of  time  for  the  payment  of  the  principal  debt,  consti- 
tutes the  assignee  a  holder  for  value  for  a  new  consideration,  and  freed 
from  the  equities  existing  between  the  original  parties  of  which  he  has 
no  notice,  the  collateral  not  being  due  when  assigned,  and  he  can  enforce 
his  security  to  the  extent  of  the  debt  due  him  from  his  assignor. 

Bill  of  Exceptions  Consisting  of  Testimony  of  witnesses,  letters,  etc., 
as  taken  by  the  stenographer,  and  copied,  signed  by  the  judge,  attached 
together,  and  followed  by  a  skeleton  bill  of  exceptions, —  as,  "Plaintiff 
was  then  sworn  as  a  witness,  and  testified  as  follows  [here  insert  his 
testimony],"  and  so  as  to  various  witnesses,  depositions,  etc.,  except  that 
the  motion  for  a  new  trial  is  copied  in  full,  and  all  is  attached  together 
and  signed  by  the  judge,  —  is  sufficient,  under  the  Missouri  practice,  and 
authorizes  the  clerk  to  till  up  the  skeleton  bill  with  the  evidence,  depo- 
sitions, etc.,  when  called  for. 

Cavipbcll,  for  the  appellants. 

Reynolds,  Dinning,  and  Byrns,  and  Thomas,  for  the  re- 
spondent. 

By  Court,  Black,  J.  The  plaintiff  brought  this  suit  to 
enjoin  the  proposed  sale  of  real  estate  under  a  deed  of  trust 
given  by  him  to  secure  his  note,  dated  the  9tli  of  November, 


746  Crawford  v.  Spencer.  [Missouri, 

1881,  for  five  thousand  dollars,  due  in  one  hundred  days,  and 
payable  to  the  order  of  Harlow,  Spencer,  and  Company.  The 
members  of  this  firm  were  made  defendants  by  the  petition, 
but  it  appearing  that  the  note  had  been  assigned  to  D.  R. 
Francis  and  Brother,  the  members  of  that  firm  were  brought 
in  by  amendment,  and  the  suit  proceeded  against  all  these 
parties  and  the  trustee  to  a  final  decree,  as  prayed  for  by  the 
plaintiff. 

The  ground  for  relief  is,  that  the  note  grew  out  of  alleged 
gambling  contracts,  for  the  purchase  and  sale  of  wheat  and 
corn.  The  evidence  shows  that  the  plaintiff,  who  resided  at 
De  Soto,  in  this  state,  had  been,  for  some  months  prior  to  the 
date  of  the  note,  speculating  in  option  deals  in  grain,  through 
Harlow,  Spencer,  and  Company,  brokers,  at  St.  Louis,  and 
through  them  he  became  a  member  of  the  Merchants'  Ex- 
change. At  the  date  of  the  note  the  brokers  called  upon  the 
plaintiff  for  two  thousand  dollars  margin,  in  addition  to  what 
he  had  before  paid.  At  that  time  they  were  indebted  to  him 
in  the  sum  of  $2,536,  on  account  of  closed  transactions,  but 
they  were  then  carrying  unclosed  deals,  upon  which  margins 
were  due  to  them.  On  the  entire  account,  it  is  clear  that 
plaintiff  owed  them  as  much  as  two  thousand  dollars,  and 
perhaps  as  much  as  five  thousand  dollars.  Plaintiff  was 
about  to  leave  the  state,  on  matters  connected  with  his  busi- 
ness as  railroad  contractor,  and  he  states  that  he  gave  the 
note  and  deed  of  trust  to  them,  that  they  might  use  it  to  raise 
money  if  it  became  necessary  so  to  do,  on  account  of  pending 
or  future  deals.  Harlow,  Spencer,  and  Company  say  the  note 
and  deed  of  trust  were  given  to  them  to  secure  them  against 
loss,  as  the  plaintiff  desired  to  use  his  money  in  other  busi- 
ness; and  this,  we  conclude,  was  the  real  nature  of  the  trans- 
action, for  it  cannot  be  claimed  but  the  brokers,  at  the  date 
of  the  note,  were  entitled  to  at  least  two  thousand  dollars,  on 
account  of  the  face  of  the  then  past  and  pending  transac- 
tions. 

Harlow,  Spencer,  and  Company  failed  on  the  10th  of 
February,  1882.  They  then  had  contracts  for  twenty  thou- 
sand bushels  of  May  corn,  and  thirty  thousand  bushels  of 
May  wheat,  which  they  had  bought  for  plaintiff.  They  in- 
structed the  persons  from  whom  they  had  purchased  the 
grain  to  close  out  the  deals,  which  was  done,  and  an  account 
rendered  for  the  loss,  which  was  settled  by  the  brokers.  Har- 
low, Spencer,  and  Company  then  rendered  an  account  to  the 


April,  1887.]  Crawford  v.  Spencer.  747 

plaintifiF,  showing  a  balance  due  to  them  of  $7,128.  When 
Harlow,  Spencer,  and  Company  failed,  they  owed  D.  R. 
Francis  and  Brother,  who  were  also  brokers,  some  twenty- 
Bix  thousand  dollars,  and  they  turned  the  plaintiff's  note 
over  to  the  latter  firm,  on  account  of  that  indebtedness. 

There  is  much  conflict  in  the  direct  evidence  of  the  plaintiff 
and  the  members  of  the  firm  of  Harlow,  Spencer,  and  Com- 
pany, as  to  the  real  character  of  these  transactions.  The 
plaintiff  says  he  became  acquainted  with  a  member  of  the 
firm,  and  after  frequent  conversations  as  to  the  speculations 
then  going  on,  he  concluded  to  make  some  deals;  that  it  was 
the  distinct  understanding  between  him  and  the  brokers  that 
no  grain  would  be  delivered  or  received,  but  that  differences 
only  would  be  settled,  and  in  this  he  is  corroborated  by  the 
evidence  of  Mr.  Norton,  who  was  interested  with  the  plaintiff 
in  some  of  the  early  transactions.  Harlow,  Spencer,  and 
Company  say  there  was  no  such  understanding,  and  that  the 
deals  were  to  be,  and  were,  all  made  in  good  faith,  and  con- 
templated an  actual  delivery  of  the  commodity,  though  de- 
livery might  be  dispensed  with.  The  brokers  did  buy  and 
ship  to  plaintiff  a  small  quantity  of  corn  for  use,  but  that 
was  paid  for  at  the  time,  and  does  not  enter  into  the  transac- 
tions in  question;  the  difference  between  the  manner  in  which 
that  transaction  was  conducted  and  these  in  question  is  of 
some  significance.  It  is  an  undisputed  fact  in  the  case  that 
not  a  grain  of  wheat  or  corn  was  ever  delivered  under  any  of 
the  contracts  in  question.  They  were  all  closed  out  and  set- 
tled by  the  adjustment  of  differences,  and  in  all  cases  before 
the  maturity  of  the  contracts.  That  they  were  all  mere  specu- 
lations is  not  denied.  The  plaintiff  made,  and  intended  to 
make,  no  arrangement  for  the  delivery  or  reception  of  any  of 
the  grain,  and  this  was  at  all  times  well  known  to  the  brokers. 
The  brokers  were  engaged  in  an  extensive  business,  many 
times  in  excess  of  the  amount  of  produce  handled  by  them. 
It  was  the  especial  duty  of  one  of  the  firm  to  look  after  trans- 
actions like  those  in  question.  If  we  look  to  the  bare  assertion 
of  the  parties,  on  the  one  side  and  the  other,  we  might  well 
conclude  that  plaintiff  has  failed  to  make  out  a  case;  but  if 
we  look  to  the  attending  circumstances,  which  we  must  do, 
we  can  but  conclude  that  these  transactions,  as  between  the 
plaintiff  and  the  brokers,  were  mere  speculations  upon  the 
future  price  of  wheat  and  corn,  with  a  complete  understand- 
ing, on  the  part  of  both,  that  no  grain  was,  in  any  case,  to  be 


748  CuAAVFORD  V.  SpENCER.  [Missoufi, 

received  or  delivered.  It  is  true  the  contracts  were  all  made 
in  the  names  of  the  brokers,  the  name  of  the  real  principal 
not  appearing;  that  they  were  in  writing,  and,  under  the  rules 
of  the  exchange,  the  purchaser  had  the  right  to  call  for  the 
commodity;  but  they  were  made  by  the  plaintifl''s  brokers,  in 
compliance  with  their  understanding  with  him,  and  it  is  be- 
lieved with  an  implied  understanding  with  the  jjersons  wdth 
whom  the  deals  were  made  that  no  grain  was  to  be  delivered. 

The  law  is  now  well  settled,  that  a  sale  of  goods  to  be  de- 
livered in  the  future  is  valid;  such  a  contract  is  valid,  though 
there  is  an  option  as  to  the  time  of  delivery,  and  though 
the  seller  has  no  other  means  of  getting  them  than  to  go  into 
the  market  and  buy  them;  but  if,  under  the  guise  of  such  a 
contract,  valid  on  its  face,  the  real  purpose  and  intention  of 
the  parties  is  merely  to  speculate  in  the  rise  or  fall  of  prices, 
and  the  goods  are  not  to  be  delivered,  but  the  difference  be- 
tween the  contract  and  market  price  only  paid,  then  the  trans- 
action is  a  wager,  and  the  contract  is  void.  It  is  not  enough 
to  render  the  contract  void  that  one  party  only  intended  by  it 
a  speculation  in  prices;  it  must  be  shown  that  both  parties  did 
not  intend  a  delivery  of  the  goods,  but  contemplated  and  in- 
tended a  settlement  only  of  differences.  The  burden  of  show- 
ing the  invalidity  of  the  contract  rests  upon  the  party  asserting 
it:  Irwin  v.  Williar,  110  U.  S.  499;  Cockrell  v.  Thovipson,  85 
Mo.  510. 

With  respect  to  a  suit  by  the  brokers  for  services  rendered 
and  moneys  advanced  for  the  principal  in  procuring  these 
wagering  contracts,  it  was  said,  in  Inoin  v.  Williar,  110  U.  S. 
499:  "It  is  certainly  true  that  a  broker  might  negotiate  such 
a  contract  without  being  privy  to  the  illegal  intent  of  the  prin- 
cipal parties  to  it,  which  renders  it  void,  and  in  such  a  case,  be- 
ing innocent  of  any  violation  of  law,  and  not  suing  to  enforce  an 
unlawful  contract,  has  a  meritorious  ground  for  the  recovery  of 
compensation  for  services  and  advances.  But  we  are  also  of  the 
opinion  that,  when  the  broker  is  privy  to  the  unlawful  design 
of  the  parties,  and  brings  them  together  for  the  very  purpose 
of  entering  into  an  illegal  agreement,  he  is  particeps  crimiiiisy 
and  cannot  recover  for  services  rendered  or  losses  incurred  by 
himself  on  behalf  of  either  in  forwarding  the  transactions." 
In  the  present  case,  the  note  was  given  by  the  plaintiff  to  the 
brokers  to  protect  and  save  the  latter  harmless  because  of 
these  illegal  transactions,  then  pending,  and  thereafter  to  be 
made.     The  illegal  ventures  were  carried  on  by  the  brokers  in 


April,  1887.J  Crawford  v.  Spencer.  749 

their  own  names,  and  they  were  parties  thereto  from  first  to 
last,  —  parties  to  tlie  agreements  which  niade  the  contracts 
illegal.  Tlie  case  comes  clearly  within  the  principles  asserted 
in  the  case  last  cited,  where  it  is  said  the  brokers  cannot 
recover. 

In  the  case  of  Corkrell  v.  Thompson,  85  Mo.  513,  Cole  Brothers 
were  the  brokers  or  factors.  They  made  the  ventures  for  Cock- 
rell  and  Thompson.  The  deals  were  closed  out,  and  Cockrell 
then  settled  with  the  brokers,  and  sued  Thompson  for  one 
half  of  the  losses  thus  paid  to  Cole  Brothers.  From  the  re- 
port of  the  case,  it  would  seem  that  the  contracts  for  the 
purchase  and  sale  of  the  wheat  were  made  in  the  name  of 
Thompson  and  Cockrell  by  the  factors.  At  all  events,  it  was 
not  alleged  or  shown  that  Cole  Brothers  did  not  make  for 
Cockrell  and  Thompson  valid  contracts.  There  was  no  charge 
that  any  seller  or  buyer  who  dealt  with  Cockrell  and  Thomp- 
son through  the  brokers  did  not  intend  to  deliver  or  receive 
the  wheat.  It  did  not,  therefore,  appear,  nor  was  it  alleged, 
that  the  contracts  made  were  illegal.  In  the  present  case,  we 
are  satisfied  that  it  was  not  only  the  understanding  with  plain- 
tiff and  his  brokers  that  the  deals  were  mere  speculations  on 
prices,  but  that  such  was  also  the  character  of  the  contracts,  as 
between  the  brokers  and  the  persons  with  whom  they  made 
the  contracts.  There  is  therefore  nothing  in  the  Cockrell- 
Thom])son  case  inconsistent  with  the  principle  of  law  before 
asserted.  It  follows  that  the  plaintiff  is  entitled  to  the  relief 
demanded,  as  against  Harlow,  Spencer,  and  Company. 

It  remains  to  bo  seen  whether  he  is  entitled  to  the  relief 
as  against  Francis  and  Brother.  We  do  not  agree  with 
counsel  for  the  plaintiff,  that  the  note  is  void  in  the  hands  of 
a  bona  fide  indorsee,  because  of  our  statute  upon  the  subject  of 
gambling.  These  statutes,  section  5721-5723,  Revised  Statutes, 
1879,  make  all  notes  "  where  the  consideration  is  money  or 
property  won  at  any  game  or  gambling  device  "void.  The 
assignment  of  such  a  note,  the  statute  says,  shall  not  affect 
the  defense.  Under  these  statutes  it  was  held  in  Ilickerson  v. 
Benson,  8  Mo.  9,  40  Am.  Dec.  115,  that  a  wager  on  the  result 
of  an  election  was  not  within  their  meaning.  Subsequently 
the  statute  was  so  amendotl  (sec.  572G)  as  to  include  bets  and 
wagers  on  elections,  but  the  amendment  does  not  include  such 
contracts  as  those  here  in  question.  The  sections  of  the  stat- 
ute before  noted  are  evidently  designed  to  be  in  aid  of  the 
criminal  law.     This  much  is  said  in  the  case  of  Williams  v. 


750  Crawford  v.  Spencer.  [Missouri, 

Wall,  60  Mo.  320.  It  cannot  be  said  that  contracts  like  those 
in  question  come  within  the  provisions  of  the  criminal  stat- 
utes. These  wagering  contracts  are  void,  not  because  pro- 
hibited by  statute,  but  because  they  are  against  public  policy. 
The  note  is  not  void  in  the  hands  of  an  indorsee  before  matu- 
rity, simply  because  based  upon  such  a  consideration.  This 
is  the  view  taken  of  the  statute  in  Third  National  Bank  v. 
Harrison,  10  Fed.  Rep.  243,  and  we  believe  it  to  be  the  correct 
one. 

The  evidence  does  not  show  that  Francis  and  Brother  had 
notice  of  the  infirmity  existing  in  the  note  when  they  took  it, 
which  was  before  maturity;  nor  is  the  validity  of  the  debt 
due  to  them  from  Harlow,  Spencer,  and  Company  fairly  im- 
peached. But  the  further  claim  is,  that  they  took  the  note  as 
collateral  security  for  a  pre-existing  debt,  and  therefore  hold 
the  note  subject  to  any  defense  existing  between  the  original 
parties.  The  proof  is,  that  Harlow,  Spencer,  and  Company 
owed  Francis  and  Brother  twenty-six  thousand  dollars,  on 
open  account.  The  day  before  Harlow,  Spencer,  and  Com- 
pany failed,  they  gave  to  Francis  and  Brother  notes,  including 
the  one  in  question,  amounting  to  twelve  thousand  dollars,  in 
payment  of  that  amount  of  the  indebtedness;  this  left  fourteen 
thousand  dollars  unpaid,  which  was  settled  and  paid  at  fifty 
cents  on  the  dollar,  and  the  entire  account  receipted  in  full. 
Afterwards,  Harlow,  Spencer,  and  Company  took  up  half  the 
notes,  by  a  cash  payment;  this  left  six  thousand  dollars  of  the 
notes,  including  the  one  in  question,  in  the  hands  of  Francis 
and  Brother;  some  of  the  notes  were  small,  and  to  avoid  pro- 
test fees,  Harlow,  Spencer,  and  Company,  who  were  indorsers, 
gave  Francis  and  Brother  their  note,  also,  for  six  thousand 
dollars,  the  latter  retaining  plaintiff's  note.  There  is  still 
due  on  this  note  from  six  hundred  to  two  thousand  dollars; 
the  evidence  is  not  definite  in  this  respect. 

In  Goodman  v.  Simonds,  19  Mo.  107,  it  was  said:  "We  do 
not  say  that  a  bill  of  exchange,  passed  to  a  person  in  payment 
of  a  pre-existing  debt,  would  be  liable  in  his  hands,  without 
notice,  to  the  equities  or  defenses  of  the  original  parties;  but 
that  the  holder  of  a  bill  merely  as  collateral  security  for  a  pre- 
existing debt,  having  given  no  value  for  it, — no  consideration 
for  it, — holds  it  liable  to  such  equities."  This  case  was  cited, 
but  not  mentioned  in  the  opinion,  in  the  subsequent  case  of 
Boatman's  Savings  Institution  v.  Holland,  38  Id.  51.  Subse- 
quently, it  was  held  that  one  who  takes  a  note  as  collateral 


April,  1887.]  Crawford  v.  Spencer.  751 

security  for  a  debt  then  created  is  a  holder  for  value:  Logan  v. 
Smith,  62  Id.  455.  And  still  later  it  was  held  that  if  the  cred- 
itor extends  the  time  of  the  payment  of  the  principal  debt 
until  the  collateral  shall  become  due,  the  agreement  to  delay 
constitutes  the  transferee  of  the  collateral  a  holder  for  value: 
Deere  v.  Marsden,  88  Id.  512.  Where  there  is  a  new  consid- 
eration at  the  time  the  collateral  is  given,  such  as  the  exten- 
sion of  the  time  of  the  payment  of  the  principal  debt,  there 
can  be  no  doubt  but  the  transferee  of  the  collateral  takes  it 
freed  from  equities  existing  between  the  original  parties,  of 
which  he  has  no  notice,  the  collateral  not  being  due  when 
transferred.  Where  there  is  no  such  new  consideration,  there 
is  much  conflict  in  the  authorities.  But  in  this  case,  we  are 
satisfied  that  the  notes,  amounting  to  twelve  thousand  dollars, 
were  taken  in  actual  payment  of  that  amount  of  the  indebted- 
ness of  Harlow,  Spencer,  and  Company,  and  that  being  so, 
Francis  and  Brother  took  the  note  freed  from  the  equities  ex- 
isting as  between  plaintiff  and  Harlow,  Spencer,  and  Company: 
Daniel  on  Negotiable  Instruments,  3d  ed.,  sec.  332. 

It  is  true  that  after  Plarlow,  Spencer,  and  Company  gave 
Francis  and  Brother  their  note  for  six  thousand  dollars,  the 
plaintiff's  note  for  five  thousand  dollars  is  spoken  of  as  a  col- 
lateral to  the  six-thousand-dollar  note;  but  we  do  not  see  that 
the  giving  of  the  new  note  by  Harlow,  Spencer,  and  Company, 
as  a  substitute  for  their  indorsement,  puts  Francis  and  Brother 
in  any  worse  condition  than  they  were  when  they  took  plain- 
tiff's note  in  payment  of  five  thousand  dollars.  In  any  possi- 
ble view  of  the  case,  payment  of  five  thousand  dollars  of  the 
indebtedness  of  Harlow,  Spencer,  and  Company  to  Francis 
and  Brother  was  extended  until  the  note  in  question  matured, 
and  had  it  been  received  by  Francis  and  Brother  as  collateral 
security,  and  not  in  payment,  the  extension  of  time,  under  the 
authorities  before  cited,  would  have  constituted  them  holders 
for  value,  for  a  new  consideration.  On  the  evidence  as  it  now 
stands  in  this  case,  Francis  and  Brother  are  entitled  to  enforce 
this  security  to  the  extent  of  the  amount  due  to  them  from 
Harlow,  Spencer,  and  Company. 

3.  It  is  insisted  by  the  plaintiff,  respondent  here,  that  the 
evidence  is  not  preserved  by  the  bill  of  exceptions,  and  for 
that  reason  the  judgment  should  be  affirmed.  In  obedience 
to  a  writ  of  certiorari,  issued  at  the  instance  of  the  plaintiff, 
the  clerk  has  sent  up  an  exact  copy  of  the  bill  of  exceptions  as 
it  was  when  signed  by  the  jiidge  and  filed  in  the  court  below. 


752  Crawford  v.  Spencer.  [Missouri, 

It  consists  of  172  pages  of  testimony  of  witnesses,  letters,  and 
the  like,  as  taken  down  and  copied  by  the  stenographer,  at- 
tached together  by  means  of  strings.  Then  follows  a  skeleton 
bill  of  exceptions.  As  an  example,  it  states:  "Plaintiff  was 
then  sworn  as  a  witness,  and  testified  as  follows  [here  insert 
testimony  of  Samuel  W.  Crawford]  ";  and  so  with  the  various 
witnesses  and  depositions  and  motions,  except  the  motion  for 
new  trial,  which  is  copied  in  full;  and  then  follows  the  signa- 
ture of  the  judge.  All  these  papers  are  attached  together  by 
another  fastening.  The  skeleton  bill  was  made  out  in  com- 
pliance with  the  practice  which  prevails  in  this  state.  The 
depositions  and  motions  were  sufficiently  identified,  and  the 
evidence  of  the  witnesses  sworn  in  open  court  Avas  written  out, 
and  actually  attached  to  the  skeleton  bill  before  the  judge 
signed  the  same.  No  more  could  be  desired.  The  bill  is 
sufficient  in  all  respects.  Under  these  circumstances,  the 
clerk  was  authorized  to  fill  up  the  skeleton  bill  with  the  evi- 
dence, depositions,  and  motions,  when  culled  for. 

There  is  no  need  of  a  new  hearing,  so  far  as  the  members  of 
the  firm  of  Harlow,  Spencer,  and  Company  are  concerned,  and 
the  judgment  is,  therefore,  as  to  Corwin  B.  Spencer,  John  F. 
Carpenter,  and  Thomas  II.  Morgan,  affirmed;  but  as  to  the 
other  defendants  the  judgment  is  reversed,  and  the  cause  re- 
manded for  a  new  hearing  on  the  issues  between  them  and 
the  plaintiff. 


Contracts  for  Sale  of  Personal  Property  to  be  Delivered  in 
Future.  —  The  question  of  the  validity  of  contracts  for  the  sale  of  personal 
property  to  be  delivered  in  the  future  —  sometimes  called  ' '  futures  " —  is  one 
of  special  importance  in  this  country.  These  contracts  may  be  entirely 
valid,  or  they  may  be  objectionable  as  wagering  or  gaming  contracts,  either 
on  general  principles,  or  because  obnoxious  to  some  statutory  provision. 
The  purpose  of  this  note  will  be  to  discuss  the  question  in  all  its  bearings. 

Stock-jobbing  Acts,  and  Other  Statutes. — In  1734,  when  speculation 
i.i  public  stocks  or  securities  had  become  so  prevalent  that  the  whole  busi- 
nj33  community  was  infected  and  demoralized  by  it,  Parliament  passed  "An 
act  to  prevent  the  infamous  practice  of  stock -jobbing":  7  Geo.  II.,  c.  8; 
which  was  made  perpetual  in  1837:  10  Geo.  II.,  c.  8.  The  object  of  the  act 
was  to  prevent  gambling  in  certain  funds  by  parties  who  never  intended  to 
buy  or  sell,  but  merely  to  speculate  upon  the  future  price  of  stock,  by  mak- 
ing what  are  called  "time  bargains,"  and  compounding  for  difi'ereuces:  Dos 
Passos  on  Stockbrokers,  383.  It  was  directed  against  fictitious  sales  of 
stock;  and  was  not  intended  to  affect  bona  Jide  sales,  where  the  stock  was 
actually  transferred,  although  the  seller  was  not  possessed  of  it  at  the  time 
of  making  the  contract:  MorUmer  v.  McCallan,  G  Mees.  &  W.  58;  nor  did  it 
apply  where  the  seller  was  really  possessed  of  the  stock  intended  to  be 
transferred:  Sanders  v.  Kentish,  8  Term  Rop.  1G2;  Child  v.  Morley,  8  Id.  610; 


April,  18d7.]  Crawford  v.  Spencer*  753 

although  the  broker  who  made  the  sale  did  not  disclose  the  name  of  his 
principal  when  the  bargain  was  made:  CJtild  v.  Morley,  supra.  Again,  the 
act  only  applied  to  "public  "  stocks  and  securities,  and  not  to  railway  and 
joint-stock  shares:  Williams  v.  Tri/e,  18  Beav.  306;  Hewitt  v.  Price,  4  Man.  & 
G.  355;  5  Scott  N.  R.  227;  Time  bargains  in  foreign  funds  were,  further- 
more, not  within  its  prohibitions:  Elsworth  v.  Cole,  2  Mees.  &  W.  31;  2 
Gale,  220;  Wells  v.  Porter,  3  Scott,  141;  2  Bing.  N.  C.  722;  Oakleij  v.  Pi'jhy, 
3  Scott,  194;  2  Bing.  N.  C.  732;  Morgan  v.  Pehrer,  4  Scott,  230,  235;  3  Bing.  N. 
C.  457,463;  Henderson  v.  Bine,  3  Stark.  158;  nor  were  such  agreements  illegal 
by  the  common  law:  Wells  v.  Porter,  3  Scott,  141;  2  Bing.  N.  C.  722.  The 
statute  was  thus  of  limited  operation;  but  nevertheless,  a  change  of  senti- 
ment seemingly  having  occurred,  it  was  considered  as  imposing  "unneces- 
sary restrictions  on  the  making  of  contracts  for  the  sale  and  transfer  of  public 
stocks  and  securities,"  and  it  was  therefore  repealed  in  1860:  23  &  34  Vict.,  c. 
28. 

In  two  of  the  states  of  this  country  statutes  pro\ade  that  every  contract, 
written  or  verbal,  for  the  sale  or  transfer  of  stocks  or  bonds  of  the  United 
States,  or  of  any  state,  or  corporation,  public  or  private,  is  void,  unless  the 
vendor  is  at  the  time  of  making  the  contract  the  owner  or  assignee  thereof, 
or  authorized  by  such  owner  or  assignee,  or  his  agent,  to  sell  and  transfer  the 
same, — Massachusetts  (Pub.  Stats,  of  1882,  c.  78,  sec.  0)  and  South  Carolina 
(Stats,  of  1883,  No.  306,  sec.  1).  In  New  York  a  similar  statute  existed:  1 
H.  S.  of  1829,  p.  710,  sec.  6;  but  it  was  repealed  l>y  Laws  of  1858,  chapter 
134,  which  provide  that  no  such  contract  shall  be  void  or  voidable  for  such 
reason,  or  for  want  or  non-payment  of  the  consideration.  In  the  South 
Carolina  statute  there  is  an  express  saving  clause,  which  makes  the  contract 
valid,  if  it  was  the  bona  fde  intention  of  both  the  parties  thereto,  at  the 
time,  that  the  certificate,  bond,  or  other  evidence  of  debt  should  be  actually 
delivered  and  received  in  kind  at  the  specitied  period  in  the  future.  The 
constitution  of  California  also  says:  "All  contracts  for  the  sale  of  shares  of 
the  capital  stock  of  any  corporation  or  association  on  margin,  or  to  be  de- 
livered at  a  future  day,  sliall  be  void,  anel  any  money  paid  on  such  contracts 
may  be  recovered  by  the  party  paying  it,  by  suit  in  any  court  of  competent 
jurisdiction ":  Art.  4,  sec.  6.  In  conformity  with  the  foregoing,  it  is  held 
that  a  contract  for  the  transfer  of  shares  in  the  capital  stock  of  a  company 
incorporated  under  the  statutes  of  another  state  is  void,  unless  the  contract- 
ing party  was  at  the  time  of  making  the  contract  the  owner  or  assignee 
thereof,  or  authorized  to  sell  or  transfer  the  same:  Barrett  v.  Mead,  10  Allen, 
337.  So  a  vendor  must  hold  the  stock  which  he  contracts  to  sell  at  a  future 
day,  free  from  other  liabilities  and  obligations  that  have  already  exhausted  it 
as  the  basis  of  a  contract  of  sale:  Stehhins  v.  Leowolf,  3  Cush.  137;  but  where 
a  broker,  employed  to  purchase  stock,  contracted  for  it  in  his  own  name 
with  a  person  who  owned  it  at  the  time,  but  had  made  a  prior  contract  of 
sale,  and  the  employer,  for  groundless  reasons,  repudiated  the  contract,  but 
the  broker,  having  no  knowledge  of  or  reason  to  suspect  the  prior  sale  by  the 
seller,  paid  for  the  stock  when  tendered  to  him,  the  statute  did  not  debar 
the  broker  from  recovering  from  his  employer  the  amount  so  paid:  Brown  v. 
Phelps,  103  Mass.  313.  The  statute  avoids  the  contract  only  when  the  vendor 
does  not  own  the  shares  at  the  time  it  is  made.  Therefore,  a  contract  to 
deliver  in  the  future  one  hundred  shares  of  stock,  the  vendor  owning  them 
at  the  time,  and  having  a  right  to  transfer  them,  is  good,  although  he  sell  all 
but  forty  shares  intermediate  the  contract  and  the  time  of  transfer:  Frost  v. 
Clarkson,  7  Cow.  24.  So  a  promise  by  the  holder  of  uiore  than  three  hiindred 
Am.  St.  Kep.,  Vol.  I.  — 4S 


754  Crawford  v.  Spencer.  [Missouri, 

ehares  of  stock  of  a  certain  corporation  to  transfer  three  hundred  shares, 
whenever  he  should  acquire  erough  to  do  so  and  still  retain  a  majority  of  the 
shares  in  the  corporation,  is  not  within  the  statute:  Price  v.  Minot,  107  Mass. 
49;  nor  is  an  agreement  to  share  equally  in  the  profits  and  losses  resulting 
from  the  purchase  and  sale  of  stock  already  owned  by  one  of  the  parties  to 
the  agreement,  he  having  bought  it  through  a  broker  on  a  margin:  Bullard 
V.  Smith,  139  Id.  492;  nor  an  agreement  by  which  one  party  was  to  pur- 
chase stocks  for  the  other  and  sell  them  within  a  certain  time,  the  profits  to 
be  divided  but  the  loss  to  be  borne  by  the  former:  Barrett  v.  Hyde,  7  Gray,  160. 
A  party  who  has  either  bought  or  sold  stock,  which  the  vendor  did  not  own, 
on  time,  and  who  has  advanced  the  difference  between  the  time  of  the  sale 
and  the  time  appointed  for  the  delivery  of  the  stock,  may  recover  back  the 
money  paid,  under  1  N.  Y,  R.  S.,  p.  710,  sec.  8:  Gram  v.  Stehhins,  6  Paige, 
124. 

Statutes  broader  in  their  terms  have  been  passed  in  several  other  states. 
These  statutes  differ  in  their  details,  but  the  following  will  indicate  their 
general  scope:  The  buying  or  selling  or  otherwise  dealing  in  "futures"  is 
made  a  misdemeanor  in  Arkansas  (Dig.  of  Stats,  of  1884,  sees.  1848, 
1849);  Mississippi  (Laws  of  1882,  c.  117);  Ohio  (Laws  of  1885,  p.  254;  R.  S., 
sec.  6934  c);  Texas  (Laws  of  1887,  c.  113);  in  other  states  the  statutes  say  that 
the  buying  or  selling  of  stocks,  bonds,  grain,  cotton,  petroleum,  pork,  or  any 
other  commodity,  on  margin,  without  any  intention  of  future  delivery,  is  a 
misdemeanor:  Iowa  (Laws  of  1884,  c.  93;  Rev.  Code  of  1886,  p.  959  a,  con- 
fined to  "mercantile  or  agricultural  products'");  Kentucky  (Stats,  of  1884, 
c.  1613,  restricted  to  the  city  of  Lexington);  Michigan  (Pub.  Acts  of  1887, 
c.  199,  "on  margins  or  otherwise");  Ohio  (Laws  of  1885,  p.  254);  Tennessee 
(Acts  of  1883,  c.  251);  and  the  keeping  of  "  bucket  shops,"  or  places  where 
such  business  is  transacted,  is  likewise  made  a  misdemeanor:  Iowa,  Michi- 
gan, Texas;  and  such  contracts  are  in  words  declared  unlawful:  Iowa,  Ken- 
tucky, Michigan,  Mississippi,  Ohio,  Tennessee;  but  in  Iowa  it  is  expressly 
provided  that  the  act  shall  not  apply  to  nor  in  any  way  affect  any  contracts 
for  the  actual  buying  or  selling  of  any  commodity,  where  the  actual  delivery 
or  receipt  of  the  thing  sold  is  contemplated,  and  in  good  faith  intended  by 
either  of  the  parties  to  the  contract;  and  the  South  Carolina  statute  contains 
a  similar  proviso:  Stats,  of  1883,  No.  306,  sec.  1.  In  Wisconsin  it  is  enacted 
that  contracts  for  future  delivery  shall  not  be  void  when  either  party  shall 
in  good  faith  intend  to  perform  the  same;  that  an  intention  by  either  party 
not  to  perform  the  contract  shall  not  vitiate  it,  if  the  other  party  shall  in 
good  faith  intend  to  perform  it;  and  that  the  contract  shall  not  be  void  be- 
cause the  vendor  is  not  at  the  time  it  is  made  the  owner  of  the  property 
contracted  to  be  sold;  and  it  is  further  provided  that  iu  any  action  on  such 
contract  it  shall  not  be  competent  to  show  in  defense,  by  extrinsic  evidence, 
that  the  contract  had  any  other  intent  or  meaning  than  that  expressed  or 
stipulated,  but  evidence  is  admissible  to  show  fraud,  want  of  consideration, 
or  that  both  parties  intended  a  wagering  contract:  Laws  of  1881,  c.  81  (R.  S., 
sec.  2319  a). 

In  Illinois  it  is  provided  that  whoever  contracts  to  have  or  give  to  himself 
or  another  the  option  to  sell  or  buy,  at  a  future  time,  any  grain  or  other  com- 
modity, stock  of  any  railroad  or  other  company,  or  gold,  shall  be  fined  or  im- 
prisoned in  the  county  jail,  and  all  contracts  made  in  violation  of  the  section 
shall  be  considered  gambling  contracts,  and  void:  R.  S.  of  1883,  c.  38, 
sec.  130  (Crim.  Code,  sec.  130).  In  Ohio,  it  is  also  enacted  that  all  agreements 
by  which  any  person  shall  contract  to  sell  or  buy  flour,  grain,  or  meat,  of 


April,  1887.]  Crawford  v.  Spencer.  755 

which  he  is  not  the  owner,  and  has  not  the  possession,  or  when  the  purchaser 
has  not  the  means  to  pay,  or  does  not  intend  actually  to  deliver  or  to  receive 
and  pay  for  the  same,  are  illegal  and  void:  Laws  of  1885,  p.  254  (R.  S., 
eec.  6934  b).  The  statute  of  South  Carolina  further  provides  that  every  con- 
tract for  the  sale  or  transfer,  at  any  future  time,  of  any  cotton,  grain,  meats, 
or  any  other  product,  shall  be  void,  unless  the  party  contracting  to  sell  or 
transfer  the  same  is  at  the  time  of  making  such  contract  the  owner  or  assignee 
thereof,  or  authorized  by  the  owner  or  assignee,  or  his  agent,  to  enter  into 
the  contract,  unless  it  is  the  bojia  Jicle  intention  of  both  parties  that  there 
shall  be  an  actual  delivery  and  receipt  in  kind,  at  the  period  in  the  future 
epecified:  Stats,  of  1883,  No.  30G,  sec.  1.  In  Georgia,  the  code,  section 
2638,  says:  "A  contract  for  the  sale  of  goods  to  be  delivered  at  a  future  day, 
where  both  parties  are  aware  that  the  seller  expects  to  purchase  himself  to 
fulfill  his  contract,  and  no  skill  and  labor  or  expense  enters  into  the  consid- 
eration, but  the  same  is  a  pure  speculation  upon  chances,  is  contrary  to  tlio 
policy  of  the  law,  and  can  be  enforced  by  neither  party. "  In  two  states, 
notes,  bills,  bonds,  judgments,  mortgages,  and  other  securities  are  expressly 
made  void  when  the  consideration  is  for  money  or  property  lost  by  reason  of 
the  prohibited  contracts:  Illinois  (Rev.  Stats,  of  1883,  c.  38,  sec.  131;  Crim. 
Code,  sec.  131);  South  Carolina  (Stats,  of  1883,  No.  306,  sec.  5);  and  in  Illi- 
nois no  assignment  thereof  affects  the  defense  of  the  person  giving,  granting, 
drawing,  entering  into,  or  executing  such  securities,  or  the  remedies  of  any 
person  interested  therein:  Sec.  136. 

A  few  decisions  have  interpreted  the  foregoing  statutory  provisions.  Thu3 
it  is  held  that  the  Arkansas  act  was  not  intended  to  prohibit  contracts  for 
future  delivery,  entered  into  in  good  faith,  with  an  actual  intention  of  ful- 
fillment, but  speculation  upon  chances  where  no  delivery  is  contemplated, 
but  the  parties  expect  to  settle  differences:  Fortenhury  v.  iitate,  1  S.  W.  Rep. 
58  (Ark.).  But  contracts  purporting  on  their  face  to  be  contracts  of  pur- 
chase or  sale  of  grain,  stocks,  or  other  property,  to  be  delivered  at  a  future 
day,  but  under  which  neither  of  the  parties  intends  to  buy  or  sell,  but  both 
intend  at  the  time  of  making  the  contracts  to  close  them  by  a  settlement  of 
differences  merely,  are  gambling  or  wagering  contracts,  and  illegal  both  by 
statute  of  Tennessee  and  by  public  policy:  Dunn  v.  Bell,  4  Id.  41  (Tenn.).  So 
in  Georgia,  in  the  language  of  the  code,  a  contract  for  the  sale  of  goods  to 
be  delivered  at  a  future  day,  where  both  parties  are  aware  that  the  seller  ex- 
pects to  purchase  himself  to  fulfill  his  contract,  and  no  skill  and  labor  or 
expense  enters  into  the  consideration,  but  the  same  is  a  pure  speculation 
upon  chances,  is  contrary  to  the  policy  of  the  law,  and  can  be  enforced  by 
neither  party:  Warren  v.  Hewitt,  45  Ga.  501;  Branch  v.  Palmer,  65  Id.  210; 
Thompson  v.  Cumminrjs,  68  Id.  124;  Porter  v.  Massengale,  63  Id.  296.  In 
Illinois,  it  will  be  noticed,  the  statute  prohibits  options  *'  to  sell  or  buy."  It 
is  therefore  the  accepted  doctrine  that  "puts, "or  privileges  of  delivering 
or  not  delivering  the  thing  sold,  and  "calls,"  or  privileges  of  calling  for  or 
not  calling  for  the  thing  bought,  are  the  only  objectionable  contracts  within 
its  terms:  Pklceriwiv.  Cease,  79  111.  328,  330;  Pixlei/  v.  Boynton,  79  Id.  351, 
353;  Lofjan  v.  Musick,  81  Id.  415;  Pearce  v.  Foote,  113  Id.  228,  234;  55  Am. 
Rep.  414;  416;  Temiey  v.  Foote,  4  111.  App.  594,  598,  affirmed  in  95  111.  99, 
109;  Webster  v.  Sluryes,  7  111.  App.  560;  Beveridye  v.  Hewitt,  8  Id.  467; 
Coldenvood  v.  McCrea,  11  Id.  543;  Coffman  v.  Young,  20  Id.  76;  Miller  v. 
Bensley,  20  Id.  528;  Gilbert  v.  Gawjar,  8  Biss.  214  (C.  C,  N.  D.  of  III);  Jack- 
son v.  Foote,  11  Id.  223;  12  Fed.  Rep.  37  (C.  C,  N.  D.  of  111.);  Melchert 
V.  American  Union  Tel.  Co.,  3  McCrary,  521;    11    Fed.  Rep.   193  (C.  C, 


756  Crawford  v.  Spencer.  [Missouri, 

D.  of  Iowa,  decided  under  the  Illinois  statute);  although  such  contracts 
might  be  void,  as  wagering  contracts,  at  the  common  law:  See  Pickering  v. 
Cease,  79  111.  32S;  Beveridge  v.  Heivitt,  8  111.  App.  467.  "Time"  contracts, 
or  those  where  the  thing  is  to  be  delivered,  but  an  option  is  given  the  seller 
or  buyer  as  to  the  time  of  delivery  or  receipt,  within  a  limited  period  in  the 
future,  are  not  prohibited:  Wdlcott  v.  Heath,  78  111.  433;  Pickering  v.  Cease, 
79  I  J.  328,  330-  -"^xley  v.  Boynton,  79  Id.  351,  353;  Logan  v.  Musick,  81  Id. 
415;  Corbeit  v.  dnderwood,  83  Id.  324,  330;  25  Am.  Rep.  392,  397;  Cole  v. 
Milmine,  88  Id.  349;  Tenney  v.  Foote,  4  111.  App.  594,  598,  affirmed  in  95  111. 
99,  109;  Webster  v.  Sturges,  7  111.  App.  560;  Bevendge  v.  Hewilt,  8  Id.  467; 
Colderwood  v.  McCrea,  11  Id.  543;  Miller  v.  Bensley,  20  Id.  528;  Gilbert  v. 
Ciujar,  8  Biss.  214  (C.  C,  N.  D.  of  111.);  although  if  the  parties  do  not 
intend  a  delivery,  but  simply  contemplate  a  settlement  of  differences,  such 
contracts  will  nevertheless  be  void,  at  the  common  law,  as  wagering  or  gam- 
ing contracts:  Lyon  v.  Culhertson,  83  111.  33;  25  Am.  Rep.  349;  Jackson  v. 
Foote,  11  Biss.  223;  12  Fed.  Rep.  37  (C.  C,  N.  D.  of  111.). 

There  has  been  considerable  discussion  as  to  whether,  in  the  absence  of 
special  statutes,  contracts  of  sale  for  future  delivery,  where  no  actual  de- 
livery was  contemplated  by  the  parties,  but  only  a  settlement  of  the  differ- 
ence between  the  contract  price  and  the  market  price  at  the  time  appointed 
for  delivery  intended,  fell  within  the  general  statutes  as  to  gaming  and 
wagering.  This  question  has  arisen  in  some  cases  from  the  English  theory 
that  such  contracts  were  not  illegal  at  the  common  law:  Wells  v.  Porter,  3 
Scott,  141;  2  Bing.  N.  C.  722;  Thacker  v.  Hardy,  L.  R.  4  Q.  B.  D.  685;  L-win 
v.  Williar,  110  U.  S.  499,  510;  and  in  other  cases  from  the  fact  that  by  certain 
statutes  negotiable  paper,  given  on  a  gaming  or  wagering  consideration,  is 
invalidated  in  the  hands  of  bona  fide  indorsees,  for  value,  without  notice,  and 
before  maturity.  By  the  statute  8  &  9  Vict.,  c.  109,  sec.  18,  "all  contracts 
or  agreemento,  whether  by  parol  or  in  writing,  by  way  of  gaming  or  wager- 
ing, sliall  be  null  and  void;  and  no  suit  shall  be  brought  or  maintained  in  any 
court  of  law  or  equity  for  recovering  any  sum  of  money  or  valuable  thing 
alleged  to  be  won  upon  any  wager,  or  which  shall  have  been  deposited  in  the 
hands  of  any  person  to  abide  the  event  on  which  any  wager  shall  have  been 
made  ";  and  it  is  held  that  a  colorable  contract  for  the  purchase  and  sale  of 
railway  shares,  where  neither  party  intends  to  deliver  or  accept  the  shares, 
but  merely  to  jiay  differences,  according  to  the  rise  or  fall  of  the  market,  is 
gaming  and  wagering  within  the  statute:  Grizeivood  v.  Blane,  11  Com.  B.  536; 
Barry 'V.  Croskey,  2  Johns.  &  H.  1;  and  of  course  this  doctrine  is  general: 
See  2  Addison  on  Contracts,  Abbott's  ed.,  *1157;  Benjamin  on  Sales,  Ben- 
nett's 4th  ed.,  sec.  542.  A  similar  view  has  been  taken  by  a  few  cases  in 
this  country,  in  which  it  has  been  held  that  such  contracts  were  within  the 
acts  to  prevent  gaming  and  wagering,  or  at  least  were  opposed  to  the  public 
policy  thereby  established:  Cassard  v.  Hinman,  1  Bosw.  207;  Bijelow  v. 
Benedict,  70  N.  Y.  202,  206;  26  Am.  Rep.  573,  576;  Barnard  v.  Backhaus,  52 
Wis.  593,  599,  approved  in  Evenngham  v.  MeigJian,  55  Id.  354;  Lovn^y  v.  Dill- 
man,  59  Id.  197;  Wall  v.  Schneider,  59  Id.  352,  3^4;  48  Am.  Rep.  520,  521; 
2n  re  Green,  7  Biss.  338,  339;  15  Nat.  Bank.  Reg.  198  (D.  C,  W.  D.  of  Wis.); 
Flngg  V.  Baldwin,  38  N.  J.  Eq.  219;  48  Am.  Rep.  308;  Li  re  Bunt,  26  Fed. 
Rep.  739  (D.  C,  D.  of  N.  J.);  McGreiv  v.  City  Produce  Exchange,  4  S.  W.  Rep. 
38  (Tenn.);  Dunn  v.  Bell,  4  Id.  41,  44  (Tenn.);  but  it  must  be  admitted  that 
a  considerable  straining  of  language  is  generally  required  to  reach  this  result. 
It  has  also  been  held  that  a  promissory  note,  the  consideration  of  which  grows 
out  of  a  speculating  transaction,  is  void  in  the  hands  of  a  bona  fide  indorsee, 


April,  1887.]  Crawford  v.  Spencer.  757 

for  value,  without  notice,  and  before  maturity,  under  a  general  statutory 
provision  that  all  evidences  of  debt,  "executed  upon  a  gaming  considera- 
tion," are  void  in  the  hands  of  any  person:  Cuniiimjham  v.  National  Bank  of 
Aucjusta,  71  Ga.  400;  51  Am.  Rep.  2GG;  see  also  Ilawley  v.  Blhh,  09  Ala.  52; 
Barnard  v.  Bachhaus,  52  Wis.  593;  but  other  cases,  with  more  reason,  reach 
the  opposite  conclusion  under  similar  statutes,  although  recognizing  that  on 
general  considerations  of  public  policy  the  notes  couLl  not  be  enforced  be- 
tween the  immediate  parties:  The  principal  case;  Third  National  Bank  v. 
Tinsley,  11  Mo.  App.  498;  Third  National  Bankv.  Harrison,  3  McCrary,  316; 
10  Fed.  Rep.  243  (D.  C,  E.  D.  of  Uo.);  Third  National  Bank  v.  Tinsley,  MS. 
opinion,  quoted  3  McCrarj^,  323;  10  Fed.  Rep.  249;  in  Michigan  bona  fide 
holders,  without  notice,  are  expressly  excepted:  Shaw  v.  Clark,  49  Mich.  384; 
43  Am.  Rep.  474. 

Vendor  need  not  Own  Property.  — It  is  a  well-settled  rule  that  a  con- 
tract for  the  sale  of  personal  property  to  be  delivered  in  the  future  is  not 
invalid  merely  because  the  vendor,  at  the  time  the  contract  was  made,  has  not 
the  property,  nor  has  entered  into  any  contract  to  buy  it,  nor  has  any  other 
means  of  getting  it  than  to  go  into  the  market  and  buy  it:  Benjamin  on 
Sales,  Bennett's  4th  ed.,  sec.  542;  Newmark  on  Sales,  sec.  309;  2  Addison 
oil  Contracts,  Abbott's  ed.,  *1157;  Bishop  on  Contracts,  sec.  534;  1  Wliar- 
ton  on  Contracts,  sec.  453;  Biddle  on  Stockbrokers,  185,  302,  309;  Dos  Pas- 
S03  on  Stockbrokers,  410,  452;  note  to  T hacker  v.  Hardy,  18  Am.  Law  Reg., 
N.  S.,  258,  by  Judge  Bennett;  Hibhlewhite  v.  McMorine,  5  Mees.  &  W.  462; 
Mortimer  v.  McCallan,  6  Id.  58;  Porter  v.  Viets,  1  Biss.  177;  Clurke  v.  Foss, 
7  Id.  540;  Melchert  v.  American  Union  Tel.  Co.,  3  McCrary,  521,  524;  11 
Fed.  Rep.  193,  195,  and  note,  pages  53G  and  204,  respectivel}',  by  Dr.  Fran- 
cis Wharton;  Bartlett  v.  Smith,  4  McCrary,  388;  13  Fed.  Rep.  263;  Cohh  v. 
Prell,  5  McCrary,  80;  15  Fed.  Rep.  774;  22  Am.  Law  Reg.,  N.  S.,  609;  Kirk- 
pati-ickv.  Adams,  20  Fed.  Rep.  287;  Irwin  v.  Wllliar,  110  U.  S.  499;  Hawley 
v.  Bibb,  69  Ala.  52;  Hatch  v.  Don  fas,  48  Conn.  116,  127;  40  Am.  Rep.  154, 
155;  Whitesides  v.  Hunt,  97  lud.  191.  195,  202;  49  Am.  Rep.  441,  444,  448; 
Sawyer  v.  Taggart,  14  Bush,  727,  733;  18  Am.  Law  Reg.,  N.  S.,  222,  224, 
and  note,  page  230,  by  Charles  li.  Wood;  Beadles  v.  McEiratlt,  3  S.  W.  Rep. 
152,  154  (Ky.);  Conner  v.  /Robertson,  37  La.  Ann.  814;  55  Am.  Rep.  521,  525; 
Rumsey  v.  Berry,  65  Me.  570,  573;  Gregory  v.  Wendell,  39  Mich.  337,  340;  33 
Am.  Rep.  390,  392;  Gregory  v.  Wendell,  40  Mich.  432;  Clay  v.  .AUen,  63  Miss. 
426;  Cockrell  v.  Thompson,  85  Mo.  510,  519;  the  principal  case;  Williams  v. 
Tiedemann,  6  Mo.  App.  269;  Kent  v.  Miltenberger,  13  Id.  503;  Stanton  v. 
Small,  3  Sand.  230;  Cansard  v.  Hlnman,  1  Bosw.  207;  Mcllvaine  v.  Eger- 
ton,  2  Robt.  422;  Tyler  v.  Barrows,  6  Id.  104;  Peabody  v.  Speyers,  56  N.  Y. 
230,  234;  Bigeloto  v.  Benedict,  70  Id.  202,  206;  26  Am.  Rep.  573,  576;  Max- 
ton  v.  Gheen,  75  Pa.  St.  166,  168;  Marshall  v.  Thnn^ton,  3  Lea,  740;  See- 
ligson  v.  Leiois,  65  Tex.  215;  57  Am.  Rep.  593,  596;  Barnard  v.  B>ickhaus, 
52  Wis.  593,  597,  599;  Wall  v.  Schneider,  59  Id.  352,  354;  48  Am.  Rep.  520, 
521.  The  contrary  doctrine  announced  in  Lorymer  v.  Smith,  1  Barn.  &  C.  1, 
and  Bryan  v.  Lewis,  Ryan  &  M.  386,  was  overruled  iu  the  leading  case  of 
Hibblewhite  v,  McMorine,  supra.  It  may  be  stated  that  such  future  contracts 
may  be  made  for  the  sale  of  gold:  Appleman  v.  Fisher,  34  Md.  540;  Pealiody 
V.  Speyers,  56  N.  Y.  230,  234;  Btgelowv.  Benedict,  9  Hun,  429,  4.32,  affirmed  in 
70  N.  Y.  202;  26  Am.  Rep.  573;  Broivn  v.  Speyers,  20  Gratt.  296;  a  contract 
for  the  purchase  or  sale  of  gold  not  being  opposed  to  public  polic}'. 

In  Gregory  v.  Wendell,  39  Mich.  337,  340,  33  Am.  Rep.  390,  392,  Marston,  J., 
says:  "Some  nice  distinctions  have  heretofore  been  drawn  as  to  the  right  of 


758  Crawford  v.  Spencer.  [Missouri, 

a  person  to  sell  personal  property  not  at  the  time  owned  by  him,  but  which 
he  intended  to  go  into  the  market  and  buy,  or  as  was  said,  that  which  he 
hath  neither  actually  nor  potentially.  Courts  must,  however,  from  necessity, 
recognize  the  methods  of  conducting  and  carrying  on  business  at  the  present 
day,  and  applying  well-settled  principles  of  the  common  law,  enforce  what 
might  be  called  a  new  class  or  kind  of  agreements,  heretofore  unknown,  un- 
less they  violate  some  rule  of  public  policy.  The  mercantile  business  of  the 
present  day  could  no  longer  be  successfully  carried  on,  if  merchants  and 
dealers  were  unable  to  purchase  or  sell  that  which  as  to  them  had  no  actual 
or  potential  existence.  A  dealer  has  a  clear  right  to  sell  and  agree  to  deliver 
at  some  future  time  that  which  he  then  has  not,  but  expects  to  go  into  the  mar- 
ket and  buy.  And  it  is  equally  clear  that  the  parties  may  mutually  agree  that 
there  need  not  be  a  present  delivery  of  the  goods,  but  that  such  delivery  may 
take  place  at  some  other  time;  and  that  there  need  not  be  an  actual  manual 
possession  given,  but  a  symbolical  one,  as  by  delivery  of  warehouse  receipts, 
according  to  custom,  is  also  beyond  dispute."  "  Present  ownership  is  of  less 
coiisequence  than  the  intention  of  the  contracting  parties ":  Cockrell  v. 
Thompson,  85  Mo.  510,  519.  The  fact  that  the  particular  goods  are  not  iden- 
tified is  of  no  consequence,  because,  from  the  very  nature  of  the  contract, 
the  sale  is  not  of  ascertained  articles,  but  of  articles  of  a  designated  kind  to 
be  selected  at  the  time  of  performance,  and  may  be  discharged  by  the  de- 
livery of  any  articles  a,nswering  to  the  general  description  given  in  the  con- 
tract: Sawyer  v.  Tagjart,  14  Bush,  727,  736;  Conner  v.  Robertsoji,  37  La.  Ann. 
814;  55  Am.  Rep.  521,  526.  A  note  payable  in  the  future  in  cotton  is  not 
illegal  because  the  maker  did  not  at  the  time  have  the  cotton  on  hand  ready 
to  be  delivered:  Phillips  v.  Ocmulgee  Mills,  55  Ga.  633.  "Such  a  principle 
would  make  illegal  every  loan  of  corn  by  one  neighbor  to  another,  to  be  re- 
turned at  the  end  of  the  season  when  the  new  crop  came  in  ":  Id.  Of  course, 
if  one  has  the  property  under  his  control,  as  a  growing  crop,  he  has  the  right 
to  sell  it,  to  be  delivered  at  a  future  time:  Sanbor7i  v.  Benedict,  78  111.  309; 
and,  necessarily,  a  contract  for  the  sale  and  transfer  at  a  future  day  of  a 
certain  number  of  shares  of  stock  which  the  vendor  has  at  the  time  of  de- 
livery, and  of  which  an  actual  transfer  is  intended,  is  not  a  stock-jobbing  or 
wagering  contract:  Noyes  v.  Spaulding,  27  Vt.  420. 

Wagering  Contracts  for  Sale  are  Void. — While  it  is  thus  seen  that 
a  contract  for  the  sale  of  personal  property,  to  be  delivered  in  the  future, 
may  be  valid,  although  the  vendor  has  not  the  property  at  the  time  the  con- 
tract is  made,  but  is  obliged  to  procure  it  to  meet  the  contract,  yet  such  a 
contract  is  only  valid  where  the  parties  really  intend  that  the  property  is  to 
be  delivered  by  the  seller,  and  the  price  paid  by  the  buyer.  If  the  in- 
tent of  the  iiarties  be  merely  to  speculate  in  the  rise  and  fall  of  prices, 
and  the  property  is  not  to  be  delivered,  but  one  party  is  to  pay  to  the  other 
the  difiference  between  the  contract  price  and  the  market  price  at  the  time 
specified  for  executing  the  contract,  then  the  transaction,  whatever  be  its 
form,  is  a  wager,  and  void.  It  has  been  shown  above  that  this  is  the  conclu- 
sion reached  by  Grizewood  v.  Blane,  1 1  Com.  B.  536,  and  other  cases  under 
the  gaming  act  of  8  &  9  Vict.,  c.  109,  sec.  IS,  such  contracts  not  being  ob- 
noxious to  the  common  law  of  England;  and  that  several  courts  of  this  coun- 
try, in  states  which  have  not  adopted  the  special  statutes  already  noticed 
invalidating  these  transactions,  have  also  been  disposed  to  adopt  the  rule  as  a 
result  of  general  acts  against  gaming  and  wagering.  But  in  a  great  majority 
of  the  states  the  rule  is  adopted  as  a  part  of  the  American  common  law,  and 
the  contracts  pronounced  void  as  wagering  or  gambling  transactions  for 


April,  1887.]  Crawford  v.  Spencer.  759 

reasons  of  public  policy:  Benjamin  on  Sales,  Bennett's  4th  ed.,  American 
note  to  sec.  542;  Newmark  on  Sales,  sec.  3G9;  Bishop  on  Contracts,  sec.  534; 
1  Wharton  on  Contracts,  sec.  453;  BidJle  on  Stockbrokers,  313;  Dos  Passes 
on  Stockbrokers,  410;  In  re  Chandler,  13  Am.  Law  Reg.,  N.  S.,  310;  9  Nat. 
Bank.  Reg.  514;  sub  nom.  Ex  parte  Young,  6  Biss.  53,  and  note  thereto  in  13 
Am.  Law  Reg.,  N.  S.,  318,  by  Judge  Redfield;  Jackson  v.  Foote,  11  Biss.  223; 
12  Fed.  Rep.  37;  Bartlettv.  Smith,  4  McCrary,  388;  13  Fed.  Rep.  263;  Cobb 
V.  Prell,  5  McCrary,  80;  15  Fed.  Rep.  774;  22  Am.  Law  Reg.,  N.  S.,  609, 
and  note  thereto  in  5  McCrary,  89;  22  Am.  Law  Reg.,  N.  S.,  615,  by  Adel- 
bert  Hamilton;  Bryant  v.  Western  Union  Tel.  Co.,  17  Fed.  Rep.  825;  Kirk- 
patrick  v.  Adams,  20  Id.  287;  Bangs  v.  Horniclc,  30  Id.  97,  98;  Mutual  Life 
Ins.  Co.  V.  Watson,  30  Id.  653;  Ward  v.  Vosburgh,  31  Id.   12,   13;  Irwin  v. 

Willlar,  110  U.  S.  499;  Justh  v.  HolUday,  2  Mackey,  346;  Ilawlcy  v.  Bibb, 
69  Ala.  52;  Hatch  v.  Douglas,  48  Conn.  116,  127;  40  Am.  Rep.  154;  White- 
sides  v.  Hunt,  97  Ind.  191,  195,  202;  49  Am.  Rep.  441,  445,  449;  Lyon  v. 
Culbertson,  83  III.  33;  25  Am.  Rep.  349;  Lowe  v.  Young,  59  Iowa,  364;  First 
National  Bank  v.  Oskaloosa  Packing  Co.,  6(5  LI.  41;  Tomblin  v.  Callen,  69  la. 
229;  Beadles  v.  McElrath,  3  S.  W.  Rep.  152,  154  (Ky.) ;  Conner  v.  Robertson, 
37  La.  Ann.  814;  55  Am.  Rep.  521,  524;  Ru',vsey  v.  Berry,  65  Me.  570;  Greg- 
ory V.  Wendell,  39  Mich.  337;  33  Am.  Rep.  390,  395;  Clay  v.  Allen,  63  Miss. 
426;  Cockrell  v.  Thompson,  85  Mo.  510;  the  principal  case;  Waterman  v. 
Buckland,  1  Mo.  App.  45;  Williams  v.  Tiedemann,  6  Id.  269;  Kent  v. 
Miltenberger,  13  Id.  503;  TIdrd  National  Bank  v.  Tinsley,  Cir.  Ct.  of  Mo., 
MS.  opinion,  quoted  3  McCrary,  323;  10  Fed.  Rep.  249;  Rudolf  v.  Win- 
ters, 7  Neb.  125;  Kingsbury  v.  Kirwan,  11  N.  Y.  612,  affirming  11  Joues  &  S. 
451;  Yerkes  v.  Salomon,  11  Hun,  471;  Nichols  v.  Lumpkin,  19  Jones  &  S. 
88;  Brua's  Appeal,  55  Pa.  St.  294;  Swariz's  Appeal,  3  Brewst.  131;  Thomp- 
son's Estate,  15  Phila.  532;  Alaxton  v.  Gheen,  75  Pa.  St.  166,  168;  North  v. 
Phillips,  89  Id.  250,  256;  Ruchizhj  v.  De  Haven,  97  Id.  202,  209;  GriJJitlis  v. 
Sears,  112  Id.  523;  Waughv.  Beck,  114  Id.  422;  Marshall  v.  Thruston,  3  Lea, 
740;  Beadles  v.  Owjihj,  16  Id.  424;  Dunn  v.  Bell,  4  S.  W.  Rep.  41  (Tenn.); 
Seeligson  v.  Lewk,  65  Tex.  215;  57  Am.  Rep.  593,  596.  Of  course  an  agree- 
ment to  make  a  "corner "in  stock,  by  buying  it  up  so  as  to  control  the 
market,  and  then  purchasing  for  future  deliveries,  would  be  invalid:  Samp- 
son V.  Shaw,  101  Mass.  145;  3  Am.  Rep.  327. 

The  doctrine  is  well  stated  by  Franklin,  C,  after  a  review  of  cases,  in 

Whilesidesv.  Hunt,  97  Ind.  191,  202,  49  Am.  Rep.  441,  448:  "We  conclude 
from  the  foregoing  authorities  that  in  this  class  of  cases  the  correct  rule  is, 
that  where  a  commodity  is  bought  for  future  delivery,  no  matter  what  the 
form  of  the  contract  is,  the  law  regards  the  substance,  and  not  the  shadow, 
and  if  the  parties  mutually  understood  and  intended  that  the  purchaser 
should  pay  for  and  the  seller  should  deliver  the  commodity  at  the  maturity 
of  the  contract,  it  is  a  legal  and  valid  transaction,  and  the  fact  that  the  pur- 
chaser is  required  to  deposit  a  margin,  and  increase  the  same  at  any  time  the 
market  requires  it,  in  order  to  secure  the  payment  at  maturity,  or  that  the 
seller  shall  deposit  a  margin,  and  increase  tlie  same,  like  the  purchaser,  in 
order  to  secure  the  delivery  at  maturity,  does  not  vitiate  the  contract.  But 
if,  at  tbe  time  of  the  contract,  it  is  mutually  understood  and  intended  by  all 
the  parties,  whether  expressed  or  not,  that  the  commodity  said  to  be  sold 
was  not  to  be  paid  for  nor  to  be  delivered,  but  that  the  contract  was  to  be 
settled  and  adjusted  by  the  payment  of  difference  in  price, — if  the  price 
should  decline  the  purchaser  paying  the  difference,  if  it  should  rise  the 
Beller  paying  the  advance,  the  contract  price  being  the  basis  upon  which  to 


760  Crawford  v.  Spencer.  [Missouri^ 

calculate  differences,  —  in  such  case,  it  would  be  a  gambling  contract,  and 
void,  and  the  deposits  of  margins  are  only  to  be  considered  as  attempting  to 
secure  the  terms  of  the  bet  on  prices  at  some  future  time." 

If  "margins  "  are  deposited  upon  such  an  illegal  transaction,  they  cannot 
be  recovered  back:  Gregory  v.  Wendell,  89  Mich.  337;  33  Am.  Rep.  390; 
Thompson  v.  Cummings,  GS  Ga.  124;  compare  In  re  Chandler,  13  Am.  Law 
Reg.,  N.  S.,  310;  2  Nat.  Bank.  Reg.  514;  sub  norn.  Ex  parte  Young,  6  Biss. 
53;  but  in  Norton  v.  Bli7m,  39  Ohio  St.  145,  it  was  decided  that  while  the 
policy  of  the  law  is  to  leave  the  parties  to  such  a  transaction  where  it  finds 
them,  yet  an  agent  who  receives  money  of  his  principal  to  invest  in  illegal 
options  was  bound  to  accoiant  therefor. 

Money  loaned  to  pay  losses  incurred  in  stock-jobbing  transactions,  it  has 
been  held,  could  be  recovered  back:  Falhiey  v.  lieynous,  1  W.  Black.  633;  4 
Burr.  2069;  Petrie  v.  Ilannay,  3  Term  Rep.  418;  Steers  v.  Lashley,  6  Id.  61, 
62;  but  it  was  more  recently  decided  that  if  the  money  be  knowingly  lent 
for  the  express  purpose  of  enabling  the  borrower  to  settle  sucli  losses,  it  can- 
not be  so  recovered:  Cannnn  v.  Bryce,  3  Barn.  &  Aid.  179,  185;  and  one  who, 
knowingly,  and  with  the  purpose  of  furthering  a  gambling  transaction  in 
purchasing  commodities  on  margin,  lends  money  to  another,  cannot  recover 
it;  but  it  is  not  enough  to  defeat  the  recovery  that  the  lender  knew  of  the 
borrower's  intention  to  illegally  appropriate  the  loan;  he  must  know  that 
the  borrower  is  purposing  the  specific  illegal  use,  and  must  be  implicated  as 
a  confederate  in  the  transaction:    Waiigh  v.  Beck,  114  Pa.  St.  422. 

A  promissory  note  given  for  a  debt  arising  in  whole  or  in  part  out  of  an 
illegal  transaction  is,  as  between  the  parties,  void:  Seeligson  v.  Lewis,  65  Tex. 
215;  57  Am.  Rep.  593;  and  where  some  of  the  transactions  which  enter  into 
the  consideration  of  a  note  and  mortgage  are  merely  gaming  transactions, 
they  render  the  whole  security  void:  Barnard  v.  BacMaus,  52  Wis.  593. 
Nor  can  negotiable  paper  tainted  with  the  illegality  be  recovered  upon  by 
an  indorsee  thereof  with  notice:  Steers  v.  Lashley,  6  Term  Rep.  61;  nor  when 
the  paper  was  indorsed  after  maturity:  Brown  v.  Turner,  7  Id.  630;  and  of 
course  the  assignee  of  a  bond  who  takes  with  notice  cannot  recover:  Amory 
V.  Meryioeather,  4  Dowl.  &  R.  86;  2  Barn.  &  C.  573;  Griffiths  v.  Sears,  112 
Pa.  St.  523;  but  negotiable  paper  which  could  not  be  enforced  between  the 
immediate  parties  because  of  illegality  is  good  in  the  hands  of  a  bona  fide  in- 
dorsee, without  notice,  for  value,  and  before  maturity:  Greenland  v.  Dyer,  2 
Man.  &  R.  422;  Day  v.  Stuart,  6  Biug.  109;  3  Moore  &  P.  334;  the  principal 
case;  Third  National  Bank  \.  Tinsley,  11  Mo.  App.  498;  Third  National  Banh 
V.  Harrison,  3  McCrary,  310;  10  Fed.  Rep.  243  (D.  C,  E.  D.  of  Mo.);  Third 
National  Banh  v.  Tinsley,  MS.  opinion,  quoted  3  McCrary,  323;  10  Fed.  Rep. 
249  (Mo.  Cir.  Ct.);  Shaw  v.  Clark,  49  Mich.  384;  43  Am.  Rep.  474;  unless, 
as  in  Illinois,  it  is  expressly  made  void  by  statute:  Root  v.  Mernam,  27  Fed. 
Rep.  909  (C.  C,  D.  of  Neb.,  decided  under  the  Illinois  statute);  Tenney  \. 
Foote,  4  111.  App.  594,  affirmed  in  95  111.  99;  compare  yacfeo?«  v.  Foote,  11  Biss. 
223;  12  Fed.  Rep.  37  (C.  C,  N.  D.  of  111.);  or  held  to  be  void  under  general 
statutes  against  gaming  and  wagering:  Cunningham  v.  National  Bank  of  Au- 
gusta, 71  Ga.  400;  51  Am.  Rep.  266;  Ilawley  v.  Bibb,  69  Ala.  52;  Barnard  v. 
Bachhaus,  52  Wis.  593. 

Intention  op  Parties  the  Criterion.  —  As  above  intimated,  it  is  the 
real  intention  of  the  parties  to  a  contract  for  sale  for  future  delivery  which 
makes  it  valid  or  invalid:  Note  to  Thacker  v.  Hardy,  18  Am.  Law  Reg., 
N.  S.,  259,  by  Judge  Bennett;  Hentz  v.  Jewell,  4  Woods,  656;  20  Fed.  Rep. 
692:  Bennett  v.   Covington,  22  Id.   816;   Justh  v.  Holllday,   2  Mackey,  346; 


April,  1887.]  Crawford  v.  Spencer.  761 

Gregory  v.  Wendell,  39  Mich.  337,  343;  33  Am.  Rep.  390,  395;  40  Mich.  432. 
"The  real  intention  of  the  parties,"  says  Adams,  C.  J.,  in  Tomblin  v.  Callen, 
69  Iowa,  229,  231,  "of  course,  must  determine  the  character  of  the  transac- 
tion; and  in  arriving  at  the  intention,  we  must  be  governed  by  the  evidence, 
and  not  by  conjectures  based  upon  our  knowledge  of  other  contracts." 
"The  actual  intention  may  be  difficult  to  prove  or  disprove;  but  when  ouce 
the  fact  is  established  one  way  or  the  other,  there  is  no  difficulty  in  applying 
the  law":  Hatch  v.  Dowjlas,  48  Conn.  116,  127;  40  Am.  Rep.  154,  155. 

In  order,  moreover,  to  render  the  contract  invalid,  the  illegal  intent  must 
have  been  participated  in  by  both  the  parties.  If  one  of  the  parties  intends 
an  actual  purchase  and  sale,  the  contract  as  to  him  will  not  be  aflfected  by  an 
illegal  intent  or  purpose  of  the  other  not  communicated  or  concurred  in: 
Newmark  on  Sales,  sec.  369;  Benjamin  on  Sales,  Bennett's  4th  ed.,  American 
note  to  sec.  542;  1  Wharton  on  Contracts,  sec.  453;  note  to  Tliaclcer  v.  Hardy, 

18  Am.  Law  Reg.,  N.  S.,  259,  by  Judge  Bennett;  Lehman  v.  Strassherger,  2 
Woods,  554,  564;  Clarice  v.  Fos.%  7  Biss.  540;  Bartlett  v.  Smith,  4  McCrary, 
388;  13  Fed.  Rep.  263;  Bangs  v.  Hornick,  30  Fed.  Rep.  97,  98;  Ward  v.  Vos- 
burgh,  31  Id.  12,  13;  Pixleyv.  Boynton,  79  111.  351,  354;  McCormickv.  Nichols, 

19  111.  App.  334;  Whitesidcs  v.  Hunt,  97  Ind.  191,  210;  Murry  v.  Ocheltree,  59 
Iowa,  435;  Conner  v.  Robertson,  37  La.  Ann.  814;  55  Am.  Rep.  521,  525; 
Gregory  v.  Wendell,  40  Mich.  432;  Clay\.  Allen,  63  Miss.  426,  430;  Cockrell 
V.  Thompson,  85  Mo.  510;  the  principal  case;  Williams  v.  Tledemann,  0  Mo. 
App.  269;  Teasdale  v.  McPike,  25  Id.  341;  Williams  v.  Carr,  80  N.  C. 
294,  298;  Wall  v.  Schneider,  59  Wis.  352;  48  Am.  Rep.  520.  "If  one  of 
the  parties  acts  in  good  faith,  with  the  intention  and  expectation  of  de- 
liveriu'T  or  receiving  the  property  which  is  the  subject  of  the  sale,  the  trans- 
action as  to  him  will  be  valid,  and  will  be  a  sufficient  consideration  for  a 
contract  in  his  hands  based  thereon":  Murry  v.  Ocheltree,  supra.  "In  order 
to  make  a  wager,  both  parties  must  intend  it  to  be  such.  If  one  intends  a 
bona  fide  sale  or  purchase,  while  the  other  means  only  a  gambling  risk  upon 
prospective  differences,  there  will  be  no  propriety  in  depriving  the  former  of 
the  benefit  of  his  contract  because  of  a  secret  reservation  in  the  mind  of  the 
latter  ":  Williams  v.  Tledemann,  supra.  But  the  effect  of  the  Tennessee  act 
of  1883,  chapter  251,  is  to  declare  the  dealing  in  futures,  where  either  party 
intends  a  mere  speculation  on  the  rise  and  fall  of  prices,  gaming:  McGreio  v. 
City  Produce  Exchange,  4  S.  W.  Rep.  38  (Tenn.). 

The  validity  of  the  contract,  furthermore,  depends  upon  the  intent  of  the 
parties  at  the  time  it  is  made.  It  is  therefore  perfectly  competent  for  the 
parties,  after  having  entered  into  a  valid  contract  for  sale  for  future  deliv- 
ery, to  agree  upon  a  settlement  thereof  by  payment  of  differences  between 
the  contract  price  and  the  market  price,  instead  of  by  actual  delivery:  New- 
mark  on  Sales,  sec.  369;  Clarke  v.  Foss,  7  Biss.  540;  Gilbert  v.  Gaugar,  8  Iil. 
214;  Kirkpatrick  v.  Adams,  20  Fed.  Rep.  287;  Ward  v.  Vosburgh,  31  Id.  12. 
13,  ir.;  Savyyer  v.  Taggart,  14  Bush,  727;  18  Am.  Law  Reg.,  N.  S.,  222; 
Conner  v.  Robertson,  37  La.  Ann.  814;  55  Am.  Rep.  521,  525;  Kent  v.  Milten- 
ber-jer,  13  Mo.  App.  503,  508,  510;  Wall  v.  Schneider,  59  Wis.  352,  359;  48 
Am.  Rep.  520,  526;  for,  as  is  tersely  observed  by  Thompson,  J.,  in  Kent  v. 
Miltcnbergcr,  supra,  "  it  has  never  been  held  that  a  lawful  contract  may  not 
be  discharged  by  the  voluntary  act  of  the  obligee  in  accepting  a  pecuniary 
equivalent  for  its  performance."  And  if  delivery  is  in  fact  intended,  the 
contract  is  vali<l,  it  is  held,  although  the  parties  may  at  the  same  time  con- 
template the  possibility  of  a  settlement  by  a  payment  of  differences:  Tomblin 
V.  Callen,  69  Iowa,  227.     It  may  here  be  noticed  that  parties,  after  having 


762  Crawford  v.  Spencer.  [Missouri, 

made  an  illega,!  contract,  are  at  liberty  to  enter  into  another  contract  in  rela- 
tion to  the  same  subject-matter  as  though  no  former  contract  existed,  but  the 
new  contract  must  be  in  no  sense  a  continuation  of  the  old;  the  old  contract 
must  be  utterly  abandoned,  so  that  neither  its  terms  nor  its  consideration, 
nor  any  claim  or  right  springing  out  of  it,  shall  enter  into  the  new:  Webster 
V.  Sturges,  7  111.  App.  560. 

The  fact  that  speculation  was  the  object  is  not  material,  if  the  parties  in 
good  faith  intend  an  actual  purchase  and  sale:  Grefjorij  v.  Wendell,  4D  Mich. 
432,  437;  Sawyer  v.  Twjjart,  14  Bush,  727;  18  Am.  Law  Reg.,  N.  S.,  222; 
Smith  V.  Bouvier,  70  Pa.  St.  325.  "The  right  to  buy  grain  in  the  open  mar- 
ket in  the  hope  to  profit  by  a  rise  in  the  market  value,"  says  Cooley,  J.,  in 
Gregory  v.  Wendell,  supra,  "is  as  plain  as  the  right  to  buy  wild  lands  or  any 
other  property. " 

The  question  whether  the  contract  is  a  wagering  one  or  not  is  a  question 
of  fact  for  the  jury:  Fereira  v.  Gahell,  89  Pa.  St.  89;  Kirlpatrkk  v.  Adams, 
23  Fed.  Rep.  287;  Gregory  v.  Wendell,  39  Mich.  337,  343;  33  Am.  Rep.  390, 
395;  40  Mich.  432. 

Form  of  Contract  does  not  Control.  —  As  observed  above,  the  intent 
of  the  parties  controls.  The  form  of  the  contract  is  consequently  not  conclu- 
sive as  to  the  true  nature  of  the  transaction,  nor,  indeed,  should  much  stress 
be  placed  thereon:  In  re  Green,  7  Biss.  3.'i8,  339;  15  Nat.  Bank.  Reg.  198; 
Melchert  v.  American  Union  Tel.  Co.,  3  McCrary,  521,  526;  11  Fed.  Rep.  193, 
196;  Bartlett  v.  Smith,  4  Id.  388,  395;  13  Fed.  Rep.  263,  268;  Justh  v.  Holli- 
day,  2  Mackey,  346;  Tenmj  v.  Foote,  4  111.  App.  594,  599,  affirmed  in  95  111. 
99,  109;  Beveridge  v.  Hewitt,  8  111.  App.  467;  Colderwood  v.  McCrea,  11  Id. 
543;  Coffman  v.  Young,  20  Id.  76;  Whitesides  v.  Hunt,  97  Ind.  191,  202;  49 
Am.  Rep.  441,  448;  Gregory  v.  WendeU,  39  Mich.  337;  33  Am.  Rep.  390,  395; 
Barnard  v.  Backkaus,  52  Wis.  593,  GOO;  Fortenhxiry  v.  State,  1  S.  W.  Rep.  58 
(Ark.).  "  It  will  not  do  to  attach  too  much  weight  or  importance  to  the  mere 
form  of  the  instrument,  for  it  is  quite  certain  that  parties  will  be  astute  in 
concealing  their  intention,  and  the  real  nature  of  the  transaction,  if  it  be 
illegal  ":  Barnard  v.  Backliaus,  supra,  per  Cole,  C.  J. 

A  sale  "  short,"  or  in  other  words,  a  sale  of  that  which  the  seller  does  not 
own  or  possess,  but  which  he  expects  to  buy  in  at  a  lower  price  than  that  for 
which  he  sells,  is  not  ipso  facto  a  wager:  Note  to  Thacker  v.  Hardy,  18  Am. 
Law  Reg.,  N.  S.,  259,  by  Judge  Bennett;  Maxton  v.  Gheen,  75  Pa.  St.  166, 
168;  and  see  the  authorities  cited  supra,  "Vendor  need  not  Own  Property." 
Nor  does  the  fact  that  one  of  the  parties,  generally  the  vendor,  is  given 
an  option  as  to  the  time  of  delivery,  render  the  transaction  objectionable: 
Note  to  Sawyer  v.  Taggart,  18  Am.  Law  Reg.,  N.  S.,  230,  by  Charles  H. 
Wood;  Melclbcrt  v.  American  Union  Tel.  Co.,  3  McCrary,  521,  524;  11  Fed. 
Rep.  193,  195;  Union  National  Bank  v.  Carr,  5  McCrary,  71;  15  Fed.  Rep. 
438;  Gregory  v.  Wattowa,  58  Iowa,  711,  713;  Williams  v.  Tiedemann,  6  Mo. 
App.  269,  273;  Kirkpatrick  v.  Bo)isall,  72  Pa.  St.  155;  Wall  v.  Schneider,  59 
Wis.  352;  48  Am.  Rep.  520.  "The  option  as  to  the  time  of  delivery  of  mer- 
chandise purchased  is  not  illegal,  if  there  be  an  agreement  to  make  actual 
delivery.  The  optional  contracts  that  are  void  are  such  as  do  not  contem- 
plate the  actual  delivery  of  the  commodity  purchased,  but  rather  contemplate 
that  the  subject  of  the  contract  is  not  intended  to  be  delivered  ":  Gregory  v. 
Wattowa,  supra.  These  "time"  contracts,  where  a  delivery  is  actually  con- 
templated, are  not,  as  seen  above,  within  the  Illinois  statute  prohibiting 
"options  to  sell  or  buy":  Wolcott  v.  Heath,  78  111.  433;  Pickering  v.  Cease,  79 
Id.  328,  330;  Pixley  v.  BoynUm,  79  Id.  351,  353;  Logan  v.  Musick,  81  Id.  415; 


April,  3887.]  Crawford  v.  Spencer.  763 

Corbett  v.  Underwood,  83  111.  324,  330;  25  Am.  Rep.  392,  397;  Cole  v.  Milmine, 
88  Id.  349;  I'enney  v.  Foote,  4  111.  App.  594,  598,  affirmed  in  95  111.  99,  109; 
Webster  v.  Slurges,  7  111.  App.  560;  Beveridge  v.  Hewitt,  8  Id.  467;  Colderwood 
V.  McCrea,  11  Id.  543;  Jililkr  v.  Bensley,  20  Id.  528;  Gilbert  v.  Gaugar,  SBiss. 
214  (C.  C,  N.  D.  of  111.);  although  in  Illinois,  as  elsewhere,  if  the  parties  do 
not  intend  a  delivery,  but  simply  contemplate  a  settlement  of  diflferences, 
such  contracts  are  void  as  wagering  or  gaming  contracts:  Lyon  v.  Culbertson, 
83  III.  33;  25  Am.  Rep.  349;  Jackson  v.  Foote,  11  Biss.  223;  12  Fed.  Rep.  37 
(C.  C,  N.  D.  of  111.).  "Puts,"  or  privileges  on  the  part  of  sellers  of  deliv- 
ering or  not  delivering,  and  "calls,"  or  privileges  of  buyers  of  calling  or  not 
calling  for  the  thing  sold,  at  their  option,  are  not  necessarily  invalid:  Note 
to  Thaclcer  v.  Hardy,  18  Am.  Law  Reg.,  N.  S.,  258;  In  re  Chandler,  13  Id. 
310,  316;  9  Nat.  Bank.  Reg.  514,  521;  sid}  nom.  Ex  parte  Young,  6  Biss.  53, 
66;  Bigelow  v.  Benedict,  70  N.  Y.  202;  26  Am.  Rep.  573;  Williams  v.  Tiede- 
mann,  0  Mo.  Apx).  269,  274;  although  it  seems  they  would  be  under  the  stat- 
ute of  Illinois;  but  see  In  re  Chandler,  svpra.  "That  there  is  an  element  of 
hazard  in  the  contract  is  plain.  But  the  same  hazard  is  incurred  in  every 
optional  contract  for  the  sale  of  any  marketable  commodity,  when,  for  a  con- 
sideration paid,  one  of  the  parties  binds  himself  to  sell  or  receive  the  property 
at  a  future  time,  at  a  specified  price,  at  the  election  of  the  other.  Mercantile 
contracts  of  this  character  are  not  infrequent,  and  they  are  consistent  with  a 
ho7ta  fide  intention  on  the  part  of  both  parties  to  perform  them  ":  Bigelow  v. 
Benedict,  supra.  And  a  "straddle,"  even,  or  the  double  privilege  of  a  "put " 
and  a  "call,"  securing  to  the  holder  the  right  to  buy  of  or  sell  to  another 
something  within  a  certain  time,  at  a  certain  price,  is  not  necessarily  void: 
Harris  v.  Tumbridyc,  83  N.  Y.  92;  38  Am.  Rep.  398;  Story  v.  Salomon,  71 
N.  Y.  420,  affirming  6  Daly,  531.  "We  may  guess  that  the  parties  were 
speculating  upon  the  fluctuations  in  the  price  of  the  stock,  and  that  the  de- 
fendant was  not  required  to  take  or  deliver  any  stock  in  any  case,  but  simply 
to  pay  difTerences.  But  a  contract  which  can  have  legal  interpretation  and 
efl"ect  should  not  be  condemned  without  any  proof,  in  that  way  ":  Story  v. 
Salomon,  supra.  But  in  Kirkpatrick  v.  Bonsall,  72  Pa.  St.  155,  158,  Agnew,  J., 
gives  the  following  observations,  which  may  appropriately  apply  to  all  these 
optional  contracts,  although  referring  to  but  one  kind:  "  It  is  evident  such 
agreements  can  be  readily  prostituted  to  the  worst  kind  of  gambling  ventures, 
and  therefore  its  character  may  be  weighed  by  a  jury,  in  counoction  with  other 
facts,  in  considering  wliether  the  bargain  was  a  mere  scheme  to  gamble  upon 
the  chance  of  prices.  The  form  of  the  venture,  when  aided  by  evidence,  may 
clearly  indicate  a  purpose  to  wager  upon  a  rise  or  fall  in  the  price  of  oil  at  a 
future  day,  and  not  to  deal  in  the  article  as  men  usually  do  in  that  business. 
We  must  not  confound  gambling,  whether  it  be  in  corporation  stocks  or  mer- 
chandise, with  what  is  commonly  termed  '  speculation. ' " 

The  mere  fact,  furthermore,  that  a  margin  is  required  to  be  deposited  as 
security  does  not  make  the  contract  illegal:  Wall  v.  Schneider,  59  Wis.  352; 
48  Am.  Rep.  520;  Whitesides  v.  Hunt,  97  Ind.  191,  202;  49  Am.  Rep.  441, 
448;  Earlx.  lloivell,  14  Abb.  N.  C.  474,  476;  Hatch  v.  Douglas,  48  Conn.  116; 
4U  Am.  Rep.  154;  nor  that  delivery  is  to  be  made  in  warehouse  receipts: 
Wall  V.  Schneider,  supra;  Gregory  v.  Wendell,  39  Mich.  337,  340;  33  Am. 
Rep.  390,  392;  nor  because  the  contract  provides  that  the  measure  of  dam- 
ages in  case  of  a  breach  shall  be  the  difference  between  the  contract  price 
and  the  market  price  on  the  chamber  of  commerce  where  the  contract  ia 
made:    Wall  v.  Schneider,  supra. 


764  Crawford  v.  Spencer.  [Missouri, 

Evidence  of  Illegality  —  Burden  of  Proof.  —  There  is  no  doubt  that 
although  a  contract  is  regular  and  legal  on  its  face,  it  is  competent  to  show 
that  it  was  intended  as  a  mere  gambling  transacti£)n:  Clarke  v.  Foss,  7  Biss. 
540,  551;  Stewart  \.  Schall,  G5  Md.  2S9;  57  Am.  Rep.  327;  Kent  v.  Mllten- 
berger,  13  Mo.  App.  503;  Beadles  v.  McElrath,  3  S.  W.  Rep.  152  (Ky.);  con- 
tra: Porter  V.  Vlets,  1  Biss.  177;  and  in  order  to  ascertain  the  intention  of 
the  parties,  it  may  be  shown  how  they  were  in  the  habit  of  dealing  together 
in  respect  to  like  transactions  prior  to  the  one  in  controversy:  Colderwood  v. 
McCrea,  11  111.  App.  543;  but  the  illegality  of  a  contract  cannot  be  estab- 
lished by  proving  the  usual  custom  of  persons  making  such  contracts,  or  a 
general  expectation  or  understanding  that  stich  contracts  were  to  be  settled 
without  an  actual  delivery:  Bennett  v.  Coviwjton,  22  Fed.  Rep.  816.  But 
contracts  for  future  delivery  are  presumptively  valid:  Note  to  Cohh  v.  Prell, 
5  McCrary,  90;  22  Am.  Law  Reg.,  N.  S.,  617;  Ke7it  v.  Milienberger,  13  Mo. 
App.  503;  Beadles  v.  McElrath,  3  S.  W.  Rep.  152  (Ky.);  compare  KirJcpat- 
rick  V.  Adams,  20  Fed.  Rep.  287;  and  "in  construing  a  contract,  that  con- 
struction is  to  be  preferred  which  will  support  it,  rather  than  one  which  will 
avoid  it":  Bljelow  v.  Benedict,  70  N.  Y.  202,  204;  26  Am.  Rep.  573,  575;  Clay 
V.  A  lien,  63  Miss.  426.  The  burden  of  proof  of  establishing  the  illegality  rests 
therefore  upon  the  party  who  asserts  it:  Newmark  on  Sales,  sec.  369;  Clarke 
v.  Foss,  7  Biss.  540,  550;  Bennett  v.  Coviwjton,  22  Fed.  Rep.  816;  Bangs  v. 
Hornick,  30  Id.  97,  99;  Ward  v.  Vosburyh,  31  Id.  12;  Pixley  v.  Boynton,  79 
111.  351,  352;  Whitesides  v.  Hunt,  97  Ind.  191,  210;  Gregory  v.  Wattowa,  58 
Iowa,  711;  First  Nat.  Bank  v.  Oskaloosa  Packing  Co.,  66  Id.  41,  40;  Beadles 
V.  McElrath,  3  S.  W,  Rep.  152  (Ky.);  Conner  v.  Robertson,  37  La.  Ann.  814; 
55  Am.  Rep.  521,  525;  Rumsey  v.  Berry,  65  Me.  570;  Wynian  v.  Fiske,  3 
Allen,  238;  Clay  v.  Allen,  63  Miss.  426;  the  principal  case;  Williams  v.  Tiede- 
mann,  6  Mo.  App.  269;  Kent  v.  Miltenherger,  13  Id.  503;  Teasdale  v.  McPike, 
25  Id.  341;  Mcllvaine  v.  Egerton,  2  Robt.  422;  Dykers  v.  Townsend,  24  N.  Y. 
57;  Bigelow  v.  Benedict,  70  Id.  202,  206,  207;  26  Am.  Rep.  573,  576,  577;  Wil- 
Uams  v.  Carr,  80  N.  C.  294,  298,  although  there  are  soine  expressions  to  the 
contrary:  Barnard  v.  Backhaus,  52  Wis.  593,  599;  Cobb  v.  Prell,  5  McCrary, 
80;  15  Fed.  Rep.  774;  22  Am.  Law  Reg.,  N.  S.,  609;  Stebbins  v.  Leowolf,  3 
Cush.  137;  and  see  First  Nat.  Bank  v.  Oskaloosa  Packing  Co.^  supra.  "We 
cannot  assume,"  says  Danforth,  J.,  in  Rumsey  v.  Berry,  supra,  "that  any  one 
has  violated  the  law,  and  been  guilty  of  immoral  and  corrupting  practices  in 
his  business  transactions,  without  proof,  even  though  he  may  ask  it  himself 
for  the  purpose  of  being  relieved  from  the  obligation  of  a  losing  contract." 
Yet,  upon  the  well-settled  doctrine  concerning  negotiable  instruments,  if  the 
illegality  in  tlie  inception  of  a  promissory  note  be  shown  by  the  maker  in  an 
action  against  him  thereon  by  an  indorsee,  the  burden  is  on  the  j)laintiff  to 
show  that  he  acquired  the  paper  in  good  faith,  for  value,  in  the  usual  course 
of  business,  and  before' maturity:  Third  Nat.  Bank  v.  Tinsley,  11  Mo.  App. 
498,  502. 

Broker'3  Right  to  Commissions  and  Advances.  —  The  right  of  a  broker 
who  negotiates  a  contract  for  future  delivery  to  recover  commissions  and  ad- 
vances from  his  principal  is  of  course  unquestionable  if  the  contract  is  held 
to  be  valid:  See  Roundtree  v.  Smith,  108  U.  S.  269;  Whitesides  v.  Hunt,  97  Ind. 
191,  203;  Teasdale  v.  McPike,  25  Mo.  App.  341;  Smith  v.  Bouvier,  70  Pa.  St. 
325;  Maxton  v.  Oheen,  45  Id.  166;  Poivellv.  McCord,  12  N.  E.  Rep.  262  (111.). 
But  there  is  considerable  difficulty  and  conflict  of  decision  where  the  con- 
tract negotiated  is  invalid.  In  England  it  is  well  settled  that  neither  the 
statute  7  Geo.  II.,  c.  8,  nor  the  statute  7  &  8  Vict.,  c.  109,  sec.  18,  heretofore 


April,  1887.]  Crawford  v.  Spencer.  765 

referred  to,  applies  to  claims  by  a  stock-broker  or  share-broker  against  his 
principal  so  as  to  defeat  his  recovery:  2  Addison  on  Contracts,  Abbott's  ed., 
*1157;  Wells  v.  Porter,  3  Scott,  141;  2  Bing.  N.  C.  722;  Jessopp  v.  Lut- 
wyche,  10  Ex.  614;  Kniglit  v.  Cambers,  15  Com.  B.  5G2;  Knight  v.  Fitch,  15  Id. 
66G;  Ashton  v.  Dnkin,  4  Hurl.  &  N.  8G9;  Rosewnrnev.  Billhig,  15  Com.  B.,  N.  vS., 
31G;  Thacker  v.  Hardy,  L.  R.  4  Q.  B.  D.  G85;  Cooper  v.  Neil,  27  Week.  Rep. 
159,  note;  and  to  the  same  effect,  under  the  stock-jobbing  act  of  Massachu- 
setts, see  Wyman  v.  Fklce,  3  Allen,  238;  Durant  v.  Bell,  98  Mass.  IGI;  but 
see  Stehhins  v.  Leowolf,  3  Cush.  1 37.  In  a  few  cases  in  this  country  the  bro- 
ker's right  to  recover  has  turned  upon  the  fact  that  the  principal  subse- 
quently executed  his  note  to  the  broker  for  advances  and  commissions  in  the 
illegal  transaction:  Leliman  v.  Strassherrjer,  2  Woods,  554  (C.  C,  N.  D.  of 
Ala.);  Ilentzw.  Jewell,  4  Id.  G56;  20  Fed.  Rep.  592  (C.  C,  S.  D.  of  Miss.);  and 
see  Clarke  v.  Foss,  7  Biss.  540,  553  (D.  C,  W.  D.  of  Wis.);  Ilawley  v.  Bihh, 
69  Ala.  52.  "The  contract  between  the  principal  and  agent,  made  after  the 
illegal  transactions  are  closed,  although  it  may  spring  from  them  and  be  the 
result  of  them,  is  a  binding  contract ":  Leliman  v.  Stras)iherijer,  supra;  but 
see  the  language  in  Seelii/wnv,  Leivis,  G5  Tex.  215,  222;  57  Am.  Rep.  59.3,  599. 
>So  in  Georgia  it  is  held  that  where  the  contract  is  executed,  an  agent  or  broker 
employed  by  the  principal  to  make  it  can  recover  any  money  advanced  in  the 
transaction  by  the  previous  authority  or  subsequent  ratification  of  the  prin- 
cipal: ]Varreny.  Hewitt,  45  Ga.  501;  Heard  w  Liissell,  59  Id.  25;  Champion 
v.  WiUon,  G4  Id.  184,  188;  Thompson  v.  Cummimja,  G8  Id.  124;  and  this  ruling 
has  been  approved  in  Williams  v.  Carr,.  SO  N.  C.  294;  but  in  Cunnimjhavi  v. 
National  Bank  of  Augusta,  71  Ga.  400,  405,  51  Am.  Rep.  2GG,  2G9,  the  court 
•'are  not  prepared  to  say  that  we  will  be  bound  in  the  future  by  the  decis- 
ions last  referred  to."  On  the  other  hand,  in  Wisconsin  and  New  Jersey, 
the  right  of  a  broker  to  recover  for  advances  made  and  services  rendered 
concerning  a  gambling  transaction  is  stringently  denied:  In  re  Green,  7  Biss. 
338;  15  Nat.  Bank.  Reg.  198  (D.  C,  W.  D.  of  Wis.);  Barnard  v.  Backhaus,  52 
Wis.  593;  Flagg  v.  Baldwin,  38  N.  J.  Eq.  219;  48  Am.  Rep.  308;  In  re  Hunt, 
26  Fed.  Rep.  739  (D.  C,  D.  of  N.  J.);  upon  the  ground  that  contracts  for 
Bale  for  future  delivery,  where  the  parties  contemplate  simply  a  settlement  of 
differences,  are,  under  the  general  statutes  relating  to  gaming  and  wagering, 
not  simply  void,  but  illegal,  and  the  collateral  contracts  between  brokers 
and  principals  are  consequently  affected.  In  New  Jersey  the  further  reason 
is  given  that  one  who  enters  into  such  a  speculative  contract  with  a  broker 
is  to  be  considered  as  dealing  with  him  as  a  xirincipal,  and  not  as  an  agent; 
and  this  view  is  supported  by  certain  other,  principally  Pennsylvania,  cases: 
North  v.  Phillips,  89  Ta.  St.  250;  Buchizky  v.  De  Haven,  97  Id.  202;  Dichions 
Ex\-  v.  Thomas,  97  Id.  278;  Jiisth  v.  Holliday,  2  Mackey,  346;  but  compare 
Smith  V.  Bouvier,  70  Pa.  St.  315;  Maxtonv.  Gheen,  75  Id.  lOG;  Fareiray.  Gahell, 
89  Id.  89;  but  these  Pennsylvania  cases  are  much  criticised:  Dos  Passos  on 
Stockbrokers,  423-434;  Biddle  on  Stockbrokers,  305,  317.  In  Illinois,  also,  a 
broker  who  deals  for  his  principal  in  contravention  of  section  130  of  the  Crim- 
inal Code  cannot  recover  his  disbursements  or  commissions:  Coffmanv.  Youmj, 
20  111.  Aiip.  7G;  Tenney  v.  Footc,  4  Id.  594,  afhrmed  in  95  111.  93;  Pearce  v.  Foote., 
113  Id.  228;  55  Am.  Rep.  414;  compare  t/ac^-60w  v.  Foote,  11  Biss.  223;  12  Fed. 
Rep.  37  (C.  C,  N.  D.  of  111.);  and  tlie  broker  is  a  "winner"  within  the  mean- 
ing of  section  132  of  the  same  code,  which  permits  an  action  to  recover  back 
from  the  winner  any  money  or  property  paid  on  account  of  a  gambling  trans- 
action: Pearce  v.  Foote,  supra;  McCormick  v.  Nichols,  19  111.  App.  334,  339. 
The  most  satisfactory  doctrine  on  this  question,  however,  and  the  one 


766  Crawford  v.  Spencer.  [Missouri, 

which  best  accords  with  principle,  and  is  sustained  by  the  weight  of  au- 
thority, in  the  absence  of  Eome  such  statute  as  that  of  Illinois,  is  that  an- 
nounced by  Mr.  Justice  Matthews,  in  L-win  v.  WilUar,  110  U.  S.  499,  510. 
"It  is  certainly  true  that  a  broker  might  negotiate  such  a  contract  without 
being  privy  to  the  illegal  intent  of  the  principal  parties  to  it  which  renders 
it  void,  and  in  such  a  case,  being  innocent  of  any  violation  of  law,  and  not 
suing  to  enforce  an  unlawful  contract,  has  a  meritorious  ground  for  the  re- 
covery of  compensation  for  services  and  advances.  But  we  are  also  of  the 
opinion  that  when  the  broker  is  privy  to  the  ixnlawful  design  of  the  parties, 
and  brings  them  together  for  the  very  purpose  of  entering  into  an  illegal 
agreement,  he  is  partlceps  criminis,  and  cannot  recover  for  services  rendered 
or  losses  incurred  by  himself  on  behalf  of  either  in  forwarding  the  transac- 
tion." See  also  Bartlett  v.  Smith,  4  McCrary,  388;  13  Fed.  Rep.  263  (C.  C,  D. 
of  Minn.);  Cohb  v.  Prell,  5  McCrary,  80;  15  Fed.  Rep.  774;  22  Am.  Law 
Reg.,  N.  S.,  609  (C.  C,  D.  of  Kan.);  Kirkpatnck  v.  Adams,  20  Fed.  Rep. 
287  (0.  C,  W.  D.  of  Tenn.);  Bawjsw.  Hornich,  30  Id.  97  (C.  C,  D.  of  Minn.); 
Hatch  V.  Douglas,  48  Conn.  116;  40  Am.  Rep.  154;  First  National  Baiik  v. 
Oslcaloosa  Packing  Co.,  66  Iowa,  41,  48;  Steioart  v.  SchalJ,  65  Md.  289;  57 
*  Am.  Rep.  327;  the  principal  case;  Crane  v.  Whittemore,  4  Mo.  App.  510;  Kent 
V.  MiUenberger,  13  Id.  503;  Tliird  National  Bank  v.  Tinsley,  MS.  opinion, 
quoted  3  McCrary,  323;  10  Fed.  Rep.  249;  Marshall  v.  Thruston,  3  Lea,  740; 
Beadles  v.  Ownhy,  16  Id.  424;  Seeligson  v.  Lewis,  65  Tex.  215;  57  Am.  Rep. 
593,  599;  Brown  v.  Speyers,  20  Gratt.  296,  309. 

If  the  transaction  between  broker  and  principal  is  a  gambling  one,  it  would 
seem  clear  that  it  could  not  be  validated  by  any  form  of  authorization  or 
ratification:  McCorviich  v.  Nichols,  19  111.  App.  334.  So  where  the  defend- 
ant employed  the  plaintifif  to  buy  and  sell  grain  for  him  in  form  for  future 
delivery,  but  in  fact  no  grain  was  intended  to  be  or  ever  was  received  or  de- 
livered, and  a  dispute  having  arisen  between  the  parties  as  to  who  should 
bear  the  losses  incurred  in  the  speculation,  and  paid  by  the  plaintiff,  it  was 
agreed  that  part  of  the  losses  should  be  borne  by  the  plaintiff,  and  the  bal- 
ance thereof  should  be  paid  to  him  by  the  defendant,  it  was  held  that  there 
could  be  no  recovery  upon  such  agreement  or  compromise:  Everingham  v. 
Meighan,  55  Wis.  354.  But  where  a  broker  claimed  a  balance  due  him  by 
his  principal  on  account  of  certain  stock  transactions,  and  a  third  party  as- 
sumed and  paid  the  same,  the  principal  cannot  repudiate  a  note  which  he  exe- 
cuted to  the  third  person  therefor,  on  the  ground  that  the  balance  claimed 
by  the  broker  was  due  on  a  gambling  transaction:  Bangs  v.  IJomick,  30  Fed. 
Rep.  97.  Where  the  transactions  between  broker  and  principal  are  of  a 
gambling  nature,  the  question  whether  or  not  third  persons  dealing  with  the 
broker  participated  in  the  illegal  intention  is,  it  seems,  immaterial:  Bcveridge 
V.  IlewUt,  8  111.  App.  467. 


AMERICAN  STATE  REPOKTS. 

Vol.   II,    1'  VLri-.   ;;)i  -bOb. 
BELL  V.  HUDSON. 

[78    CAIIFORNrA,    m^.] 

Stale  Claims. 


Aug.  1887.]  Bell  v.  Hudson.  791 

The  Court,     For  the  reasons  given  in  the  foregoing  opinion, 
the  order  is  affirmed. 


Holder  of  Note  cannot  Recover  against  indorser,  unless  he  shows  due 
diligence  in  making  demand  upon  the  maker,  and  notice  to  the  indorser  oi 
non-payment:  Tate  v.  Sullivan,  96  Am.  Dec.  597,  and  note  G12. 


Bell  v.  Hudson. 

[73  California,  285.J 

In  Action  for  Partnership  Accounting,  equity  will  refuse  to  interfere  on 
the  ground  that  the  claim  is  stale,  where  plaintiff  has  allowed  twenty- 
five  years  to  elapse  before  attempting  to  enforce  his  rights,  during  a]l  of 
which  time  he  had  knowledge  of  all  the  facts,  and  there  was  no  impedi- 
ment to  the  prosecution  of  his  claim,  nor  had  he  made  any  demand  upon 
defendant,  nor  in  any  way  asserted  his  claim. 

In  Action  for  Partnership  Accounting,  objection  that  the  claim  is  stale 
may  be  raised  by  demurrer,  on  the  ground  that  the  complaint  does  not 
state  facts  sufficient  to  constitute  a  cause  of  action. 

In  Action  for  Partnership  Accounting  between  an  administrator  of  one 
partner  and  the  representatives  of  the  other,  if  the  complaint  is  insuffi- 
cient in  other  respects  it  is  not  cured  nor  made  sufficient  by  an  allega- 
tion that  the  real  property  "has  at  all  times  since  the  same  was  acquired 
and  still  does  stand  in  the  names  of  said  partners, "  for  the  action  cannot 
be  considered  as  for  partition,  ejectment,  or  mesne  profits,  as  the  neces- 
sary allegations  to  support  either  are  not  made. 

Hundley  and  Gale,  and  A.  F.  Jones,  for  the  appellant. 

W.  C.  Belcher  and  William  G.  Murphy,  for  the  respondents. 

By  Court,  Hayne,  C.  According  to  the  complaint,  the  ma- 
terial facts  are  as  follows:  In  1849  John  A.  Bell  and  William 
M.  Bell  became  partners  "in  the  business  of  buying  and  sell- 
ing stock,  and  the  purchase  of  real  and  personal  property." 
The  business  was  carried  on  until  the  death  of  John  A. 
Bell  in  1859,  at  which  time  there  was  on  hand,  belonging  to 
the  firm,  "  a  large  amount  of  personal  property,  consisting  of 
stock  cattle,  beef  cattle,  horses,  and  mares,  of  the  estimated 
value,  as  plaintiff  is  informed  and  believes  to  be  true,  of  fifty 
thousand  dollars;  real  estate  situated  in  the  county  of  Sutter 
and  state  of  California,  and  in  the  county  of  Westmoreland, 
state  of  Pennsylvania,  of  the  estimated  value,  as  plaintiff  is  in- 
formed and  believes  to  be  true,  of  ten  thousand  dollars;  which 
said  real  estate  has  at  all  times  since  the  same  was  acquired 
and  still  does  stand  in  the  names  of  said  partners,  John  A. 
and  William  M.  Bell;  together  with  notes  and  other  demands 


792  Bell  r.  Hudson.  [Cal. 

of  the  estimated  value  of  over  ten  thousand  dollars,  as  plain- 
tiff is  likewise  informed  and  believes  to  be  true,  besides  other 
property  to  the  plaintiff  unknown." 

No  administration  was  had  upon  the  estate  of  John  A.  Bell 
until  June  3,  1885,  when  the  plaintiff  was  appointed  adminis- 
trator. In  the  mean  time,  ''  and  up  to  the  third  day  of  June, 
A.  D.  1885,  the  said  William  M.  Bell  has  continued  and  did 
continue  individually  in  the  possession  of  the  whole  of  said  real 
and  personal  property,  and  to  manage  and  carry  on  said  busi- 
ness, and  dispose  of  said  property,  and  to  collect  the  debts  and 
things  in  action,  and  to  manage  and  control  all  the  property 
in  any  wise  belonging  to  said  partnership,  and  during  the  time 
aforesaid  used  the  said  property  in  any  manner  he  saw  fit,  and 
has  sold  and  disposed  of  said  property,  and  changed  it  into 
other  property,  and  realized  thereon  large  sums  of  money,  the 
amount  of  which  plaintiff  does  not  know  and  cannot  ascer- 
tain." 

It  is  not  alleged  that  the  heirs  of  John  A.  Bell  were  ignorant 
of  these  proceedings  on  the  part  of  William  M.  Bell,  or  that 
there  were  any  impediments  to  the  prosecution  of  their  claims, 
or  that  they  made  any  demand  upon  him,  or  in  any  way  as- 
serted their  claims,  during  his  lifetime.  He  died  on  June  3, 
1885,  and  the  defendants  were  appointed  executors  of  his  will. 
The  complaint  gc^s  on  to  allege  that  "the  said  plaintiff  has 
requested  and  demanded  of  the  said  defendants  a  statement 
and  account  of  said  copartnership  transactions,  which  the  said 
defendants  have  neglected  and  refused  to  give;  and  that  he 
demanded  of  the  said  defendants  that  they  deliver  over  all 
property  due  and  owing,  belonging  or  coming,  to  him  as  ad- 
ministrator of  the  estate  of  John  A.  Bell,  deceased;  and  that 
they  pay  over  to  him  as  such  administrator  all  sums  of  money 
as  were  due  to  the  estate  of  John  A.  Bell,  deceased,  as  his  part 
of  said  partnership  assets  and  property,  which  they  have  like- 
wise failed  to  do."  The  prayer  is  for  an  accounting,  and  for 
general  relief. 

The  court  below  sustained  a  demurrer  to  the  complaint,  and 
the  plaintiff  not  amending,  final  judgment  was  entered  in 
favor  of  the  defendants.  Two  grounds  are  urged  in  support 
of  the  judgment.  It  is  argued,  in  the  first  place,  that  the 
claim  is  barred  by  the  statute  of  limitations;  and  in  the  sec- 
ond place,  that  the  claim  is  so  stale  that  a  court  of  equity  will 
refuse  to  enforce  it. 

1.  In  ^  he  view  we  take  of  the  case,  it  is  unnecessary  to  pass 


Aug.  1887.]  Bell  v.  Hudson.  793 

upon  the  first  question.  Assuming  in  favor  of  the  plaintiff 
what  we  are  inclined  to  think  is  true, — viz.,  that  the  trust  is 
not  one  of  those  implied  trusts  against  which  the  statute  runs, 
— we  think  that,  so  far  as  the  claim  for  relief  is  founded  upon 
the  partnership  transaction,  it  is  stale,  and  that  a  court  of 
equity  will  not  aid  its  enforcement. 

This  is  a  defense  peculiar  to  courts  of  equity,  and  applies, 
although  no  statute  of  limitations  governs  the  case:  Harwood 
V.  Railroad  Co.,  17  Wall.  81;  Sullivan  v.  Portland  etc.,  94  U.  S. 
811;  Godden  v.  Kimmell,  99  Id.  201;  Sheldon  v.  Rockwell,  9 
Wis.  181;  76  Am.  Dec.  265;  Harrison  v.  Gibson,  23  Gratt.  212; 
Stout  v.  Seahrook,  30  N.  J.  Eq.  189,  190;  Matter  of  Neilley,  95 
N.  Y.  390;  Groenendyke  v.  Coffeen,  109  111.  329;  2  Story's  Eq. 
Jur.,  sec.  1520.  It  is  not  the  same  thing  as  equitable  estoppel, 
although  it  has  been  termed  a  quasi  estoppel:  2  Pomeroy's 
Eq.  Jur.,  sees.  816,  817;  and  hence  the  rules  governing  equita- 
ble estoppel  (see  Boggs  v.  Merced  Mining  Co.,  14  Cal.  279)  do 
not  apply.  The  ground  of  the  doctrine  was  stated  by  Taney, 
C  J.,  delivering  the  opinion  of  the  supreme  court  of  the  United 
States  in  McKnight  v.  Taylor,  1  How.  168,  as  follows:  "We  do 
not  found  our  judgment  upon  the  presumption  of  payment; 
for  it  is  not  merely  on  presumption  of  payment,  or  in  analogy 
10  the  statute  of  limitations,  that  a  court  of  chancery  refuses 
to  lend  its  aid  to  stale  demands.  There  must  be  conscience, 
good  faith,  and  reasonable  diligence  to  call  into  action  the 
powers  of  the  court.  In  matters  of  account,  where  they  are 
not  barred  by  the  act  of  limitations,  courts  of  equity  refuse  to 
interfere  after  a  considerable  lapse  of  time,  from  considera- 
tions of  public  policy,  and  from  the  diflSculty  of  doing  entire 
justice  when  the  original  transactions  have  become  obscure  by 
time,  and  the  evidence  may  be  lost." 

The  principal  foundations  of  the  doctrine  are  acquiescence 
and  lapse  of  time.  But  other  circumstances  will  be  taken 
into  consideration.  Thus  it  is  a  material  circumstance  tliat 
the  claim  was  not  made  until  after  the  death  of  those  who 
could  have  explained  the  transaction:  See  Mooers  v.  White,  6 
Johns.  Ch.  360;  Barnes  v.  Taylor,  27  N.  J.  Eq.  259;  German- 
American  Seminary  v.  Kiefer,  43  Mich.  Ill;  Bolton  v.  Dickens, 
4  Lea,  577;  Hatcher  v.  Hall,  77  Va.  578.  So  it  has  been  held 
that  a  change  in  the  value  and  character  of  the  property  may 
be  material:  Bliss  v.  Prichard,  67  Mo.  187;  Allen  v.  Allen,  47 
Mich.  79.  But,  as  stated  by  Davis,  J.,  in  McQuiddy  v.  Ware, 
20  Wall.  19,  "there  is  no  artificial  rule  on  such  a  subject,  but 


794  Bell  v.  Hudson.  [Cal. 

each  case  as  it  arises  must  be  determined  by  its  own  particu- 
lar circumstances."  In  other  words,  the  question  is  addressed 
to  the  sound  discretion  of  the  chancellor  in  each  case:  Brown 
V.  County  of  Buena  Vista,  95  U.  S.  160;  Rayner  v.  Penrsall,  3 
Johns.  Ch.  *586;  Landrum  v.  Union  Bank,  63  Mo.  56. 

The  following  decisions  are  instances  of  the  application  of 
the  rule  to  facts  similar  to  the  facts  of  the  case  under  consid- 
eration: In  Groenendyke  v.  Coffeen,  109  111.  339,  which  was  a 
suit  by  the  heirs  of  the  deceased  partner  for  an  accounting,  it 
was  beld  that  a  delay  of  sixteen  years  rendered  the  claim 
stale.  In  Codman  v.  Rodgers,  10  Pick.  119,  which  was  a  suit 
for  an  accounting  brought  by  the  representatives  of  the  de- 
ceased partner  against  the  representatives  of  the  surviving 
partner,  it  was  held  that  a  delay  of  seventeen  years  rendered 
the  claim  stale.  In  Harris  v.  Hillegas,  66  Cal.  79,  which  was  a 
similar  case,  it  was  held  that  a  delay  of  somewhat  over  twenty 
years  rendered  the  claim  stale.  And  like  decisions  were  made 
in  Ray  v.  Bogart.  2  Johns.  Cas.  432,  and  Harlow  v.  La'ke  Supe- 
rior Co.,  41  Mich.  584.  And  in  McEwin  v.  Gillespie,  3  Lea, 
205,  which  was  a  similar  case,  it  was  held  that  a  delay  of 
twenty-one  years  rendered  the  claim  stale. 

Now,  in  the  present  case,  the  complaint  does  not  allege  that 
the  heirs  of  John  A.  Bell  had  not  knowledge  of  the  proceed- 
ings of  William  M.  Bell,  or  that  there  was  any  impediment  to 
their  action,  and  consequently  it  must  be  presumed  that  they 
had  such  knowledge,  and  that  there  were  no  such  impedi- 
ments: Marsh  v.  Whitmore,  21  Wall.  184,  185;  McQuiddy  v. 
Ware,  20  Id.  19;  Harwood  v.  Railroad  Co.,  17  Id.  81.  Such 
being  the  case,  we  think  that  the  fact  that  they  delayed  the 
assertion  of  their  claim  until  the  death  of  the  surviving  part- 
ner, a  period  of  twenty-five  years,  is  sufiicient  to  make  their 
claim  stale. 

It  is  contended,  however,  that  this  question  cannot  be  raised 
on  demurrer.  But  the  preponderance  of  authority  (and  we 
think  the  better  reason)  is  to  the  effect  that  it  can:  Landsdale 
V.  Smith,  106  U.  S.  392;  Bliss  v.  Prichard,  67  Mo.  189,  190; 
Shorter  v.  Smith,  56  Ala.  210.  The  defense  is,  in  substance, 
that  the  bill  does  not  show  equity;  or  in  the  language  of  our 
statute,  that  the  complaint  does  not  state  facts  suflBcient  to 
constitute  a  cause  of  action.  This  is  a  ground  of  demurrer 
under  our  system. 

We  think,  therefore,  that  so  far  as  tlie  claim  for  relief  is 
founded  on  the  partnership  transactions,  a  court  of  equity  will 
Dot  enforce  it. 


Aug.  1887.]  Bell  v.  Hupson.  795 

2.  But  the  complaint  alleges  that  the  real  property  "  has  at 
all  times  since  the  same  was  acquired,  and  still  does  stand  in 
the  names  of  said  partners,  John  A.  and  William  M.  Bell." 
Does  this,  in  connection  with  the  other  allegations,  state  a 
cause  of  action  of  any  kind  ?  We  think  not.  The  action  can- 
not he  considered  as  for  partition  between  co-tenants  because 
the  administrator  is  not  a  co-tenant,  and  cannot  bring  such  an 
action:  Freeman  on  Cotenancy  and  Partition,  sec.  454.  It 
cannot  be  treated  as  an  action  of  ejectment  between  co-ten- 
ants, because  what  is  alleged  does  not  amount  to  an  averment 
of  ouster;  Carpentier  v.  Webster,  27  Cal.  561;  Carpentier  v. 
Mendenhall,  28  Id.  487;  87  Am.  Dec.  135;  and  it  cannot  be 
treated  as  an  action  for  mesne  profits,  because  (if  for  no  other 
reason)  there  is  no  averment  that  the  use  of  the  land  was  of 
any  value. 

We  see  no  aspect  in  which  the  complaint  states  a  cause  of 
action;  and  we  therefore  advise  that  the  judgment  be  affirmed. 

FooTE,  C,  and  Belcher,  C.  C,  concurred. 

The  Court,  For  the  reasons  given  in  the  foregoing  opinion, 
the  judgment  is  affirmed. 

Stale  Claims.  —  The  general  principles  which  govern  courts  of  equity  in 
permitting  a  defendant  to  avail  himself  of  the  laches  of  the  plaintifiF  in  prose- 
cuting his  claim  are  exhaustively  considered  in  the  note  to  Smith  v.  T/iompson, 
64  Am.  Dec.  130,  so  that  it  becomes  \innecessary  to  discuss  here  the  right 
which  courts  of  chancery  have  to  act  in  cases  where  there  has  been  gross 
laches  or  unreasonable  delay:  See  also  1  Pomeroy's  Eq.  Jur.,  sees.  418,  419; 
Steams  v.  Page,  7  How.  819,  829;  Wagner  v.  Baird,  7  Id.  258;  Speidcll  v. 
Heinrici,  15  Fed.  Rep.  757.  We  would  add  here,  however,  that  "what  con- 
stitutes a  stale  equity  is  a  vexed  question  hardly  susceptible  of  an  accurate 
definition.  Length  of  time  alone  is  not  a  test  of  staleness  ";  the  question 
must  be  determined  by  the  facts  and  circumstances  of  each  case,  and  accord- 
ing to  right  and  justice:  Paschall  v.  Hinderer,  20  Ohio  St.  5l38,  580;  Brown  v. 
County  of  Buena  Vista,  95  U.  S.  159;  Jeffery  v.  Fitch,  4G  Conn.  GOl,  605;  1 
Sugden  on  Vendors,  8th  Am.  ed.,  Perkins's  notes,  387,  note  p^  The  court 
is  not  confined  to  the  statutory  period  of  time  in  determining  whether  or  not 
the  demand  is  stale,  but  may  refuse  relief  in  cases  where  the  delay  is  less  or 
greater  than  that  named  in  the  statute:  Wood  on  Limitations  of  Action?, 
ed.  1883,  sec.  GO,  p.  122;  1  Sugden  on  Vendors,  8th  Am.  ed.,  Perkins's  notes, 
387,  notepi;  1  Perry  on  Trusts,  3d  ed.,  sec.  230. 

Laches  and  Acquiescence  Distinguished.  — An  important  distinction  ig 
made  by  some  of  the  authorities  between  lapse  of  time  or  laches  and  lying  by 
or  acquiescence:  Leeds  v.  Amlierst,  2  Phill.  C.  C.  123;  Fisher  v.  Boody,  1  Curt. 
206,  219;  Archhold  v.  Scully,  9  H.  L.  Cas.  383;  Clark  v.  Potter,  32  Ohio  St.  GI. 
So  it  is  said  in  Wood  on  Limitations  of  Actions,  ed.  1883,  sec.  62,  p.  126,  that 
"while  the  words  'laches 'and  '  acquiescence '  are  often  used  as  similar  in 
meaning,  the  distinction  in  their  import  is  both  great  and  important.    Laches 


796  Bell  v.  Hudson.  [Cal. 

imports  a  merely  passive,  while  acquiescence  implies  active,  assent;  and 
while,  where  there  is  no  statutory  limitation  applicable  to  the  case,  courts  of 
equity  would  discourage  laches  and  refuse  relief  after  great  and  unexplained 
delay,  yet  where  there  is  such  a  statutory  limitation,  they  will  not  anticipate 
it  as  they  may  where  acquiescence  has  existed."  It  was  held,  however,  in 
Life  Ass'n  of  Scotland  v.  Skldal,  3  De  Gex,  F.  &  J.  72,  that  the  two  proposi- 
tions of  a  bar  from  length  of  time  or  laches  and  by  acquiescence  were  not 
distinct,  but  constituted  only  one  proposition. 

Now,  while  lying  by  and  acquiescence  would  in  many  cases  by  analogy  to 
the  doctrine  of  estoppel  preclude  a  party  from  asserting  cUimed  rights  in 
equity  to  the  detriment  of  others  who  had  relied  in  good  faith  upon  such 
acts,  yet  lying  by  and  acquiescence  are  of  necessity  an  important  factor  in 
determining  whether  there  have  been  such  laches  as  to  constitute  a  bar  to  re- 
lief ill  equity.  So  it  was  declared  by  the  court  in  Life  Ass'n  of  Scotland  v. 
Siddal,  3  De  Gex,  F.  &  J.  72,  that  length  of  time,  where  it  does  not  operate  as 
a  statutory  or  positive  bar,  operates  as  evidence  of  assent  or  acquiescence, 
and  to  the  same  effect  are  the  words  of  the  court  in  Lindsay  Petroleum  Co. 
v  Hurd,  L.  R.  5  P.  C.  221,  239,  where  it  is  held  that  "the  doctrine  of 
laches  in  courts  of  equity  is  not  an  arbitrary  or  a  technical  doctrine.  Where  it 
would  be  practically  unjust  to  give  a  remedy,  either  because  the  party  has 
by  his  conduct  done  that  which  might  fairly  be  regarded  as  equivalent  to  a 
waiver  of  it,  or  where  by  liis  conduct  and  neglect  he  has,  though  perhaps 
not  waiving  that  remedy,  yet  put  the  other  party  in  a  situation  in  which  it 
would  not  be  reasonable  to  place  him  if  the  remedy  were  afterwards  to  be 
asserted,  in  either  of  these  cases,  lapse  of  time  and  delay  are  most  material. 
But  in  every  case,  if  an  argument  against  relief  which  otherwise  would  be 
just  is  founded  upon  mere  delay,  that  delay  of  course  not  amounting  to  a  bar 
by  any  statute  of  limitations,  the  validity  of  that  defense  must  be  tried 
upon  principles  substantially  equitable.  Two  circumstances  always  im- 
portant in  such  cases  are  the  length  of  the  delay,  and  the  nature  of  the  acts 
done  during  the  interval  which  might  affect  either  party,  and  cause  a  balance 
of  justice  or  injustice  in  taking  the  one  course  or  the  other  so  far  as  relates 
to  th^  remedy." 

Distinction  between  Executory  and  Executed  Interests.  —  A  fur- 
ther distinction  is  also  made  by  the  courts  between  executory  and  execuu-d 
interests  in  passing  upon  the  question  whether  there  have  been  laches  oi 
acquiescence,  greater  laches  being  required  in  the  latter  than  in  the  former 
case,  since  in  executed  interests  mere  laches  will  not  alone  disentitle  a  party 
to  relief;  something  more,  such  as  waiver  or  abandonment,  being  required: 
Clarke  v.  Hart,  G  H.  L.  Cas.  632,  654. 

Specific  Performance  Generally.  —  As  to  when  specific  performance 
is  barred  by  staloness  of  the  claim,  see  note  to  54  Am.  Dec.  132;  Hilliard  oa 
Vendors,  2d  ed.,  181,  and  note. 

In  Cases  of  Partnership  Agreements,  delay  or  laches  may  furnish  a  ground 
for  the  court  to  refuse  to  decree  specific  performance  of  the  contract,  espe- 
cially in  cases  of  mining  partnerships  or  others,  which  are  speculative  in 
their  nature:  Bell  v.  Hudson,  73  Cal.  285;  Harris  v.  Hillegass,  54  Id.  463; 
Cleyj  V.  Edmomon,  8  De  Gex,  M.  &  G.  787;  Walker  v.  Jeffreys,  1  Hare,  341. 
There  are  exceptions,  however,  to  this  rule,  where  the  courts  have  granted 
the  relief  sought,  although  the  claim  has  become  stale:  McGuire  v.  Bamsey, 
9  Ark.  518;  Coleman  v.  Marble,  9  La.  Ann.  476;  Ludloiu  v,  Coor>er,  4  Ohio  St, 
1;  Pay  v.  Bogart,  2  Johns.  Cas.  432. 


Aug.  1887.]  Bell  v.  Hudson.  797 

Agents.  —  In  cases  where  an  agent  has  sought  to  avail  himself  of  an  ad- 
vantageous transaction  by  reason  of  his  confidential  relation  as  employee, 
and  such  transaction  is  endeavored  to  be  set  aside  after  a  lapse  of  time,  or 
the  transaction  has  become  a  stale  demand,  the  rule  seems  to  be  that  it  is 
very  difficult  for  a  confidential  agent  to  set  up  as  an  available  defense  the 
laches  of  his  employer,  since  it  is  his  duty,  so  long  as  the  relation  continues, 
to  guard  against  his  employer's  negligence  in  all  his  transactions,  and  more 
particularly  those  in  which  he,  as  agent,  is  concerned.  "Length  of  time 
weighs  less  in  this  case  than  any  other  ":  Note  4  to  Croire  v.  Ballard,  1  Ves. 
Jr.,  Sumner's  ed.,  citing  Beaumont  v.  Bonltbee,  6  Ves.  492,  494;  7  Id.  G09; 
Hardwkke  v.  Vernon,  14  Id.  511;  see  further,  as  to  fiduciary  and  confidential 
relations,  McDonald  v.  McDonald,  1  Bligh,  33G;  Lewes  v.  Morgan,  5  Price, 
42;  Berkmeyer  v.  Kcllerman,  32  Ohio  St.  257.  But  where  an  attorney  sold 
his  client's  bonds  at  a  public  sale,  and  bought  them  himself,  giving  their  full 
value  at  the  time  for  them,  it  was  held  that  it  was  too  late  for  the  client  to 
obtain  any  relief  in  equity,  he  having  acquiesced  in  the  purchase  for  twelve 
years:  Marsh  v.   Whitmore,  21  Wall.  178. 

Parent  and  Child.  —  Where  a  child  made  a  voluntary  settlement  upon 
his  father  while  under  his  influence,  but  thereafter  was  emancipated  from 
parental  control,  and  for  nine  years  was  in  a  position  to  assert  his  rights, 
but  neglected  to  do  so  during  that  time,  and  then  filed  a  bill  asking  that  thf 
deed  might  be  set  aside,  the  relief  asked  was  refused,  and  the  court  observed 
that  "  if  it  be  shown  that  the  influence  is  gone,  the  court  expects  steps  to  be 
taken  especially  in  regard  to  these  family  matters,  in  order  that  persons  may 
know  what  line  of  conduct  they  are  to  adopt  where  there  is  a  transaction 

which  may  be  subject  to  be  impugned The  court  requires  a  porson 

to  be  prompt  in  asserting  his  right  in  a  case  of  this  description,  where  the 
whole  conduct  and  life  of  the  father  is  framed  upon  tlie  supposition  that  the 
property  is  in  the  state  in  which  it  is  until  it  is  disputed  ":  Turner  v.  Collinn, 
20  Week.  Rep.  305;  41  L.  J.  558;  L.  R.  7  Ch.  329.  In  the  following  case,  a 
daughter,  for  a  nominal  consideration,  very  soon  after  attaining  her  majority, 
gave  to  her  father,  who  was  also  her  guardian,  a  life  interest  in  part  of  her 
real  estate.  Sixteen  months  thereafter  she  married,  and  seven  years  afuer 
the  execution  of  the  indenture  she  died.  Three  years  after  her  decease,  her 
husband,  on  whom  her  rights  had  devolved,  brought  a  bill  in  equity,  asking 
to  have  the  father  declared  a  trustee  of  the  life  estate,  and  aa  account  of  the 
tents  and  profits  which  accrued  prior  to  the  daughter's  minority  and  afterwards. 
It  was  "held,  that  if  the  bill  had  been  filed  shortly  after  the  transaction,  or 
even  near  the  time  of  the  marriage,  it  might  have  been  set  aside,  since  courts 
look  with  great  jealousy  upon  all  transactions  of  such  a  character  between 
parent  and  child,  but  that  a  delay  of  ten  years  was  such  laches  that  the  bil' 
could  not  be  sustained,  and  it  was  accordingly  dismissed  on  that  grounu; 
Wright  v.   Vandei-planl;  2  Kay  &  J.  1;  1  Perry  on  Trusts,  3d  ed.,  sec.  201. 

Members  of  the  Same  Family.  —  As  a  rule,  the  delay  is  not  so  preju- 
dicial where  all  the  parties  are  members  of  the  same  family  as  in  case  of 
Btrangers:  Paschall  v.  Hiudcrcr,  28  Ohio  St.  5G8,  582,  citing  Laverv.  Fielder, 
9  Jur.,  N.  S.,  190. 

Guardian  and  Ward.  — A  bill  in  equity  for  an  accounting,  and  for  set- 
ting aside  a  release  given  by  the  ward  in  ignorance  of  her  rights,  will  lie 
against  the  guardian  and  against  his  sureties  on  his  bond,  who  had  notice  of 
the  fraudulent  character  of  the  release,  although  the  action  is  brought  within 
•igbt  years  after  the  ward  arrives  at  majority,  it  appearing  that  she  had  no 


798  Bell  v,  Hudson.  [Cal. 

knowledge  of  her  rights  until  about  a  year  before  bringing  suit:  Carter  v. 
Tice,  120  111.  277. 

Judgments.  —  A  court  of  equity  will  open  a  judgment  upon  a  petition 
brought  within  a  reasonable  time  after  the  fact  that  such  judgment  exists 
comes  to  the  party's  knowledge,  he  having  had  no  notice  of  the  pendency  of 
the  suit,  and  it  makes  no  difference  that  the  time  fixed  by  the  statute  of 
^imitations  has  expired:  Jcffery  v.  Fitch,  46  Conn.  601,  605.  But  relief  will 
be  refused  where  it  is  sought  to  set  aside  a  judgment  obtained  by  fraud,  if  it 
appears  that  the  complainant  has  not  exercised  proper  diligence,  and  that 
the  petition  was  not  brought  until  seven  years  after  the  judgment  was  ob- 
tained: Brown  v.  County  of  Buena  Vista,  95  U.  S.  157;  and  a  party  who 
seeks  the  aid  of  a  court  of  equity  for  relief  against  a  judgment,  on  account 
of  a  matter  which  would  have  been  a  good  defense  at  law,  must  show  that 
his  failure  to  make  his  defense  was  not  owing  to  his  own  neglect  or  want  of 
diligence,  since  in  no  case  will  a  court  of  equity  relieve  a  person  against  the  con- 
sequences of  his  own  laches:  DrviJcard  v.  Ingram,  21  Tex.  650;  73  Am.  Dec.  250. 
Although  mere  irregularities  may  be  cured  by  lapse  of  time,  yet  such  is  not  the 
case  if  the  proceedings  are  void:  Shae/er  v.  Gates,  2  B.  Mon.  457;  38  Am.  Dec. 
164;  and  in  favor  of  a  judgment,  it  is  held  that  facts  which  are  indispensable  to 
its  validity  may  be  presumed  after  a  lapse  of  time,  although  they  are  not  ap- 
parent on  the  record:  Id.  So  in  case  of  a  delay  of  forty-three  years  everything 
is  presumed  in  favor  of  a  judicial  act  not  shown  to  have  been  unauthorized: 
Shackelford  v.  Miller,  9  Dana,  278.  In  Sullivan  v.  Andre,  4  Hughes,  290,  6 
Fed.  Rep.  641,  the  facts  were  these:  A  bill  was  filed  in  1879  to  set  aside  a  dis- 
tribution of  personal  estate  made  in  1869,  and  ib  appeared  that  the  complain- 
ants were  aliens;  that  they  first  learned  of  the  intestate's  death  in  1874,  and 
had  instituted  a  suit  in  1876  to  set  aside  the  distribution,  which  suit  they 
were  obliged  to  discontinue;  and  that  they  had  used  every  endeavor  to  ascer- 
tain the  parties  to  whom  the  money  had  been  distributed,  and  upon  finding 
one  of  them,  had  brought  this  action.  It  was  held,  in  view  of  the  facts, 
that  lapse  of  time  was  not  a  bar. 

A  Judicial  Sale.  — The  court  refused  to  set  aside  a  judicial  sale  where  there 
had  been  laches  in  delaying  to  bring  a  suit  for  five  years:  Ilarwood  v.  Rail 
rood  Co.,  17  Wall.  78. 

Execution  Sale.  —  Equity  will  not  interfere  to  set  aside  a  sale  of  real  estate 
made  under  an  execution,  where  the  party  seeking  relief  has,  without  excuse, 
failed  to  avail  himself  of  his  rights  at  the  proper  time,  since  justice  requires 
that  one  must  suffer  for  his  own  laches  in  such  a  case,  although  a  large  estate 
be  sacrificed  for  a  small  sum  of  money:  Stone  v.  Gardner,  20  111.  304;  71  Am. 
Dec.  2G8. 

That  Demand  is  Stale  cannot  ee  Availed  of  against  thb  Government, 
tior  is  laches  imputable  to  it  on  account  of  negligence  of  its  public  officers  or 
its  agents.  This  doctrine  is  well  settled:  United  States  v.  City  of  Alexandria, 
4  Hughes,  545;  22  Myer's  Fed.  Dec,  sec.  327.  The  court  said  in  this  case 
that  "  the  general  principle  is,  that  laches  are  not  imputable  to  the  govern- 
ment; the  utmost  vigilance  would  not  save  the  public  from  the  most  serious 
losses  if  the  doctrine  of  laches  could  be  applied  to  its  transactions  ";  but  the 
exception  is  made  as  to  third  parties,  who  are  strangers  to  transactions 
as  to  which  the  negligence  may  occur:  Haehnlen  v.  Commonwealth,  13  Pa.  St. 
617;  53  Am.  Dec.  502,  and  note  503;  United  States  v.  Williams,  4  McLean, 
567;  Sedgwick  and  Wait's  Trial  of  Title  to  Land,  2d  ed.,  sec.  753  a;  United 
States  v.  Kirk-patrick,  9  Wheat.  720;  United  States  v.  Little  Miami  etc.  B. 
C,   1   Fed.  Rep.  701;    United  States  v.  Van  Zandt,   11   Wheat.    184;   United 


Aug.  1887.]  Bell  v.  Hudson.  799 

States  V.  BarrowcUJT,  3  Ben.  519;  Mclntyre  v.  Thompson,,  4  Hughes,  562.  But 
see  7  Opin.  Att'y-Gen.  614,  where  it  is  said  that  rights  of  action  in  favor 
of  the  United  States  are  not  barred  in  the  absence  of  a  special  provision  by 
act  of  Congress,  and  citing  United  States  v.  Knight,  14  Pet.  311,  .315;  United 
States  V.  Hoar,  2  Mason,  311;  though  laches  may  be  availed  of  by  the  gov- 
ernment as  against  the  claimant  of  a  grant:  United  States  v.  Moore,  12  How. 
223.  As  to  claims,  however,  which  are  presented  against  the  United  States, 
it  is  said  that  "the  presumption  and  inference " arising  from  staleness  of  a 
demand  "may  be  rebutted  by  other  evidence  accounting  for  the  delay,  and 
explaining  that  it  arose  from  other  causes  ":  2  Opin.  Att'y-Gen.  464. 

The  Rule  Governing  Trusts. — Laches  does  not  operate  as  a  bar  to 
purely  equitable  trusts  which  are  direct,  continuing,  or  express:  Hiijhtoioery. 
Thornton,  8  Ga.  486;  52  Am.  Dec.  412;  and  see  notes  24  Id.  569;  12  Id.  372. 
Although  "time  does  not  bar  a  direct  trust  where  the  relation  of  trustee  and 
cestui  que  trust  is  admitted  to  exist,  yet  diligence  must  be  used  to  establish 

a  constructive  trust  on  the  ground  of  fraud A  constructive  trust  will 

be  barred  by  long  acquiescence,  although  the  fraud  was  evident,  and  the  re- 
lief was  originally  clear":  1  Perry  on  Trusts,  3d  ed.,  sees.  228  et  seq. ;  see 
Speidel  v.  Ilenrici,  15  Fed.  Rep.  753,  and  note  758;  Oodden  v.  Kimmel,  99 
U.  S.  201,  212;  22  Myer's  Fed.  Dec,  sec.  315;  Etting  v.  Marx,  4  Hughes, 
312;  4  Fed.  Rep.  673;  22  Myer's  Fed.  Dec,  sec.  325.  A  very  concise  rule 
and  clear  statement  of  the  law  on  this  question,  of  what  trusts  are  and  what 
trusts  are  not  barred,  is  given  by  Judge  Story.  He  says:  "It  is  often  sug- 
gested that  lapse  of  time  constitutes  no  bar  in  cases  of  trust.  But  this  prop- 
osition must  be  received  with  its  appropriate  qualifications.  As  long  as  the 
relation  of  trustee  and  cestui  que  trust  is  acknowledged  to  exist  between  the 
parties,  and  the  trust  is  continued,  lapse  of  time  can  constitute  no  bar  to 
an  account,  or  other  proper  relief,  for  the  cestui  que  trust.  But  where  this 
relation  is  no  longer  admitted  to  exist,  or  time  and  long  acquiescence  have 
obscured  the  nature  and  character  of  the  trust,  or  the  acts  of  the  parties,  or 
other  circumstances,  give  rise  to  presumptions  imfavorable  to  its  continu- 
ance, —  in  all  such  cases  a  court  of  equity  will  refuse  relief  upon  the  ground 
of  lapse  of  time  and  its  inability  to  do  complete  justice.  This  doctrine  will 
apply  even  to  cases  of  express  trust;  and  a  fortiori  it  will  apply  with  in- 
creased strength  to  cases  of  imjdied  or  constructive  trusts":  2  Story's  Eq. 
Jur.,  13th  ed.,  sec  1520  a;  Pomcroy's  Eq.  Jur.,  sees.  418,  419,  1080;  Angell  on 
Limitations,  6th  ed.,  sees.  166-169,  171,  174-178,  468-472;  Prevost  v.  Gratz,  6 
Wheat.  497.  In  consideration  of  this  question,  the  words  of  the  court  in 
Michoud  V.  Girod,  4  How.  503,  561,  are  important.  It  is  said  in  that  case 
that  the  time  within  which  a  constructive  "trust  will  be  barred  must  de- 
pend  upon  the  circumstances  of  the  case:  Boone  v.  Chiles,  10  Pet.  177. 
There  is  no  rule  in  equity  which  excludes  the  consideration  of  circumstances; 
and  in  a  case  of  actual  fraud,  we  believe  no  case  can  be  found  in  the  books  in 
which  a  court  of  equity  has  refused  to  give  relief  within  the  lifetime  of  either 
of  the  parties  upon  whom  the  fraud  is  proved,  or  within  thirty  years  after  it 
has  been  discovered  or  become  known  to  the  party  whose  rights  are  affected 
by  it ":  See  also  Tiffany  and  BuUard's  Law  of  Trusts  and  Trustees,  ed.  1862, 
718,  719;  1  Perry  on  Trusts,  3d  ed.,  sec  229. 

Instances  of  Trusts  Barred  and  not  Barred.  —  A  cestui  que  titist  cannot  be 
bound  by  acquiesceuce,  except  when  he  has  been  fully  informed  of  his  rights 
and  all  the  material  facts  and  circumstances  of  the  case:  Life  Assn  o^  Scot- 
land V.  Siddal,  3  De  Gex,  F.  &  J.  74.  A  delay  of  twelve  years  after  the 
expiration  of  a  trust,  or  tea  years  after  the  death  of  the  trustee,  does  not 


800  Bell  v.  Hudson.  [Cal. 

constitute  such  laches  as  to  bar  the  representatives  of  a  cestui  que  trust  from 
the  right  to  a  trust  account:  Diclrnso/i  v.  Holland,  2  Beav.  310.  Although 
in  regard  to  express  trusts,  lapse  of  time  is  not  as  a  rule  considered,  yet 
where  the  cestui  que  trust  was  guilty  of  gross  laches,  it  was  held  that  the 
rule  did  not  apply:  De  Busche  v.  Alt,  L.  R.  8  Ch.  D.  286.  But  equity  will 
not  enforce  a  trust  in  behalf  of  creditors  who  bave  slept  on  their  rights  for 
twenty  years,  such  delay  being  unreasonable:  McKnigJd  v.  Taylor,  1  How. 
161.  WTiere  there  has  been  a  great  lapse  of  time  or  laches  on  the  part 
of  the  cestui  que  trust,  a  resulting  trust  will  not  be  enforced,  especially  not 
against  occupation  under  a  deed  or  against  an  adverse  holding:  1  Perry  on 
Trusts,  3d  ed.,  sec.  141.  In  a  recent  case  in  Massachusetts  the  following 
facts  appeared:  The  plaintiff's  testator  became  a  surety  on  the  probate  bond 
of  a  trustee  in  1855.  An  account  was  rendered  by  the  trustee  in  1856,  but 
no  other  was  rendered,  except  one  occasionally  to  the  cestuis  que  trust.  The 
trustee  in  1864  pledged  certain  stock  of  the  trust  estate  to  a  bank  as  security 
for  indebtedness  to  it  from  his  firm.  The  bank  had  notice  that  the  stock  be- 
longed to  the  trust  estate,  but  thereafter,  in  1867,  sold  the  same  at  the  trus- 
tee's request,  and  the  amount  realized  therefrom  was  applied  on  the  debt. 
No  benefit  was  received  by  the  trust  estate  from  such  disposal  of  the  stock. 
The  surety  was  secured  by  the  trustee  in  18<^8,  but  in  1869,  upon  being  re- 
leased by  the  court  from  the  bond,  gave  up  his  security.  The  cestuis  que  trust 
first  learned  of  the  breach  of  trust  in  August,  1877.  A  suit  was  commenced 
upon  the  bond  in  November,  1877.  Thereafter,  in  1878,  the  original  trustee 
was  removed,  and  another  trustee  appointed.  A  judgment  for  the  penal  sum 
of  the  bond  was  rendered,  although  the  full  amount  due  on  the  execution 
was  not  at  that  time  determined.  Before  filing  their  bill  in  equity,  the  plain- 
tiffs paid  the  amount  due,  so  far  as  ascertainable,  and  subsequently  thereto 
they  paid  the  balance  in  full  on  the  execution.  In  1884  they  brought  this 
petition  against  the  bank  to  recover  the  sum  paid  on  the  judgment  and  execu- 
tion. It  was  held  that  there  was  no  such  laches  on  the  part  of  the  cestuis  que 
trust  in  failing  to  call  for  an  account  as  would  prevent  them  from  following 
the  funds  into  the  bank,  since  they  had  no  knowledge  of  the  breach  of  trust 
until  1877,  and  that  the  pendency  of  the  suit  on  the  bond  justified  the  delay 
necessary  to  defend  it,  that  the  delay  was  not  unreasonable,  and  was,  there- 
fore, no  sufficient  ground  of  defense,  and  that  it  would  be  inequitable  to 
deprive  the  plaintiffs  of  their  remedy  on  account  of  it:  Blake  v.  Traders 
National  Bank,  145  Mass.  13. 

But  a  direct  trust  not  cognizable  at  law,  though  falling  exclusively  within  the 
jurisdiction  of  courts  of  equity,  is  not  subject  to  the  doctrine  of  stale  demand 
as  a  defense,  where  the  bill  seeking  relief  is  filed  in  five  years  after  the 
liability  accrues:  Hightower  v.  Thornton,  8  Ga.  486;  52  Am.  Dec.  412.  In 
the  last  case  the  remedy  was  soiight  against  the  stockholders  of  a  banking 
corporation,  the  legal  assets  of  which  were  exhausted.  So  lapse  of  time  is  no 
bar  to  relief  for  the  enforcement  of  a  resulting  trust,  when  it  appears  that  the 
trust  has  been  acknowledged,  and  there  have  been  no  laches  or  adverse  posses- 
sion: Doiu  V.  Jewell,  18  N.  H.  341,  357;  45  Am.  Dec.  371.  In  Barwell  v.  Bar- 
well,  34  Beav.  371,  a  trustee  bought  up  a  charge  on  the  share  of  one  of  the 
cestuis  que  trust  to  certain  trust  property  for  the  benefit  of  his  reprtseutatives; 
they  were  unable  to  purchase  it  at  the  price  paid,  and  he  subsequently  sold  it 
to  others  of  the  cestuii  que  trust,  all  the  transactions  were  openly  entered 
into,  and  there  was  no  concealment  of  the  facts.  lb  was  held  that  such  pur- 
chase would  not  be  set  aside  after  the  lapse  of  twenty  years,  although  the 
property  had  very  greatly  enlianced  in  value.     Again:  the  plaintiff's  ancest<»' 


Aug.  1887.]  Bell  v.  Hudson.  801 

conveyed  real  and  personal  estate  to  trustees  for  the  purpose  of  paying  certain 
debts,  and  to  hold  the  balance  in  trust  for  himself;  twenty-two  years  there- 
after he  died,  and  two  years  after  his  decease  a  bill  was  tiled  for  discovery 
and  account  against  the  survivors  of  the  trustees.  At  no  time  during  his  life 
had  the  grantor  made  any  attempt  to  annul  the  transaction  or  obtain  a  set- 
tlement. It  was  held  that  the  long  delay  and  acquiescence  was  a  proper 
objection  to  the  bill:  West  v.  Randall,  2  Mason,  181.  So  a  presumption  that 
a  trust  has  been  satisfied  or  extinguished  may  arise  after  a  lapse  of  forty 
years:  Prevoi^t  v.  Gratz,  G  Wheat.  481.  And  where  there  has  been  a  posses- 
sion under  absolute  deeds  for  a  long  time  without  question,  and  evidence 
relied  on  to  establish  a  resulting  trust,  such  evidence  must  be  clear  and  ex- 
plicit, so  as  to  leave  no  doubt  as  to  the  character  of  the  transaction:  Mil- 
ler v.  Blose,  30  Gratt.  744,  751.  Although  purely  equitable  trusts  which 
are  direct,  express,  and  subsisting  are  not  barred  by  lapse  of  time,  yet  where 
the  suit  is  brought  for  redress  for  an  injury  caused  by  a  violation  of  the  trust, 
a  diflferent  rule  prevails,  and  the  suit  is  barred:  Wichliffe  v.  City  of  Lexington, 
11  B.  Mon.  IGl. 

Fraud.  —  In  cases  where  it  is  sought  to  impeach  a  transaction  on  the 
ground  of  fraud,  lapse  of  time  is  a  question  of  much  importance,  owing  to 
the  fact  that  much  evidence  originally  available  and  necessary  to  a  full 
knowledge  of  the  equities  of  the  transaction  may  be  lost:  Prevost  v.  Gratz,  6 
Wheat.  481,  498.  And  the  plaintiff  in  equitable  proceedings  in  cases  of 
asserted  fraud  can  have  no  relief  if  he  has  been  guilty  of  gross  laches:  Oould 
V.  Gould,  3  Story,  51G;  Charter  v.  Trevelyan,  11  Clark  &  F.  714. 

In  an  action  on  a  note  based  upon  the  conveyance  of  certain  land  as  a  con- 
sideration, the  defense  of  fraud  in  making  the  conveyance  was  set  up,  and 
an  offer  was  made  to  reconvey.  The  fraud  was  discovered  in  1877;  the  deed 
was  given  in  1873;  the  action  was  commenced  in  1877;  and  in  1879  the  answer 
averring  fraud  was  filed.  It  also  appeared  that  "the  delay  of  the  defend- 
ant in  electing  to  rescind,  after  he  suspected  the  fraud,  was  the  natural  conse- 
quence of,  or  at  least  might  have  been  caused  by,  the  acts  of  the  plaintiff"; 
and  it  was  held,  therefore,  that  he  had  not,  under  the  peculiar  circumstances 
of  the  case,  "lost  his  right  to  rescind  by  his  delay  to  elect  so  to  do  beyond 
a  reasonable  time  after  he  had  full  knowledge  of  the  fraud":  Nealon  v. 
Henry,  131  Mass.  153.  It  is  said,  however,  in  James  v.  Atlantic  Delaine  Co., 
3  Cliff.  G14,  G20,  that  the  rule  that  staleness  of  a  claim  is  a  good  defense 
"should  seldom  or  never  be  applied  in  cases  of  trust  where  the  means  of 
knowledge  are  wholly  or  even  chiefly  on  one  side.  W^hen  the  fraud  charged 
and  proved  consists  of  misrepresentations  and  concealments,  courts  of  equity 
are  reluctant  to  apply  the  rule  at  all,  unless  it  appear  that  the  rights  of  inno- 
cent third  parties  will  be  injuriously  affected  if  that  defense  be  overruled." 
But  in  cases  of  fraud,  the  time  when  the  fraud  was  discovered,  or  when  by 
the  exercise  of  reasonable  diligence  itmightor  ought  to  have  been  discovered, 
is  material:  1  Sugden  on  Vendors,  8th  Am.  ed.,  Perkins's  notes,  389;  and  the 
remedy  is  not  barred  by  lapse  of  time,  where  the  party  has  never  with  a 
knowledge  of  the  facts  done  anything  which  amounts  to  acquiescence:  Cltar- 
ter  V.  Trevelyan,  11  Clark  &  F.  714,  740.  Relief  was  granted  in  the  last  case, 
where  the  fraud  was  first  discovered  after  a  lapse  of  thirty-seven  years:  Id. 
So  laches  will  not  avail  as  a  defense  in  cases  of  secret  fraud,  if  the  action  is 
brought  within  a  reasonable  time  after  its  discovery :  Meader  v.  Norton,  1 1 
Wall.  442;  and  a  suit  brought  in  one  year  after  the  discovery  of  the  fraud,  the 
action  being  to  rescind  a  sale  of  land,  is  instituted  within  a  reasonable  time: 
8mUh  v.  Babcock,  2  Wood.  &  M.  24G. 
Am.  St.  Rep.,  Vol.  II.  — 51 


802  Bell  v.  Hudson.  [Cal. 

Knowledge  13  Material. — Acquiescence  importa  full  knowledge:  Life 
Ass'n  o/Scothnd  v.  Siddal,  4  De  (I^ex,  F.  &  J.  7-t.  Tlierefore  a  party  w  11  not  be 
held  to  acquiesce  in  acts  which  he  did  not  know  he  iiad  a.iy  right  to  diopute: 
Cliolmondelpu  v.  Clinton,  2  ^ler.  171,  3G2.  Nnr  is  the  rule  confined  to  cases  of 
acquiescence  merely;  for  it  is  said  that  where  one  is  iguoi-aut  of  the  tacts, 
there  can  be  neither  laches  nor  acquiescence:  Chartvr  v.  Trdvelijan,  11  Clark 
&  F.  714,  740;  Bennttv.  Collei/,  1  Myl.ie  &  K.  225,  232;  Wood  on  Limitations 
of  Actions,  ed.  1S83,  sec.  61,  p.  125;  and  where  fraud  is  relied  on  in  cases  of 
trust,  there  can  be  no  laches  by  reason  of  anything  done  or  neglected,  where 
the  party  seeking  relief  has,  without  any  fault  of  his  own,  remained  in  igno- 
rance of  his  rights:  liolj'e  v.  Greijory,  13  Week.  Rep.  355;  Savei-y  v.  Kimj,  5 
H.  L.  Cas.  626,  665.  In  brief,  time  does  not  commence  to  run,  except  there  ia 
full  information  and  knowledge  by  a  party  of  his  rights  ami  the  injury  done, 
and  he  has  such  notice  thereof  as  that  he  ought  to  have  made  inquiry,  or  where 
there  is  undue  inHuence,  and  the  disability  is  removed,  or  where  he  himself 
possesses  the  means  of  knowledge:  1  Sugden  on  Vendors,  8th  Am.  ed.,  Per- 
kins's notes,  3S7,  note  p'.  So  the  time  when  a  party  first  seeks  to  impeach 
an  agreement  which  he  had  hitherto  treated  as  fair  is  material  in  determin- 
ing the  question  of  laches:  Moron//  v.  O'Dea,  1  Ball  &  B.  118;  and  see  cases 
under  title  "Fraud,"  supra;  2  Pomeroy's  Eq.  Jur.,  sec.  917. 

Wlwre  a  parfj  ivith  knowledrje  of  the  facU  neglects  for  nineteen  years  to 
assert  his  claim,  with  no  sufficient  excuse  for  delay,  his  laches  will  bar  relief 
in  equity:  Cantnerv.  Walrod,  25  Am.  Rep.  369;  see  also  »S/«i</i  v.  Thompson, 
64  Am.  Dec.  126,  note  130-134;  De  Cardova  v.  Smith,  58  Id.  136;  Strimpjler 
V.  Rohertu,  57  Id.  606,  and  notes  to  these  cases. 

Accounts.  —  Long  acquiescence  in  an  account  makes  it  a  settled  one: 
Baker  v.  Bkldle,  1  Bald.  394,  418;  for  this  reason  the  court  will  refuse  to 
order  an  accounting  where  several  years  have  elapsed  since  the  transactions 
in  question  were  had,  although  the  statute  of  limitations  does  not  apply: 
Sherman  v.  Sherman,  2  Vern.  276.  So  where  a  bill  was  filed  against  a  son  to 
account  to  his  father's  estate  for  money  given  him  by  his  father  twenty  years 
before,  upon  the  ground  that  the  sum  was  a  debt  due  the  estate,  it  not  being 
claimed  as  an  advancement.  It  was  held  that  the  equities  after  such  a  lapse 
of  time  raised  the  presumption  of  payment  when  the  same  was  averred  in 
the  answer:  Blackerhy  v.  Ilolton,  5  Dana,  525;  and  where  a  tenant  for  life  in 
remainder  brought  a  bill  against  the  representatives  of  a  prior  tenant  for  life 
twenty  years  after  his  death  for  an  account  of  timber  improperly  cut,  the 
bill  was  dismissed:  Harcourt  v.   White,  28  Beav.  303. 

Injunctions.  — Delay,  laches,  or  acquiescence  may  prevent  a  party  from 
obtaining  relief  where  an  injunction  is  sought.  So  held  where  it  was  sought 
to  enjoin  making  an  award:  Dulin  v.  Caldwell  d:  Co.,  28  Ga.  117;  and  lachea 
may  be  a  defense  to  an  application  for  an  injunction,  by  way  of  information, 
equally  with  that  of  proceeding  by  a  bill:  Attorney -General  v.  Sheffield  etc.  Co., 
3  De  Gex,  M.  &  G.  304.  So  laches  may  be  set  up  in  defense  to  a  motion  for  an 
interlocutory  injunction  in  cases  of  patents:  Ilockholzer  v.  E(ujer,  2  Saw.  361; 
and  see  Walker  ou  Patents,  2d  ed.,  sec.  684;  and  M-here  one  has  been  guilty  of 
unreasonable  delay  and  laches  in  prosecuting  his  rights,  equity  will  not  aid 
such  a  person  by  injunction  in  the  collection  of  purchase-money  from  a  ven- 
dor: 1  High  on  Injunctions,  2d  ed.,  sec.  383.  So  a  delay  of  three  and  a  half 
years  was  held  to  be  sufficient  laches  to  warrant  the  refusal  of  an  injunction 
against  a  claimed  uuisauce:  Tichenor  v.  Wilson,  8  N.  J.  Eq.  197;  and  where 
the  plaintiff,  after  a  delay  of  nineteen  years,  sought  for  an  injunction  to  pro- 
hibit an  injury  arising  from  the  setting  back  of  water  by  reason  of  a  mill- 
» 


Aug.  1887.]  Bell  v.  Hudson.  803 

dam,  it  was  held,  in  the  absence  of  fraud,  misrepresentation,  unfair  dealing, 
or  mistake,  excusing  his  delay,  that  it  was  such  laches  as  not  to  entitle  him 
to  relief:  Sheldon  v.  Bochwell,  9  Wis.  167;  76  Am.  Dec.  265.  Nor  need  the 
delay  amount  to  proof  of  acquiescence  in  the  wrong  sought  to  be  remedied: 
Eigh  on  Injunctions,  2d  ed.,  sec.  7.  As  to  delay  and  acquiescence  affecting 
the  granting  of  injunctions,  see  also  Kerr  on  Injunctions,  ed.  1871,  pp.  205, 
206,  228,  238,  349,  406,  551. 

Patents.  — In  cases  of  patent  rights,  it  is  said  that  "delay  to  sue  is  not 
always  laches,  because  it  may  have  resulted  from  the  fact  that  the  complain- 
ant did  not  know  of  the  infringement  till  long  after  it  began,  or  from  the 
fact  that  he  was  litigating  a  test  case  under  his  patent  against  another  in- 
fringer during  the  time  of  the  delay Where  neither  of  these  excuses 

can  be  invoked  by  a  complainant,  he  may  perhaps  avail  himself  of  some  ex- 
cuse arising  out  of  grievous  poverty  or  protracted  sickness  ":  Walker  on 
Patents,  ed.  1883,  sec.  596.  As  to  when  laches  is  fatal  to  any  claim  of  con- 
tinuity between  withdrawn  and  rejected  applications  for  the  same  patent,  or 
as  to  when  it  constitutes  proof  of  an  abandonment  of  both  application  and 
invention,  see  Walker  on  Patents,  2d  ed.,  sees.  91,  145.  That  reasonable 
diligence  is  necessary  in  prosecuting  rights  under  patent  claims,  see  Goodyear 
V.  Honsinijer,  2  Biss.  1;  Sawyer  v.  Massey,  25  Fed.  Rep.  144;  Majic  Ruffle  Co. 
V.  Eba  City  Co.,  14  Blatchf.  109;  McLean  v.  Fleminrj,  96  U.  S.  245. 

Stale  Demands  in  Regard  to  Land.  —  "Long  acquiescence  and  laches 
by  a  party  out  of  possession  [of  land],  productive  of  much  hardship  and  injus- 
tice to  0|hers,  cannot  be  excused  except  by  showing  some  actual  impediment 
or  hindrance  caused  l^y  the  fraud  or  concealment  of  the  party  in  possession, 
which  will  appeal  to  the  conscience  of  the  chancellor ":  Jolinson  v.  Toul- 
min,  18  Ala.  50;  52  Am.  Dec.  212,  220,  citing  from  Wagner  v.  Baird,  7  How. 
234.  Nor  can  the  party  guilty  of  such  laches  "  screen  his  title  from  the  just 
imputation  of  staleness  merely  by  the  allegation  of  an  imaginary  impediment 
or  technical  disability  ":  Waijner  v.  Baird,  7  Id.  258.  So  adverse  j^ossession 
of  land,  continued  for  thirty  years,  is  an  equitable  bar,  in  the  absence  of  any 
excusable  or  explanatory  circumstances:  Piatt  v.  Vattier,  9  Pet.  405;  Scottv. 
Evans,  1  McLean,  480.  And  if  parties  setting  up  a  claim  of  title  to  land  have 
slept  upon  their  rights  for  forty-nine  years,  such  fact  constitutes  a  good  de- 
fense: Copen  V.  Flesher,  1  Bond,  440.  So  the  court  will  refuse  to  enforce  a 
bond  for  the  conveyance  of  an  interest  in  lands  dependent  upon  certain  pay- 
ments, when  twenty  years  have  elapsed  since  the  obligation  became  due: 
Wright  V.  Fullerton,  2  Biss.  336.  In  Wagner  v.  Baird,  7  Uow.  234,  a  petition 
was  brought  to  obtain  the  possession  of  certain  land.  It  appeared  that  the 
defendants  or  their  immediate  grantors  had  paid  a  valuable  consideration  for 
the  land,  and  had  entered  upon  and  occupied  it  for  twenty-seven  years,  and 
had,  by  their  industry,  and  by  a  large  expenditure  of  money  thereon,  greatly 
enhanced  its  value,  and  that  no  bad  faith,  concealment,  or  fraud  could  be  im- 
puted to  them.  It  also  appeared  that  the  complainants  had  taken  no  meas- 
ures during  such  occupancy  by  the  defendants,  or  those  under  whom  they 
claimed,  to  secure  or  protect  their  riglits.  The  court  decided  that  these  facts 
brought  tlie  case  within  the  rule  that  lapse  of  time  and  staleness  of  a  claim 
were  a  good  defense  in  equity,  and  ordered  the  bill  dismissed.  But  where  a 
charge  is  created  upon  land  by  will,  and  there  is  a  delay  of  three  years  in 
bringing  a  suit  to  enforce  such  cliarge,  this  is  not  such  laclies  as  to  constitute 
a  sutiicient  reason  for  rejecting  tlic  bill,  especially  where  it  appears  that  no 
change  had  been  made  by  the  defendant  in  his  position  by  reason  of  such 
quiescence  of  the  plaintiffs,  or  if  it  had,  that  it  was  not  attributable  to  that 


804  Bell  v.  Hudson.  [Cal. 

cause:  Mudd  v.  Poioers,  135  Mass.  273.  And  lapse  of  time  is  no  bar  to  relief 
in  equity  againsj  one  who  holds  the  legal  title  to  land  as  trustee  under  a  de- 
cree which  has  been  reversed:  TalboU's  Ex'rs  v.  BelVs  Heirs,  5  B.  Mon.  320; 
43  Am.  Dec.  126.  In  this  connection,  it  may  be  well  to  note  the  proposition 
that  inasmuch  as  the  various  improvement  statutes  are  in  effect  a  punishment 
against  the  real  owner  of  land  for  his  laches  in  remaining  quiet  and  failing  to 
assert  his  title  against  the  adverse  possessor,  tliey  are  for  this  reason  founded 
upon  equitable  principles,  and  are  therefore  constitutional:  Sedgwick  and 
Wait's  Trial  of  Title  to  Land,  2d  ed.,  sec.  712. 

Deeds  and  Agreements.  —  The  court  will  refuse  to  rescind  a  deed  or  con- 
veyance, when  the  delay  and  acquiescence  of  the  plaintiff  are  such  that  the 
parties  cannot  be  restored  to  their  original  position:  Fisher  v.  Boody,  1  Curt. 
200.  So  thirty  .years'  delay  after  the  execution  of  a  deed,  which  acknowl- 
edges the  receipt  of  the  purchase-money,  is  a  bar,  if  unaccounted  for:  Smith 
V.  Kincatd,  4  J.  J.  Marsh.  240;  and  acquiescence  for  twenty-three  years  under 
an  agreement  will  preclude  the  parties  from  impeaching  it  on  the  ground  of 
claimed  illegality:  Westby  v.  Westhij,  1  Con.  &  L.  537.  So  stale  and  ante- 
quated  demands  in  respect  to  the  purchase  of  lands  are  discouraged  by 
courts  of  equity:  Johnson  v.  Toulmin,  18  Ala.  50;  52  Am.  Dec.  212,  220;  and 
where  there  was  an  unexplained  delay  of  fifteen  months  in  conveying  a 
patent  right  under  a  contract  of  sale  providing  for  a  conveyance  "as  soon 
as  practicable,"  it  was  held  that  the  vendor  had  lost  the  right  to  enforce  the 
contract:  Bellas  v.  Hays,  5  Serg.  &  R.  427;  9  Am.  Dec.  385. 

MiscELLANEOcrs  Cases.  — Where  the  bonds  of  a  railroad  corporation  wera 
appropriated  by  its  officers  for  an  illegal  and  void  purpose,  and  it  was  not  at- 
tempted to  enforce  the  payment  of  such  bonds,  it  was  held  that  the  stock- 
holders might  interpose  by  a  suit,  after  a  delay  of  eleven  and  a  half  years, 
to  cancel  the  bonds  and  the  deed  of  trust  given  as  security  for  their  pay- 
ment, and  that  such  delay  did  not  constitute  such  laches  or  acquiescence  as 
to  bar  maintenance  of  the  bill:  City  of  Chicago  v.  Cameron,  120  111.  447,  462. 
But  a  suit  for  a  legacy  charged  upon  land  is  barred  by  the  lapse  of  thirty 
years  without  any  demand  for  its  payment,  either  by  the  legatee  or  her  hus- 
band: Perkins  V.  Cartmell,  4  Ilarr.  (Del.)  270;  42  Am.  Dec.  753;  and  it  was 
held  in  Hunt  v.  Hamilton,  9  Dana,  91,  that  a  will  could  not  be  established 
after  thirty  years'  time  unaccounted  for.  So  where  a  mortgagee  or  his 
alienee  were  in  possession  under  a  mortgage,  and  the  mortgagor  died  in- 
solvent before  the  debt  became  due,  and  his  alienee  also  became  insolvent 
and  left  the  state,  it  was  held  that  no  presumption  of  payment  of  the 
mortgage  could  arise  under  the  circumstances  from  lapse  of  time:  Brobst  v. 
Brock,  10  Wall.  519,  535;  and  if  mistake  is  relied  on  as  a  ground  of  relief, 
there  must  be  due  and  reasonable  diligence  after  the  discovery  of  the  mis- 
take, since  delay  will  be  fatal:  Sugden  on  Vendors,  8th  Am.  ed.,  Perkins's 
notes,  171. 

Admiralty.  —  Stale  claims  will  not  be  entertained  in  a  court  of  admiralty 
any  more  than  in  a  court  of  equity;  "  and  to  determine  what  is  stale,  resort 
is  sometimes  had  to  the  limitation  in  common-law  actions  established  by 
statute,  but  the  statutes  themselves  are  not  binding.  The  court  is  emphati- 
cally a  commercial  court,  and  requires  reasonable  promptness  on  the  part  of 
its  suitors":  Ocean  Ins.  Co.  v.  Sun  Mutual  Ins.  Co.,  15  Blatchf.  249.  But 
where  it  was  sought,  three  years  and  a  half  subsequent  to  the  time  when  the 
cause  of  action  accrued,  to  have  a  lien  enforced  against  a  vessel  by  reason  of 
its  alleged  failure  to  fulfill  a  contract  of  affreightment,  and  in  the  mean  time 
the  ownership  of  the  vessel  had  changed  hands,  it  was  held  that  the  lien  was 


Aug.  1887.]  Bell  v.  Hudson.  805 

not  barred  by  laches.  The  court  said  in  this  case:  "1.  That  while  courts  of 
admiralty  are  not  governed  in  such  cases  by  any  statute  of  limitation,  they 
adopt  the  principle  that  laches  or  delay  in  the  judicial  enforcement  of  mari- 
time liens  will,  under  proper  circumstances,  constitute  a  valid  defense;  2, 
That  no  arbitrary  or  fixed  period  of  time  has  been  or  will  be  established  as 
an  inflexible  rule,  but  that  the  delay  which  will  defeat  such  a  suit  must  in 
every  case  depend  on  the  peculiar  equitable  circumstances  of  that  case;  3. 
That  where  the  lien  is  to  be  enforced  to  the  detriment  of  a  purchaser  for 
value,  without  notice  of  the  lien,  the  defense  will  be  held  valid  under  shorter 
time  and  a  more  rigid  scrutiny  of  the  circumstances  of  the  delay  than  when 
the  claimant  is  the  owner  at  the  time  the  lien  accrued":  The  Key  City,  14 
Wall.  G53.  GGO.  Though  a  lien  not  sought  to  be  enforced  by  a  material-man 
within  three  years,  when  a  third  person  had  in  the  mean  while  become  the 
owner  of  the  vessel,  is  barred  by  reason  of  laches:  The  Buckeye  State,  1  Newb. 
Adm.  Ill;  and  a  suit  brought  for  wages  three  years  after  the  right  thereto 
had  accrued,  and  in  the  mean  time  the  ownership  of  the  vessel  had  changed 
and  one  of  the  owners  had  become  insolvent,  was  declared  to  be  such  a  delay 
as  to  bar  any  relief:  The  Louisa,  2  Wood.  &  M.  48;  see  also  Willard  v.  Dorr, 

3  Mason,  161;  Pitman  v.  Hooper,  3  Sum.  2SG;  Joy  v.  Allen,  2  Wood.  &.  M. 
304.  In  Smith  v.  Stuvfjis,  3  Ben.  330,  a  suit  was  brought  for  damages  arising 
from  a  collision  between  a  steam-tug  and  another  vessel,  and  it  appeared 
that  the  owners  of  the  vessel  against  whom  the  libel  was  filed  had  been  in 
the  district  for  a  period  of  six  years  after  the  collision,  and  up  to  the  time  of 
bringing  the  suit,  and  that  the  vessel  itself  had  been  kept  there  for  over  a 
year  subsequent  to  the  collision.  It  was  lieLl  that  a  delay  from  December, 
1859,  to  March,  18GG,  before  bringing  suit  was,  without  any  reasonable  ex- 
cuse for  delay,  such  laches  that  the  action  was  barred. 

Excuses.  — It  is  a  rule  founded  in  justice  and  reason  that  equity  will  not 
refuse  relief  where  there  has  been  a  reasonable  excuse  for  the  delay:  Wood 
on  Limitations  of  Actions,  ed.  1883,  sec.  GJ,  p.  124.  But  if  no  active  steps 
are  taken  to  enforce  one's  rights,  it  will  not  avail  such  party  that  he  con- 
stantly asserted  them,  or  made  a  continual  claim  thereto:  Clegrj  v.  Clegg,  3 
Jur.,  N.  S.,  299.  Tiie  court  said  in  this  case:  "I  cannot  agree  to  a  doctrine 
BO  dangerous  as  that  the  mere  assertion  of  a  claim,  unaccompanied  by  any 
act  to  give  effect  to  it,  can  avail  to  keep  alive  a  right  which  would  otherwise 
be  precluded":  Id.  303;  see  also  Lehniann  v.  Ale  Arthur,  L.  R.  3  Ch.  496.  So 
laches  or  lapse  of  time  may  be  excused  where  the  plaintiflF  was  unable,  from 
the  obscurity  of  the  transaction,  to  obtain  full  information  in  regard  to  his 
rights:  Murray  v.  Palmer,  2  Schoales  &  L.  474,  486. 

Circumstances  of  Embarrassment  or  Continuing  Influence  are  material  as  an  ex- 
cuse. So  where  a  person  in  distressed  circumstances,  by  reason  of  undue  influ- 
ence brought  to  bear  upon  him,  executes  a  conveyance,  or  enters  into  a  contract, 
acquiescence  will  not  be  imputed  so  long  as  the  same  conditions  continue  to 
exist;  it  is  only  when  the  distressed  party  is  relieved  from  the  oppression  which 
controlled  in  the  first  instance  that  he  can  be  expected  to  act:  Note  4  to  Crowe 
V.  Ballard,  1  Ves.  Jr.,  Sumner's  cd.,  221,  citing  Purcelt  v.  Macnamara,  14 
Ves.  lOG,  121;  Gowland  v.  De  Faria,  17  Id.  23;  Aylward  v.  Kearney,  2  Ball 
&  B.  477;    Wood  v.  Downes,  18  Ves.  128.     It  was  held  in  Rolierts  v.  Tunstall, 

4  Hare,  257,  that  the  poverty  of  the  cestui  que  trust  was  not  sufficient  to  ex- 
cuse delay  in  prosecuting  his  claim  to  relief.  Tlie  case  was  one  where  it  was 
Bougnt,  after  a  period  of  nearly  eighteen  years,  to  set  aside  a  sale  aud  pur- 
chase by  a  trustee  claimed  to  have  been  made  at.an  undervalue;  the  trustee 
was  also  a  tenant  for  life,  and  died  two  and  a  half  years  after  the  execution 


806  Bell  v.  Hudson.  [Cal. 

of  the  deed.  It  was  also  decided  that  the  time  which  might  elapse  during 
such  tenancy  would  not  alone  be  considered  as  amounting  to  laches.  In- 
asmuch as  this  case  is  frequently  cited  as  an  authority  upon  the  main  ques- 
tion as  to  poverty  not  being  an  excuse,  we  cite  from  the  opinion  of  the  court 
as  showing  that  no  general  rule  to  such  effect  was  intended  to  be  laid  down. 
The  court  declares  that  "  where  a  transaction  of  this  kind  has  been  brought 
about  by  misrepresentation,  concealment,  or  undue  influence,  or  where  the 
vendor  is  dependent  on  the  bounty  of  the  purchaser,  the  court  considers  that 
the  right  of  the  vendor  to  rescind  the  sale  exists,  without  the  importation  of 
laches,  until  such  time  as  it  was  shown  that  he  was  released  from  the  position 
in  which  he  was  placed  by  these  circumstances.  The  poverty  of  the  vendor, 
added  to  the  other  circumstances,  is  also  a  material  ingredient  in  such  a  case. 
But  where  none  of  the  special  grounds  of  complaint  exist, —  where  there  is 
no  misrepresentation,  concealment,  or  undue  influence,  and  no  dependency 
of  the  seller  on  the  purchaser,  where  the  right  to  rescind  the  transaction  is 
an  equity  arising  out  of  the  ti'ansaction  itself,  as  in  the  oase  of  a  sale  of  the 
reversionary  interest,  is  it  to  be  said  that  waiver  will  not  apply,  or  that  no 
time  will  be  a  bar  merely  because  the  seller  was  poor?  ....  In  Roche  v. 
0'Brif.n,  1  Ball  &  B.  330,  a  fraud  was  committed  upon  a  distressed  man  in 
the  situation  of  an  expectant  heir,  by  the  purchase  from  him  of  his  expected 
reversion  by  the  defendant,  an  experienced  attorney;  and  that  fraud  was  con- 
tinued in  a  second  transaction,  intended  to  confirm  the  first,  and  entered  into 
some  years  afterwards  while  the  distress  of  the  vendor  continued.  Upon  a  bill 
filed  to  set  aside  the  transaction  twenty-seven  years  after  it  took  place.  Lord 
Manners  did  not  say  that  mere  pecuniary  distress  would  excuse  the  delay;  on 
the  contrary,  his  language  was  against  such  a  conclusion."  But  the  court 
(after  saying  that  it  found  nothing  in  the  authorities  to  the  eff'ect  that  pov- 
erty was  an  excuse  in  the  absence  of  the  existence  of  the  special  grounds  of 
complaint  above  stated,  and  that  it  thought  that  the  reasoning  was  the 
other  way)  added:  "  I  do  not  mean  to  lay  down  any  general  rule;  but  in  the 
circumstances  of  this  case,  ....  my  opinion  is,  that  the  consequences  of  un- 
explained delay  must  prevail.  It  is  contrary  to  all  experience  to  suppose 
that  because  a  party  is  poor  he  is  therefore  unable  to  obtain  professional  ad- 
vice ":  See  1  Perry  on  Trusts,  3d  ed.,  sec.  230,  cases  in  note  4;  and  the  case  of 
Hovenden  v.  Anneslcy,  2  Schoales  &  L.  G39,  decides  that  the  fact  that  the 
complainants  were  embarrassed  and  reducc^d  by  the  fraud  of  others  is  no  ex- 
cuse for  laches.  But  it  is  said  in  note  4  to  Crowe  v.  Ballard,  1  Ves.  Jr.,  Sum- 
ner's ed.,  221,  that  "a  mere  general  embarrassment,  having  no  reference  to 
any  fraud  with  respect  to  the  particular  contract  complained  of,  is  not  a  cir- 
cumstance upon  which  the  court  will  act  to  set  aside,  after  a  long  lapse  of 
time,  conveyances  deliberately  executed.  If  this  were  the  practice,  there 
would  be  an  end  of  all  limitations  of  suits  in  the  cases  of  distressed  per- 
sons, and  all  property  would  be  thrown  into  confusion  ":  See  also  Gregory  v. 
Gixrjory,  Coop.  205;  and  that  poverty  maybe  a  defense,  see  Mason  v.  Croshy, 
Dav.  303;  and  see  title  "Patents,"  ante. 

Infancy  and  Coverture  constitute,  with  few  exceptions,  a  valid  excuse  for 
laches:  Whaley  v.  Elliott's  Heirs,  1  A.  K.  Marsh.  345;  Steele  v.  McKnigU,  1 
Bay,  Go;  Blandford  v.  Marlhoi-ough,  2  Atk.  545;  Bennett  v.  Colley,  1  Mylne  & 
K.  225,  233;  Co-pen  v.  Flcsher,  1  Bond,  410;  Chew  v.  Hyman,  7  Fed.  Rep.  7. 
See,  however.  Havens  v.  Patterson,  43  N.  Y.  218;  Kemp  v.  Cook,  18  Md.  130; 
and  on  the  point  of  coverture,  see  Bedilian  v.  Seaion,  3  Wall.  Jr.  279,  287; 
mimg  V.  31ar.x,  4  Hughes,  312;  4  Fed.  Rep.  673;  22  Myer's  Fed.  Dec,  sec. 
326;  Harrison  v.  Gibson,  23  Gratt.  212.     In  the  case  of  minors,  this  rule  was 


.  Aug.  1887.]  Bell  v.  Hudson.  807 

held  especially  applicable,  where  the  minors  had  no  knowledge  of  their  rights, 
and  their  residence  was  ill  a  different  state:  Heirsof  Warev.  Brush,  1  McLean, 
533.  But  voluntary  disabilities,  such  as  absence  from  the  state,  are  no  defense 
against  the  charge  of  staleness:  Bediliaii  v.  Seaton,  3  Wall.  Jr.  279,  287.  And 
that  the  defendant  is  an  infant  is  no  excuse  for  laches  on  the  part  of  the 
plaintiff:  Jones  v.  Tiirherville,  2  Ves.  Jr.  11. 

Pendency  of  Suit.  —  As  a  rule,  a  party's  right  is  not  prejudiced  by  lapse  of 
time  while  a  suit  is  pending:  Darby  and  Bosanqiiet  on  Limitations,  ed.  18G7, 
199;  nor  is  a  party  prejudiced  by  lapse  of  time  when  a  court  of  equity  has  pre- 
vented him  from  pursuing  his  remedy:  Id.  But  the  pendency  of  an  action  was 
held  no  excuse,  where  it  appeared  upon  a  bill  brought  against  several  parties 
for  an  account  of  profits  for  infringement  of  a  patent  right  that  the  plaintiffs 
had,  prior  thereto,  instituted  a  suit  against  only  one  party  for  violating  the 
patent,  but  had  not  notified  the  others  of  the  claimed  infringement,  nor  taken 
any  steps  against  them  until  after  that  suit  was  determined.  The  patent  ex- 
pired in  1849,  and  the  test  suit  was  brought  in  1852,  and  decided  in  1853: 
Smith  v.  London  etc.  R.  R.  Co.,  1  Kay,  408.  But  see  title  "Patents"  herein, 
ante.  And  the  fact  that  a  party  has  been  compelled  to  bring  a  bill  of  dis- 
covery against  persons  who  have  in  their  possession  the  papers  necessary  to 
enable  him  to  obtain  his  rights,  is  an  excuse  for  what  might  otherwise  be  delay 
BufBcient  to  constitute  laches:  Bond  v.  Hopkins,  1  Schoales  &  L.  413. 

Creditors.  —  Equity  will  not  aid  a  creditor  who  waits  forty-six  years  to  col- 
lect a  claim,  although  he  believed  that  his  debtor  was  insolvent  during  all 
that  time,  where  it  appears  that  he  might,  by  the  exercise  of  reasonable  dili- 
gence, have  recovered  his  money  by  a  suit  at  law:  Maxicell  v.  Kennedy,  8 
How.  181.  Nor  does  laches  apply  to  a  large  body  of  creditors:  Whicote  v. 
Lawrence,  3  Ves.  Jr.  740. 

Pleading. — The  complainant  "should  set  forth  in  his  bill  specifically 
what  were  the  impediments  to  an  earlier  prosecution  of  his  claim,  how  he 
came  to  be  so  long  ignorant  of  his  rights,  and  the  means  used  by  the  respon- 
dent to  fraudulently  keep  him  in  ignorance,  and  how  and  when  he  first  came 
to  a  knowledge  of  the  matters  alleged  in  his  bill ":  Marsh  v.  Whitmore,  21 
Wall.  178,  181,  citing  from  Badger  v.  Badger,  2  Id.  95.  So  the  time  and 
means  of  the  discovery  of  a  secret  fraud  must  be  particularly  alleged:  Badger 
v.  Badger,  2  Cliff.  137.  "And  especially  must  there  be  distinct  averments  of 
the  time  when  the  fraud,  mistake,  concealment,  or  misrepresentation  was  dis- 
covered, and  how  discovered,  and  wiiat  the  discovery  is;  so  that  the  court 
may  clearly  see  whether,  by  the  exercise  of  ordinary  ddigence,  the  discovery 
might  not  have  been  before  made;  for  if  by  such  diligence  the  discovery 
might  have  been  before  made,  the  bill  has  no  foundation  on  which  it  can 
stand  in  equity  on  account  of  the  laches  ":  Stearns  v.  Page,  1  Story,  204,  215. 
So  in  cases  where  it  is  sought  to  open  an  account  on  the  ground  of  fraud, 
mistake,  etc.,  the  exercise  of  ordinar}'  diligence  in  making  the  discovery  of 
the  same  is  an  important  factor;  and  for  this  reason,  the  time  when  the  dis- 
covery was  made,  as  well  as  what  the  discovery  is,  must  be  distinctly  averred: 
Stearns  v.  Page,  7  How.  819,  829. 

Demurrer.  — The  objection  to  a  stale  demand,  lapse  of  time,  or  laches,  may 
be  taken  by  demurrer  when  apparent  on  the  face  cf  the  pleadings:  Maxivell  v. 
Kennedy,  8  Uow.  210;  Sullivan  v.  Railroad  Co.,  94  U.  S.  811;  Copcn  v. 
Flesher,  1  Bond,  440.  Courts  of  equity  as  a  rule,  however,  are  very  re- 
luctant to  sustain  a  demurrer  to  a  bill  on  the  ground  of  staleness  alone,  un- 
less it  is  such  that  the  delay  would  bar  a  suit  at  law  on  the  same  claim,  or 
unless  there  is  a  clear  and  strong  analogy  between  the  case  in  chancery  and 


808  Cross  v.  Eureka  Lake  etc.  Canal  Co.  [Cal. 

a  case  at  law  on  which  a  statute  of  limitation  would  operate:  The  court  in  Put- 
nam V.  New  Albany,  4  Biss.  365,  372.  But  it  is  not  necessary,  in  order  to 
avail  himself  of  the  defense  of  staleness  of  the  demand,  that  a  party  should 
rely  upon  a  plea,  answer,  or  demurrer;  since  such  defense  may  be  suggested 
at  the  hearing:  Baker  v.  Biddle,  1  Bald.  394,  418;  Fisher  v.  Boody,  1  Curt. 
206,  218;  Sullivan  v.  Railroad  Co.,  supra. 

The  Defense  of  the  Statute  of  LiMiTATiONa  may  be  raised  by  demurrer: 
Smith  V.  Fly,  76  Am.  Dec.  109,  and  note  114. 

Evidence.  —  If  laches  are  set  up  as  a  defense  by  a  party  against  whom  fraud 
is  established,  the  burden  is  upon  him  to  prove  the  time  when  knowledge  of 
such  fraud  was  obtained  by  the  other  party,  and  that  he  was  guilty  of  laches 
in  prosecuting  his  rights  thereafter:  Lindsay  Petroleum  Co.  v.  Hurd,  L.  R. 
5  P.  C.  221.  So  the  burdeti  of  proving  laches  or  acquiescence  is  on  the  party 
setting  it  up:  W^dl  v.  Cockrell,  1  II.  L.  Cas.  229,  243;  and  every  presumption 
that  can  fairly  be  made  against  a  stale  demand  may  be  made:  Pichering  v. 
Stamford,  2  Ves.  Jr.  581. 

Lapse  of  Time  when  a  Bab  in  matters  of  summary  jurisdiction  over 
attorneys,  see  note  to  Burns  v.  Allen,  post,  p.  860,  subtitle  "Lapse  of  Time  a 
Bar." 


Cross  v.  Eureka   Lake   and    Yuba   Canal  Co. 

173  California,  302.] 

Pledgee  of  Corporate  Stock  has  right  to  retain  it  until  the  debt  for 
which  it  was  pleilged  is  fully  satisfied,  but  during  such  time  he  cannot 
assert  that  he  holds  it  adversely,  and  thereby  acquire  title  under  the 
statute  of  limitations. 

As  between  Pledgee  and  Pledgor  of  corporate  stock,  tlie  general  prop- 
erty remains  in  the  latter,  and  when  the  debt  to  secure  which  the  pledge 
was  given  is  paid,  the  lien  is  extinguished. 

Where  in  Suit  by  Pledgee  of  Corporate  Stock  to  recover  dividends 
against  the  corporation  the  latter  deposits  the  money  in  court,  and  has 
the  pledgor  and  his  assignee  made  defendants,  and  it  appears  that  the 
debt  for  which  the  stock  was  pledged  is  liquidated,  whereupon  judgment 
is  rendered  by  consent  of  the  pledgor  for  the  assignee  for  the  entire 
amount  sued  for,  as  the  pledgee  has  no  interest  in  the  money  be  cannot 
complain  of  the  judgment  awarding  the  assignee  the  dividends  accruing 
prior  to  its  rendition. 

Freemarij  Bates,  and  Rankin,  and  H.  V.  Eeardan,  for  the  ap- 
pellant. 

R.  H.  Taylor,  E.  H.  Gaylord,  T.  M.  Osment,  and  Taylor  and 
Craig,  for  the  respondents. 

By  Court,  Bei.cher,  C.  C.  The  plaintiff,  as  administrator 
of  the  estate  of  T.  W.  Sigourney,  deceased,  brought  this  action 
against  the  Euieka  Lake  and  Yuba  Canal  Company,  a  corpo- 
ration, to  recover  the  sum  of  fifteen  thousand  dollars  for  divi- 
dends alleged  to  have  been  declared  by  the  company  after 


AMERICAN  STATE  REPOKTS. 

Vol.,   111.   I'\>-i  -  :■'.:>  ;  \:> 
WHlTWOKLll    :.    ILIOMAS. 

Rescission  of  Contracts. 

Pages  rOT-s::!. 
THOMPSON  r.   Rl'.XO  SA\  FXOS   HANK. 

I  19   .\'k\  V!.\,    lUH.  I 

Corporations     Stockholders. 


Dec.  1887.]  Whitworth  v.  Thomas.  725 

Whitworth  V.  Thomas. 

[83  Alabama,  808.] 

Seller  ov  Horse  Who  Represents  Him  to  bb  Sound,  knowing  him  to 
be  unsound,  and  thereby  misleading  the  purchaser,  who  is  unable  to  dis- 
cover the  defect  by  ordinary  observation,  perpetrates  a  fraud  which  will 
entitle  the  purchaser  to  rescind  on  demand  made  within  a  reasonable 
time  after  the  discovery  of  the  fraud. 

In  Action  for  Rescission  of  Contract  for  Exchange  of  Horses  on  the 
ground  of  defendant's  fraud,  the  defendant  cannot  set  up  the  fraud  of 
the  plaintiff  as  a  defense. 

In  Statotort  Action  Corresponding  to  Detinue,  there  can  bo  no  set-off 
or  recoupment  of  damages. 

On  Question  of  Soundness  of  Horse,  it  is  relevant  and  competent  to  prove 
what  kind  of  and  how  much  work  was  done  by  the  animal  while  in  the 
purchaser's  hands. 

Action  for  recovery  of  a  mule,  with  damages  for  its  deten- 
tion.    The  opinion  states  the  facts. 

R.  C.  Hunt  and  W.  L.  Martin^  for  the  appellants. 

/.  E.  Brown,  for  the  respondents. 

By  Court,  Stone,  C.  J.  The  present  suit  is  a  statutory  ac- 
tion for  the  recovery  of  a  chattel  in  specie,  corresponding  to 
the  common-law  action  of  detinue  in  every  respect  material  to 
the  decision  of  this  appeal.  Thomas  exchanged  with  Whit- 
worth a  mule  for  a  mare,  giving  and  paying  a  small  differ- 
ence. About  two  weeks  after  the  exchange,  he  tendered  the 
mare  back,  and  demanded  a  rescission,  claiming  that  the 
mare  was  unsound  when  traded  to  him,  and  that  he  had  been 
defrauded  in  the  trade.  Whitworth  refused  to  receive  the 
mare,  and  refused  to  rescind.  Thomas  thereupon  brought 
this  action  to  recover  the  mule.  There  is  no  contrariety  of 
testimony  bearing  on  the  points  stated  above. 

There  is  no  pretense  in  this  case  that  there  was  any  war- 
ranty of  the  soundness  of  the  mare.  The  scope  of  the  con- 
tention is,  that  the  mare  was  unsound;  that  the  fact  was 
known  to  Whitworth,  but  unknown  to  Thomas;  and  that,  in 
negotiating  the  trade,  Whitworth  represented  that  she  was 
sound,  so  far  as  he  knew,  and  by  means  thereof  induced 
Thomas  to  make  the  trade.  If  these  were  the  facts,  they 
armed  Thomas  with  the  right  to  rescind,  if  seasonably  and 
properly  demanded.  The  demand  would  be  seasonable  and 
proper,  if  he  tendered  the  mare  back  with  no  undue  delay, 
after  discovering  the  deceit  practiced  upon  him:  3  Brickell's 
Digest,  736,  sees.  78-80;  Perry  v.  Johnson,  59  Ala.  648;  2  Par- 


726  Whitworth  v.  Thomas.  [Alabama, 

eons  on  Contracts,  bottom  page,  920;  3  Wait's  Actions  and 
Defenses,  432,  455,  453.  If  a  seller  knows  the  horse  to  be  un- 
sound, and  informs  the  buj^er  that  he  is  sound  so  far  as  he 
knows;  and  the  buyer,  not  knowing  the  contrary,  nor  able  to 
discover  it  by  ordinary  observation,  relies  on  such  representa- 
tion, and  consummates  the  trade,  this,  if  injury  result  from  it, 
constitutes  a  fraud;  and  the  buyer  is  authorized  to  rescind,  if 
he  demand  it  within  a  reasonable  time  after  discovering  the 
fraud. 

The  maxim,  In  pari  delicto,  potior  est  conditio  possidentis^ 
has  no  application  to  a  case  like  this.  That  maxim  applies, 
and  only  applies,  where  two  or  more  are  jointly  concerned  in 
the  perpetration  of  one  and  the  same  fraud,  —  a  conspiracy  or 
combination  to  accomplish  an  illegal  object,  through  fraud, 
by  which  some  third  person  is  to  be  the  sufferer.  It  does  not 
permit  one  independent  deceit  or  fraud  to  be  set  off  against 
another  deceit  or  fraud,  so  as,  on  that  account,  to  estop  the 
latter  from  maintaining  his  suit.  It  may  confer  a  right  to  a 
cross-action.     It  does  not  deny  to  either  party  all  right  to  sue. 

The  plaintiff's  right  of  action  in  this  case  depends  on  his 
ability  to  show  that  Whitworth  had  defrauded  him  in  the 
exchange  of  the  mare  for  the  mule.  The  issue  raised  the  in- 
quiries whether  the  mare  was  unsound  when  the  trade  was 
made;  whether  Whitworth  knew  it;  and  whether  he  used  any 
expression,  or  resorted  to  any  artifice,  with  a  view  of  conceal- 
ing that  fact,  or  of  throwing  Thomas  off  his  guard.  If  these 
inquiries  be  answered  in. the  affirmative,  and  if  Thomas  trusted 
them,  and  suffered  injury  as  a  consequence,  this  part  of  his 
complaint  is  made  good.  In  the  present  action,  —  statutory 
detinue, — no  question  of  recoupment  or  set-off  could  have  been 
considered,  even  if  it  had  been  attempted.  It  was  not  offered 
to  be  raised  by  the  pleadings:  Code  1886,  sec.  2683. 

It  follows,  from  what  is  said  above,  that  any  and  all  testi- 
mony tending  to  show  legitimately  that  the  mare  was  un- 
sound when  traded,  that  Whitworth  knew  it,  apd  that  he 
made  any  false  representations  in  regard  to  it,  or  practiced 
any  deceit  or  artifice  to  mislead  Thomas,  should  have  been 
received;  and  any  legal  testimony  tending  to  disprove  either 
of  these  propositions  was  also  admissible.  On  the  other  hand, 
any  proof  of  misrepresentation  of  the  qualities  of  the  mule, 
alleged  to  have  been  made  by  Thomas,  was  wholly  immaterial. 
The  value  of  the  mule,  and  of  his  hire,  was  pertinent  only  a& 
tending  to  furnish  a  basis  of  recovery. 


Dec.  1887.]  Whitworth  v.  Thomas.  727 

All  the  testimony  in  regard  to  the  working  qualities  of  the 
mule,  and  in  reference  to  Thomas's  representations  in  relation 
thereto,  was  properly  ruled  out  by  the  court;  and  we  will  not 
make  further  reference  to  rulings  on  that  question. 

The  circuit  court  erred  in  refusing  to  allow  the  defendant  to 
ask  the  plaintiff,  on  cross-examination  as  a  witness,  to  state 
what  work  the  mare  had  done  since  he  traded  for  her.  An  an- 
swer to  this  question  would  have  tended  to  prove  the  mare's 
capacity  for  work,  and  would  have  shed  some  light  on  the 
question  of  her  soundness. 

In  rebuttal,  plaintiff  was  asked  by  his  counsel,  "  Did  you 
treat  the  mare  well  or  ill?"  In  form,  the  question  was,  per- 
haps, objectionable,  but  that  furnishes  no  ground  of  reversal. 
In  substance,  the  answer  was  but  a  short-hand  rendering  of 
the  facts,  subject  to  having  the  details  called  out  on  cross- 
examination,  if  requested.  The  court  did  not  err  in  allowing 
this  question  to  be  answered. 

A  witness  for  defendant  was  asked,  "What  character  of 
work  and  service  is  the  mare  performing  for  plaintiff  at  this 
time?"  This,  on  motion  of  plaintiff,  was  excluded.  In  this 
the  circuit  court  erred,  for  reasons  stated  above. 

Lisle,  a  witness  for  plaintifT,  was  asked  if  he  heard  Mrs. 
Latham,  one  of  the  defendants,  say  anything  about  trading 
the  mare.  There  was  exception  to  the  ruling  of  the  court, 
permitting  this  question  to  be  asked.  The  question  was  proper, 
but  the  answer  was  too  remote  to  shed  any  proper  light  on  the 
question  at  issue. 

Reversed  and  remanded. 


Rescission  of  Contracts  Generally:  See  notes  to  Johmon  v.  Evans,  50 
Am.  Dec.  G72-G81;  and  Bryant  v.  Ishiinjh,  74  Id.  657-CG2. 

Effect  of  Fraud  or  Concealment  in  Sale:  See  notes  to  IlujJiesv.  Rob- 
ertson, 15  Am.  Dec.  106-108;  and  Barnard  v.  Duncan,  90  Id.  425^31. 

Set-off  and  Counterclaim  Generally:  See  the  notes  to  Grerjgv.  James, 
12  Am.  Dec.  152-157;  aud  Woodruff  v.  Garner,  89  Id.  842. 

Recriminatory  Fraud.  —  The  question  of  how  far  the  fraud  of  the  plain- 
tiff may  be  availed  of  as  a  recriminatory  defense  is  one  which  has  been  the 
subject  of  much  discussion  in  the  several  states.  The  class  of  cases  in  which 
the  question  hag  been  most  frequently  considered  are  those  where  deeds,  con- 
veyances, sales,  and  other  contracts  relating  to  the  transfer  of  real  and  per- 
sonal estate,  have  been  made  and  cutercil  into  for  the  purpose  of  defrauding 
creditors,  and  thereafter  one  of  the  parties  has  sought  to  rescind  such  fraud- 
ulent executed  contracts,  or  to  enforce  them  when  executory.  As  preliuii- 
nary  to  the  consideration  of  this  question,  it  may  be  stated  that  altliougb 
there  are  some  exceptions,  yet  it  is  a  conclusive  rule  of  law,  adjudicated  by  a 
great  weight  of  authorities,  that  deeds,  conveyances,  contracts,  and  trausac- 


728  Whitworth  v.  Thomas.  [Alabama, 

tions  entered  into  in  fraud  of  creditors  are  valid  between  the  parties:  Jackson 
V.  Cadwell,  1  Cow.  622;  Ov)en  v.  Dixon,  17  Conn.  496;  Kinnemon  v.  Miller, 
2  Md.  Ch.  407;  Babcoch  v.  Booth,  2  Hill,  181;  38  Am.  Dec.  578;  Sherk  v. 
Endress,  3  Watts  &  S.  255;  White  v.  Brocaw,  14  Ohio  St.  339;  Wwth  v. 
Northam,  4  Ired.  102;  Jackson  v.  Marshall,  1  Id.  323;  3  Am.  Dec.  695; 
Trem-perv.  Barton,  18  Ohio,  418;  Crockery.  Crocker,  17  How.  Pr.  504;  Moore 
V.  Lmnijston,  14  Id.  1;  IJenriques  v.  Hone,  2  Edw.  Ch.  119;  Waterbury  v. 
We.-iterveit,  9  N.  Y.  598;  Trimhle  v.  Z>o<^,  16  Ohio  St.  118,  129;  ^rown  v.  Webb, 
2D  Ohio,  389;  Cushwa  v.  Cushwa's  Lessee,  5  Md.  44;  Atkinson  v.  Phillips,  1  Md. 
Ca.  507,  515;  Dunnock  v.  Dunnock,  3  Id.  140;  Doujlass's  Lessee  v.  Dunlap, 
10  Ohio,  102,  103;  Lessee  of  Simon  v.  Gibson,  1  Yeates,  291;  IFaftoM  v. 
Tusten,  49  Miss.  509,  575;  Snodgrass  v.  Andrews,  30  Id.  472,  488;  64  Am. 
Dec.  169;  Skinner  v.  Gate,  10  Mo.  App.  45,  50;  Jacobs  v.  5mi</t,  89  Mo.  673; 
Schenck  v.  Hart,  32  N.  J.  Eq.  774,  781;  McMaster  v.  Campbell,  41  Mich.  513, 
516;  0!/%  V.  Hull,  31  Miss.  20;  Davlf  v.  Swanson,  54  Ala.  277;  25  Am.  Rep. 
678;  Crawford V.  Lyle,  30  Mo.  App.  585;  Holtv.  Creamer,  34  N.  J.  Eq.  181,  182; 
Armstrowjv.  Stovall,  20  Miss.  275,  277;  Bush  v.  ffojan,  65  Ga.  320;  38  Am. 
Rep.  785;  Georje  v.  Williamson,  26  Mo.  190;  72  Am.  Dec.  203;  Frinkv.  Roe, 
70  Cd.  290,  308;  Parkhurst  v.  McGraw,  24  Miss.  134;  Gardner  v.  67ior<,  19 
N.  J.  Eq.  341;  Lokerson  v.  Stillwell,.l3  Id.  357;  Osborne  v.  il/o.ss,  7  Johns.  161; 
5  Am.  Dec.  252,  and  note;  Jackson  v.  Garnsey,  16  Johns.  189,  192;  Thomas 
V.  iSoper,  5  Munf.  28;  Cutler  v.  T'wWfe,  19  N.  J.  Eq.  549,  502;  Ogden  v.  Pren- 
tice, 33  Barb.  ICO;  Finlcy  v.  McConnell,  60  111.  259;  /sanc-s  v.  Gearheart,  12 
B.  Mon.  235;  To^ym  v.  Helm,  4  J.  J.  Marsh.  288,  291;  Gilpin  v.  Davis,  2  Bibb, 
410,  418;  5  Am.  Dec.  622;  Lemay  v.  Bibeau,  2  Minn.  291;  Jones  v.  Rahilly, 
10  Id.  320;  Edwards  v.  Haverstick,  53  Ind.  348;  Chapin  v.  Pease,  10  Conn.  69; 
£5  Am.  Dec.  56;  Anderson  v.  Dunn,  19  Ark.  650,  659;  Piper  v.  Johnston,  12 
Mum.  00,  00;  Sheaky  v.  Edwards,  75  Ala.  411;  Coon  v.  Pir/c?en,  4  Col.  275, 
2S1;  Rochele  v.  Harrison,  8  Port.  351;  Henry  v.  Stevens,  108  Ind.  280;  iietfej/ 
V.  Karsner,  72  Ala.  100;  Anderson  v.  Brown,  72  Ga.  713,  722;  Edwards  \. 
Kilpatrick,  70  Id.  328;  PirZ;e«  v.  Pip/l7«,  64  Ala.  520;  Eddins  v.  T7<7son,  1  Id. 
237;  Leasee  of  Hartley  \.  McAnulty,  4  Yeates,  95;  2  Am.  Dec.  396;  Lessee  of 
Church  V.  Church,  4  Yeates,  280;  Tiernay  v.  Cfa^en,  15  R.  I.  220,  222;  Pem- 
iertoii  V.  S^nith,  3  Head,  18;  Battle  v.  (Si/eei!,  85  Tenn.  282,  293;  Murphy  v. 
//j<^>e?-<,  10  Pa.  St.  50;  Hoe><er  v.  Kraeka,  29  Tex.  450,  453;  Kid  v.  Mitchell,  1 
Nott  &  McC.  334;  9  Am.  Dec.  702;  Reichart  v.  Castator,  5  Binn.  109;  6 
Am.  Dec.  402,  and  note  400;  note  14  Am.  Dec.  703;  Hubbs  v.  Brockwell,  3 
Sneed,  574;  Smith  v.  Grim,  28  Pa.  St.  95;  65  Am.  Dec.  400,  and  note  401; 
Abbey  \.  Commercial  Bank  of  New  Orleans,  34  Miss.  571;  69  Am.  Dec.  401, 
and  note  405;  Williams  v.  Loive,  4  Humph.  02;  Jackson  v.  Marsltall,  1  Murph. 
323;  3  Am.  Dec.  695;  Worth  v.  Northam,  4  Ired.  102;  Vick  v.  Flowers,  1 
Murph.  32;  Epperson  v.  Young,  8  Tex.  135;  Stewart  v.  Iglehart,  7  Gill  &  J. 
132;  28  Am.  Dec.  202,  and  note  206;  Sides  v.  McCuUough,  7  Mart.  (La.)  654; 
12  Am.  Dec.  519;  Banks  v.  Thomas,  Meigs,  28;  Seligman  v.  Wilson,  1  Tex. 
App.  890;  Eyrick  v.  Hetrick,  13  Pa.  St.  488;  Choteau  v.  Jones,  11  111.  300; 
50  Am.  Dec.  400,  and  note  409;  Britt  v.  Aylett,  11  Ark.  475;  52  Am. 
Dec.  282,  and  note  285;  Mason  v.  Baker,  1  A.  K.  Marsh.  208;  10  Am. 
Dec.  724;  Byrd  v.  Curlin,  1  Humph.  466;  Lynch  v.  Sanders,  9  Dana,  59; 
Dale  V.  Harrison,  1  Bibb,  65;  Davy  v.  Kelley,  66  Wis.  452;  notes  31  Am. 
Dec.  484;  42  Id.  109;  Butlerx.  Moore,  73  Me.  151;  40  Am.  Rep.  348;  Clemens  v. 
Clemens,  28  Wis.  637;  9  Am.  Rep.  520;  Zuver  v.  Clark,  104  Pa.  St.  222;  Sillv. 
Swnckhammer,  103 Id.  7;  Jncohi  v.  Schloss,  7  Cold.  385;  Snodgrass  v.  Andrews, 
30  Miss.  472;  64  Am.  Dec.  109,  and  note  175;^  Telford  v.  Adams,  6  Watts,  429. 


Dec.  1887.]  Whitworth  v.  Thomas.  729 

So  it  is  an  undoubted  doctrine  of  law  and  equity  that  such  fraudulent 
deed  vests  the  title  absolutely  in  the  grantee,  and  gives  to  him  a  legal  and 
perfect  estate,  except  as  to  those  persons  actually  defrauded  by  the  transac- 
tion, since  such  conveyance  passes  as  valid  a  title  as  if  it  were  bonajide  and 
for  a  full  and  adequate  consideration:  Zuver  v.  Clark;  104  Pa.  St.  222;  Sill  v. 
Bwackkawmer,  103  Id.  7;  Lynch  v.  Sanders,  9  Dana,  59;  Chopin  v.  Pease,  10 
Conn.  09;  25  Am.  Dec.  56;  Jackson  v.  Garnsey,  10  Johns.  189,  192;  Parkhurst 
V.  McOraw,  24  Miss.  134;  Skinner  v.  Oakes,  10  Mo.  App.  45,  50;  Jacobs  v. 
Smith,  89  Mo.  673;  McMaster  v.  Camphell,  41  Mich.  513,  510;  Lemay  v.  Bibeau, 
2  Minn.  291;  Moore  v.  Livingston,  14  llow.  Pr.  1;  Waterhury  v.  Westei-velt,  9 
N.  Y.  598;  Henriquesv.  Hone,  2  Edw.  Ch.  119;  Crocker  v.  Crocker,  17  How. 
Pr.  504;  and  this  rule  is  said  to  hold  true  although  no  consideration  was  paid 
or  possession  given:  Hoeserv.  Kraeka,  29  Tex.  450,  453;  Chapin  v.  Pease,  10 
Conn.  69;  25  Am.  Dec.  56;  in  this  last  case  the  conveyance  was  volun- 
tary. But  in  Tierney  v.  Clajlh),  15  R.  I.  220,  the  rule  was  qualified  and 
there  limited  to  innocent  grantees,  though  the  case  was  not  argued  so 
far  as  the  limitation  was  concerned:  See  also  Newell  v.  Newell,  34  Miss. 
385;  and  it  was  said  in  Hess  v.  Final,  32  Mich.  516,  that  such  a  con- 
veyance may  be  good  between  the  parties  when  based  on  a  valid  con- 
sideration. The  court,  however,  although  not  directly  making  the  dis- 
tinction there  between  those  cases  where  a  consideration  exists  and  those 
•where  the  conveyance  is  voluntary,  impliedly  intimates  that  such  a  distinc- 
tion exists.  So  a  similar  distinction  is  made  in  Georgia  between  those  cases 
where  the  conveyance  is  voluntary  and  where  the  whole  consideration  was 
paid:  Bush  v.  Roijan,  65  Ga.  320;  38  Am.  Picp.  785.  The  illustration  of  this 
in  Ooodtoyn  v.  Goodwyn,  20  Ga.  600,  being  that  if  A  sclb  property  to  B  to  de- 
feat a  third  party,  and  such  property  is  paid  for  by  B,  this  entitles  B  to  sue 
for  and  recover  it  from  A;  not  so,  however,  if  B  paid  nothing  as  a  considera- 
tion. If  B  obtained  possession  he  can  hold  it  as  against  A  and  those  hold- 
ing as  volunteers  under  him,  although  if  he  failed  to  get  possession  the  court 
■will  refuse  its  aid  to  compel  the  execution  of  the  covinous  contract. 

Heirs,  Privies,  Assigns,  etc.,  how  Far  Bound. — Such  fraudulent  deed 
is  equally  binding  upon  the  grantor,  his  heirs,  privies,  assigns,  and  those  claim- 
ing under  him:  Reichart  v.  Castator,  5  Binn.  109;  6  Am.  Dec.  402,  and  note  406; 
Masonv.  Baker,  1  A.  K.  Marsh.  65;  10  Am.  Dec.  724;  Skinner  v.  Oakes,  10  Mo. 
App.  45,  50;  Jacobs  v.  Smith,  89  Mo.  673;  Dale  v.  Harrison,  4  Bibb,  65;  Craw- 
ford V.  L7jle,  3  Mo.  App.  585;  Finley  v.  McConnell,  00  111.  259;  Horner  v.  Zim- 
merman, 45  Id.  14;  Lyons  v.  Robhins,  46  Id.  276;  Fitzijerald  v.  Forristd,  48  Id. 
228;  Bushv.  Rogan,  65  Ga.  320;  38  Am.  Rep.  785;  Anderson  v.  Broirn,  72 
Ga.  713,  722;  Edward  v.  Kilpatrick,  70  Id.  328;  Battle  v.  Street,  85  Tcnn.  282, 
293;  Murphy  v.  Hubert,  16  Pa.  St.  50;  note  14  Am.  Dec.  703;  Kid  v.  Mitchell, 
1  Nott  &  McC.  334;  9  Am.  Dec.  702;  Smith  v.  Grim,  28  Pa.  St.  95;  67  Am. 
Dec.  400;  Tremper  v.  Barton,  18  Ohio,  418;  TerreVs  Heirs  v.  Cropper,  9 
Mart.   (La.)  350;  13  Am.  Dec.  309;  Cushwa  v.  Cushioas  Lessee,  5  M-l.  44. 

Executed  and  Executory  Contracts. — Although  the  courts  with  few 
exceptions  have  decided  that  conveyances  and  contracts  made  and  entered 
into  in  fraud  of  creditors  are  valid  and  binding  between  the  parties,  yet  an 
examination  of  the  cases  discovers  that  the  application  of  this  principle  has 
been  the  real  source  of  controversy,  especially  in  regard  to  executory  con- 
tracts. As  elucidating  this  point,  and  arriving  at  a  determination  of  tho 
governing  rule,  it  will  be  eminently  proper  to  consider  some  of  the  several 
cases  wherein  the  question  has  been  discussed.  The  case  of  Clemens  v, 
Clemens,   28  Wis.  637,  9  Am.    Rep.    520.    is  a  leadmg  case  in  Wisconsin. 


730  Whitworth  v.  Thomas.  [Alabama, 

There  the  plaintiff  and  the  defendant  entered  into  an  arrangement  whereby 
tho  former,  for  the  purpose  o!"  defrauding  hia  creditors,  was  to  convey  to  the 
ilefendant,  without  consideration,  a  certain  tract  of  land,  the  defendant 
agreeing  to  reconvey  the  same  on  request.  In  considering  the  question,  the 
court  refers  to  the  cases  of  Dyer  v.  Homer,  22  Pick.  253,  and  Harvey  v. 
Varney,  98  Mass.  118,  and  also  to  the  earlier  Massachusetts  cases  as  deter- 
mining the  principle  which  should  govern  it  in  its  conclusions,  and  says: 
"  In  that  state,  a  conveyance  or  sale  of  property  made  with  intent  to  hinder 
or  defraud  the  creditors  of  the  grantor  or  seller,  if  executed  in  due  form  of 
law,  is  good  and  effectual  to  pass  the  title  to  the  grantee  or  vendee,  because, 
as  between  the  parties  to  it,  it  was  fairly,  deliberately,  and  intentionally 
executed  and  delivered.  The  grantor  or  seller  may  not  claim  relief,  or  the 
right  to  rescind  or  set  aside  the  conveyance  or  transfer,  on  the  ground  that 
no  consideration  was  paid  or  agreed  to  be.  He  may  be  concluded  from  doing 
this  by  reason  of  his  fraud,  but  more  likely  for  other  sufficient  reasons.  All 
other  remedies,  however,  are  open  to  him  as  against  the  grantee  or  pur- 
chaser, subject,  of  course,  to  such  defenses  as  may  have  arisen  in  favor  of 
the  latter  by  the  action  of  creditors  or  purchasers,  who  may  at  any  time 
avoid  the  conveyance  or  transfer.  If  the  grantee  or  vendee  has  given  hia 
promissory  note  in  consideration  of  the  conveyance  or  transfer,  or  entered 
into  any  other  promise  or  obligation,  in  other  respects  sufficient  to  pay  for 
the  property,  the  grantor  or  seller  may  enforce  the  same,  or  recover  damages 
for  the  breach  by  his  appropriate  action  at  law,  or  if  the  nature  of  the  com- 
plaint or  cause  of  action  be  such  as  remediable  only  in  equity,  he  may  file 
his  bill  in  that  court,  and  relief  will  be  granted  in  the  same  manner  and  to 
the  same  extent  as  between  other  parties  to  contracts  or  agreements  not 
affected  by  the  element  of  fraud  or  delay  with  respect  to  the  claims  of  credi- 
tors or  others.  The  doctrine  of  par  delictum  has  no  application  between  the 
contracting  parties,  the  conveyance  or  contract  being  considered  illegal  or 
void,  only  so  far  as  it  is  declared  so  by  the  statute  ";  and  the  court  cites  also, 
as  sustaining  the  doctrine  advocated  by  it,  Nichols  v.  Patten,  18  Me.  231;  36 
Am.  Dec.  713;  Andrews  v.  Marshall,  43  Me.  472;  48  Id.  26;  Osbornev.  Moss, 
7  Johns.  IGl;  5  Am.  Dec.  252;  Jackson  v.  Garnsey,  16  Johns.  189;  Findley  y. 
Cooley,  I  Blackf.  262;  Scott  v.  Purcell,  7  Id.  G6,  08;  39  Am.  Dec.  453;  Moore 
V.  Meek;  20  Ind.  484;  Springer  v.  Drosch,  32  Id.  486;  2  Am.  Rep.  356;  Hoeser 
V.  Kraebx,  29  Tex.  450;  Davis  v.  Ransom.,  28  111.  105;  Lawton  v.  Gordon,  34 
Cal.  30;  91  Am.  Dec.  070.  The  later  cases  in  Wisconsin,  —  Davy  v.  Kelley, 
00  Wis.  452,  457;  Melhop  v.  Pettihone,  54  Id.  052,  057;  Dietrich  v.  Koch,  35 
Id.  CIS;  Hardy  v.  Stonebreaker,  31  Id.  047;  and  Sutton  v.  Wauwatoso,  29  Id. 
21,  32;  9  Am.  Rep.  534, — although  citing  Clemens  v.  Clemens,  supra,  to  the 
extent  that  the  contract  is  valid  between  the  parties,  do  not  seem  to  agree 
upon  the  application  of  that  doctrine.  The  case  in  29  Wis.  32,  declares  that 
for  consistency  the  ruling  in  Clemens  v.  Clemens,  sttpra,  should  be  followed. 
But  the  court  in  31  Wis.  047,  while  citing  that  case,  says  the  maxim  is  too 
well  established  in  law  to  admit  of  controversy,  that  a  court  of  justice  will 
not,  as  a  rule,  "interfere  between  parties  equally  guilty,  to  adjust  their 
controversies  and  apportion  the  shares  to  which  they  are  respectively  en- 
titled, accruing  from  a  fraudulent,  illegal,  or  immoral  enterprise."  Die- 
trich V.  Koch,  supra,  simply  holds  that  such  fraudulent  contracts  are  valid 
and  binding  between  the  parties;  while  Melliop  v.  Pettihone,  stcpra,  holds 
that  a  fraudulent  grantor  may  not  reclaim  lands  from  his  fraudulent  grantee, 
relying  upon  the  Bau:e  doctrine  stated  in  Clemens  v.  Clemens,  supra;  viz.,  that 
such  conveyance  is  valid  between  them,  although  it  will  be  observed  that  a 


Dec.  1887.]  Whitworth  v.  Thomas.  731 

different  application  of  the  rule  is  there  made.  But  the  case  of  Davey  v. 
Kelley,  supra,  sustains  that  of  Clemens  v.  Clemens,  supra,  by  a  direct  applica- 
tion of  the  doctrines  therein  considered. 

The  oft-cited  case  of  NelUs  v.  Clark,  20  Wend.  24,  decides  that  no  recovery 
can  be  Jiad  upon  a  note  given  as  a  part  consideration  for  a  fraudulent  convey- 
ance of  land;  that  a  promise  to  pay  for  property  purchased  with  the  intention 
to  defraud  creditors  will  not  be  enforced.  The  court,  anjucndo,  says:  "I  lay 
out  of  view  the  failure  of  consideration,  because  I  agree  that  such  a  purchaser 
would  never  be  protected  on  his  own  account.  He  would  be  esteemed  guilty 
of  a  crime  against  social  policy;  and  though  he  had  paid  the  most  ample  con- 
sideration, he  could  not  recover  it  back  ";  and  the  rule  was  declared  to  be 
the  same  "  whether  the  act  be  declared  fraudulent  at  the  common  law  or  by 
statute,  and  the  same  at  law  as  in  equity,"  fraud  of  this  character  being 
there  declared  to  be  so  both  at  common  law  and  by  the  statute;  and  that, 
whether  the  contract  be  executed  or  executory,  no  aid  will  be  given  either 
party,  —  an  executed  contract  being  binding  between  the  parties,  and  an  ex- 
ecutory one  being  in  effect  a  nullity,  so  that  the  contractor  may  not  be  com- 
pelled to  perform  his  agreements  or  pay  damages  for  its  non-performance. 
The  dissenting  opinion  of  the  chief  justice  in  this  case  has,  however,  been 
followed  in  some  of  the  cases,  as  will  be  seen  in  this  note.  In  this  dissenting 
opinion,  a  distinction  is  made  between  executed  and  executory  contracts; 
and  it  is  argued  that  a  recovery  could  be  had  upon  the  note  in  suit  upon  the 
ground  that  such  a  contract  is  valid  and  legal  as  between  the  parties  them- 
Belves.  In  Chamherlain  v.  Barnes,  20  Barb.  160,  162,  the  decision  in  Nellis  v. 
Clark,  supra,  is  affirmed,  and  the  doctrine  applied  to  the  effect  that  a  bond 
and  mortgage  executed  for  the  purchase-money  for  a  fraudulent  conveyance 
could  not  be  enforced,  although  the  plaintiff  obtained  them  from  the  party 
to  the  original  covinous  transaction.  The  claim  was  made  in  this  case  "  that 
the  plaintiff,  in  respect  to  his  mortgage,  [stood]  in  the  position  of  a  grantee 
of  the  premises;  and  even  if  the  mortgage  [was]  fraudulent,  the  defendants" 
could  not  dispute  its  validity.  The  court  ruled,  however,  that  "this  would 
be  so  if  the  mortgage  conveyed  the  title  to  the  land,  and  it  became  vested  in 
the  plaintiff  by  tlie  assignment.  The  law  would  then,  as  to  the  parties  and 
privies,  and  all  claiming  under  them  or  either  of  them  by  grant  or  assign- 
ment, leave  the  title  where  the  fraudulent  act  had  placed  it.  But  a  mort- 
gage upon  real  estate  has  no  such  effect;  it  is  a  mere  lien  upon  the  land,  and 

is  security  for  the  debt,  and  carries  no  title The  bond,  which  is  the 

debt,  is  clearly  an  executory  contract,  and  the  mortgage,  being  but  a  security 
for  the  debt,  partakes  of  the  same  character." 

Again,  the  application  of  the  doctrine  that  such  a  conveyance  is  valid 
between  the  parties  is  limited  to  executed  contracts,  in  Moseley  v.  Moseley,  15 
N.  Y.  334,  335,  where  the  court  says:  "It  was  formerly  understood  to  be  the 
law  that  contracts  and  conveyances  made  with  a  view  to  delay,  hinder,  or  de- 
fraud creditors  were,  nevertheless,  valid  and  binding  between  the  parties  to 

Buch  contracts  and  conveyances In  Nellis  v.  Clark,  20  Wend.  24,  the 

rule  was  departed  from  by  a  decision  which  restricted  the  doctrine  to  exe- 
cuted conveyances,  the  court  holding  that  an  executory  agreement  entered 
into  in  fraud  of  creditors  could  not  be  enforced  between  the  parties;  con- 
ceding, however,  that  the  principle  which  I  have  stated  applied  universally 
to  grants  and  conveyances,  and  all  executed  contracts.  The  court  ap])lied  to 
transactions  fraudulent  against  creditors  the  rule  which  prevails  as  to  other 
illegal  contracts,  namely,  that  whatever  the  parties  have  illegally  contracted 
to  execute,  neither  can  by  law  compel  the  other  to  execute,  or  to  pay  dam- 


732  Whitworth  v.  Thomas.  [Alabama, 

ages  for  not  executing;  and  that,  as  to  conveyances  and  executed  contracts, 
it  refuses  to  aid  either  party,  but  leaves  them  -where  it  finds  them.  This 
modification  of  the  law  as  it  was  finally  held,  having  received  the  sanction 
of  the  court  of  errors,  should  now  be  considered  as  established." 

Brirj'js  V.  Merrill,  58  Barb.  389,  399,  was  another  case  where  it  was  sought  to 
enforce  the  payment  of  a  promissory  note  given  in  part  performance  of  such 
fraudulent  transaction,  and  the  court  refused  to  aid  the  plaintiff  in  its  collec- 
tion, relying  upon  Nellis  v.  Clark,  supra.  And  it  also  held,  in  Machie  v.  Cairns, 
5  Cow.  547,  Li  Am.  Dec.  477,  that  the  parties  to  such  fraudulent  conveyance 
will  not  be  permitted  to  deuy  its  validity.  Nor  may  such  fraudulent  grantor 
maintain  a  suit  to  set  aside  such  a  conveyance,  although  the  conveyance  was 
made  by  the  advice  of  the  grantee,  with  whom  the  plaintiff  was  very  intimate, 
and  in  whom  he  reposed  great  confidence,  although  a  distinction  was  made  be- 
tween such  a  case  and  one  where  the  grantee  was  a  legal  adviser:  Renfrew  v. 
McDonald,  11  Hun,  254.  And  where  there  has  been  a  fraudulent  transfer  of 
personal  property,  the  law  cannot  be  invoked  to  aid  either,  because  the  title 
by  such  act  is  vested  absolutely  in  the  transferee,  even  though  he  was  a  party 
to  the  fraud:  Crocker  v.  Crocker,  17  How.  Pr.  504.  So  in  Ilenriques  v.  Hone,  2 
Edw.  Ch.  119,  it  is  said  that  the  grantor  may  not  impeach  such  fraudulent  grant 
of  land  since  the  court  will  refuse  to  set  it  aside  as  a  nullity  between  the  parties. 
But  in  Sweet  v.  Finslar,  52  Barb.  271,  it  was  held  that  an  action  to  compel 
an  accounting  by  the  defendant,  and  a  reconveyance  by  him  of  real  estate  so 
fraudulently  conveyed  to  him  under  a  trust  agreement  entered  into  for  the 
plaintiff's  benefit,  could  not  be  sustained,  it  being  there  said  that  the  doctrine 
is  well  settled  that  a  court  of  equity  will  not  set  aside  such  an  agreement, 
and  that,  being  particeps  criminis,  neither  party  will  be  relieved  as  against 
the  other  from  the  consequences  of  such  covinous  acts.  Although  it  was  de- 
clared that  "  if  there  had  been  a  promise  on  the  part  of  the  defendant  to 
render  an  account,  or  to  pay  the  plaintiff  for  moneys  received,  or  an  agree- 
meni;  subsequently  made  for  a  valuable  consideration  to  reconvey  the  lands, 
then  perhaps  the  action  might  be  maintainable. " 

And  in  Jackson  v.  Garnsey,  16  Johns.  189,  192,  it  was  decided  that  where 
property  was  so  fraudulently  conveyed  under  an  agreement  for  a  reconvey- 
ance, although  voluntary  and  without  any  consideration,  that  the  parties 
■were  as  much  bound  as  though  a  bona  fide  and  valuable  consideration  had 
been  paid,  and  that  neither  at  law  or  in  equity  would  Buch  conveyance  be  set 
aside. 

In  Maine,  the  case  of  Butler  v.  Moore,  73  Me.  151,  40  Am.  Rep.  348,  holds 
that  in  an  action  on  a  note  against  the  maker  thereof,  and  which  was  given  as 
the  consideration  of  a  conveyance  made  in  fraud  of  creditors,  the  fraud  may 
not  be  availed  of  as  a  defense.  The  court  there  says:  "It  is  generally  true 
that  the  law  will  not  aid  parties  violating  its  express  or  implied  rules  in  exe- 
cuting their  unlawful  contracts,  or  afford  them  relief  from  their  effects  when 
executed.  In  such  cases,  the  old  maxims,  ex  turpi  and  in  pari  delicto,  stand 
like  walls  against  the  parties."  It  then  declares  that  such  fraudulent  con- 
veyance is  valid  between  the  parties,  and  adds:  "If  valid,  we  fail  to  see  why 
the  note  given  in  payment  is  not  also  valid.     The  transaction  is  not  a  turpia 

causa,  and  neither  do  the  parties  stand  in  pari  delicto The  decisions 

in  Massachusetts  sustain  actions  like  this";  and  it  relies  upon  the  cases  of 
Dyer  v.  Homer,  Harvey  v.  Varney,  cited  ante;  Butler  v.  Hildreth,  5  Met.  49. 
50;  Bailey  v.  Foster,  9  Pick.  139;  Clemens  v.  Clemens,  28  Wis.  G37;  9  Am, 
Rep.  520;  Carpenter  v.  McClure,  39  Vt.  9;  91  Am.  Dec.  370.  Finally,  how- 
ever, the  court,  without  directly  overruling  the  prior  cases  in  its  own  stat» 


Dec.  1887.]  "Whitworth  v.  Thomas.  733 

which  are  contra,  argues  as  follows:  "We  are  aware  that  the  early  decisions 
in  our  own  state  are  somewhat  inconsistent:  Smith  v.  Iluhhs,  10  Me.  71; 
Nichols  V.  Patten,  18  Id.  231;  36  Am.  Dec.  713;  Ellis  v.  Ilig-jins,  32  Me.  34; 
Andreius  v.  Alarshall,  48  Id.  26.  But  in  none  of  these  cases  was  this  precise 
question  presented,  although  it  was  discussed.  Wc  think,  however,  the 
better  doctrine  is  the  one  held  by  the  cases  above  cited." 

In  another  leading  case,  Drinkivaler  v.  Drinkioater,  4  Mass.  355,  360,  it  was 
ruled  that  where  land  is  so  fraudulently  conveyed,  that  only  for  the  benefit  of 
creditors  can  the  covinous  transaction  be  shown,  and  that  neither  the  grantor 
nor  his  heirs  can  impeach  for  fraud  a  conveyance  to  which  he  was  a  party. 
The  case  of  Di)er  v.  Homer,  22  Pick.  253,  is,  if  not  contra,  certainly  not 
consistent  with  the  reasoning  in  this  case,  since  it  was  there  held  that  there 
was  no  reason  why  a  non-negotiable  promissory  note  given  as  the  con- 
sideration of  a  fraudulent  sale  of  personal  property  should  not  be  enforced  in 
the  name  of  the  promisee  for  the  benefit  of  the  assignee.  It  will  be  observed 
that  in  this  case  a  distinction  is  apparently  made  between  notes  given  with- 
out and  those  which  are  supported  by  a  consideration;  and  in  Harvey 
V.  Varnerj,  98  Mass.  118,  it  was  held  that  it  made  no  difference  whether 
the  contract  was  executed  or  executory;  it  was  good  and  valid  between 
the  parties,  although  the  parties  were  in  pari  delicto,  and  judgment  was 
given  in  that  case  for  the  plaintiff,  the  action  being  a  bill  in  equity  for 
the  settlement  of  partnership  accounts;  and  the  court  argued  that  the  de- 
fendants could  not  be  permitted  to  set  up  in  defense  that  the  purpose  of 
forming  the  partnership  was  to  defraud  creditors,  and  cites  Dyer  v.  Homer, 
supra,  as  a  precedent,  although  it  is  said  that  such  fraudulent  conveyance  is 
good,  and  stands  between  the  parties:  Id.  120.  The  case  of  Kellis  v.  Clark, 
20  Wend.  24,  is  referred  to  as  sustaining  an  adverse  doctrine,  but  the  court, 
notwithstanding,  adopts  the  dissenting  opinion  in  that  case  of  Chief  Justice 
Nelson,  "the  reasoning  and  conclusions  of  which,"  it  Says,  "commend 
themselves  to  our  judgment  in  preference  to  the  opinion  of  the  majority  of 
that  court."  The  case  of  Canton  v.  Dorchester,  8  Cush.  525,  is  criticised  at 
at  length,  and  it  was  declared  that  "the  question  whether  a  contract  to  re- 
convey  an  estate  could  bo  avoided  by  proving  that  it  and  the  deed  were  both 
given  to  cover  up  the  property  from  attachment,  was  not  distinctly  presented 
to  the  court  nor  involved  in  the  case  under  examination.  We  cannot  sup- 
pose that  it  was  intended  in  an  incidental  and  summary  manner  to  overrule 
the  entire  current  of  authorities";  and  the  court  adds  that  although  in  that 
case  it  was  decided  that  no  court  of  law  or  equity  would,  upon  the  application 
of  the  grantor,  enforce  an  executory  contract  founded  on  a  fraudulent  trans- 
action, yet  the  gist  of  the  ruling  was  merely  a  statement  of  the  "general 
do3trine  that  the  discretionary  power  of  a  court  of  chancery  to  enforce  spe- 
cific performance  will  not  be  exercised  where  the  plaintiff  has  been  guilty  of 
fraud  ";  that  the  position  that  a  court  of  law  would  not  sustain  an  action 
on  such  a  contract  was  not  upheld  by  any  authorities  there  cited,  and  was  a 
remark  not  necessary  to  the  decision  in  that  action.  The  case  of  Harvey  v. 
Varney,  supra,  and  Dyer  v.  Homer,  supra,  being  the  latest  cases,  may  —  how- 
ever questionable  —  undoubtedly  be  held  as  the  decisive  ones  in  Massachu- 
setts. 

So  in  Walton  v.  Tusfen,  49  Miss.  569,  576,  it  is  determined  that  "  there  is  a 
distinction  between  an  executed  and  an  executory  fraudulent  contract.  As  to 
the  latter,  the  court,  where  the  parties  are  equally  participants  in  the  fraud, 
—  in  pari  delicto,  —  will  leave  them  in  the  predicament  where  they  place  them- 
selves, by  denying  any  relief  or  interference.     But  where  the  contract  La 


734  Whitworth  v.  Thomas.  [Alabama, 

executed,  ....  the  court  acts  upon  the  same  principle,  declining  altogether 
to  cancel  the  deed,  and  restore  the  title  to  [the  grantor].  But  the  effect  is 
very  different:  in  the  former  case,  specific  performance  will  be  rcfusefl;  in 
the  latter,  the  fraudulent  grantee  remains  owner  of  the  estate  against  the 
grantor  and  his  heirs,  and  against  all  other  persons  except  the  creditors  of 

the  grantor The  estate  in  tlie  fraudulent  grantee  is  complete,  and 

fully  vested,  so  that  it  is  subject  to  sale  and  conveyance,  or  to  descent;  the 
title  cannot  be  impugned  by  covin  and  collusion,  in  which  it  was  contrived  and 
transferred,  by  any  other  person  except  those  injured  by  the  deceit  and  fraud; 
no  other  person  can  assail  the  conveyance  except  the  creditors  (of  the  gran- 
tor)  The  rights  of  the  immediate  parties  are  left  to  be  dealt  with  by 

the  common  law.  Ex  turpi  causa  non  actio  oritur,  —  a  party  applying  to  a  court 
of  equity  for  relief  must  have  an  honest  and  just  claim.  To  extend  aid  to 
either  party  engaged  in  a  conspiracy  to  cheat  and  defraud  would  be  to  sanc- 
tion the  wrong,  and  carry  it  to  a  successful  consummation;  therefore  equity 
will  not  decree  a  specific  performance  of  an  agreement  by  the  fraudulent 
grantee  to  reconvey  the  property  to  the  debtor."  So  the  fraudulent  grantor 
cannot  maintain  a  suit  to  set  aside  such  fraudulent  conveyance,  nor  may  he 
recover  on  the  ground  of  fraud  the  property  so  conveyed:  Snodjrass  v.  A71- 
dreivs,  30  Miss.  472,  488,  G4  Am.  Dec.  169;  since  he  will  not  be  permitted  to 
impeach  his  deed:  Newell  v.  Newell,  34  Miss.  385;  nor  will  the  courts  inter- 
fere between  parties  in  pari  delicto:  Watt  v.  Conger,  13  Smedes  &  M.  412,  421. 
But  in  Ga7-y  v.  Jackson,  55  Miss.  204,  30  Am.  Dec.  514,  and  note  517,  we  find 
the  doctrine  that  in  an  action  for  the  price  of  goods  sold  and  delivered,  the 
defendant  cannot  avoid  payment  on  the  ground  that  the  sale  was  in  fraud  of 
tlie  seller's  creditors. 

Again,  it  is  decided,  in  Pennsylvania,  that  an  agreement  that  a  judgment 
note  should  be  held  until  the  maker  became  embarrassed,  and  then  be  en- 
tered, and  his  real  estate  sold  for  the  benefit  of  his  wife,  was  a  contract  in- 
tended to  hinder,  delay,  and  defraud  creditors,  and  that  such  agreement 
could  not  be  enforced,  and  that  neither  one  party  nor  the  other  could  set  up 
the  fraud,  as  between  themselves,  to  defeat  the  other  party  of  any  claiui  un- 
der it.  "A  party  to  such  a  transaction  cannot  give  in  evidence  his  own  fraud 
in  defense  against  his  own  act,  whether  it  be  an  absolute  deed  or  a  mortgage, 
or  a  confession  of  judgment,  no  matter  how  it  may  be  mingled  with  other 
arrangements  or  agreements  between  the  parties."  And  the  court  also  saya 
that  such  fraudulent  deed  "is  valid  as  against  the  grantor  and  those  for 

whose  benefit  it  is  designed That  a  trust  cannot  be  enforced  where  it 

is  designed  to  effect  a  fraud  on  creditors,  is  settled  by  authority.  The  cases, 
without  exception,  decide  that  such  a  trust  is  void  in  itself,  and  therefore  in- 
capable of  being  made  the  foundation  of  a  right  in  others  ":  Shank  v.  Sinip- 
eon,  114  Pa.  St.  208,  212,  relying  on  Ser/ross  v.  Fisher,  10  Id.  185;  Williams's 
Adm'x  V.  Williams,  34  Id.  312;  Murphy  v.  Hubert,  16  Id.  57;  Blystone  v.  Bly- 
stone,  51  Id.  273. 

In  another  case  in  Pennsylvania, — that  of  Bonestcel  v.  Sullivan,  104  Pa. 
St.  9,  14,  — it  was  determined  that  if  a  mortgagee  who  seeks  to  recover  on 
a  mortgage  made  with  intent  to  defraud  the  creditors  of  the  mortgagor  can 
make  out  his  case  without  resorting  to  the  fraudulent  transaction,  he  is  not 
precluded  from  recovering  in  a  suit  upon  the  mortgage,  since  in  such  action 
the  defendant  cannot  set  up  the  fraud  as  a  defense,  the  mortgage  having 
prima  facie  been  executed  in  good  faith  and  for  a  valuable  consideration. 
The  court  said  that  the  plaintiff,  "  though  a  participant  in  the  fraud,  has  this 
advantage  over  the  defendant,  —  he  is  not  obliged  to  resort  to  the  fraudulent 


Dec.  1887.]  Whitworth  v.  Thomas.  735 

transaction  to  make  out  his  case";  that  the  mortgagor,  "as  the  very  first 
step  in  his  defense,  is  obliged  to  exhibit  his  own  fraud,  hence  he  cannot  gain 
the  ear  of  the  court,  for,  on  all  authority,  the  court  will  not  aid  or  abet  a 
party  who  comes  into  it  with  a  dishonest  case ";  and  it  adds  that  such  a 
mortgage  is  good  as  between  the  parties  to  it. 

So  in  Dannels  v.  Fitch,  Hale  v.  Fitch,  8  Pa.  St.  495,  the  rule  is  declared  to 
be  that  a  defendant  in  replevin  may  not  avail  himself  of  the  defense  of  fraud 
in  an  action  to  recover  personal  property,  or  its  value,  since  such  transaction 
is  valid  between  the  parties  and  may  be  enforced.  It  is  also  decided  that 
such  fraudulent  contract  for  the  sale  of  goods  is  valid  between  parties,  al- 
though void  as  to  creditors,  and  the  court  will  enforce  the  same:  Telford  v. 
Adams,  G  Watts,  429. 

And  again,  that  trover  will  not  lie  to  recover  the  possession  of  personal 
property  which  the  plaintiff  has  parted  with  for  the  purpose  of  defrauding 
his  creditors:  Stewart  v.  Kearney,  6  Watts,  453;  31  Am.  Dec.  482,  and  note 
484. 

So  upon  the  ground  that  such  fraudulent  transaction  is  valid  between  the 
parties,  it  is  determined  in  Winton  v.  Freeman,  102  Pa.  St.  366,  369,  that  the 
maker  of  a  note  fraudulent  in  its  inception  cannot  set  up  his  fraud  as  a  de- 
fense against  the  payee  to  prevent  its  collection,  the  court  saying  that  "it  ia 
settled  by  numerous  authorities  that  there  is  no  more  binding  consideration 
known  to  the  law  than  the  mutual  fraud  of  the  parties.  The  books  are  full 
of  cases  where  a  party  to  the  fraud  has  sought  relief  in  the  courts  from  the 
consequences  of  his  unlawful  act,  but  the  decisions  have  been  uniformly  ad- 
verse to  such  applications.  It  is  not  the  province  of  the  law  to  help  a  rogue 
out  of  his  toils.  The  rule  is  to  leave  the  parties  where  it  finds  them,  giving 
no  relief  and  no  countenance  to  contracts  made  in  violation  of  statutes."  "  A 
person  cannot  profit  by  his  fraud.  He  cannot  use  it  to  acquire  any  rights, 
or  to  protect  himself  against  any  claim  ":  Brown  v.  Scott,  51  Pa.  St.  357,  365. 

In  keeping  with  the  above  decisions  in  this  state,  to  the  effect  that  a  party 
cannot  set  up  his  own  fraud  to  avoid  any  instrument  or  contract  executed  or 
entered  into  by  him,  and  that  equity  will  refuse  relief  to  one  who,  in  seeking 
its  aid,  discloses  his  own  turpitude  in  the  very  contracts  on  which  his  action 
depends,  we  find  the  following  additional  cases:  KunUe's  Appeal,  107  Pa.  St. 
368;  Pringle  v.  Pringle,  59  Id.  281,  286;  Lessee  of  Simon  v.  Gibson,  1  Yeates, 
291;  Reichart  v.  Castator,  5  Binn.  109,  112;  6  Am.  Dec.  402;  Sickman  v.  Laps- 
ley,  13  Serg.  &  R.  224;  15  Am.  Dec.  596,  and  note  599;  French  v.  Mehan,  56 
Pa.  St.  286;  Stewart  v.  Kearney,  6  Watts,  453;  31  Am.  Dec.  482.  The  rea- 
sons given  iu, Sherk  v.  Endress,  3  Watts  &  S.  255,  for  sustaining  the  doctrine 
above  stated,  in  regard  to  executory  contracts,  are,  that  "the  statute  does 
not  operate  in  a  contest  betwixt  the  actors  themselves  on  what  it  declares  to 
be  fraud  only  in  its  relation  to  third  persons;  for  in  any  other  aspect  there  in 
no  fraud  whatever,  and  it  is  unimportant  whether  the  contract  is  used  to 
found  a  claim  betwixt  the  parties  to  it,  or  to  rebut  one;  it  is  free  from  taint 
in  regard  to  them,  and  the  one  may  use  it  against  the  other  for  any  purpose 
whatever.  The  reason  why  a  contract  void  against  creditors  may  be  set  up 
against  either  of  the  parties  to  it  is  not  because  he  shall  not  be  allowed  to 
defeat  it  by  showing  his  own  criminality,  but  because  there  is  no  criminality 
to  be  shown.  It  is  a  trite  remark  that  though  a  contract  within  the  purview 
of  the  statute  is  no  contract  at  all  against  the  interests  intended  to  be  de- 
frauded, yet  it  is  a  contract  in  respect  to  everything  else,  and  consequently 
it  must  have  all  the  effect  of  one  betwixt  the  parties  to  it The  prin- 
ciple I  have  indicated  arises  from  no  provision  of  the  statute,  for  a  contract 


736  Whitworth  v.  Thomas.  [Alabama, 

infected  with  actual  fraud  against  a  third  person  not  a  creditor  is,  by  the 
policy  of  the  law,  enforceable  even  in  equity  between  those  who  intended  to 
perpetrate  the  act." 

In  Iowa,  it  is  decided,  in  the  case  of  Jones  v.  Farris,  70  Iowa,  739.  that 
neither  a  grantor  nor  his  fraudulent  creditor  can  have  relief  in  a  court  of 
equity  to  set  aside  a  deed  made  for  the  purpose  of  defrauding  creditors,  al- 
though there  was  a  secret  agreement  to  reconvey.  The  question  was  not  dis- 
cussed, however,  the  case  being  only  a  mere  dictum  to  the  above  effect.  This 
case  is  in  keeping  with  those  of  Kervick  v.  Mitchell,  68  Id.  27.3;  Weir  v.  Day, 
57  Id.  84,  86;  Mellen  v.  Ames,  39  Id.  283;  Wnijht  v.  Hovdl,  35  Id.  288;  Har- 
lin  V.  Stevenson,  30  Id.  371;  Holliday\.  Ilolliday,  10  Id.  200.  Nor  will  a 
court  of  chancery  compel  a  reconveyance  for  the  purpose  of  enforcing  a  trust 
between  the  parties:  Stephens  v.  Heirs  of  Harrow,  26  Id.  458,  465;  and  "while 
equity  will  not  interfere  to  set  aside  such  a  deed  between  the  parties  or  their 
heirs,  it  is  also  true  that  it  will  not  lend  its  aid  to  enable  parties  to  consum- 
mate their  dishonest  purposes Equity  will  not  rectify  or  in  any  man- 
ner recognize  a  voluntary  instrument  which  doos  noi  complete  the  transfer 

of   the  property As   equity  abhors  fraud,   there  are   still   stronger 

reasons  why  it  should  not  interfere  to  correct  a  deed  executed  with- 
out consideration  and  for  a  fraudulent  purpose  ":  Gehhard  v.  Saltier,  40  Id, 
152,  154.  In  this  last  case,  it  was  sought  to  correct  a  mistake  in  a  deed  made 
in  fraud  of  creditors;  but  there  were  no  creditors  in  fact.  Here,  although 
the  grantor  believed  that  an  old  claim  might  be  prosecuted  against  hiui,  and 
the  grantee  had  encouraged  such  belief,  and  the  conveyance  had  been  made, 
it  was  held  that  a  recovery  might  be  had  against  the  grantee  of  the  property 
itself  or  of  its  value:  See  Kervick  v.  Mitchell,  68  Id.  273. 

In  Illinois,  the  doctrine  is  laid  down  that  courts  will  not  aid  parties  to 
regain  property  fraudulently  conveyed,  but  will  leave  them  where  they  find 
them:  Sanger  v.  Pari7-idje,  107  111.  529,  533.  But  in  the  case  of  Second 
National  Bank  v.  Brady,  96  Ind.  498,  it  is  said  that  "there  is  an  important 
difference  between  setting  aside  a  conveyance  made  to  defraud  creditors  at 
the  suit  of  the  fraudulent  grantor  and  the  enforcement  of  notes  or  mortgages 
executed  in  the  course  of  the  fraudulent  transaction.  The  cases  of  Gamer  v. 
Graves,  54  Ind.  188,  Edwards  v.  Ilaverstick,  53  Id.  348,  and  Laney  v.  Laney, 
2  Id.  196,  decide  that  a  fraudulent  conveyance  cannot  be  avoided  by  the 
grantor.  Van  Wy  v.  Clark,  50  Id.  259,  and  O'Neil  v.  Chandler,  42  Id.  371, 
following  without  investigation  the  case  of  Springer  v.  Drosch,  32  Id.  486, 
2  Am.  Rep.  356,  decide  that  notes  and  mortgages  executed  by  the  fraudulent 
grantor  to  his  fraudulent  grantee  may  be  enforced,  while  Welby  v.  Armstrong, 
21  Ind.  489,  decides  the  question  exactly  the  other  way.  It  seems  that 
Springer  v,  Drosch,  supra,  is  opposed  to  the  familiar  rule  that  courts  will  not 
aid  either  party  to  enforce  a  contract  founded  in  fraud,  but  it  will  leave  thera 
where  it  found  them;  it  certainly  is  in  conflict  with  the  great  weight  of  author- 
ity; and  the  court  relies  upon  the  cases  of  Nell'is  v.  Clark,  4  Hill,  424;  Moseley 
V.  Moseley,  15  N.  Y.  334;  Mason  v.  Baker,  1  A.  K.  Marsh.  208;  10  Am.  Dec. 
724;  Norris  v.  Norris,  9  Dana,  317;  35  Am.  Dec.  138;  Randall  v.  Howard,  2 
Black,585;  Fox  v.  Gardner,  21  Wall.  475;  Hamilton  v.  5cm//,  25  Mo.  165;  69  Am. 
Dec.  460;  McCaiisland  v.  Balston,  12  Nev.  195;  28  Am.  Rep.  781;  Miller  v. 
Marckle,  21  111.  152;  Heinemanv.  Newman,  55  Ga.  262;  21  Am.  Rep.  279;  Mc- 
Quadev.  Rosecrans,  36  Ohio  St.  442;  Wearse  v.  Peirce,  24  Pick  140."  Further 
than  this  statement,  however,  the  court  does  not  go,  and  does  not  directly 
overrule  Springer  v.  Drosch,  supra.  The  decision  of  Seivors  v.  Dickover,  101 
Ind.  495,  follows  the  case  of  Second  National  Bank  v.  Brady,  supra.     But 


Dec.  1887.]  Whitworth  v.  Thomas.  737 

unless  these  last  two  decisions  may  be  held  to  impliedly  overrule  Springer 
V.  Droscfi,  supra,  that  case  stands  as  law  in  Indiana,  since  it  directly 
overrules  Welhy  v.  Armstrong,  21  Ind.  489,  and  is  followed,  as  above  stated, 
by  Von  Wy  v.  Clark,  supra,  and  O'Neil  v.  Chandler,  supra.  The  cases  of 
NellL-iv.  Clark,  4  Hill,  424;  Mason  v.  Baker,  I  A.  K.  Marsh.  208,  10  Am.  Dec. 
724.  and  Norris  v.  Norris,  9  Dana,  317,  35  Am.  Dec.  138,  directly  relied  on 
in  Second  National  Bank  v.  Brady,  supra,  are  declared  in  Springer  v.  Droach 
to  find  no  support  in  the  principles  of  the  common  law,  and  are  said  not  to 
be  sustained  by  a  single  authority.  ,  This  last  case  relies  upon  Drinkwater  v. 
Drinkwiiter,  4  Mass.  354;  Taylor  v.  Weld,  5  Id.  109;  Eeichart  v.  Castator,  5 
Binn.  109;  6  Am.  Dec.  402;  Gillespie  v.  Gillespie,  2  Bibb,  89;  Dale  v.  Harrison, 
4  IJ.  Q>o;  Clcivp  V.  Tirrill,  20  Pick.  247;  Dyer  v.  Homer,  22  Id.  253;  Skerkv. 
Endre.ts,  3  Watts  &  S.  255;  Randall  v.  Phillips,  3  Mason,  378;  Byrd  v.  Curlin, 
1  Humph.  4G6;  Thompson  v.  Moore,  36  Me.  47;  Eyrickv.  Hetrick,  13  Pa.  St. 
4S8;  Burgett  v.  Burgett,  1  Ohio,  469;  13  Am.  Dec.  634;  Worth  v.  Nortliam,  4 
Ired.  102;  Hendricks  v.  Mount,  5  N.  J.  L.  738;  8  Am.  Dec.  623;  Robinson  v. 
Moiijoy,  5  N.  J.  L.  173;  Sumner  v.  Murphy,  2,Hill  (S.  C),  488;  32  Am.  Dec.  397; 
Ch'pin  v.  Pease,  10  Conn.  69;  25  Am.  Dec.  56;  Dearman  v.  Radcliffe,  5  Ala. 
192;  McGuire  v.  Miller,  15  Id.  394;  Mchols  v.  Patten,  18  Me.  231;  36  Am. 
Dec.  713;  Fairbanks  V.  Blackington,  9  Pick.  93. 

The  case  of  Seivors  v.  Dickover,  101  Ind.  495,  498,  holds  that  the  court  will 
refuse  to  refund  to  such  fraudulent  grantee  the  amount  paid  by  him  in  the 
transaction,  although  it  has  gone  to  the  creditors  of  the  failing  debtor,  since 
tiie  law  uniformly  leaves  the  parties  to  such  fraudulent  transactions  exactly 
where  it  finds  them.  And  in  Edwards  v.  Haverstick,  53  Id.  348,  it  is  said 
that  an  exec  ition  against  a  grantee  can  be  levied  on  laud  so  frau Juleutly 
conveyed  to  him. 

In  California,  the  decisions  seem  to  conflict,  since  in  Davis  v.  Mitchell,  34 
Cal.  82,  it  was  held,  in  an  action  on  a  note  given  in  fraud  of  creditors,  and 
which  was  bought  at  an  execution  sale  of  the  property  of  the  payee,  that 
he  could  neither  allege  nor  jjrove  that  the  transaction  upon  which  such 
note  was  based  was  fraudulent;  that  the  courts  would  listen  neither  to  such 
a  defense  nor  to  an  action  to  recover  back  property  so  fi'audulently  trans- 
ferred, citing  Ahbe  v.  Marr,  14  Cal.  210;  Valentine  v.  Stewart,  15  Id.  387; 
Gregory  v.  Haivorth,  25  Id.  653. 

But  in  Ager  v.  Duncan,  50  Cal.  325,  327,  where  the  contract  was  executory, 
and  a  suit  was  brought  to  enforce  the  payment  of  a  note  given  with  a  fraudu- 
lent intent  of  concealing  the  actual  ownership  of  property  from  creditors,  and 
it  appeared  tliat  the  parties  w eve  in  pari  delicto,  the  court  said:  "In  such 
cases  it  is  immaterial  by  which  of  the  parties  the  fraudulent  nature  of  the 
contract  is  disclosed  to  the  court;  as  soon  as  the  fraud  is  made  to  appear  by 
either  of  tlie  parties,  the  court  will  refuse  to  interfere,  and  will  leave  them  as 
they  were.  It  will  not  enforce  a  contract  founded  on  the  mutual  turpitude 
of  the  parties  to  it;  and  for  the  same  reason,  if  the  contract  has  been  executed 
the  court  will  not  aid  either  party  to  escape  its  consequences." 

Courts  will  enforce,  in  Texas,  a  fraudulent  conveyance  of  real  or  personal 
estate  against  the  grantor,  as  where  chattels  or  land  have  been  sold  and 
granted,  but  the  vemlor  or  grantor  has  remained  in  possession;  in  such  cases  a 
Buit  may  be  maintained  by  the  fraudulent  grantee  for  recovery  of  the  same, 
nor  can  the  grantor  of  such  frauduleut  deed  impeach  it.  "  It  has  universally 
been  held  that  wherever  the  conveyance  was  completed,  cither  by  the  actual 
er  constructive  delivery  of  the  property,  the  grantee  was  entitled  to  recover, 
thougli  the  grantor  was  in  possession  of  the  property  at  the  commencement 
Am.  St.  KKi'..  Vol.  III.— 47 


738  Whitworth  v.  Thomas.  [Alabama, 

of  the  suit,  and  had  been  continuously  so  from  the  date  of  the  conveyance  ": 
Hoeser  v.  KraeJca,  29  Tex.  450.  454;  see  also  Seawell  v.  Lowery,  16  Id.  47,  50. 
A  distinction  is  impliedly  made  in  Hoeser  v.  Kraeka,  supra,  betweea  executed 
and  executory  contracts. 

In  Carpenter  v.  McClure,  39  Vt.  9,  91  Am.  Dec.  370,  it  is  determined 
that  a  note  having  its  inception  under  a  conlract  fra'.idulent  as  to  creditor! 
may  be  enforced  against  the  makers,  notwithstanding  the  fraud.  The  case 
of  Nellls  V.  Clark,  20  Wend.  24,  is  considered,  and  the  distinction  there  made 
between  executory  and  executed  contraQts  is  hcl  1  not  in  keeping  with  the 
decisions  of  the  Vermont  courts:  Martin  v.  Martin,  1  Vt.  91;  18  Am.  Dec. 
675;  Gifford  v.  Ford,  5  Vt.  532;  Conner  v.  Caif  enter,  28  Id.  240;  Boutwell  v. 
McClure,  30  Id.  67G;  Seaver  v.  Price,  42  Id.  325;  Roberta  v.  Lund,  45  Id.  82. 
In  the  last  case,  it  was  said  that  the  law  will  not  permit  a  party  to  allege  hia 
own  fraud  to  avoid  his  contract  or  the  legal  consequences  of  his  own  acts: 
45  Id.  87;  and  see  Peaslee  v.  Barney,  1  D.  Chip.  331;  6  Am.  Dec.  743. 

In  Tennessee,  the  courts  equally  refuse  to  aid  either  party  to  such  fraudu- 
lent agreements,  deeds,  and  transfers  of  property,  and  refuse  to  rescind  such 
fraudulent  conveyance,  or  to  enforce  such  convinous  agreements,  as  where  a 
note  is  given  for  real  property  where  a  pretended  sale  is  made  to  defraud 
creditors,  no  recovery  can  be  had:  Parlces  v.  McKaney,  3  Head,  297;  Hamil- 
ton V.  Gilbert,  2  Heisk.  680;  WaUcer  v.  McConico,  10  Yerg.  228.  In  this  last 
case  the  note  was  without  consideration:  Battle  v.  Street,  85Tenn.  282,  293; 
Shaio  V.  Cnrlile,  9  Heisk.  594;  Sioan  v.  Castleman,  4  Baxt.  257,  269;  so 
where  one  holding  a  note  surrenders  it  to  another  in  order  to  delay  and 
defraud  creditors,  under  an  agreement  to  account  for  said  note,  no  court  will 
aid  the  party  in  recovering  the  same,  since  "the  courts  will  not,  as  between 
the  parties,  take  cognizance  of  such  a  fraudulent  transaction,  nor  interpose,  at 
the  instance  of  either,  for  any  purpose  whatever ":  Mulloy  v.  Younj,  10 
Humph.  297.  Such  fraudulent  sale  is  binding  upon  the  parties  in  Arkansas, 
and  may  not  be  rescinded  or  enforced:  Britt  v.  Aylett,  11  Ark.  475;  52  Am. 
Dec.  282,  and  note  285;  Anderson  v.  Dunn,  19  Ark.  650,  659. 

In  West  Virginia,  where,  under  a  contract,  something  fraudulent  or  op- 
posed to  public  policy,  is  agreed  to  be  done,  and  the  parties  are  in  -pari  delicto, 
the  court  will,  as  a  general  rule,  refuse  to  enforce  such  a  contract:  Horn  v. 
Star  Foundry  Co.,  23  W.  Va.  522,  533. 

The  doctrine  that  neither  party  to  a  fraudulent  conveyance  can  be  aided  in 
a  court  of  justice,  but  that  they  will  be  left  in  exactly  that  position  in  which 
they  have  placed  themselves  by  their  covinous  and  fraudulent  transactions,  and 
that  the  fraudulent  grantor  may  not  be  permitted  to  impeach  his  deed,  or  to 
revoke  or  rescind  such  executed  contract,  is  followed  in  North  Carolina:  EU 
Ungton  v.  Carrie,  5  Ired.  Eq.  21;  Waller  v.  Mills,  3  Dev.  515,  519;  Jones  y:. 
Gorman,  7  Ired.  Eq.  21,  23;  Bynum  v.  Miller,  86  N.  C.  559,  562;  41  Am.  Rep. 
467;  and  this  rule  was  extended,  in  that  state,  to  a  case  where  a  party,  at  th« 
suggestion  and  advice  of  his  attorney,  conveyed  land  to  him  with  the  intent 
to  defraud  his  creditors,  the  court  refusing  to  grant  any  relief:  York  v. 
Merriit,  80  N.  C.  285;  so  in  South  Carolina:  Kidd  v.  MitcMl,  1  Nott  &  McC. 
334;  9  Am.  Dec.  702;  and  the  same  rule  obtains  in  New  Jersey:  Cutler  v. 
Tuttle,  19  N.  J.  Eq.  549,  562;  Holt  v.  Creamer,  34  N.  J.  Eq.  181,  182;  Evan* 
▼.  Herriwj,  27  N.  J.  L.  243;  nor  may  such  fraudulent  grantor  invoke  the  aid 
of  a  court,  "either  directly  or  indirectly  (as  by  a  suitor  in  the  guise  of  a 
creditor),  to  recover  the  control  of  the  property,  or  direct  the  disposition  of 
it  in  any  form":  Puckmanv.  Conover,  37  N.  J.  Eq.  583,  585;  the  rule  is  also 
followed  in  Kentucky:    Martin  v.  Martin,   5   Bush,  47;    Norris  v.   Norris's 


Dec.  1887.]  Whitworth  v.  Thomas.  739 

AdrrHr,  9  Dana,  318;  35  Am.  Dec.  138;  Jones  v.  Read,  3  Dana,  540;  Mason  v. 
BaJcer,  1  A.  K.  Marsh.  208;  10  Am.  Dec.724;  Dale  v.  Harrison,  4  Bibb,  65.  Italso 
obtains  in  Alabama:  Williams  v.  ffigjins,  69  Ala.  517,  523;  Dearman  v.  Ead- 
cliffe,  5  Ala.  192,  193;  it  being  declared  in  that  state  that  where  lands  are 
conveyed  in  fraud  of  creditors,  no  matter  what  the  agreement  of  the  grantee 
to  hold  in  trust  or  to  reconvey  may  have  been,  the  grantor  is  precluded  from 
recovering  back  the  title,  not  that  the  grantee,  by  such  convej-ance,  is  given 
an  honest  right  to  hold,  but  because,  by  reason  of  the  vicious  intent  of  the 
grantor  he  forfeits  all  right  to  recover:  Kelly  v.  Karsner,  72  Ala.  106,  111; 
and  this  doctrine  prevails  in  Maryland:  Lamborn  v.  Moore,  6  Har.  &  J.  422, 
426;  Freeman  v.  SedwicTc,  6  Gill,  28;  46  Am.  Dec.  650;  Ba>jne  v.  Suit,  1  Md. 
80,  80;  Roman's  Devisee  v.  Mali,  43  Id.  513,  533;  Wilson  v.  Watts,  9  Id. 
356,  456;  also  in  Ohio:  Roll  v.  Raguet,  4  Ohio,  400,  419;  22  Am.  Dec.  759; 
White  V.  Brocaw,  14  Ohio  St.  339,  341;  Trimble  v.  Doty,  16  Ohio  St.  118,  129; 
Emrie  v,  Gilbert,  Wright,  704;  Goudy  v.  Gebhari,  1  Ohio  St.  263,  268;  Bar- 
ton V.  Morris,  15  Ohio,  408,  428;  also  in  Nevada:  Peterson  v.  Brown, 
17  Nev.  172;  45  Am.  Rep.  437;  and  in  Virginia:  James  v.  Bird's  Adm'r, 
8  Leigh,  510;  31  Am.  Dec.  608,  and  note  070;  Owen  v.  Sliarp,  12  Leigh, 
427,  429;  Tliomas  v.  Soper,  5  Munf.  28;  also  in  Colorado:  Coon  v.  Rhjden, 
4  Col.  275,  281;  also  in  Connecticut:  Oioen  v.  Dixon,  17  Conn.  496.  Though 
it  is  said  in  Nichols  v.  McCarthy,  53  Id.  299,  324,  55  Am.  Rep.  105, 
that  "it  is  a  well  settled  rule  than  where  a  debtor  understandingly  and 
deliberately  conveys  away  his  property  to  defraud  or  hinder  his  creditors, 
a  court  of  equity  will  not  lend  him  its  aid  to  recover  the  property  back. 
....  It  is  not,  perhaps,  an  established  qualification  of  the  rule  mentioned 
that  a  person  who,  in  retaining  property  conveyed  to  him,  is  himself  guilty 
of  a  fraud,  cannot  avail  himself  of  the  prior  fraud  of  the  grantor  for  the  pur- 
pose of  keeping  the  property,  but  such  a  qualification  of  the  rule  is  at  least 
implied  in  Railroad  Company  v.  Durant,  95  U.  S.  579,  and  Byinrjton  v.  Moore, 
62  Iowa,  470.  Such  a  qualification  seems  a  reasonable  one."  See  also,  as  sus- 
taining the  above  principal  rule,  Kinney  v.  Consolidated  Mining  Co.,  4  Saw.  382; 
Schenck  v.  Hart,  32  N.  J.  Eq.  774,  782;  note  34  Am.  Dec.  765;  Pemberton  v. 
Smith,  3  Head,  18;  Fowler  v.  Stoneum,  11  Tex.  478,  502;  02  Am.  Dec.  490; 
Dajizeyw.  Smith,  4:  Tex.  411;  Epperson  v.  Young,  8  Id.  135;  Partes  v.  Hill,  14 
Id.  69;  Hall  v.  Callahan,  66  Mo.  316,  323;  Powell  v.  Tnmaji,  8  Jones,  43G;  82 
Am.  Dec.  426;  Quirk  v.  Thomas,  6  Mich.  98;  Hazard  v.  Hall,  5  Mo.  App.  584; 
Frasner  v.  City  Council,  19  S.  C.  384,  403;  Hollisv.  Morris,  2  Ilarr.  (Del.)  123; 
Newson  v.  Douglass,  7  Har.  &  J.  317;  16  Am.  Dec.  317;  Ciishwa  v.  Cicshwa's 
Lessee,  5  Md.  44;  Jackson  v.  Dutton,  3  Harr.  (Del.)  98;  in  this  last  case  the  con- 
veyance was  fraudulently  made  to  deprive  the  wife  of  alimony :  TerreVs  Heirs  v. 
Cropper,  9  Mart.  (La.)  350;  13  Am.  Dec.  309;  Burns  v.  Baugcrt,  92  Mo.  107;  Rust 
V.  Shackelford,  47  Ga.  534;  Steadmanv.  Hayes,  80  Mo.  319;  Skinner  \.  Oakcs, 
10  Mo.  App.  45,  50;  Burke  v.  Adams,  80  Mo.  505;  50  Am.  Rep.  510;  Bu.^h 
V.  Rogan,  65  Ga.  320;  38  Am.  Rep.  785,  where  the  decision  seems  limited 
to  those  cases  where  a  consideration  was  paid;  it  was  also  said  in  this  case 
that  the  grantor  to  such  fraudulent  deed  will  not  be  permitted  in  an  action 
of  ejectment  to  set  up  the  fraud:  Anderson  v.  Brown,  72  Ga.  713,  722;  Ed- 
ward V.  Kilpatrick,  70  Id.  328;  but  see  Harrison  v.  Hatcher,  44  Ga.  038,  042. 
Whether  such  fraudulent  executory  contracts  are  held  to  be  valid  or  a 
nullity,  the  conclusion  that  they  can  be  enforced  is  certainly  not  a  logical 
one,  or  at  least  not  one  founded  on  legal  or  equitable  principles,  because,  a3 
in  the  particular  instance  of  enforcing  the  collection  of  notes  given  in  the 
payment  of  land  or  personal  property  so  fraudulently  transferred,  the  court 


740  Whitworth  v.  Thomas.  [Alabama, 

thereby  simply  enables  the  fraudulent  grantor  or  vendor  to  reap  the  fruita 
of  Ilia  covinous  transaction  by  collecting  the  proceeds  of  such  sale,  grant,  or 
transfer.  The  following  cases,  therefore,  which  hold  that  such  executory 
contract  cannot  be  enforced,  seem  more  consistent  with  all  law  and  equity: 
Hamilton  v.  Scull's  Adm'r,  25  Mo.  1G5;  69  Am.  Dec.  460;  Norris  v.  Norris'a 
Achn'r,  9  Dana,  318;  35  Am.  Dec.  138;  Jones  v.  Read,  3  Dana,  540;  Dearman 
V.  RadcUffe,  5  Ala.  192,  193;  Freeman  v.  Sedwich,  6  Gill,  28;  46  Am.  Dec. 
650,  and  note  654;  Larnmore  v.  Ttjler,  88  Mo.  661,  668;  Trimble  v.  Doty,  16 
Ohio  St.  118;  Fenton  v.  Ham,  35  Mo.  409;  Goudy  v.  Gehhart,  1  Ohio,  263; 
Roll  V.  Rarjuet,  4  Id.  400,  419;  22  Am.  Dec.  759;  Anderson  v.  Dunn,  19  Ark. 
«50,  659;  Vich  \.  Flowers,  1  Murph.  321;  Jackson  v.  Marshall,  1  Id.  323;  3 
Am.  Dec.  690;  Powell  v.  Inman,  8  Jones,  436;  82  Am.  Dec.  426,  and  note  428; 
Boatner  v.  Yarhorowjh,  12  La.  Ann.  249,  251;  Denton  v.  Wilcox,  2  Id.  60; 
Meyer  v.  Farmer,  36  Id.  785,  789;  Succession  of  Pointer,  24  Id.  275;  Heineman 
V.  Newman,  55  Ga.  262;  Eyre  v.  Eyre,  19  N.  J.  Eq.  42;  Schenchv,  Hart,  32  Id. 
774,  781;  although  in  Owiies  v.  Ownes,  23  Id.  60,  62,  the  application  of  the 
rule  seems  limited  to  executory  contracts  without  consideration;  and  sea 
Mason  v.  Baker,  1  A.  K.  Marsh.  208;  10  Am.  Dec.  724;  Dale  v.  Harrison,  4 
Bibb,  65;  but  examine  Danzey  v.  Smith,  4  Tex.  411,  415;  Holt  v.  Creamer,  34 
N.  J.  Eq.  181,  182;  Auhic  v.  Gil,  2  La.  Ann.  342;  Louis  v.  Richard,  12  Id.  684; 
Lessee  of  Barton  v.  Heirs  of  Morris,  15  Ohio,  408,  428;  Hess  v.  Final,  32  Mich. 
516;  Ross  V.  Garlick,  10  Rob.  (La.)  365,  370;  Herz  v.  Wilder,  10  La.  Ann.  199, 
eOl;  1  Pomeroy's  Eq.  Jur.,  sec.  401;  2  Id.,  sees.  916,  940;  McCausland  v. 
Ualston,  12  Nev.  195;  28  Am.  Rep.  781, — where  this  question  in  regard  to 
executed  and  executory  contracts  is  considered,  and  the  English  and  Ameri- 
can authorities  reviewed  at  length;  see  also  Bigelow  on  Frauds,  ed.  1888, 
207. 

Right  of  Executor  or  Administrator  to  Impeach  or  Defend  on 
Ground  of  Fraud.  — In  Lockwood  v.  Krum,  34  Oliio  Sb.  1,  10,  it  was  said 
ihat  the  point  whether  an  executor  or  administrator  could  recover  property 
to  fraudulently  conveyed  had  not  then  been  authoritatively  settled  in  that 
state;  nor  was  it  decided  in  that  case;  although  such  right  was  denied  in 
Benjamin  v.  Le  Baron's  Adm'r,  15  Ohio,  517;  and  it  was  also  decided  in 
Kilbourne  v.  Fay,  Keller  v.  Shaeffer,  29  Ohio  St.  2G4,  284,  23  Am.  Rep. 
741,  that  where  the  mortgagor  of  chattels  dies  insolvent,  and  in  posses- 
sion of  the  estate,  the  property  becomes  assets  in  the  hands  of  the  execu- 
tor or  administrator,  where  siich  mortgage  was  based  on  fraud  and  was  void 
as  to  creditors,  and  that  it  was  the  duty  and  right  of  such  representative  of 
the  mortgagor  to  protect  such  property  against  the  mortgagee;  and  that  it 
made  no  difference  that  the  mortgage  was  a  valid  lien  against  the  mortgagor 
during  his  lifetime,  and  against  the  distributees  of  his  estate  after  his  death. 
In  a  majority  of  cases,  however,  it  is  decided  that  an  administrator  of  a 
fraudulent  grantor  cannot  maintain  a  suit  to  set  aside  such  fraudulent  con- 
veyance: McLaiKjhlin  v.  McLaughlins  Adm'r,  16  Mo.  242;  George  v.  William- 
eon,  26  Id.  190;  72  Am.  Dec.  203;  Kellinger  v.  Reidenhauer,  6  Serg.  &  R.  531; 
Pringle  v.  Pringle,  59  Pa.  St.  281,  286;  Henriques  v.  Hone,  2  Edw.  Ch.  119; 
Snodgrass  v.  Andrews,  30  Miss.  472,  488;  64  Am.  Dec.  169,  and  note  175; 
Ai-mstrong  v.  Stovale,  26  Miss.  275,  277;  Partee  v.  Matthews,  53  Id.  140;  Van 
Wickle  V.  Calvin,  23  La.  Ann.  205;  Hall  v.  Callahan,  66  Mo.  316,  323;  Kinne- 
manv.  Miller,  2  Md.  Ch.  407;  Holt  v.  Creamer,  34  N.  J.  Eq.  181,  182;  Con- 
nell  V.  Chandler,  13  Tex.  5;  62  Am.  Dec.  545;  Davis  v.  Swanson,  54  Ala.  277; 
25  Am.  Rep.  678;  Hunt  v.  Butterworth,  21  Tex.  133;  73  Am.  Dec.  223,  and 
note  228;  Avery  v.  Avery,  12  Tex.  54,  57;  62  Am.  Dec.  513,  and  note  518; 


Dec.  1887.]  Whitworth  v.  Thomas.  741 

Mulloy  V.  Young,  10  Humph.  297,  300;  Moody  v.  Fry,  3  Id.  567;  Estes  y. 
Howland,  15  R.  I.  127,  citing  Bump  on  Fraudulent  Conveyances,  3d  ed.,  445, 
notes  1,  2;  Crawford's  Admrv.  Lehr,  20  Kan.  509;  White  v.  Jiussell,  79  111. 
155;  Burton  v.  FarinhoU,  80  N.  C.  2G0;  Merry  v.  Fremon,  44  Mo.  518;  Zoll  r. 
Sojier,  75  Id.  460;  Cohb  v.  Norwood,  11  Tex.  65G;  Bogrjs  v.  McCoy,  15  W.  Va. 
344. 

So  trover  will  not  lie  by  the  administrator  to  recover  goods  of  the  intestato 
80  fraudulently  transferred,  although  it  was  not  decided  in  thia  case  whether 
any  remedy  would  lie  in  chancery:  Benjamin  v.  Le  Barons  AdrrCr,  15  Ohio, 
617,  526.  Nor  can  such  fraud  be  set  up  by  the  administrator  of  a  mortgagor 
in  a  suit  upon  the  mortgage,  since  neither  party  to  the  fraud  could  profit  by 
the  fraud  to  defeat  the  claim  of  either  party  under  it:  Williams s  Admx  v. 
Williams,  34  Pa.  St.  312;  and  where  the  administrator  took  possession  of 
Buch  goods  so  fraudulently  conveyed  away  by  his  intestate,  it  was  held,  in 
an  action  of  trespass  brought  by  the  fraudulent  vendee  from  whom  they  had 
been  taken,  that  the  fraud  of  the  intestate  could  not  be  set  up  by  his  admin- 
istrator as  a  defense:  Osborne  v.  Moss,  7  Johns.  161;  5  Am.  Dec.  252,  and 
note.  The  case  relies  upon  Hawes  v.  Leader,  Cro.  Jac.  270;  Yelv.  196.  But 
see  Nellis  v.  Clarh,  20  Wend.  24;  4  Hill,  424;  and  see  Pillsbury  v.  Kinonon, 
33  N.  J.  Eq.  287;  36  Am.  Rep.  556,  565,  as  to  assignee;  and  examine  note 
62  Am.  Dec.  546;  Tenney  v.  Poor,  14  Gray,  500;  77  Am.  Dec.  340,  and  note 
342;  Browns  Adm'r  v.  Fi7iley,  18  Mo.  375;  Gibbons  v.  Peeler,  8  Pick.  254; 
Holland  v.  Kru/t,  20  Id.  32;  Babcock  v.  Booth,  2  Hill,  85;  38  Am.  Dec.  578; 
Stewart  v.  Kearney,  6  Watts,  453;  31  Am.  Dec.  482;  Buehler  v.  Gloniger,  2 
Watts,  226;  and  the  fact  that  the  administrator  or  executor  is  a  creditor 
himself  does  not  enable  him  to  impeach  such  deed  or  conveyance:  Moody's 
Adm'r  V.  Fry,  3  Humph.  567;  Osborne  v.  Moss,  7  Johns.  161;  5  Am.  Dec. 
252,  and  note. 

But  in  New  York  executors  and  administrators  are  by  statute  enabled  to 
impeach  such  fraudulent  conveyances  of  the  deceased:  Moseley  v.  Moseley,  15 
N.  Y.  334;  Babcochv.  Booth,  2  Hill,  181;  38  Am.  Dec.  598,  and  note.  They 
not  only  may  do  this  in  that  state,  but  it  is  their  duty  to  pursue  such  prop- 
erty where  there  are  not  otherwise  sufficient  assets  to  pay  the  debts,  and  to 
recover  the  same  for  the  benefit  of  creditors:  Lichtenherg  v.  Ilcrtfelder,  103 
N.  Y.  302,  306.  So  in  Tennessee  such  fraudulent  deed  could  not  be  im- 
peached by  the  administrator  for  the  fraud  of  the  deceased,  until  the  act  of 
1852,  which  was  carried  into  the  code  at  section  3241:  Battle  v.  Street,  85 
Tenn.  282,  293.  And  in  New  Jersey  such  action  lies,  under  the  assignment 
act,  by  the  representatives  of  the  deceased:  Pillslniry  v.  Kingdon,  33  N.  J. 
Eq.  287,  and  see  cases  in  note  thereto  2S8:  30  Am.  Rep.  5-56,  565.  So  it 
was  held  in  Blake  v.  Jones,  1  Bail.  Eq.  141,  21  Am.  Dec.  530,  that  the  ad- 
ministrator may  set  up  the  fact  that  a  gift  of  his  intestate  was  fraudulent  and 
void  as  to  creditors,  in  an  action  to  cstaljlish  sucli  gift;  and  the  personal  rep- 
resentative of  a  fraudulent  vendor  who  remained  in  possession  of  the  prop- 
erty until  the  time  of  his  death  can  because  of  non-delivery  set  up  the  fraud 
for  the  bonetit  of  creditors,  and  thus  avoid  the  sale:  Hunt  v.  ButterwortJt,  21 
Tex.  133;  73  Am.  Dec.  223. 

So  such  administrator  may  have  such  recovery  of  the  estate  of  the  de- 
ceased, notwithstanding  his  fraud,  where  it  appears  that  such  estate  is  needed 
to  pay  the  expenses  of  the  administration:  Estes  v.  Howland,  15  R.  I.  127; 
«r  where  it  appears  that  a  fraudulent  assignment  of  tlie  property  of  the  in- 
testate was  procured  by  the  covinous  conduct  of  the  assignee:  Prewett  v. 
Coopwood,  30  Miss.  2?^      So  in  Pennsylvania  and  North  Carolina,  where  his 


742  Whitworth  v.  Thomas.  [Alabama, 

estate  is  otherwise  insufficient  to  pay  his  debts:  Stewart  v.  Kearney,  6  Watts, 
453;  31  Am.  Dec.  482;  Coltraine  v.  Causei/,  3  Ired.  Eq.  246;  42  Am.  Dec.  108. 

RuLB  Extended  to  Other  Illegal  and  Immoral  Contracts.  —  White 
V.  Hunter,  23  N.  H.  128,  was  a  case  which  extended  the  doctrine  beyond  that 
of  conveyances  made  in  fraud  of  creditors  to  all  contracts  based  upon  an  im- 
moral or  illegal  consideration,  the  parties  being  in  pari  delicto,  and  declared 
that  the  whole  current  of  authority  holds  that  in  such  case  the  parties  can 
have  no  relief,  and  that  land  so  conveyed,  or  money  so  paid,  cannot  be  recov- 
ered back.  "The  party  thus  guilty,  thus  particeps  criminis,  thus  in  pari  de- 
licto, will  not  be  listened  to,  when  he  alleges  and  offers  evidence  of  his  own 
criminality,  or  immorality  and  turpitude,  as  a  ground  upon  which  to  establish 
a  claim  of  right  against  another  in  a  court  of  justice. " 

The  following  cases  are  cited  by  the  court  and  are  in  point:  Hoioson  v. 
Hancock,  8  Term  Rep.  575;  Vandyck  v.  Hewett,  1  East,  98;  Smith  v.  Bromley, 
Doug.  696,  note;  Lowry  v.  Bourdieu,  Doug.  467;  2  Comyns  on  Contracts, 
109;  Browning  v.  Norris,  Cowp.  790;  Steers  v.  Lashley,  6  Dowl.  &  L.  61; 
Brown  V.  Turner,  7  Id.  630;  Clark  v.  Shee,  Cowp.  197;  McCullmnv.  Gonslay, 
8  Johns.  113;  Inhabitants  of  Worcester  v.  Eaton,  11  Mass.  368;  White  v.  Frank- 
lin  Bank,  22  Pick.  181;  Bahcock  v.  Thompson,  3  Id.  446;  15  Am.  Dec.  235; 
Burt  v.  Place,  6  Cow.  431;  Denton  v.  English,  2  Nott  &  McC.  581;  10  Am. 
Dec.  638;  Boby  v.  West,  4  N.  H.  285;  17  Am.  Dec.  423.  See  also  Heineman 
V.  Newman,  05  Ga.  262;  Hinnen  v.  Newman,  35  Kan.  709,  where  the  rule  is 
extended  to  immoral  and  all  transactions  which  contravene  public  policy  and 
are  clearly  illegal. 

Exceptions. — The  rule  that  the  courts  will  refuse  to  aid  either  party 
to  a  fraudulent  transaction  entered  into  to  defraud  others  is  subject  to 
very  few  exceptions:  Watt  v.  Conger,  13  Smedes  &  M.  412,  421.  But 
"where  public  interest  requires  its  [the  court's]  intervention,  relief  will  be 
granted,  though  the  result  may  be  that  the  property  will  be  restored  to,  or 
a  benefit  derived  by,  a  plaintiff  who  is  iu  equal  guilt  with  the  defendant. 
In  such  cases  the  guilt  of  the  respective  parties  is  not  considered  by  the 
court,  which  looks  only  to  the  higher  right  of  the  public,  the  guilty  party 
to  whom  relief  is  granted  being  only  the  instrument  by  which  the  publio 
is  served":  O'Conner  v.  Ward,  60  Miss.  1025,  1037,  citing  St.  John  v.  St. 
John,  11  Ves.  535;  Hatch  v.  Hatch,  9  Ves.  292;  Morris  v.  MacCullock,  2 
Eden,  190;  Roberts  v.  Roberts,  3  P.  Wms.  65;  Smith  v.  Bromley,  Doug.  695; 

Browning  v.  Morris,  Cowp.  790;  Osborne  v.  Williams,  18  Ves.  379;   W v. 

B ,  32  Beav.  574;  Ford  v.  Harrington,  16  N.  Y.  285.    And  it  is  further 

said  in  this  connection  that  "courts  are  and  should  be  cautious  in  af- 
fording relief  to  a  fraudulent  debtor  or  other  violator  of  the  law  under 
this  exception,  and  should  act  only  where  it  is  evident  that  some  greater 
public  good  can  be  subserved  by  action  than  by  inaction;  some  security 
afforded  to  a  class  of  persons  entitled  to  peculiar  protection,  or  some  safe- 
guard thrown  around  a  relationship  which  is  an  object  of  the  law's  jealous 
consideration.  But  it  may  be  safely  asserted  that  it  will  be  of  far  greater 
protection  to  the  public,  that  one  occupying  the  relation  of  guardian,  trustee, 
executor,  or  administrator  shall  in  all  cases  be  compelled  to  return  any  prop- 
erty or  profit  secured  by  his  frauds  from  those  whose  interests  he  is  bound 
to  protect,  than  to  permit  him  under  auy  circumstances  to  shelter  himself 
behind  the  plea  that  those  defrauded  by  him  were  themselves  guilty  of  an 
equal  wrong":  O'Conner  v.  Ward,  supra.  Starke's  Ex'r  v.  Littlepage,  4  Rand. 
368,  is  declared  in  Horn  v.  Star  Foundry  Co. ,  23  W.  Va.  522,  537,  to  be  an 
exception,  and  one  in  which  "it  is  obvious  that  to  refuse  to  enforce  this 


I 


Dec.  1887.]  Whitworth  v.  Thomas.  743 

fraudulent  contract  would  be  to  encourage  such  fraudulent  arrangements,  as 
such  refusal  would  have  made  the  fraudulent  scheme  of  the  debtor  a  perfect 

success In  such  cases  it  is  only  the  public  interest  which  the  courts 

regard,  and  they  care  nothing  for  the  interest  of  the  parties  to  such  fraudu- 
lent arrangements. "  See  also  Cushwa  v.  Cushwa's  Lessee,  5  Md.  44,  62.  So 
where  a  creditor  has  availed  himself  of  his  power  over  the  debtor,  and  by 
misrepresentation  induced  him  to  unite  in  a  fraudulent  conveyance  to  him  of 
certain  property,  it  was  held  that  a  court  of  equity  ought  to  take  cognizance 
of  the  situation  of  the  debtor  as  not  being  so  culpable  as  the  creditor,  and 
apportion  the  relief  granted  to  the  degree  of  criminality  in  both  parties: 
Austin  V.  Winston,  1  Hen.  &  M.  33;  3  Am.  Dec,  583,  and  note  GOl.  ""And  the 
court,  in  Gay  v.  Wemlem,  2  Freem.  101,  refused  to  enforce  a  bond  privately 
given  by  a  sister  to  her  brother  to  return  certain  money  which  he  had  given 
her  to  enable  her  to  more  favorably  form  a  marriage,  this  being  an  exception 
where  the  court  refused  relief  because  if  such  bond  could  be  recovered  such 
frauds  against  public  policy  could  be  practiced  with  impunity. 

So  it  is  said  in  2  Pomeroy's  Eq.  Jur.,  sec.  941,  that  to  the  general  rule 
"there  is  an  important  exception  even  where  the  parties  are  in  pari  delicto, 
the  courts  may  interfere  from  motives  of  public  policy.  Whenever  public 
policy  is  considered  as  advanced  by  allowing  either  party  to  sue  for  relief 
against  the  transaction,  then  relief  is  given  to  him.  In  pursuance  of  this 
principle,  and  in  compliance  with  the  demands  of  a  high  public  policy,  equity 
may  aid  a  party  equally  guilty  with  his  opponent,  not  only  by  canceling  and 
ordering  the  surrender  of  an  executory  agreement,  but  even  by  setting  aside 
an  executory  contract,  conveyance,  or  transfer,  and  decreeing  the  recovery 
back  of  money  paid  or  property  delivered  in  performance  of  the  agreement. 
The  cases  in  which  this  limitation  may  apply,  and  the  affirmative  relief  may 
thus  be  grantc'l,  include  the  class  of  contracts  which  are  intrinsically  con- 
trary to  the  public  policy,  —  contracts  in  which  the  illegality  itself  consists 
in  their  opposition  to  public  policy,  and  any  other  species  of  illegal  contracts, 
in  which,  from  their  particular  circumstances,  incidental  and  collateral,  mo- 
tives of  public  policy  require  relief."  And  in  a  recent  case  in  Virginia,  the 
court  holds  that  "if,  in  a  particular  case,  it  can  be  clearly  shown  that  the 
observance  of  the  rule  that  the  plaintiff  will  be  furnished  no  relief  in  such 
a  case,  would  tend  to  encourage  such  fraudulent  and  vicious  practices  by 
really  giving  effect  to  the  objects  which  the  parties  had  in  contemplation 
when  such  fraudulent  and  vicious  schemes  were  devised,  then  the  courts  will 
not  apply  the  rule,  but  will  permit  such  fraudulent  plaintiff  to  recover,  not 
because  of  any  favor  that  the  court  is  disposed  to  show  him,  but  simply  be- 
cause, in  such  a  peculiar  case,  the  public  policy  requires  that  such  recovery 
or  relief  should  be  had  against  the  fraudulent  defendant.  It  rarely  happens, 
however,  that  public  policy  requires  the  courts  to  render  relief  to  the  plain- 
tiff on  such  fraudulent  or  vicious  contract":  Horn  v.  Star  Foundi-y  Co.,  23 
W.  Va.  522,  533.  So  it  is  held  in  Florida,  in  Bellamy  v.  Bellamy's  AdmW,  6 
Fla.  62,  103,  that  "in  equity,  the  general  maxim  of  pan  delicto  does  not 
always  prevail.  Circumstances  of  the  particular  case  often  form  exceptions, 
and  where  it  is  necessary,  relief  will  be  granted  ";  and  cites  1  Story's  Eq.  Jur., 
■ec.  380;  Easthrookv.  Scott,  3  Ves.  Jr.  456;  Austins  Adm'xv.  Winston  a  Ex'r,  1 
Hen.  &.  M.  33;  3  Am.  Dec.  583;  Hill  on  Trustees,  sec.  164;  Williams  v.  Avant, 
51red.  50;  Starke's  Ex'r  v.  Littlepage,  4  Rand.  372;  James  v.  Bird's  Adm'r, 
8  Leigh,  512;  31  Am.  Dec.  068;  and  where  a  note  was  given  by  A  to  his 
brother  to  enable  him  to  make  a  wealthy  marriage,  it  was  enforced  because  for 
the  public  good,  and  also  upon  the  ground  that  such  contracts  would  best  be 


744  Wpiitworth  v.  Thomas.  [Alabama, 

discouraged  by  enforcing  them:  Montefiori  v.  Montefiori,  1  W.  Black.  363.  In 
Hill  on  Trustees,  sec.  164,  it  is  said  that  "where  the  transaction  is  against 
public  policy,  this  equity  may  be  enforced  by  the  party  himself  who  has  cre- 
ated the  interest,  although  he  be  in  pari  delicto  with  the  defendant,  but  relief 
will  only  be  given  in  these  cases  [viz.,  exceptions  to  the  rule]  upon  the  terms 
of  returning  any  consideration  that  may  have  been  received."  In  James  v. 
Bird's  Admr,  8  Leigh,  512,  31  Am.  Dec.  GG8,  doubt  is  expressed  as  to 
•w\iet\ier  Austiris  Adni'x  v.  Winston s  Ex'r,  supra,  was  properly  decided;  the 
court  saying  that  it  was  the  only  case  in  equity  whei-e  relief  had  been  given 
to  a  grantor  of  property  who  had  fraudulently  conveyed  it  to  another 
to  defeat  creditors;  and  in  Starke's  Exrs  v.  Liitleparje,  4  Rand.  372,  the 
exception  to  the  rule  in  pari  delicto  is  thus  stated:  "  But  this  rule  operates 
only  in  cases  where  the  refusal  of  the  courts  to  aid  either  party  frustrates 
the  object  of  the  transaction,  and  takes  away  the  temptation  to  engage 
in  contracts  contra  honos  mores,  or  violating  the  policy  of  the  laws.  If  it  be 
necessary,  in  order  to  discountenance  such  transactions,  to  enforce  such  a 
contract  at  law,  or  to  relieve  against  it  in  equity,  it  will  be  done,  though 
both  parties  are  in  pari  delicto.  The  party  is  not  allowed  to  allege  his 
own  turpitude  in  such  cases  when  defendant  at  law,  or  prevented  from  al- 
leging it  when  plaintiff  in  equity,  whenever  the  refusal  to  execute  the  contract 
at  law,  or  the  refusal  to  relieve  against  it  in  equity,  would  give  effect  to  the 
original  purpose,  and  encourage  the  parties  engaging  in  such  transactions. " 
Several  instances  are  considered,  and- the  court  adds:  "  In  these  and  many 
other  cases,  ....  the  contract  is  enforced  or  avoided,  both  at  law  and  in 
equity,  as  may  best  answer  the  purpose  of  discouraging  the  fraud  or  contract 
against  the  policy  of  the  law;  and  it  is  for  this  purpose,  and  not  because  the 
defendant  is,  in  such  cases,  strictly  entitled,  on  his  own  account,  to  be  dis- 
charged from  the  contract,  that  the  rule  is  established  that  in  pari  delicto 
....  defendentis;  a  rule  which,  in  general,  discourages  vicious  contracts, 
but  which  is  not  enforced  when  it  would  counteract  this  policy  of  the  law. " 
Another  exception  is  made  in  Fagg  v.  Tennessee  Nat.  Bank,  9  Heisk,  479, 
487,  between  cases  where  the  parties  are  in  delicto,  and  not  in  pari  delicto,  the 
rule  not  being  applied  in  the  former  case.  Upon  this  point,  the  rule  stated 
in  Bump  on  Fraudulent  Conveyances  —  that  where  such  conveyances  are 
made,  the  court  will  not  inquire  into  the  degrees  of  guilt  between  the  grantor 
and  grantee  —  is  disputed  in  0' Conner  v.  Ward,  60  Miss.  1025,  1035;  and  it  is 
there  declared  not  to  be  a  universal  rule,  and  not  supported  by  the  authori- 
ties, the  exception  being  there  made  that  although  the  parties  are  in  delicto, 
yet  not  in  pari  delicto,  the  court  will,  in  certain  cases,  grant  relief  to  the  least 
guilty,  if  the  "  circumstances  are  such  as  to  justify  the  court  in  proceeding, 
notwithstanding  the  fraudulent  character  of  the  conveyances  ";  citing  Ybarra 
V.  Lorenzana,  53  Cal.  197.  And  it  is  said  by  the  court  in  Roman  v.  Mali,  42 
Md.  513,  532,  that  "there  are  exceptions  to  the  general  rule  that  courts  of 
justice  will  not  actually  interpose  for  the  relief  of  a  party  who  has  been  par- 
ticeps  criminis  in  an  illegal  or  fraudulent  transaction;  and  that  one  of  the  ex- 
ceptions is,  where  the  party  suing,  although  particeps  ciiminis,  is  not  in  pari 
delicto  with  the  adverse  party.  There  may  be  different  degrees  of  guilt  as 
between  the  parties  to  the  fraudulent  or  illegal  transaction;  and  if  one  party 
act  under  circumstances  of  oppression,  imposition,  undue  influence,  or  at 
great  disadvantage  with  the  other  party  concerned,  so  that  it  appears  tliat  his 
guilt  is  subordinate  to  that  of  the  defendant,  the  court,  in  such  case,  will  re- 
lieve."   But  see  opinion  of  Stewart,  J.,  Id.  534. 


Dec.  18S7.]  Whitworth  v.  Thomas.  745 

Miscellaneous.  —  It  is  said  in  Wheeler  v.  Sage,  1  Wall.  518,  529,  to  be  a 
fundamental  principle  that  a  part}'  who  seeka  relief  in  equity  must  be  able  to 
show  that  there  has  been  honesty  and  fair  dealing,  since  the  maxim  in  pari  de- 
licto otherwise  applies.  Therefore,  where  one  becomes  voluntarily  a  party  to 
an  obligation  intentionally  made  in  fraud  of  the  law,  and  then  asks  in  a  court 
of  equity  to  be  relieved  from  its  fulfillment,  "the  condign  and  appropriate 
answer  to  such  a  prayer  from  such  a  tribunal  is  this:  that,  however  un- 
worthy may  have  been  the  conduct  ot  your  opponent,  you  are  confessedly  in 
pari  delicto;  you  cannot  be  admitted  here  to  plead  your  own  demerits;  pre- 
cisely, therefore,  in  the  position  in  which  you  have  placed  yourself,  in  that 
position  we  must  leave  you  ":  Creath's  Adm'r  v.  Sims,  5  How.  192,  204.  It 
ia  determined  in  Illinois  that  although  the  original  conveyance  is  fraudulent, 
yet  a  reconveyance  made  by  the  fraudulent  grantee  to  his  grantor,  in  pursu- 
ance of  the  original  agreement,  is  not  tainted  with  fraud,  but  is  valid,  and 
that  notes  executed  at  the  time  of  such  reconveyance,  pursuant  to  a  verbal 
agreement  made  during  the  original  fraudulent  transaction,  may  be  enforced: 
Second  National  Bank  v.  Brady,  96  111.  498.  And  if  personal  property  be 
transferred  by  way  of  pledge  or  security,  the  party  so  transferring,  or  those 
claiming  under  him,  may  redeem  the  same  notwithstanding  the  transfer  is 
fraudulent  as  to  creditors:  Jonca  v.  Rahilly,  16  Minn.  320.  Or  where  the 
grantor  subsequently  pays  his  debts,  and  is  relieved  therefrom  by  a  discharge 
in  banki'uptcy,  and  a  subsequent  agreement  is  entered  into  by  which  the 
grantor  surrenders  to  the  grantee  the*  notes  given  for  the  property,  and  in 
consideration  thereof  the  latter  surrenders  all  his  right,  title,  and  interest  in 
the  property,  and  the  deed  is  to  be  canceled  by  agreement;  here  such  original 
transfer  is  purged  of  the  fraud,  and  the  subsequent  agrement  will  be  enforced: 
Sonijer  v.  Partridge,  107  111.  529,  534;  and  if  the  deed  is  not  in  fact  executed, 
no  property  is  conveyed,  and  the  title  remains  in  the  grantor:  Parkhurst  v. 
McGraw,  24  Miss.  134,  139. 

So  where  the  fraudulent  grantee  of  land  takes  any  steps  or  does  any  act 
subsequent  to  the  conveyance  in  the  performance  of  his  moral  duty  to  restore 
the  property,  such  acts  will  be  favorably  considered  by  a  court  of  equity: 
White  v.  Brocaw,  14  Ohio  St.  339,  341.  As  bearing  directly  upon  the  ques- 
tion of  recriminatory  fraud,  it  was  said  in  Lord  v.  Doyle,  1  Cliff.  453,  458, 
that  "  it  would  be  an  encouragement  to  fraud  to  hold  that  the  wrongful  act 
of  one  party  to  a  suit  is  a  justification  to  another  wrongful  act  on  the  part 
of  the  other  party  of  equal  magnitude  and  immorality.  Frauds  are  forbidden 
in  equity,  and  when  committed,  they  cannot  be  set  off  one  against  another, 
but  each  separate  transaction  must  stand  or  fall  by  itself."  In  applying  the 
rule  governing  in  this  class  of  cases,  it  is  held  that  a  bad  motive  is  not  alone 
sufficient;  there  must  be  an  illegal  act,  since  if  such  conveyance  is  made  to 
avoid  a  debt  where  none  exists,  or  the  property  conveyed  is  of  a  character 
which  could  not  be  subjected  by  the  creditor,  and  a  contract  otherwise  valid 
is  entered  into  to  treat  the  conveyance  as  a  mortgage,  or  providing  for  a  recon- 
veyance by  the  grantee,  the  latter  will  not  be  permitted,  in  an  action  brought 
to  enforce  such  agreement,  to  set  up  the  defense  alone  that  the  grantor  in- 
tended to  defraud  his  creditors  by  such  conveyance:  O'Conner  v.  Ward,  60 
Miss.  1025,  1037,  citing  Denman  v.  Denman,  4  Ala.  521;  Brady  v.  Elllion,  2 
Hayw.  348;  Smith  v.  Bruaer,  2  Id.  296;  Boyd  v.  De  la  Montaigne,  73  N.  Y. 
498;  29  Am.  Rep.  197. 


April,  18S5.]     Thompson  v.  Reno  Savin ^js  Bank.  797 

fin  V.  Left-hand  Ditch  Co.,  6  Col.  443;  opinion  by  Ross,  J.,  in 
Lux  V.  Haggin,  69  Cal.  255. 

It  necessarily  follows  from  the  views  we  have  expressed,  and 
from  the  doctrines  announced  in  the  authorities  we  have  cited, 
that  the  court  did  not  err  in  rendering  its  judgment  and  de- 
cree upon  the  findings  in  relation  to  prior  appropriation.  The 
case  of  Vansickle  v.  Haines,  7  Nev.  280,  in  so  far  as  the  same 
is  in  conflict  with  the  views  herein  expressed,  is  hereby  over- 
ruled. 

The  judgment  of  the  district  court  is  aflSrmed. 

Riparian  Proprietors  All  have  Right,  at  Common  Law,  to  Rea- 
sonable Use  of  Waters  of  Stream:  Davis  v.  Getchelt,  79  Am.  Dec.  636, 
and  note;  Dams  v.  Winslow,  81  Id.  573;  C'dij  of  Springfield  v.  Harris,  81  Id- 
715;  Brown  v.  Bowen,  86  Id.  406;  Ferrea  v.  Knipe,  87  Id.  128;  Merrifieldv. 
Lombard,  90  Id.  172;  Lobdell  v.  Simpson,  90  Id.  537;  Pool  v.  Lewis,  5  Am. 
Rep.  526;  Dumont  v.  Kellogg,  18  Id.  102;  Hazeltine  v.  Case,  32  Id,  715;  and 
this  use  extends  to  irrigation:  Note  to  Davis  v.  Oetchell,  79  Am.  Dec.  643; 
Rltodes  V.  Whitehead,  84  Id.  631;  Tolle  v.  Correth,  98  Id.  540. 

Reasonable  Use  by  Riparian  Proprietor  Depends  upon  Circitm- 
STANCE3,  such  as  the  size  of  the  stream,  velocity  of  the  water,  etc. :  Davis 
V.  Oetchell,  79  Am.  Dec.  636,  and  note  641;  Davis  v.  Winslow,  81  Id.  573; 
Hayes  v.  Waldron,  84  Id.  105;  Pool  v.  Lewis,  5  Am.  Rep.  526;  Hazeltine  v. 
Case,  32  Id.  715,  716;  and  is  a  question  of  fact  for  the  jury:  Note  to  Davis  y. 
Oetchell,  79  Am.  Dec.  644;  Hayes  v.  Waldron,  84  Id.  105;  Pool  v.  Lewis,  5 
Am.  Rep.  526. 

Prior  Appropriation  of  Running  Waters  Gives  Better  Right  thereto 
in  the  Pacific  states  and  territories:  Nevada  Water  Co.  v.  Powell,  91  Am.  Deo. 
685,  and  note  collecting  cases;  Lobdell  v.  Simpson,  90  Id.  537;  Davis  v.  OcdCt 
91  Id.  554;  OpMr  Silver  Mining  Co.  v.  Carpenter,  97  Id.  650. 


Thompson  v.  Eeno  Savings  Bank. 

[19  Nevada,  ]03.| 

Capital  Stock  op  Corporation,  and  Especially  Unpaid  Subscriptions 
thereto,  is  Trust  Fund  for  the  benefit  of  its  general  creditors. 

Certificate  of  Incorporation  is  Made  for  Benefit  of  Public,  and  not 
for  the  corporation  or  its  stockholders;  and  those  who  participated  in 
the  incorporation,  and,  by  a  certificate  made  in  pursuance  of  the  statute, 
announced  the  amount  of  the  capital  stock  of  the  corporation,  cannot,  aa 
against  its  creditors,  contradict  the  certificate. 

Secret  Arrangement  between  Corporation  and  its  Stockholders,  bt 
Which  Responsibility  of  Stockholders  is  Made  Less  than  it  ap- 
pears to  be  under  the  articles  of  incorporation,  is  void  aa  against  creditor! 
of  the  corporation. 

One  Who  Signs  Certificate  of  Incorporation  as  Subscriber  to  Shares 
OP  Stock  of  Corporation  cannot  afterwards,  as  against  its  creditors, 
deny  such  subscription,  especially  after  having  participated  in  its  profits 
in  accordance  therewith. 


798  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

Stockholder,  Who  is  Creditor  of  Corporation,  cannot  Set  off  In- 
debtedness OF  CoRPORAriON  agaiust  the  amount  of  his  unpaid  subscrip- 
tion, in  a  suit  against  him  by  a  creditor  of  the  corporation,  to  subject  the 
unpaid  subscription  to  tlie  satisfaction  of  the  plaintiflf 's  claim. 

Stockholder,  Who  is  Creditor  of  Corporation,  must  Pat  Amount  op 
his  Unpaid  Subscription,  and  surrender  his  collateral  securities  upon 
the  failure  of  the  corporation,  and  he  can  then  participate  in  the  fund 
ratably  with  the  other  creditors. 

Stockholder  may  be  Sued  by  Creditor  of  Corporation  to  Subject 
Unpaid  Subscription  to  Satisfaction  of  his  Judgment  without  mak- 
ing the  other  stockholders  jjarties  defendant.  If  the  stockholder  so  sued 
be  required  to  pay  more  than  his  proportionate  share  of  the  debts,  his 
remedy  is  against  the  other  stockholders  owing  unpaid  subscriptions  for 
contribution. 

Creditor  of  Corporation  mat  Sue  for  Benefit  of  Himself,  and  Other 
Creditors  who  may  choose  to  come  in,  establish  their  claims,  and  con- 
tribute to  the  expense  of  the  suit,  to  subject  the  unpaid  subscription  of 
a  stockholder  to  the  satisfaction  of  their  claims  under  the  equity  prac- 
tice, and  under  section  1077  of  the  Nevada  Compiled  Laws,  which  pro- 
vides that  when  the  question  is  one  of  common  or  general  interest  of 
many  persons,  one  or  more  may  sue  or  defend  for  the  benefit  of  all. 

Complaint  Filed  by  Creditor  of  Corporation,  in  his  Own  Interest, 
to  Reach  Unpaid  Subscription  of  Stockholder,  may  be  Amended  so 
that  the  si;it  shall  be  for  the  benefit  of  himself,  and  other  creditors  who 
may  choose  to  come  in,  establish  their  claims,  and  contribute  to  the  ex- 
pense of  the  suit. 

Creditor  of  Corporation  is  not  Obliged  to  Give  Notice  to  Other 
Creditors,  or  obtain  their  consent  to  the  commencement  of  a  suit  for 
the  benefit  of  himself,  and  other  creditors  who  may  choose  to  come  in, 
establish  their  claims,  and  contribute  to  the  expense  of  the  suit,  to  reach 
the  unpaid  subscription  of  a  stockholder. 

Suit  in  equity  by  William  Thompson,  a  judgment  creditor 
of  the  Reno  Savings  Bank,  a  corporation,  against  the  bank 
and  M.  C.  Lake,  to  subject  the  amount  of  Lake's  alleged  un- 
paid subscription  to  the  capital  stock  of  the  bank  to  the  pay- 
ment of  the  plaintiff's  judgment.  The  facts  are  stated  in  the 
opinion. 

Robert  M.  Clarke  and  Trenmor  Coffin,  for  the  appellant. 

Stone  and  Hiles,  and  R.  H.  Lindsay,  for  the  respondent. 

By  Court,  Belknap,  C.  J.  The  Reno  Savings  Bank  is  a 
corporation  organized  under  the  laws  of  this  state  for  banking 
purposes.  It  was  engaged  in  the  business  of  banking  from  its 
organization,  in  the  month  of  April,  1876,  until  the  twenty- 
fourth  day  of  June,  1880,  when  it  became  involved,  and  sus- 
pended business.  It  was  then  indebted  to  plaintiff,  Thompson, 
and  many  others,  some  of  whom,  for  convenience,  assigned 
their    demands    to    him.       Thompson    recovered    judgment 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  799 

against  the  bank.  An  execution  issued  upon  the  judgment 
was  returned  nulla  bona,  and  thereupon  Thompson  brought 
this  suit  in  equity  against  the  bank  and  Lake,  averring, 
among  other  things,  the  recovery  of  the  judgment;  that  the 
bank  had  no  assets  subject  to  execution;  that  Lake  was  in- 
debted to  the  bank  in  the  sum  of  seventeen  thousand  five 
hundred  dollars  upon  his  unpaid  subscription  to  its  capital 
stock;  and  prayed  that  this  amount  be  applied  to  the  payment 
of  the  judgment.  The  suit  was  brought  in  the  first  place  by 
Thompson  for  himself  alone.  At  the  commencement  of  the 
trial,  the  complaint  was  amended  so  that  all  other  creditors 
who  would  contribute  to  the  expense  of  the  suit  could  come  in 
as  parties  and  seek  relief  with  the  plaintiff.  A  decree  was 
rendered  in  favor  of  plaintifi".  From  the  decree,  and  an  order 
overruling  a  motion  for  a  new  trial,  this  appeal  is  taken. 

The  certificate  of  incorporation  of  the  bank  fixes  its  capital 
stock  at  one  hundred  thousand  dollars,  divided  into  one  hun- 
dred shares  of  the  par  value  of  one  thousand  dollars  each. 
The  bank  commenced  business  with  the  sum  of  thirty  thou- 
sand dollars,  of  which  defendant  Lake  paid  seven  thousand 
five  hundred  dollars.  Lake  claims  that  he  is  not  liable  be- 
cause this  sum  was  not  paid  as  a  subscription  to  capital  stock, 
but  as  a  capital  upon  which  the  bank  was  to  carry  on  its 
business,  and  avers  that  it  was  agreed  among  those  who  paid 
the  money  that  it  should  be  in  full  of  all  liability  as  to  them. 

The  capital  stock  of  a  corporation,  other  than  a  mining  cor- 
poration, is  the  amount  of  money  paid  or  promised  to  be  paid 
for  the  purposes  of  the  corporation.  It  is  a  fixed  sum,  not  to 
be  increased  or  diminished  except  in  the  mode  permitted  by 
the  statute.  This  sum  the  law  requires  shall  be  stated  in  the 
certificate  of  incorporation  to  be  filed  with  the  county  clerk 
of  the  county  in  which  the  principal  place  of  business  of  the 
corporation  is  situated,  and -a  copy  in  the  office  of  the  secre- 
tary of  state.     The  purpose  of  this  requirement  is  obvious. 

The  share-holders  are  not,  under  the  constitution,  liable  for 
the  debts  of  the  corporation.  The  capital  stock,  and  espe- 
cially the  unpaid  subscriptions  thereto,  is  a  trust  fund  for  the 
benefit  of  the  general  creditors.  When,  therefore,  the  law  re- 
quires a  public  declaration  of  the  amount  of  the  capital  upon 
which  a  corporation  operates,  it  contemplates  a  truthful  state- 
ment in  which  the  general  public  dealing  with  the  corporation 
may  copfide.  The  certificate  is  made  for  the  benefit  of  the 
public,  not  for  the  corporation   or  its    stockholders.      Those 


800  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

who  participatea  in  the  incorporation  of  this  bank,  and,  by  a 
certificate  made  in  pursuance  of  the  statute,  announced  the 
amount  of  its  capital  stock,  cannot,  as  against  the  creditors 
of  the  corporation,  contradict  their  own  certificate.  Defend- 
ant Lake  signed  it,  was  president  and  one  of  the  directors  of 
the  bank,  participated  in  the  management  of  its  aff'airs  during 
the  period  it  was  engaged  in  business,  and  received  dividends 
upon  his  investment.  He  cannot  now  be  heard  to  deny  the 
'  truth  of  the  certificate  which  he  helped  make,  and  to  assert 
that  the  capital  of  the  corporation  was  thirty  thousand  dol- 
lars instead  of  one  hundred  thousand  dollars.  Not  only  will 
equity  refuse  to  hear  the  defense  interposed,  but  the  arrange- 
ment alleged  to  have  been  made  is  in  defiance  of  the  statute 
under  which  the  bank  was  incorporated. 

Section  3543  of  the  Compiled  Laws  provides:  "It  shall  not 
be  lawful  for  the  directors  to  divide,  withdraw,  or  in  any  way 
pay  to  the  stockholders,  or  any  of  them,  any  part  of  the  cap- 
ital stock,  nor  to  reduce  the  amount  of  the  same."  Other 
provisions  of  the  laws  upon  the  subject  of  corporations  per- 
mit an  increase  or  diminution  of  capital  stock.  Whether  the 
provision  concerning  a  reduction  applies  to  corporations  of  the 
character  of  defendant,  it  is  unnecessary  to  inquire,  since  it  is 
not  pretended  in  this  case  that  any  reduction  was  made  in 
compliance  with  law.  The  statute  requires  that  any 
change  in  the  amount  of  capital  stock  shall  be  made  at  a 
stockholders'  meeting  called  for  that  purpose,  upon  notice 
specifying  the  object  of  the  meeting  and  the  proposed  changes, 
which  notice  shall  be  published  for  eight  weeks  in  a  news- 
paper of  the  county  in  which  the  principal  place  of  business 
of  the  corporation  is  located:  2  Comp.  Laws,  3401,  3406-3408, 
3544. 

The  publicity  required  in  this  proceeding  is  for  the  purpose 
— in  part,  at  least — of  advising  the  public  dealing  with  the 
corporation  of  the  proposed  change.  The  requirement  of  the 
Btatute — 1.  That  the  publicly  recorded  certificate  of  incor- 
poration shall  state  the  amount  of  the  capital  stock;  and  2. 
That  any  change  in  the  amount  thereof  shall  only  be  made 
after  extended  public  notice — is  in  direct  conflict  with  the 
secret  contrivance  alleged  to  have  been  made  by  Lake  and  his 
associates. 

The  decisions  uniformly  hold  that  any  secret  arrangement 
between  the  corporation  and  its  stockholders,  by  which  the 
responsibility  of  the  latter  is  made  less  than  it  appears  to  be 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  801 

under  the  articles  of  incorporation,  is  void  as  against  credi- 
tors. Thus  in  Allihone  v.  Hager,  46  Pa.  St.  48,  the  registered 
certificate  of  incorporation  showed  that  a  given  amount  of 
stock  remained  unpaid.  The  defendants,  who  had  prepared 
the  certificate,  claimed  that  the  unpaid  balance  represented 
stock  subscribed  for  by  them  as  agents  of  the  corporation,  to 
be  sold  by  it  when  in  need  of  funds.  The  court  overruled  the 
defense,  in  this  language:  "But,  if  I  comprehend  the  ground 
of  defense,  it  seems  to  me  to  be  directly  in  conflict  with  the 
act,  and  in  contradiction  of  the  certificate.  The  act  requires 
the  stock  to  be  subscribed  for,  and  by  persons  who  are  to  be- 
come members  of  the  company,  and  the  certificate  shows  that 
all  the  original  stock  was  subscribed  by  and  for  the  defend- 
ants in  this  suit.  Whatever  might  be  the  law  between  them 
and  the  corporation,  as  between  them  and  the  public  the  cer- 
tificate is  conclusive.  I  can  not  agree,  therefore,  with  the 
position  that  creditors  have  only  the  rights  and  equities  of  the 
corporation  as  against  the  stockholders.  They  have  the  rights 
which  the  statute  gives;  no  more  and  no  less.  The  certificate 
discloses  the  extent  of  the  capital  stock,  and  the  statute  renders 
all  the  subscribers  to  it  liable  for  its  payment  when  creditors 
call.  Were  undisclosed  arrangements  permitted  to  defeat  or 
control  the  efifect  of  the  certificate,  that  safeguard  would  at 
once  become  a  snare,  instead  of  a  protection.  If  capital  seeks 
for  immunities,  it  must  take  them  with  such  liabilities  as  are 
the  terms  upon  which  they  are  granted." 

In  McHose  v.  Wheeler,  45  Pa.  St.  40,  the  certificate  was 
acknowledged  and  recorded,  certifying  that  one  hundred 
thousand  dollars  was  subscribed  as  the  capital  stock  of  a  cor- 
poration, and  that  one  quarter  of  this  amount  had  been  paid 
in.  The  certificate  was  untrue.  Many  of  the  persons  named 
as  subscribers  had  not  subscribed,  and  no  money  was  paid  in. 
The  court  held  that  if  a  person  named  in  the  certificate  as  a 
member  acted  as  such,  or  did  not  promptly  disavow  his  alleged 
membership,  upon  discovering  the  use  of  his  name,  by  showing 
that  he  was  not  a  member,  he  would  be  deemed  as  ratifying 
the  relation  as  to  creditors;  that  the  defendants,  who  were  in- 
corporators, could  not  set  up  their  own  faults  and  mistakes  in 
their  organization  as  a  defense  against  creditors;  and  that, 
therefore,  it  was  immaterial  that  no  part  of  the  stock  had  been 
paid  in,  although  the  statute  under  which  the  corporation  was 
created  required  one  quarter  of  the  amount  to  be  paid. 

Appellant,  with  others,  assumed  control  of  the  bank.  He 
AM.  ST.  Rep.,  Vol.  IIL  —  61 


802  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

must  be  held  to  the  consequences  of  this  connection.  Persons 
dealing  with  the  banu;  were  assured  that  its  capital  was  one 
hundred  thousand  dollars.  The  law  contemplates  that  this 
representation  shall  be  true.  Appellant  entered  into  an  ar- 
rangement by  which  he  appeared  to  comply  with  the  articles 
of  incorporation.  He  must  perform  the  obligation  wliich  he 
appeared  to  assume.  If  he  did  not  expressly  subscribe  for 
stock,  the  law  implies  an  agreement  upon  his  part  to  pay  his 
proportionate  share.  He  received  one  quarter  of  the  profits  of 
the  concern  when  it  was  apparently  prosperous,  and  is  justly 
decreed  to  be  a  subscriber  to  its  stock  to  the  same  extent. 
Having  received  the  advantages  of  stockholdership,  he  canno* 
jescape  its  responsibilities. 

Appellant  is  a  creditor  of  the  bank  in  a  larger  sum  than  the 
amount  of  his  unpaid  subscription,  and  claims  the  right  to  set 
off  his  liability  with  the  bank's  indebtedness.  In  Scammon  v. 
Kimball,  92  U.  S.  366,  it  was  held  upon  similar  facts  that  set- 
off could  not  be  allowed.  In  deciding  the  case,  the  court  said: 
"Such  an  indebtedness  [for  unpaid  shares]  constitutes  an 
exception  to  the  rule  that  when  there  are  mutual  debts,  'one 
may  be  set  against  the  other,'  as  originally  provided  by  act  of 
Parliament;  or,  perhaps,  it  would  be  more  accurate  to  say  that 
the  rule  does  not  apply  when  it  appears  that  the  debts  are  not 
in  the  same  right,  as  well  as  mutual:  United  States  v.  Erkford, 
6  Wall.  488.  Courts  of  equity,  following  the  law,  will  not  allow 
a  set-off  of  a  joint  debt  against  a  separate  de,bt,  or  of  a  separate 
debt  against  a  joint  debt;  nor  will  such  courts  allow  a  set-off 
of  debts  accruing  in  different  rights,  except  under  very  special 
circumstances,  and  when  the  proofs  are  clear  and  the  equity  is 
very  strong":  2  Story's  Eq.  Jur.,  sec.  1437. 

The  debt  which  the  appellant  owes  for  his  unpaid  stock  is  a 
trust  fund  which  equity  will  distribute  among  all  of  the  credi- 
tors. The  proofs  show  a  deficiency  in  the  fund.  Each  must, 
therefore,  take  his  dividend  pro  rata.  If  the  set-off  were 
allowed,  the  appellant  would  appropriate  the  entire  fund.  "If 
such  a  defense  were  entertained,"  said  the  supreme  court  of 
Pennsylvania  in  Macungie  Sav.  Bank  v.  Bastian,  11  Rep.  785, 
"the  effect  would  be  to  withdraw  from  depositors  and  other 
creditors  of  the  insolvent  bank  a  portion  of  the  very  fund 
which  was  specially  provided  for  the  common  benefit  of  all 
alike,  and  apply  it  to  the  sole  benefit  of  the  defendant,  who  at 
best  has  no  better  right  thereto  than  other  depositors.  If  every 
delinquent  subscriber  to  the  capital  stock  could  thus  pay  his 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  803 

subscription,  what  would  become  of  other  depositors  and  credi- 
tors of  the  insolvent  bank?  It  is  not  difficult  to  see  what  a 
perversion  it  would  be  of  the  trust  fund,  and  to  what  gross 
injustice  it  would  necessarily  lead." 

The  bank's  indebtedness  to  appellant  is  collaterally  secured. 
The  district  court  correctly  held  that  appellant  must  pay  the 
amount  of  his  unpaid  subscription  and  surrender  the  collateral 
securities.  He  could  then  participate  in  the  fund  ratably  with 
the  other  creditors. 

Objection  is  made  for  want  of  proper  parties  to  maintain 
this  suit.  It  is  urged  that  the  other  stockholders  should  be 
made  parties  defendant,  to  the  end  that  each  shall  contribute 
his  proportion  to  the  debt,  and  also  that  all  of  the  creditors 
should  be  united  as  plaintiffs,  so  that  each  may  receive  his 
proportion  of  the  fund,  ahd  the  matter  be  finally  determined 
in  one  suit.  In  a  proceeding  to  wind  up  and  finally  settle  all 
of  tlie  affairs  of  the  bank,  all  of  the  stockholders  would  be 
necessary  parties  defendant.  This  is  not  such  a  proceeding, 
but  one  to  subject  the  equitable  assets  of  the  bank  to  the  claim 
of  the  creditors.  If,  in  this  proceeding,  the  defendant  is  re- 
quired to  pay  more  than  his  proportionate  share  of  the  debts 
of  the  bank,  he  may,  in  an  action  against  the  remaining  stock- 
holders, require  them  to  contribute  their  fair  share.  In  Hatch 
v.  Dana,  101  U.  S.  210,  this  question  was  considered.  The  court 
said:  "The  liability  of  a  subscriber  for  the  capital  stock  of  a 
company  is  several,  and  not  joint.  By  his  subscription,  each 
beconies  a  several  debtor  to  the  company;  as  much  so  as  if  he 
had  given  his  promissory  note  for  the  amount  of  his  subscrip- 
tion. At  law,  certainly,  his  subscription  may  be  enforced 
against  him  without  joinder  of  other  subscribers;  and  in 
equity  his  liability  does  not  cease  to  be  several.  A  creditor's 
bill  merely  subrogates  the  creditor  to  the  place  of  the  debtor, 
and  garnishes  the  debt  due  to  the  indebted  corporation.  It 
does  not  change  the  character  of  the  debt  attached  or  gar- 
nished. ^  It  may  be  that  if  the  object  of  the  bill  is  to  wind  up 
tlie  affairs  of  this  corporation,  all  the  share-holders,  at  least 
so  far  as  they  can  be  ascertained,  should  be  made  parties,  that 
complete  justice  may  be  done  by  equalizing  the  burdens,  and 
in  order  to  prevent  a  multiplicity  of  suits.  But  this  is  no  such 
case.  The  most  that  can  be  said  is,  that  the  presence  of  all 
the  stockholders  might  be  convenient,  not  that  it  is  necessary. 
When  the  only  object  of  a  bill  is  to  obtain  payment  of  a  judg- 
ment against  a  corporation  out  of  its  credits  or  intangible 


804  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

property, — that  is,  out  of  its  unpaid  stock, — there  is  not  the 
same  reason  for  requiring  all  the  stockholders  to  be  made  de- 
fendants. In  such  a  case,  no  stockholder  can  be  required  to 
pay  more  than  he  owes." 

In  Marsh  v.  Burroughs,  1  Woods,  468,  the  non-joinder  of 
parties  was  set  up  in  defense.  The  court  said:  "A  judgment 
creditor  who  has  exhausted  his  legal  remedy  may  pursue  in 
a  court  of  equity  any  equitable  interest,  trust,  or  demand  of 
his  debtor,  in  whosesoever  hands  it  may  be,  and  if  the  party 
thus  reached  has  a  remedy  over  against  other  parties  for  con- 
tribution or  indemnity,  it  will  be  no  defense  to  the  primary 
suit  against  him  that  they  are  not  parties.  If  a  creditor  were 
to  be  stayed  until  all  such  parties  could  be  made  to  contribute 
their  proportionate  shares  of  the  liability,  he  might  never  get 
his  money":  Ogilvie  v.  Knox  Ins.  Co.,  22  How.  380;  BartlettY. 
Drew,  57  N.  Y.  587. 

The  authorities  are  somewhat  conflicting  upon  the  question 
as  to  necessary  parties  plaintiff,  in  suits  of  this  character.  In 
Marsh  v.  Burroughs,  supra,  Mr.  Justice  Bradley  says:  "It  has 
long  been  settled  that  a  judgment  creditor  who  has  exhausted 
his  legal  remedy  by  execution  returned  nulla  bona  may  alone, 
or  with  other  judgment  creditors,  file  a  bill  against  persons 
holding  property  of  the  debtor,  which,  on  account  of  fraud  or 
the  existence  of  a  trust,  cannot  be  reached  by  execution." 

To  the  same  effect  is  Bartlett  v.  Drew,  57  N.  Y.  587.  This 
ruling  goes  further  than  is  necessary  to  uphold  the  present 
case.  Other  cases  hold  that  all  persons  interested  in  the 
subject-matter  of  the  suit  must  be  made  parties,  so  that 
complete  justice  may  be  done,  and  a  multiplicity  of  suits 
avoided.  An  exception  to  this  rule  has  been  uniformly  al- 
lowed in  cases  of  the  character  of  the  present  one,  when  there 
are  many  persons  having  a  common  interest.  In  such  cases  one 
or  more  may  sue  for  the  benefit  of  all,  and  those  who  come  in 
and  establish  their  claims  share  with  the  plaintiff  in  the  bene- 
fit of  the  decree.  The  doctrine  is  thus  stated  by  Chancellor 
Walworth,  in  Hallet  v.  Hallett,  2  Paige  Ch.  19:  "If  there  are 
many  parties  standing  in  the  same  situation  as  to  their  rights 
or  claims  upon  a  particular  fund,  and  when  the  shares  of  a 
part  cannot  be  determined  until  the  rights  of  all  the  others  are 
settled  or  ascertained,  as  in  the  case  of  creditors  of  an  in- 
solvent estate,  or  residuary  legatees,  all  the  parties  interested 
in  the  fund  must,  in  general,  be  brought  before  the  court, 
80  that  there  may  be  but  one  account,   and  one  decree  set- 


April,  1SS5.]     Thompson  v.  Reno  Savings  Bank.  805 

tling  the  rights  of  all.  And  if  it  appears  on  the  face  of  the 
complainant's  bill  that  an  account  of  the  whole  fund  must 
be  taken,  and  that  there  are  other  parties  interested  in  the 
distribution  thereof,  to  whom  the  defendants  '.rould  be  bound 
to  render  a  similar  account,  the  latter  may  object  that  all  who 
have  a  common  interest  with  the  complainants  are  not  before 
the  court.  In  these  cases,  to  remedy  the  practical  incon- 
venience of  making  a  great  number  of  parties  to  the  suit, 
and  compelling  those  to  litigate  who  might  otherwise  make 
no  claim  upon  the  defendants,  or  the  fund  in  their  hands,  a 
method  has  been  deviced  of  permitting  the  complainants  to 
prosecute  in  behalf  of  themselves,  and  all  others  standing  in 
the  same  situation  who  may  afterwards  elect  to  come  in  and 
claim  as  parties  to  the  suit,  and  bear  their  proportion  of  the 
expenses  of  the  litigation." 

This  rule  of  equity  practice  was  adopted  in  this  state  by 
section  1077  of  the  Compiled  Laws.  The  provision  enacts, 
among  other  things,  that  "  when  the  question  is  one  of  com- 
mon or  general  interest,  of  many  persons,  ....  one  or  more 
may  sue  or  defend  for  the  benefit  of  all":  See  also  McKenzie 
V.  U Amour eux,  11  Barb.  516. 

The  amendment  to  the  complaint  heretofore  mentioned,  by 
which  the  other  creditors  could  come  in  and  prosecute  the  suit 
with  the  plaintiff,  brought  the  case  within  the  exception  stated. 
The  amendment  was  made  immediately  before  the  trial,  but  the 
court,  by  its  decree,  allowed  the  remaining  creditors  a  reason- 
able time — thirty  days  from  the  entry  of  the  decree — within 
which  to  prove  their  claims  and  share  with  the  plaintiff  in  the 
distribution  of  the  trust  fund.  None  came  in;  but  no  complaint 
in  this  regard  has  been  suggested  in  behalf  of  any  creditor. 

The  action  of  the  district  court  in  this  particular  is  con- 
sonant with  the  equity  practice.  "  The  court  will  generally,  at 
the  hearing,  allow  a  bill  which  has  originally  been  filed  by  one 
individual  of  a  numerous  class  in  his  own  right,  to  be  amended 
BO  as  to  make  such  individual  sue  on  behalf  of  himself  and  the 
rest  of  the  class":  1  Daniel's  Chancery  Practice,  sec.  245.  Nor 
does  it  appear  that  notice  to  the  other  creditors  was  necessary. 
Thompson,  in  his  treatise  upon  the  liability  of  stockholders, 
says  of  suits  brought  by  one  creditor  in  behalf  of  himself,  and 
all  others  who  may  come  in  and  establish  their  debts:  "This 
does  nut  mean  that  the  creditor  who  files  the  bill  is  under  any 
obligation  to  look  up  all  the  widely  scattered  creditors  of  the 
corporation,  and  get  their  consent  to  the  filing  of  the  bill,  or 


806  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

notify  them  to  join  him  in  it":  Thompson  on  Liability  of  Stock- 
holders, sec.  351. 

The  decree  and  order  of  the  district  court  are  aflSrmed. 

During  the  pendency  of  this  appeal,  Mr.  Lake,  defendant 
herein,  has  died.  An  order  has  been  made  directing  the  sub- 
stitution of  the  administrator  of  his  estate. 


Liability  of  Stockholders  to  Creditors  of  Corporations  fob  Cok- 
PORATE  Debts. — The  liability  of  stockLolders  to  the  creditors  of  a  corporation 
for  the  corporate  debts  has  already  Leen  considered  in  the  notes  to  FrankUn 
Glass  Co.  V.  Alexander,  9  Am.  Dec.  96;  Freeland  v.  McCullough,  43  Id.  694; 
Prince  v.  Lynch,  99  Id.  432;  and  Germantown  Passenger  R'y  Co.  v.  Filler, 
100  Id.  552.  It  is  now  proposed  to  restate  the  principles  discussed  in  those 
notes,  and  to  add  a  more  complete  treatment  of  the  subject,  warranted  by 
its  increasing  importance.  The  liability  exists  with  respect  to  unpaid  sub- 
scriptions, and  by  virtue  of  statutory  provisions. 

No  Common-law  Liability  to  Creditors  for  Unpaid  Subscription3. 
—  While  a  stockholder  is  liable  in  an  action  at  law  by  the  corporation  for 
unpaid  subscriptions  to  its  capital  stock,  which  are  due  and  payable  by  the 
contract  of  subscription  itself,  or  which  become  due  by  virtue  of  calls  made 
by  the  corporation  upon  its  subscribers,  in  accordance  with  the  terms  of  the 
subscription,  it  does  not  follow  that  a  creditor  of  the  corporation  can  main- 
tain such  an  action.  Courts  of  law,  at  least  in  this  respect,  regard  the  cor- 
poration as  an  entity  or  person  distinct  from  its  stockholders.  A  debt  due 
from  the  corporation  is  not  a  debt  due  from  the  stockholders.  The  contract 
of  subscription  is  made  with  the  corporation,  and  it,  or  its  successors,  only, 
can  enforce  the  contract  at  law.  There  is  no  privity  between  the  creditors 
of  the  corporation  and  its  stockholders,  and  therefore  no  legal  action  can  be 
maintained  by  the  creditors  to  recover  unpaid  subscriptions:  See  2  Morawetz 
on  Corporations,  sec.  818;  Cooper  v.  Frederick,  9  Ala.  739,  742;  Jones  v.  Jar- 
man,  34  Ark.  323,  328;  Spear  v.  Grant,  16  Mass.  9,  15;  Brown  v.  Fislc,  23 
Fed.  Rep.  228;  Patterson  v.  Lynde,  106  U.  S.  519;  112  111.  196,  204,  207. 

Unpaid  Subscriptions,  when  Due  and  Payable,  are  Subject  to  Gar- 
nishment BY  Creditors.  The  right  of  a  creditor  to  reach  unpaid  subscrip- 
tions by  garnishment  proceedings  depends  upon  the  question  whether  or  not 
there  is  such  an  indebtedness  on  the  part  of  the  stockholder  as  would  authorize 
the  corporation  itself  to  maintain  an  action  against  him  for  the  unpaid  sub- 
scriptions. This  question  is  governed  by  the  contract  of  the  stockholder 
with  the  corporation.  A  subscriber  to  the  capital  stock  may  agree  to  pay  at 
once,  or  in  installments  falling  due  at  certain  times,  or,  as  is  usually  the 
case,  upon  call  of  the  corporation.  Plainly,  a  corporation  cannot  maintain 
an  action  against  a  subscriber  or  his  successors  for  unpaid  subscriptions, 
unless  they  are  due  and  payable  by  the  terms  of  the  subscription  itself,  or 
unless  a  call  has  been  made  and  the  subscriber  has  become  delinquent.  Until 
a  subsc:  iber  is  thus  in  default,  the  corporation  cannot  maintain  an  action 
against  him,  l)ecause  there  is  no  indebtedness,  and  as  there  is  no  indebted- 
ness, garnishment  proceedings  by  a  creditor  cannot  be  maintained:  Bingham 
V.  Rushing,  5  Ala.  403;  Cooper  v.  Frederick,  9  Id.  739,  742;  Paschall  v.  WMtsett, 
11  Id.  472,  477;  Brown  v.  Union  Ins.  Co.,  3  La.  Ann.  177,  182;  Hannah  v. 
Moberly  Bank,  67  Mo.  678;  Simpson  v.  Reynolds,  71  Id.  594;  McKelvey  v. 
Crockett,  18  Nev.  238;  Lanes  Appeal,  105  Pa.  St.  49;  51  Am.  Rep.  166;  note 
to  Freeland  v.  McCullough,  43  Am.  Dec.  702. 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  807 

But,  on  the  other  hand,  it  follows  that  if  subscriptions  are  due  and  payable, 
they  are,  to  that  extent,  like  other  debts  due  the  corporation,  subject  to  gar- 
nishment: Cook  on  Stock  and  Stockholders,  sec.  201;  FajiU  v.  Alaska  G.  d-  S. 
Mill.  Co.,  8  Saw.  420;  U  Fed.  Rep.  657;  De  Mony  v.  Johnston,  7  Ala.  51| 
Meinta  v.  East  St.  Louis  etc.  Co.,  89  111.  48;  Brown  v.  Union  Ins.  Co.,  3  La. 
Ann.  177,  182;  Paijne  v.  Bullard,  23  Miss.  88;  55  Am.  Dec.  74;  Hannah  v. 
Moherhj  Bank,  67  Mo.  678;  Peterson  v.  Sinclair,  83  Pa.  St.  250;  note  to  Free- 
land  V.  McCulhuijh,  43  Am.  Dec.  702;  2  Morawetz  on  Corporations,  sec.  819. 
It  is  possible,  however,  that  a  garnishment  law  or  some  other  statute  may  be 
eo  framed  as  to  permit  a  creditor  of  a  corporation  to  garnish  unpaid  subscrip- 
tions which  are  not  due.  Thus,  under  section  8  of  the  general  incorporation 
act  of  Illinois,  it  is  held  that  stockholders  may  be  compelled  to  pay  to  a  gar- 
nishing creditor  any  balance  unpaid  upon  stock  owned  by  them  respectively, 
whether  such  stock  has  been  called  in  or  not:  Robertson  v.  Soeninjer,  20  111. 
App.  227;  and  in  this  case  of  In  re  Glen  Iron  Works,  20  Fed.  Rep.  674, 
affirming  17  Id.  324,  16  Phila.  503,  it  was  held  that  in  Pennsylvania  the 
efficacy  of  attachment  process  was  not  confined  to  the  garnishment  of  legal 
demands,  but  extended  to  those  of  an  equitable  nature,  and  that  the  unpaid 
subscriptions  to  the  capital  stock  of  an  insolvent  corporation  could  be  reached 
by  writ  of  attachment  execution,  although  no  assessment  or  call  had  been 
made;  but  this  case  was  expressly  and  pointedly  disapproved  in  Lane^s  /tp- 
peal  (otherwise  cited  as  Bunns  Appeal),  105  Pa.  St.  49;  51  Am.  Rep.  166. 
It  has  been  held  that,  where  stockholders  are  in  default  after  calls  regularly 
made,  a  judgment  creditor  of  the  corporation  has  a  complete  remedy  at  law, 
and  therefore  will  not,  in  the  absence  of  some  special  circumstance,  be  allowed 
to  proceed  in  equity:  Allen  v.  Montgomery  R.  R.,  11  Ala.  437;  but  the  case  of 
Payne  v.  Bullard,  23  Miss.  88,  55  Am.  Dec.  74,  holds,  perhaps  in  contraven- 
tion of  the  rule  hereafter  noted  that  the  legal  remedies  must  first  be  ex- 
hausted, that  equity  has  jurisdiction  of  a  suit  by  a  judgment  creditor  to 
compel  a  stockholder  to  pay  the  arrears  of  his  subscription,  although,  install- 
ments of  the  subscription  falling  due  periodically,  tliere  is  a  remedy  at  law 
by  process  of  garnishment;  although  it  is  well  to  remember  the  principle  that 
the  jurisdiction  of  equity  is  not  taken  away  by  statute  providing  an  adequate 
remedy  at  law,  in  the  absence  of  express  language,  or  by  necessary  implica- 
tion: See  1  Pomeroy's  Eq.  Jur. ,  sees.  279-281;  Harmon  v.  Page,  02  Cal.  448; 
Holmes  v.  Sherwood,  3  McCrary,  405;  16  Fed.  Rep.  725. 

A  limitation  upon  the  right  of  a  creditor  of  a  corporation  to  resort  to  gar- 
nishment proceedings  has  been  placed  by  Lane's  Appeal,  105  Pa.  St.  49,  51 
Am.  Rep.  166,  in  wliich  it  is  asserted  that  if  the  corporation  is  solvent,  and 
the  subscription  is  in  the  form  of  an  absolute  engagement  to  pay  the  price  of 
the  stock,  there  was  no  doubt  that  the  creditor  could  reach  the  amounts  un- 
paid by  attachment  iu  execution,  but  that  it  seems  this  could  not  be  done  if 
the  corporation  was  insolvent,  because  upon  insolvency  the  unpaid  amounts 
constituted  a  trust  fund  for  the  benefit  of  all  the  creditors. 

Mandamus  by  Corporate  Creditors  to  Compel  Officers  of  Corpora- 
tion TO  Make  Call. — Mandamus  by  creditors  of  corporations  to  compel 
the  officers  to  make  calls  for  the  purpose  of  raising  funds  to  meet  tlieir  de- 
mands is  a  remedy  to  which  a  resort  does  not  appear  to  have  been  attempted 
iu  this  country;  and  tlie  use  of  the  writ  for  tliis  purpose  has  been  doubted: 
Cook  on  Stock  anil  Stockholders,  sec.  202;  Ilai/s  v.  Lycomimj  F.  Ins.  Co.,  93 
Pa.  St.  184;  but  in  England,  a  viamlirnns  is  sometimes  awarded:  Cook  on 
Stock  and  Stockholders,  sec.  202;  The  Queen  v.  Victoria  Park  Co.,  1  Q.  B. 
288;  The  Queen  v.  Ledyard,  1  Id.  610;   The  King  v.  6<.  KaUuirine  Dock  Co.,  4 


808  Thompson  v.  Reno  Savings  Bank.        [Nevada,- 

Barn.  &  Adol.  360;  and  see  Hatch  v.  Dana,  101  U.  S.  205,  215;  TJiompson  v. 
Heno  Savinjs  Bavlc,  19  Nev.  242,  245,  post,  j).  883.  It  has,  however,  been  de- 
cided tjiat  creditors  need  not  apply  for  a  mandamus,  but  may  compel  the  pay- 
ment of  unpaid  subscriptions  by  suit  in  equity:  Ward  v.  Griswoldville  Mfg. 
Co.,  16  Conn.  593,  601;  Dalton  etc.  R.  R.  Co.  v.  McDaniel,  50  Ga.  191.  And 
in  Patterson  v.  Lynde,  112  111.  196,  206,  the  court  was  of  the  opinion  that  a 
foreign  insolvent  corporation,  if  still  in  existence,  could  be  compelled  by 
mandamus,  or  by  bill  in  equity,  to  collect  the  unpaid  subscriptions  from  its 
stockholders.  If  it  had  ceased  to  exist,  a  receiver  should  be  appointed,  who 
would  represent  the  corporation. 

Unpaid  Subscriptions  Constitute,  in  Equity,  Tkust  Fund  for  Benefit 
OF  Creditors.  —  It  is  a  well-settled  doctrine  of  the  American  courts  that  the 
capital  stock  of  a  corporation,  including,  especially,  unpaid  subscriptions, 
constitutes,  in  equity,  a  trust  fund  for  the  benefit  of  its  creditors:  Note  to 
Freeland  v.  McCullotir/h,  43  Am.  Dec.  095;  Germantoivn  Passenger  R^y  v.  Fit- 
ler,  100  Id.  546,  and  note  552;  Cook  on  Stock  and  Stockholders,  sec.  199; 
Thompson's  Liability  of  Stockholders,  sees.  10,  11;  Angell  and  Ames  on  Cor- 
porations, sees.  600  et  seq. ;  Boone  on  Corporations,  sec.  112;  2  Morawetz  on 
Corporations,  sec.  820;  Taylor  on  Corporations,  sees.  654  et  seq.;  2  Water- 
man on  Corporations,  sec.  208;  2  Story's  Eq.  Jur.,  sec.  1252;  Wood  v.  Dum- 
mer,  3  Mason,  308,  311;  Winans  v.  McKean  R.  R.  etc.  Co.,  6  Elatchf.  215, 
222;  Union  Nat.  Bank  v.  Douglass,  1  McCrary,  86;  Plolmes  v.  Slienoood,  3  Id. 
405,  408;  16  Fed.  Rep.  725,  727;  Marsh  v.  Burrouglis,  1  Woods,  463,  468; 
Curran  v.  State  of  Arkansas,  15  How.  304;  Railroad  Co.  v.  Hoivard,  7  Wall. 
392,  409;  Sawyer  v.  Hoag,  17  Id.  010;  Upton  v.  Tribilcoch,  91  U.  S.  45;  Sanger 
V.  Upton,  91  Id.  56,  GO;  Webster  v.  C/jvton,  91  Id.  65,  66,  71 ;  Scammon  v.  Kim- 
hall,  92  Id.  362,  367;  Hatch  v.  Dana,  101  U.  S.  205,  210;  County  of  Morgan 
v.  Allen,  103  Id.  498;  Allen  v.  Montgomery  R.  R.,  11  Ala.  437;  Goodwin  v.  Mc- 
Gehee,  15  Id.  232,  246;  Smith  v.  Huckahee,  53  Id.  191,  195;  Glenn  v.  Semple,  80 
Id.  159;  60  Am.  Rep.  92-94;  Jones  v.  Arkansas  Mechanical  etc.  Co.,  38  Ark. 
17;  Ward  v.  Gnswoldville  Mfg.  Co.,  16  Conn.  593,  599;  Crandall  v.  Lincoln, 
52  Id.  73;  52  Am.  Rep.  560,  562;  Hightower  v.  Thornton,  8  Ga.  486;  52  Am. 
Dec.  412;  Reid  v.  Eatonton  Mfg.  Co.,  40  Ga.  98,  102;  2  Am.  Rep.  563,  565; 
Clapp  v.  Peterson,  104  111.  26,  31;  Coffin  v.  Ransdell,  110  Ind.  417,  421;  Osgood 
V.  Ki»g,  42  Iowa,  478;  Robertson  v.  Conrey,  5  La.  Ann.  297;  Rider  v.  Morrison, 
54  Md.  429,  444;  Farnsworth  v.  Bobbins,  36  Minn.  369;  Payne  v.  Bullard,  23 
Miss.  88;  55  Am.  Dec.  74;  Haskell  v.  Sells,  14  Mo.  App.  91;  National  Trust 
Co.  V.  Miller,  33  N.  J.  Eq.  155;  Wetherbee  v.  Baker,  35  Id.  501;  3fann  v.  Pcntz, 
3  N.  Y.  415,  422;  Dayton  v.  Borst,  31  Id.  435,  436;  Bartlett  v.  Drew,  57  Id. 
587,  589;  Hastings  v.  Drerv,  70  Id.  9;  GUmores  Ex'rs  v.  Bank  of  Cincinnati, 
8  Ohio,  62,  71;  Bank  of  Virginia  v.  Adams,  1  Pars.  Sel.  Cas.  534;  Lane's  Ap- 
peal, 105  Pa.  St.  49;  51  Am.  Rep.  lOii;  Macungie  Savings  Bank  v.  Bastian, 
11  Rep.  785;  Ohio  Life  Ins.  &  T.  Co.  v.  Merchants'  Ins.  i&  T.  Co.,  11  Humph. 
1;  53  Am.  Dec.  742;  Adler  v.  Milwaukee  Patent  Brick  Mfg.  Co.,  13  Wis. 
57.  60. 

This  doctrine  is  at  the  foundation  of  the  principal  rules  on  the  subject  of 
the  right  of  creditors  of  corporations,  to  compel  the  payment  of  unpaid  "-.ab- 
scriptions  by  stockholders  in  America.  The  overlooking  of  it,  or  the  failure  to 
recognize  its  importance  by  some  courts,  has  caused  no  little  confusion.  As 
a  result  of  the  doctrine,  a  creditor  of  a  corporation  can  maintain  a  suit  against 
the  personal  representatives  of  a  deceased  stockholder  to  compel  the  payment 
of  his  unpaid  subscription,  without  presenting  any  demand  to  the  represen- 
tatives for  allowance,  as  is  required  in  ordinary  cases  by  the  Nevada  Com- 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  809 

piled  Laws:  TlioinpHonv.  Reno  Savings  Ban!: ,  lONev.  242;  post,  p.  883;  comparo 
Davidson  v.  Rankin,  34  Cal.  503,  in  which  the  liability  of  a  stockholder  for 
the  debts  of  the  corporation  arose  under  a  statute. 

This  doctrine  seems  to  be  a  distinctively  American  one,  and  serves  to  explain 
some  of  the  differences  between  the  English  and  American  cases.  It  was  first 
announced  by  Mr.  Justice  Story,  in  1824,  in  TI^oo(/  v.  Durnmer,  3  Mason,  308, 
311,  who,  in  speaking  of  the  capital  stock  of  banking  corporations,  said:  "The 
capital  stock  of  banks  is  to  be  deemed  a  pledge  or  trust  fund  for  the  payment 
of  the  debts  contracted  by  the  bank.  The  public,  as  well  as  the  legislature, 
have  always  supposed  this  to  be  a  fund  appropriated  for  such  purpose.  The 
individual  stockholders  are  not  liable  for  the  debts  of  the  bank  in  their  private 
capacities.  The  charter  relieves  them  from  personal  responsibility,  and  sub- 
stitutes the  capital  stock  in  its  stead.  Credit  is  universally  given  to  thia 
fund  by  the  public  as  the  only  means  of  repayment.  During  the  existence  of 
the  corporation,  it  is  the  sole  property  of  the  corporation,  and  can  be  applied 
only  according  to  its  charter,  that  is,  as  a  fund  for  payment  of  its  debts,  upon 
the  security  of  which  it  may  discount  and  circulate  notes.  Why,  otherwise, 
is  any  capital  stock  required  by  our  charters  ?  If  the  stock  may,  the  next  day 
after  it  is  paid  in,  be  withdrawn  by  the  stockholders  without  payment  of  the 
debts  of  the  corporation,  why  is  its  amount  so  studiously  provided  for,  and 
its  payment  by  the  stockholders  so  diligently  required?  Tome,  this  point 
appears  so  plain,  upon  principles  of  law,  as  well  as  common  sense,  that  I  can- 
not be  brought  into  any  doubt  that  the  charters  of  our  banks  make  the  capi- 
tal stock  a  trust  fund  for  the  payment  of  all  the  debts  of  the  corporation. 
The  bill-holders  and  other  cretKtors  have  the  first  claims  upon  it,  and  the 
stockholders  have  no  rights  until  all  the  other  creditors  are  satisfied." 
Again,  in  Sanger  v.  Upton,  91  U.  S.  5G,  GO,  Swayne,  J.,  says:  "The  capital 
stock  of  an  incorporated  company  is  a  fund  set  apart  for  the  payment  of  its 
debts.  It  is  a  substitute  for  the  personal  liability  which  subsists  in  private 
copartnerships.  When  debts  are  incurred,  a  contract  arises  with  tlio  credi- 
tors that  it  shall  not  be  withdrawn  or  applied,  otherwise  than  upon  their  de- 
mands, until  such  demands  are  satisfied.  The  creditors  have  a  lien  upon  it 
in  equity.  If  diverted,  they  may  follow  it  as  far  as  it  can  be  traced,  and  sub- 
ject it  to  the  payment  of  their  claims,  except  as  against  holders  who  have 
taken  it  honajide  for  a  valuable  consideration  and  without  notice.  It  is  pub- 
licly pledged  to  those  who  deal  with  the  corporation,  for  their  security.  Un- 
paid stock  is  as  much  a  part  of  this  pledge,  and  as  much  a  part  of  the  assets 
of  the  company,  as  the  cash  which  has  been  paid  in  upon  it.  Creditors  have 
the  same  right  to  look  to  it  as  to  anything  else,  and  the  same  right  to  insist 
upon  its  payment  as  upon  the  payment  of  any  other  debt  due  to  the  company. 
As  regards  creditors,  there  is  no  distinction  between  such  a  demand  and  any 
other  asset  which  may  form  a  part  of  the  property  and  efifects  of  the  corpo- 
ration." 

And  in  the  oft  cited  and  quoted  case  of  Adler  v.  Milioaukee  Patent  Erich 
Mfj.  Co.,  13  Wis.  57,  GO,  Chief  Justice  Dixon  remarks:  "The  stockholders 
being  in  general  free  from  personal  responsibility,  the  capital  stock  consti- 
tutes the  sole  fund  to  which  creditors  look  for  the  liquidation  of  their  de- 
mands. It  is  the  basis  of  the  credit  which  is  extended  to  the  corporation  by 
the  public,  and  a  substitute  for  the  individual  liability  which  exists  in  other 
cases.  So  far  as  creditors  are  concerned,  it  is  regarded  in  the  law  as  a  trust 
fund  pledged  for  the  payment  of  the  debts  of  the  corporation.  Until  they 
are  paid,  tlie  stockholders  are  postponed;  they  are  only  entitled  to  that  which 
remains  after  the  claims  of  the  creditors  are  extin;iuished.     This  is  as  true 


810  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

of  the  unpaid  shares  subscribed,  or  balances  due  thereon,  as  of  the  amount 
•which  has  actually  been  paid  in.  Such  unpaid  shares  or  balances  arc  ai 
much  a  part  of  the  capital  stock  as  the  sums  which  have  already  been  realized 
thereon.  Aside  from  the  funds  on  hand,  they  often  constitute  the  only  re- 
source of  the  company.  They  are  debts  due  to  it,  the  payment  of  which  can 
be  enforced  by  its  officers.  The  delinquent  subscribers  are  its  debtors,  and 
the  directors  are  clothed  with  authority  to  compel  them  to  pay.  When  the 
company  is  indebted,  and  other  means  of  meeting  its  liabilities  are  exhausted, 
the  exercise  of  this  authority  becomes  a  duty,  which  they  are  under  the 
highest  moral  obligation  to  perform.  Creditors  are  supposed  to  have  trusted 
as  well  to  such  unpaid  subscriptions,  and  to  the  fair  and  faithful  exercise  of 
such  compulsory  power  for  their  payment,  as  to  the  sums  actually  paid  in; 
and  when  it  becomes  necessary  to  their  security  or  satisfaction,  they  have  a 
legal  right,  either  by  the  voluntary  action  of  the  proper  officers,  or  through 
the  aid  of  the  courts  of  the  country,  to  such  exercise  of  it.  If,  therefore,  by 
the  willful  or  stubborn  inaction  of  the  directors  or  stockholders,  the  company 
fails  to  meet  its  obligations  and  perform  its  duties,  a  court  of  equity  will,  on 
a  proper  application,  afford  the  requisite  relief."  But,  "in  speaking  of  the 
assets  of  an  insolvent  corporation  as  constituting  a  trust  fund  for  the  pay- 
ment of  creditors,"  says  Robinson,  J.,  in  Brant  v.  Ehlen,  59  Md.  124,  "it  is 
necessary  to  understand  precisely  what  is  meant  by  the  courts.  No  one  will 
pretend  for  a  moment  that  in  subscribing  to  the  stock  of  a  company,  the  pur- 
pose is  to  create  a  trust  fund  for  creditors.  On  the  contrary,  the  object, 
primarily,  is  to  furnish  means  to  carry  on  its  business,  and  to  share  the  profits 
earned  by  the  corporation;  and  so  long  as  ifc  is  a  going  concern,  it  has  the 
right,  and  indeed  it  is  its  duty,  to  manage  and  dispose  of  its  assets,  includ- 
ing stock  subscription?,  for  the  promotion  of  its  own  interest.  If  it  ceases 
to  do  business,  or  if  it  becomes  insolvent,  then  all  assets  which  it  then  has  or 
owns,  including  paid  and  unpaid  subscriptions,  either  in  the  hands  of  the 
original  subscriber  or  in  the  hands  of  his  assignee  with  notice,  become  a 
trust  fund  for  the  payment  of  creditors,  and  they  have  the  right  to  follow 
the  property  constituting  this  fund  and  subject  it  to  the  paynient  of  their 
debts,  unless  it  has  passed  into  the  hands  of  a  bona  fide  purchaser  without 
notice. " 

Equitable  Jurisdiction  to  Compel  Payment  of  Unpaid  Subscriptions, 
OR  TO  Make  Calls.  —  Since  unpaid  subscriptions  to  the  capital  stock  are 
regarded  in  equity  as  a  trust  fund  for  the  benefit  of  the  creditors  of  a  corpo- 
ration, it  results  that  courts  of  equity  have  jurisdiction  and  will  compel  the 
payment  of  the  subscriptions  by  stockholders,  as  equitable  assets,  at  the  suit 
of  creditors  of  the  corporation,  if  the  legal  assets  which  can  be  reached  by 
execution  prove  insufficient:  Note  to  Freeland  v.  McCullough,  43  Am.  Dec. 
695;  note  to  Germantown  Passenger  R'y  v.  Fitler,  100  Id.  553;  Cook  on  Stock 
and  Stockholders,  sec.  204;  Thompson's  Liability  of  Stockholders,  sees.  9  et 
seq. ;  2  Morawetz  on  Corporations,  sec.  820;  Taylor  on  Corporations,  sec.  703; 
Ogilvie  v.  Knox  Ins.  Co.,  22  How.  380;  Holmes  v.  Sheru;ood,  3  McCrary, 
405,  408;  16  Fed.  Rep.  725,  727;  Bissit  v.  Kentucky  River  Nav.  Co.,  15  Fed. 
Rep.  353;  Wilbur  v.  Stock/iolders  of  Glen  Iron  Works,  18  Nat.  Bank.  Reg.  178; 
13  Phila.  479  (U.  S.  D.  C,  E.  D.  of  Pa.);  Allen  v.  Montgomery  R.  R.,  11 
Ala.  437;  Glenn  v.  Semple,  80  Id.  159;  60  Am.  Rep.  92-94;  Jones  v.  Jarman, 
34  Ark.  323,  328;  Harmon  v.  Page,  62  Cal.  448;  HigMower  v.  Thornton,  8  Ga. 
486;  52  Am.  Dec.  412;  Stinson  v.  Williams,  35  Ga.  170;  Mann  v.  Pentz,  3 
N.  Y.  415;  Gillet  r.  Moody,  5  Barb.  179;  3  N.  Y.  479;  Gilmores  Exrs  v. 
Bavk  of  Cindnnaii,  8  Ohio,  62,  71;  Henry  v.  Vermillion  etc.  R.  R.,   17  Id. 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  811 

187;  Bank  of  Virrjinia  v.  Adams,  1  Para.  Sel.  Cas.  534;  Lane^s  Appeal,  105 
Pa.  St.  49;  51  Am.  Rep.  IGG;  Bafssett  v.  St.  Albans  Hotel  Co.,  47  Vt.  313. 
And  as  shown  above,  even  if  creditors  of  the  corporation  can  compel  its  offi- 
cers by  mandamus  to  make  calls  to  meet  the  company's  liabilities,  they  are 
not  obliged  to  do  so,  but  may  resort  to  equity:  Ward  v.  Griswoklville  Mfg. 
Co.,  IG  Conn.  593,  601;  Dalton  etc.  R.  R.  Co.  v.  McDanicl,  53  Ga.  191;  and 
as  further  shown,  no  action  at  law,  independent  of  statute,  can  be  maintained 
by  creditors  against  stockholders,  but  proceedings  must  be  had  in  equity: 
Cooper  V.  Fredericl;  9  Ala.  739.  742;  Jones  v.  Jarman,  34  Ark.  323,  328; 
Spear  v.  Grant,  16  Mass.  9,  15;  Broion  v.  Fisk,  23  Fed.  Rep.  228.  This 
equitable  suit,  furthermore,  is  not  affected  by  any  remedy  which  may  be 
given  creditors  against  stockholders  by  constitutions,  charters,  general  acta 
of  incorporation,  or  other  statutes,  unless  of  course  the  equitable  remedy  be 
taken  away  expressly  or  by  necessary  implication:  See  Harmon  v.  Pa'je,  62 
Cal.  448;  Holmes  v.  Shenoood,  3  McCrary,  405;  16  Fed.  Rep.  725;  and  it 
is  held  that  although  installments  of  the  subscription  are  due,  and  may  be 
reached  by  process  of  garnishment,  the  equitable  jurisdiction  nevertheless 
exists:  Payne  v.  Bullard,  23  Miss.  88;  55  Am.  Dec.  74;  contra:  Allen  v. 
Montgomery  R.  R.,  11  Ala.  437.  So  where  a  state  constitution  provides  that 
the  stockholders  of  corporations  "shall  be  liable  for  the  indebtedness  of  said 
corporation  to  the  amount  of  their  stock  subscribed  and  unpaid,  and  no 
more,"  no  new  right  is  created,  and  the  remedy  of  a  creditor  ;  gainst  a  stock- 
holder for  unpaid  subscriptions  is  still  in  equity:  Patterson  v.  Lynde,  106 
U.  S.  519;  112  111.  196,  204,  207;  Bush  v.  Cartwright,  7  Or.  329;  Brundage  v. 
Monumental  O.  &  S.  Min.  Co.,  12  Id.  322;  compare  Hodges  v.  Silver  Hill  Min. 
Co.,  9  Id.  200,  204;  Mills  v.  Stewart,  41  N.  Y.  384,  389;  Stephens  v.  Fox,  83 
Id.  313. 

Wliile  it  is  essential  to  the  recovery  by  the  corporation  itself  against  the 
stockholders  upon  their  contracts  of  subscription  that  the  money  should  be 
due  and  payable,  cither  because  the  contracts  themselves  have  definitely 
fixed  the  times  of  payment,  or  because  calls  have  been  made  by  the  govern- 
ing body  of  the  corporation,  no  such  condition  is  imposed  upon  the  creditors 
with  regard  to  their  right  to  proceed  in  equity  against  the  stockholders.  No 
previous  call  need  be  shown  by  the  creditors,  nor  need  they  show  that  they 
have  endeavored  to  induce  the  corporation  to  make  a  call  as  a  prerequisite  to 
a  suit  in  equity  to  compel  stockholders  to  pay  their  unpaid  subscriptions:  2 
Morawetz  on  Corporations,  sec.  821;  note  to  Germantoion  Passenger  R'y  v. 
Filler,  100  Am.  Dec.  554;  Marsh  v.  Burroughs,  1  Woods,  4G3,  4GS;  Holmes  v. 
Sherwood,  3  McCrary,  405;  16  Fed.  Rep.  725;  Thompson  v.  Reno  Sav.  Bank, 
19  Nev.  171;  post,  p.  881;  Thompson  v.  Reno  Sav.  Bank,  19  Nov.  242;  post,  p. 
883;  although  the  subscriptions  are  payable  "  as  called  for  by  the  company  ": 
Hatch  V.  Dana,  101  U.  S.  205;  see  aloo  Upton  v.  Hanshrough,  3  Biss.  417. 

Besides  the  usual  proceeding  in  equity  above  described,  in  the  nature  of  a 
creditor's  bill,  to  compel  the  payment  of  unpaid  subscriptions  by  stock- 
holders, it  is  also  settled  that  when  stock  is  payable  upon  call,  and  the  cor- 
poration refuses  or  neglects  to  make  a  call,  a  court  of  equity  may  itself  make 
it,  if  the  interests  of  the  creditors  require  it:  Cook  on  Stock  and  Stock- 
holders, sec.  207;  Thompson's  Liability  of  Stockholders,  sec.  16;  note  to 
Oermantown  Passenger  R'y  v.  Filler,  100  Am.  Dec.  553;  Dr.  Salmon  v.  The 
Uamborough  Co.,  1  Cas.  Ch.  204;  SroviUv.  Thayer,  105  U.  S.  143,  155;  Glenn 
V.  Williams,  60  Md.  93;  Briggs  v.  Penniman,  8  Cow.  3S7,  395;  18  Am.  Dec. 
454,  4G0;  and  the  decree  determining  aud  making  such  an  assessmcut  is  bind- 
ing and  effective  upon  the  stockholders  who  were  not,  in  their  individual 


812  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

capacities,  parties  to  the  suit,  they  being  represented  by  the  corporation: 
Glenn  v.  Williams,  supra.  lb  is  obviously  necessary,  however,  for  such  a  pur- 
pose, that  a  sufficient  corporate  oi-ganization  should  continue  to  exist:  TF«7- 
bur  V.  Stockholders  of  Glen  Iron  Works,  18  Nat.  Bank.  Reg.  178;  13  Phila. 
479  (U.  S.  D.  C,  E.  D.  of  Pa.).  The  "assessment,"  or  "call,"  so  named,  is 
also  different  in  its  nature  from  the  assessment  or  call  made  by  a  solvent 
corporation.  The  proceeding  is  simply  in  aid  of  the  judicial  recourse  of  the 
creditors.  "It  may  promote  the  enforcement,  but  is  not  essential  to  the 
existence  of  the  obligation  of  the  stockholders":  Wilbur  v.  Stockholders  of 
Glen  Iron  Work?,  supra. 

In  the  suit  first  above  noted,  to  compel  the  payment  of  unpaid  subscrip- 
tions, the  right  of  creditors  is  as  clear  and  strong  after  as  before  the  disso- 
lution of  the  corporation:  Tlightower  v.  Thornton,  8  Ga.  486;  52  Am.  Dec.  412; 
Tarbell  v.  Page,  24  111.  46;  although  at  common  law,  at  least  under  the  old 
theory,  the  debts  due  to  and  from  the  corporation  are  extinguished  upon  its 
dissolution:  See  Ilhjhtower  v.  Thornton,  supra;  Thornton  v.  Lane,  11  Ga.  459; 
compare  Thompson's  Liability  of  Stockholders,  sec.  3.  Herein  this  case  dif- 
fers from  that  above  mentioned,  where  it  is  sought  to  have  a  call  made  by 
a  court  of  equity,  in  which,  it  seems,  the  corporation  must  be  in  existence: 
See  Wilbur  v.  Stockholders  of  Glen  Iron  Works,  supra.  And  notwithstanding 
the  common-law  rule  as  to  the  extinguishment  of  debts  upon  the  dissolution 
of  a  corporation ,  it  is  competent,  it  may  be  here  observed,  for  the  legislature 
to  interpose  and  prevent  such  a  result:  Robinson  v.  Lane,  19  Ga.  337;  and  see 
Lane  v.  Moiris,  8  Id.  468,  476;  Thornton  v.  Lane,  11  Id.  459;  Thompson's 
Liability  of  Stockholders,  sec.  3.  Of  course  the  insolvency  of  a  corporation 
is  no  ground  for  restraining  the  collection  of  subscriptions  by  itself  to  its  stock: 
Note  to  Germantown  Passenger  R'y  v.  Filler,  100  Am.  Dec.  552;  Dill  v.  Wa- 
bash Valley  R.  R.,  21  111.  91;  Protection  Ins.  Co.  v.  Ward,  28  Conn.  409. 
"Indeed,  it  shows  the  more  urgent  reason  why  they  should  be  collected ": 
Dill  V.  Wabash  Valley  R.  R.,  21  HI.  91. 

If  it  be  necessary,  creditors  may  compel  discovery  of  the  names  of  stock- 
holders and  the  amounts  unpaid  on  their  subscriptions:  Morgan  v.  New  York 
etc.  R.  R.,  10  Paige,  290;  40  Am.  Dec.  244;  Miera  v.  Zanesville  etc.  7'urnpike 
Co.,  11  Ohio,  273;  and  see  President  etc.  of  3Iiddletoivn  Bank  v.  Russ,  3  Conn. 
135;  Bogai-dus  v.  Rosendale  Mfg.  Co.,  7  N.  Y.  147.  A  creditor  can  compel 
payment  of  the  entire  stock,  if  required  to  satisfy  his  demands:  Halderman 
V.  Ainslee,  82  Ky.  395.  So,  to  the  extent  of  their  own  unpaid  subscriptions, 
stockholders  may  be  liable  to  make  good  the  deficiency  of  assets  of  the  cor- 
poration arising  from  the  insolvency  of  other  stockholders:  Haslett's  Ex'rs 
V.  Wotherspoon,  1  Strob.  Eq.  209.  And  the  fact  that  holders  of  unpaid  stock 
of  a  banking  corporation  have  severally  redeemed  their  shares  of  bank  bills, 
under  the  charter  which  provided  that  the  persons  and  property  of  the  stock- 
holders should  be  liable  for  the  redemption  of  the  bills  and  notes  of  the  bank, 
in  proportion  to  the  number  of  shares  of  stock  which  they  held,  will  not  re- 
lease them  from  liability  for  the  amounts  due  on  their  stock  subscriptions: 
Marsh  v.  Burrouglis,  1  Woods,  403;  and  it  may  here  be  further  observed  that 
generally  where  statutes  impose  an  individual  liability  upon  stockholders  for 
the  debts  of  a  corporation,  that  such  liability  is  over  and  above  the  liability 
for  unpaid  subscription:  See  Patterson  v.  Wyomissing  Mfg.  Co.,  40  Pa.  St. 
117.  If  the  complainant  is  also  a  stockholder,  he  must  contribute  pari  passu 
■with  the  defendant  stockholders  towards  the  liquidation  of  his  demand 
against  the  corporation:  Bissetv.  Kentucky  River  Nav.  Co.,  15  Fed.  Rep.  353. 

It  is  possible  that  share-holders  may  be  liable  to  creditors  of  a  corporation 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  813 

for  unpaid  subscriptions,  notwithstanding  a  violation  of  the  charter  with  re- 
spect to  the  subscriptions,  as  the  following  cases  will  illustrate.  There  is  no 
liability  on  subscriptions  to  the  capital  stock  of  a  corporation  until  the  whole 
of  the  capital,  as  prescribed  by  the  charter,  has  been  siibscribed;  and  there- 
fore a  creditor's  bill  will  not  lie  to  enforce  payment  of  such  subscriptions,  un- 
less for  some  cause  the  subscribers  have  estopped  themselves  from  alleging 
that  the  entire  capital  was  not  subscribed:  2  Morawetz  ou  Corporations,  sec. 
823;  Temple  v.  Lemon,  112  111.  ol;  but  if  a  corporation  should,  in  violation  of 
its  charter,  begin  to  carry  on  business,  and  incur  debts  before  its  entire  capi- 
tal stock  had  been  subscribed,  undoubtedly  the  share-sholders  would  be 
liable  to  the  extent  of  their  subscriptions,  if  necessary  to  pay  creditors:  2 
Morawetz  on  Corporations,  sec.  823;  Morrison  v.  Dorsey,  48  Md.  468;  Mits- 
grave  V.  Morrison,  54  Id.  IGl;  Haqerv.  Cleveland,  36  Id.  476;  compare  Bos- 
ton etc.  R.  R.  Co.  v.  Pearson,  128  Mass.  445.  So  a  creditor's  bill  will  lie 
against  stockholders  to  compel  the  payment  of  unpaid  subscriptions, 
although  they  failed  to  pay  at  the  time  of  tlieir  subscriptions  the  per  cent 
required  by  the  charters  Henry  v.  Vermillion  etc.  R.  R.  Co.,  17  Ohio,  187. 
And  "if  the  charter  of  a  bank  require  a  certain  portion  of  the  capital  stock 
in  specie  to  be  paid  in  before  the  directors  are  permitted  to  issue  bank  notes, 
and  the  stock  is  subscribed,  but  the  specie  is  not  paid,  and  the  directors 
nevertheless  proceed  to  issue  and  put  in  circulation  the  bank  notes,  if  the 
bank  fail  or  become  insolvent,  the  bill-holders  and  creditors  may  proceed  at 
once  against  the  stockholders  for  the  subscribed  stock  not  paid  in,  and 
against  the  directors  for  a  breach  of  trust  for  issuing  and  putting  in  circula- 
tion notes  on  unpaid  subscribed  stock,  contrary  to  their  duty  under  the 
charter  ":  Schley  v.  Dixon,  24  Ga.  273,  277. 

If  a  state  has  become  a  stockholder  in  a  corporation,  a  creditor's  right  to 
compel  it  to  pay  its  unpaid  subscription  will  depend  upon  the  question 
whether  or  not  suit  can  be  maintained  against  it  under  its  constitution  and 
statutes;  for  a  sovereign  state  cannot  be  sued  without  its  consent,  and  then 
only  in  the  particular  mode  and  forum  nominated  by  itself:  Thompson's  Lia- 
bility of  Stockholders,  sec.  20.  If,  therefore,  a  state  has  subscribed  to  the 
stock  of  a  corporation,  and  has  not  made  payment,  an  action  to  compel  pay- 
ment will  not  lie  against  it  without  its  consent:  Miers  v.  Zanesville  etc.  Turn' 
pike  Co.,  11  Ohio,  273;  but  if  a  state  has  rendered  itself  liable  to  a  private 
action,  and  has  become  a  stockholder  in  a  corporation,  it  subjects  itself  to  the 
same  liabilities  which  attach  to  any  private  stockholders:  Curran  v.  Stale  of 
Arkansas,  15  How.  304;  compare  Robinson  v.  Bank  of  Durien,  18  Ga.  65,  109; 
Dabney  v.  Bank  of  South  Carolina,  3  S.  C.  124;  and  a  city  having  subscribed 
to  the  stock  of  a  railroad  company,  under  an  act  authorizing  cities  to  aid  in 
the  construction  of  railroads,  is  bound  by  the  same  statutory  liability  which 
attaches  to  an  ordinary  stockholder  for  labor  done  in  the  construction  of  the 
road:  Shipley  v.  City  of  Terre  Haute,  74  Ind.  297. 

It  has  been  held  that  a  court  of  equity  had  no  jurisdiction  to  compel  resi- 
dent stockholders  to  pay  their  unpaid  subscriptions  on  the  application  of 
creditors  of  a  foreign  corporation:  Bank  of  Virginia  v.  Adams,  1  Pars.  Sel. 
Cas.  534,  — a  technical  decision;  and  it  is  otherwise  held  that  the  judgment 
■which  it  is  necessary  for  the  creditor  to  first  obtain  against  the  corporatioa 
must  be  a  judgment  of  the  courts  of  the  state  where  the  liability  is  sought  to 
be  enforced:  Patterson  v.  Lynde,  112  111.  196,  204. 

In  Warner  v.  Callemler,  20  Ohio  St.  190,  it  was  held  that  a  judgment  cred- 
itor could  unite,  in  the  same  action,  a  claim  to  compel  payment  of  unpaid 


814  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

Bubscriptions  for  stock  aad  a  claim  to  enforce  the  statutory  liability  of  the 
stockholders  for  the  debts  of  the  corporation. 

Creditor  must  Exhaust  Legal  Remedies  against  Corporation  be- 
fore Proceeding  in  Equity  against  Stockholders  for  Unpaid  Sub- 
scriptions. As  has  already  been  intimated,  before  a  creditor  can  resort  to 
equity  to  compel  the  payment  of  unpaid  subscriptions,  it  is  necessary,  under 
ordinary  circumstances,  that  he  should  have  exhausted  his  legal  remedies 
against  the  corporation  by  judgment  and  execution  thereon  returned  unsatis- 
fied: Note  to  Germantown  Passenger  R'y  Co.  v.  Fitler,  100  Am.  Dec.  554;  Cook 
OQ  Stock  and  Stockholders,  sec.  200;  2  Morawetz  on  Corporations,  sec.  820; 
Taylor  on  Corporations,  sec.  703;  Tert-yv.  Anderson,  95  U.  S.  628,  G3G;  Pat- 
terson V.  Lynde,  112  111.  19G,  204;  Wetherbee  v.  Baker,  35  N.  J.  Eq.  501,  506; 
Blake  V.  Hinkle,  10  Yerg.  218;  Adler  v.  Milwaukee  Patent  Bnck  Alfj.  Co.,  13 
Wis.  57,  62;  see  also  Ogilvie  v.  Knox  Ins.  Co.,  22  How.  380;  Holmes  v.  Sher- 
wood, 3  McCrary,  405,  408;  16  Fed.  Rep.  725,  727;  Allen  v.  Mcntjomery  R.  R. 
Co.,  11  Ala.  437;  Harmon  v.  Page,  62  Cal.  448;  Sfuv^on  v.  Williams,  35  Ga. 
170;  Mann  v.  Pentz,  3  N.  Y.  415;  Lane's  Appeal,  105  Pa.  St.  49;  51  Am.  Rep. 
166.  These  are  the  ordinary  prerequisites  to  T;he  filing  of  a  creditor's  bill: 
See  2  Freeman  on  Executions,  sec.  428;  3  Pomeroy's  Eq.  Jur.,  sec.  1415,  and 
notes.  But  within  the  general  principles  of  creditors'  suits,  special  circum- 
stances, as  the  bankruptcy  of  the  corporation,  its  notorious  insolvency,  or  its 
formal  dissolution,  may  excuse  creditors  from  first  taking  these  steps:  See 
Cook  on  Stock  and  Stockholders,  sec.  200;  Terry  v.  Anderson,  95  U.  S.  628, 
638,  per  Waite,  C.  J.;  but  it  is  not  a  sufiicient  showing  that  no  judgment  at 
law  could  be  obtained  to  allege  that  the  stockholders  have  failed  and  re- 
fused to  elect  diregtors  and  officers,  an  act  of  the  legislature  expressly  au- 
thorizing process  to  be  served  on  the  late  president,  cashier,  or  any  director 
of  the  corporation:  Blake  v.  Hinkle,  10  Yerg.  218. 

It  has  been  held  that  the  judgment  must  be  a  judgment  of  the  state  in 
which  the  creditor's  bill  is  filed:  Patterson  v.  Lynde,  112  111.  196,  204;  Bank 
of  Virginia  v.  Adams,  1  Pars.  Sel.  Cas.  534,  —  a  ruling  which  might  be  the 
means  of  denying  the  creditor  relief;  but  if  a  receiver  of  the  corporation  is 
appointed  by  a  court  of  equity  of  one  state,  or  if  the  corporation  has  made 
an  assignment  for  the  benefit  of  creditors,  and  the  court  has  made  an  assess- 
ment, such  receiver  or  assignee  will  be  permitted  to  maintain  an  action  at  law 
in  another  state  to  recover  the  amounts  unpaid  thereunder:  Glenn  v.  Wil- 
Uams,  60  Md.  93;  Patterson  v.  Lynde,  112  111.  196,  206;  Dayton  v.  Borst,  31 
N.  Y.  435,  438. 

Judgment  against  Corporation  is  Conclusive  in  Creditor's  Suit  to 
Reach  Unpaid  Subscriptions.  — Since  a  judgment  conclusively  establishes 
the  plaintiff's  claim  against  parties  and  privies,  and  cannot  be  collaterally  at- 
tacked, except  for  fraud  or  want  of  jurisdiction,  it  follows  that,  as  the  stock- 
holders are  represented  in  the  action  by  the  corporation,  a  judgment  against 
the  corporation  is  conclusive  as  to  the  extent  and  validity  of  the  creditor's 
demand  in  his  collateral  suit  against  the  stockholders  to  compel  the  payment 
of  their  unpaid  subscriptions,  unless  the  judgment  can  be  impeached  for 
fraud  or  for  the  want  of  jurisdiction:  Cook  on  Stock  and  Stockholders,  sec. 
209;  2  Morawetz  on  Corporations,  sec.  865;  Marsh  v.  BurrougJis,  1  Woods,  403; 
Bisset  v.  Kentucky  River  Nav.  Co.,  15  Fed.  Rep.  353;  Glenn  v.  Springs,  26  Id. 
494;  Glenn  v.  Williams,  60  Md.  93;  Bank  of  Wooster  v.  Stevens,  1  Ohio  St.  233; 
Henry  v.  Vermillion  etc.  R.  R.,  17  Ohio,  187,  190;  compare  Hastings  v.  Drew, 
76  N.  Y.  9;  Stepltens  v.  Fox,  83  Id.  313.     Of  course  this  does  not  preclude  a 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  815 

stoc'-iholder  from  setting  up  special  defenses  whicli  he  may  have  to  his  per- 
Bou  ■.!  liability.  The  same  rules  should,  on  principle,  apply  in  proceedings  to 
enforce  the  statutory  liability  of  stockholders:  See  post,  this  note. 

Parties  to  Bill  in  Equity.  —  While  it  is  not  necessary  that  all  the  credi- 
toro  should  be  actually  parties  jilaintifT  in  the  equitable  suit  to  compel  the 
payment  of  unpaid  subscriptions,  nevertheless  the  suit  must  bo  in  behalf  of 
all:  Cook  on  Stock  aud  Stockholders,  sec.  205;  Thompson's  Liability  of 
Stockholders,  sec.  351;  2  Morawetz  on  Corporations,  sees.  8G4,  866;  Ofjilviev. 
Knox  Ins.  Co.,  22  How.  380;  i/ars/i  v.  Barroio/hs,  1  Woods,  463,  467;  Holmes 
V.  Sherwood,  3  McCrary,  405,  408;  16  FeJ.  Rep.  725,  727;  Cleveland  Rolling 
mil  Co.  V.  Texas  etc.  R'y,  27  Fed.  Rep.  250;  Adler  v.  Milwaukee  Patent  Brick 
ilfj.  Co.,  13  Wis.  57,  62;  Coleman  v.  White,  14  Id.  700;  80  Am.  Dec.  797; 
Mann  v.  Pentz,  3  N.  Y.  415;  Brundage  v.  Monumental  G.  <fc  <S.  Min.  Co.,  12 
Or.  322;  Crease  v.  Babcock,  10  Met.  531;  Orew  v.  Breed,  10  Id.  569,  575;  First 
Nat.  Bink  v.  Ilinjham  M/<j.  Co.,  127  Mass.  563;  Wetherbee  v.  Baker,  35 
N.  J.  Eq.  501;  compare  Patterson  v.  Lynde,  112  111.  196,  205;  Hicklimj  v.  Wil- 
son, 104  Id.  54;  and  see  Hijhtower  v.  Thornton,  8  Ga.  486;  52  Am.  Dec.  412; 
but  the  cases  do  not  seem  to  be  quite  uniform. 

Tlic  bill,  on  general,  equitable  principles,  in  order  that  the  burden  may  be 
equalized,  and  a  multiplicity  of  suits  avoided,  should  be  against  all  the 
stockliolders,  unless  they  are  unknown,  insolvent,  beyond  the  jurisdiction  of 
the  court,  or  it  is  impracticable  from  their  great  number  to  bring  them  all 
before  the  court:  Cook  on  Stock  and  Stockholders,  sec.  206;  Thompson's 
Liability  of  Stockholders,  sec.  353;  2  Morawetz  on  Corporations,  sec.  866; 
Adler  V.  Milwaukee  Patent  Brick  Mfg.  Co.,  13  Wis.  57,  62;  Coleman  v.  White, 
14  Id.  700,  702;  Mann  v.  Pentz,  3  N.  Y.  415;  Patterson  v.  Lynde,  112  111.  196, 
205;  Vickv.  Lane,  56  Miss.  681;  Bronson  v.  Wilmington  L.  his.  Co.,  85  N.  C. 
411;  Hadley  v.  Russell,  40  N.  H.  109;  Erickson  v.  Nesmith,  46  Id.  371;  Rice  v. 
Merrimac  Hosiery  Co.,  56  Id.  114,  128;  Connecticut  River  Savings  Bank  v.  Fiske, 
60  Id.  363,  368;  although,  according  to  a  respectable  line  of  authorities,  this 
is  not  necessary;  the  suit  may  be  brought  against  one,  or  any,  or  all,  leaving 
those  who  are  joined  to  seek  their  remedy  over  against  those  who  may  not  be: 
Marsh  v.  Burroughs,  1  Woods,  463,  468;  Holmes  v.  Sherivood,  3  McCrary,  405; 
16  Fed.  Rep.  725;  Ogilvie  v.  Knox  Ins.  Co.,  22  How.  380;  Hatch  v.  Daiia,  101 
U.  S.  205,  210;  Brundage  v.  Monumental  G.  <&  S.  Min.  Co.,  12  Or.  322.  Thus, 
Bays  Bradley,  J.,  in  Marsh  v.  Burrouglis,  supra,  "a  judgment  creditor  who 
has  exhausted  his  legal  remedy  may  pursue  in  a  court  of  equity  any  equitable 
interest,  trust,  or  demand  of  his  debtor,  in  whosesoever  hands  it  may  be. 
And  if  the  party  thus  reached  has  a  remedy  over  against  other  parties  for 
contribution  or  indemnity,  it  will  be  no  defense  to  the  primary  suit  against 
him  that  they  are  not  parties.  If  a  creditor  were  to  be  stayed  until  all  such 
parties  could  be  made  to  contribute  their  proportionate  shares  of  the  liabil- 
ity, he  might  never  get  his  money  ";  and  again,  it  is  said  in  Hatch  v.  Dana, 
stcpra:  "  Tlio  liability  of  a  subscriber  for  the  capital  stock  of  a  company  is 
several,  and  not  joint.  By  his  subscription,  each  becomes  a  several  debtor 
to  the  company,  as  much  so  as  if  he  had  given  his  promissory  note  for  the 
amount  of  his  subscription.  At  law,  certainly,  his  subscription  may  be  en- 
forced against  him  without  joinder  of  other  subscribers;  and  in  equity  his 
liability  does  not  cease  to  be  several."  Some  of  the  authorities  which  adopt 
this  view  suggest  a  distinction  between  the  case  of  a  bill  filed  for  the  pur- 
pose of  winding  up  an  insolvent  corporation,  and  reaching  all  the  corporate 
assets,  on  the  one  hand,  and  a  bill  which  has  for  its  object  simply  tlic  collec- 
tion of  a  debt  out  of  unpaid  subscriptions,  on  the  other;  requiring  all  tho 


816  Thompson  v.  Reno  Savings  Bank.       [Nevada, 

stockholders  to  be  made  defendants  in  the  first  case,  unless  some  valid  ex- 
cuse be  shown,  but  permitting  the  suit  to  be  brought  against  one  or  any  of 
them  in  the  second  case:  See  Brundaje  v.  Monumental  G.  d-  S.  Alin.  Co.,  12 
Or.  322;  Hatch  v.  Dana,  101  U.  S.  205,  210. 

The  corporation  itself,  if  in  existence,  should  a.lso  be  made  a  party  de- 
fendant, so  as  to  be  bound  by  the  decree:  Cook  on  Stock  and  Stockholders, 
sec.  206;  Thompson's  Liability  of  Stockholders,  sec.  301;  Adler  v.  Milwaukee 
Patent  Brick  Mf<j.  Co.,  13  Wis.  57,  G2;  Coleman  v.  White,  14  Id.  700;  80  Am. 
Dec.  797;  Mann  v.  Pentz,  3  N.  Y.  415;  Patterson  v.  Lynde,  112  111.  190,205; 
Perkins  v.  Sanders,  56  Miss.  733.  See  the  questions  as  to  parties  further 
considered,  with  reference  to  the  statutory  liability  of  stockliolders,  in  this 
note,  vost. 

Decree  in  Equitable  Suit.  —  The  different  notions  as  to  the  nature  of 
the  creditor's  bill,  observed  under  the  last  preceding  head,  will  evidently  re- 
sult in  different  rules  concerning  the  decree.  According  to  what  may  be  con- 
sidered the  prevailing  idea,  the  decree  should  be  for  the  benefit  of  all  the 
creditors  who  may  choose  to  come  in  and  prove  their  debts  under  it:  Alonjan  v. 
Ne^v  York  etc.  B.  P.,  10  Paige,  290;  40  Am.  Dec.  244;  and  a  creditor  who  first 
proceeds  should  not  thereby  be  entitled  to  ^jriority  over  the  others:  See  Rohin- 
son  V.  Bankof  Darien,  18  Ga.  65,  108;  compare  Miers  v.  Zanesvilk  etc.  Turnpike 
Co.,  13  Ohio,  197;  11  Icl.  273;  Jones  v.  Arkansas  Mechanical  etc.  Co.,  38  Ark. 
17.  On  the  other  hand,  the  decree  should  be  so  moulded  as  to  give  the  stock- 
holders all  the  privileges  to  which  they  would  have  b^en  entitled  under  the 
charter  of  the  corporation,  had  the  stock  been  called  in  by  the  directors: 
Hirjhtower  v.  Thornton,  8  Ga.  486,  502;  52  Am.  Dec.  412;  and  an  equitable 
contribution  is  to  be  made  by  the  court  between  all  the  stockholders,  as  far  as 
may  be:  Enckson  v.  Nesviith,  46  N.  H.  371.  If  the  court  makes  an  assess- 
ment, only  so  much  of  the  unpaid  capital  as  is  necessary  for  the  payment 
of  the  debts  can  be  called  in,  and  a  pro  rata  apportionment  is  made:  BelVs 
Appeal,  115  Pa.  St.  88;  2  Am.  St.  Rep.  532;  compare  IlickUwj  v.  Wilson,  104 
111.  54;  but,  it  is  held,  the  mere  fact  that  the  whole  amount  due  from  any 
stockholder  may  not  be  ultimately  wanted  for  the  payment  of  the  creditors, 
if  all  the  other  solvent  stockholders  should  pay  their  ratable  proportions  of 
what  still  remains  due  on  their  stock,  will  not  authorize  such  stockholder  to 
enjoin  a  receiver  from  proceeding  to  enforce  the  payment  of  the  balance  due 
from  him  in  the  first  instance:  Pentz  v.  Hawley,  1  Barb.  Ch.  122;  if  any  bal- 
ance should  remain  in  the  receiver's  hands  after  satisfying  the  debts  of  the 
corporation,  and  the  expenses  of  executing  the  trust,  it  will  be  distributed 
among  the  several  stockholders  who  have  paid  in  full  for  their  stock. 

Liability  only  Extend.s  to  Unpaid  Subscriptions. — Independently  of 
an  additional  liability  imposed  for  the  benefit  of  creditors  upon  the  stock- 
holders of  a  corporation,  by  special  charter,  general  acts  of  incorporation,  or 
other  statutes,  a  stockholder's  liability  is  governed  by  his  contract  of  sub- 
scription, and  does  not  extend  beyond  the  amount  due  thereon:  Taylor  on 
Corporations,  sec.  700;  2  Morawetz  on  Corporations,  sec.  831;  Seymour  v. 
Sturgess,  26  N.  Y.  134;  Waiifield  v.  Marshall  County  Cannintj  Co.,  72  Iowa, 
666;  2  Am.  St.  Rep.  263;  Jones  v.  Jarman,  34  Ark.  323,  328;  Ward  v.  Gris- 
woldville  Mfg.  Co.,  16  Conn.  593,  599.  There  is  no  common-law  liability  for 
the  debts  of  the  corporation:  See  post,  this  note.  If,  therefore,  stock  is  fully 
paid  up,  there  is  no  further  liability  in  equity:  Warjteld  v.  Marshall  County 
Canning  Co.,  supra;  and  see  post.  So  where  a  constitution  provided  that  "  in 
no  case  shall  any  stockholder  be  individually  liable  in  any  amount  over  and 
above  the  amount  of  the  stock  owned  by  him  or  her, "  a  stockholder  whose 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  817 

stock  is  fully  paid  up  is  not  liable  for  a  debt  of  the  corporation:  Schricker  ▼. 
Ridings,  G5  Mo.  208;  Gausen  v.  Buck,  68  Id.  545.  It  results  that  solvent 
stockholders,  beyond  their  unpaid  subscriptions,  are  not  bound  to  make  up, 
for  the  benefit  of  creditors,  the  deficiency  resulting  from  defaulting  and  in- 
solvent stockholders:  South  Carolina  Mf<j.  Co.  v.  Bank  of  South  Carolina,  6 
Rich.  Eq.  227;  compare  Haslett's  Ex'rs  v.  Wotherspoon,  1  Strob.  Eq.  209. 
And  a  statute  to  which  the  stockholders  did  not  consent,  authorizing  assess- 
ments against  stockholders  who  have  paid  the  full  amount  of  their  subscrip- 
tions, is  a  law  impairing  the  validity  of  their  contract  with  the  company,  and 
is  therefore  unconstitutional:  Ireland  v.  Palestine  etc.  Turnpike  Co.,  19  Ohio 
St.  2G9. 

The  unissued  shares  of  stock  of  a  corporation  are  not  assets;  and  in  the  ab- 
sence of  a  provision  of  its  charter  or  other  statute  to  the  contrary,  it  is  held, 
one  to  whom  shares  of  stock  have  been  transferred  by  the  corporation  gratu- 
itously, does  not,  by  accepting  thein,  become  a  debtor  of  the  company,  or 
make  himself  liable  to  pay  the  nominal  face  of  the  shares,  as  upon  a  subscrip- 
tion for  the  stock,  or  a  contract;  and  an  action  is  not  maintainable  against 
him,  by  a  creditor  of  the  corporation,  to  compel  him  to  pay  for  such  shares: 
Chriiitensen  v.  Eno,  106  N.  Y.  97;  compare  Coit  v.  North  Carolina  etc.  AmaJr 
gamatinij  Co.,  14  Fed.  Rep.  12;  15  Phila.  496. 

It  is  the  practice  in  some  states  to  organize  mining  corporations  with  a 
nominal  capital,  bearing  little  or  no  relation  to  the  real  capital  which  the 
stockholders  propose  to  contribate,  and  to  issue  the  stock  as  fully  paid  up, 
subject  to  assessment  as  the  needs  of  the  company  may  require,  in  considera- 
tion of  the  transfer  of  the  mining  property  to  the  corporation.  In  such  a  case, 
there  is  no  subscribed  stock;  and  a  person  who  contracts  with  the  company 
must  be  deemed  to  have  contracted  with  a  view  only  to  such  security  as  the 
property  transferred  to  it  may  furnish,  irrespective  of  the  capital  indicated 
by  the  charter:  2  Morawetz  on  Corporations,  sec.  830.  It  is  accordingly  lield 
that  in  a  case  arising  in  California,  that  the  only  liabilitj'  of  stockholders  of 
such  a  corporation  was  the  general  constitutional  and  statutory  personal  lia- 
bility imposed  upon  them  for  the  corporate  debts  and  liabilities  and  the 
liability  of  their  stock  to  assessment  by  the  corporation:  In  re  South  Moun- 
tain Consolidated  Mining  Co.,  8  Saw.  366;  14  Fed.  Rep.  347,  affirming  7  Saw. 
30;  6  Fed.  Rep.  403;  so  in  Boss  v.  Silver  and  Copper  Island  Min.  Co.,  29 
N.  W.  Rep.  591  (Alinn.),  affirmed  on  rehearing  in  31  Id.  219,  it  was  decided, 
approving  the  preceding  case,  that  where  a  statute,  under  which  a  mining 
corporation  was  formed,  provided  that  no  stock  "issued  or  sold,  purporting 
to  be  full  paid,  shall  be  subject  to  any  further  assessment  in  the  hands  of 
the  lawful  liolder  thereof  without  his  consent,"  if  the  corporation  sold,  in 
good  faith,  at  less  than  par  value,  shares  of  its  stock  purporting  to  be  full 
paid,  the  creditors  of  the  corporation  had  no  recourse  against  the  purchasers 
or  holders  of  the  stock  for  the  difi'erence  between  the  par  value  and  the  price 
at  which  the  shares  were  sold. 

Payment  of  Shares,  how  Made  —  Full-paid  Shares. — Subscriptions 
to  corporate  stock  need  not,  in  the  absence  of  statutory  provisions  requiring 
it,  be  paid  for  in  cash;  but  any  property  which  the  corporation  is  authorized 
to  purchase,  or  which  is  necessary  for  the.  purposes  of  its  legitimate  business, 
or  any  services  for  which  the  corporation  would  be  entitled  to  expend  its 
funds,  may  be  received  or  rendered  in  payment:  Cook  on  Stock  and  Stock- 
holders, sees.  13,  15;  Thompson's  Liability  of  Stockholders,  sec.  134;  Boone 
on  Corporations,  sec.  112;  2  Morawetz  on  Corporations,  sec.  825;  Taylor  on 
Corporations,  sec.  701;  Coffin  v.  Bansdell,  110  Ind.  417;  Brant  v.  Ehlen,  59 
Am.  St.  Rep.,  Vol.  III.— 52 


818  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

Md.  1;  Liehlce  v.  Kyiapp,  79  Mo.  22;  Kehlor  v.  Lademann,  11  Mo.  App.  550; 
Carry.  Le  Fevre,  27  Pa.  St.  413.  Such  a  contribution  of  property  or  services 
will,  therefore,  discharge  the  stockholder  for  unpaid  subscriptions  to  the  ex- 
tent of  their  value.  And  the  creditors  vs^ill  be  bound  by  a  valuation  of  the 
property  or  services  in  good  faith,  although  it  prove  to  be  excessive:  2  Mora- 
Tvetz  on  Corporations,  sec.  825;  Cook  on  Stock  and  Stockholders,  sees.  13,  44, 
47;  Ihompsoa's  Liability  of  Sbockholders,  sec.  134;  Coit  v.  Gold  Amalfjamat- 
inj  Co.,  119  U.  S.  343,  affirming  14  Fed.  Rep.  12;  15  Phila.  49G;  Phelan  v. 
Hazard,  5  Dill.  45;  Van  Cott  v.  Van  Brunt,  82  N.  Y.  535;  Coffin  v.  Ransdell, 
110  Ind.  417;  Brant  y.  Ehle.n,  59  Md.  1;  see,  under  the  English  companies* 
acts,  LeekfUs  Case,  L.  R.  11  Eq.  100;  S.  C.  on  appeal,  L.  R.  G  Ch.  4G9;  Dis- 
derinCaae,  L.  R.  11  Eq.  242;  Sykers  Case,  L.  R.  13  Eq.  255;  Forbes  s  Case, 
L.  R.  5  Ch.  270;  Andersons  Case,  L.  R.  7  Ch.  D.  75;  and  compare  Schroder's 
Case,  L.  R.  11  Eq.  131;  Coates's  Case,  L.  R.  17  Eq.  1G9;  Ferraos  Case,  L.  R. 
9  Ch.  355;  also  Currie's  Case,  3  De  Gex,  J.  &  S.  3G7;  Leif child's  Case,  L.  R.  1 
Eq.  231;  Ashworth  v.  Bristol  etc.  R'l/,  15  L.  T.,  N.  S.,  5G1;  Guest  v.  Worcester 
etc.  R'y,  L.  R.  4  C.  P.  9;  PelVs  Case,  L.  R.  5  Ch.  11;  Baron  De  Bevilles  Case, 
L.  R.  7  Eq.  11;  Dent's  Case,  L.  R.  15  Eq.  407;  8  Ch.  775;  FothenjilVs  Case, 
L.  R.  8  Ch.  270;  Spargo's  Case,  L.  R.  8  Ch.  407;  Browns  Case,  L.  R.  9  Ch. 
102;  Carlinr/s  Case,  L.  R.  1  Ch.  D.  115;  "there  must  be  actual  fraud  in  the 
transaction  to  enable  creditors  of  the  corporation  to  call  the  stockholders  to 
account":  Coit  v.  Gold  Amaljamatinij  Co.,  supra. 

In  New  York,  the  act  of  1853,  amendatory  of  the  act  of  1848,  authorizing 
the  formation  of  corporations  for  manufacturing  and  other  purposes,  confers 
authority  upon  the  trustees  of  such  corporations  to  purchase  property  "ne- 
cessary for  their  business,  and  to  issue  stock  to  the  amount  of  the  value 
thereof,  in  payment  therefor  ";  and  by  section  10  of  the  act  of  1848,  stock- 
holders of  such  corporations  are  made  severally  individually  liable  to  the 
creditors  of  the  company  to  an  amount  equal  to  the  stock  held  by  them  re- 
spectively, until  the  whole  capital  stock  shall  have  been  paid  in.  It  has  been 
held,  under  these  acts,  that  when  the  stock  was  fully  paid  up,  in  money  or 
property,  the  stockholders  were  released  from  personal  liability:  Boynton  v. 
Hatch,  47  N.  Y.  225;  Douglass  v.  Ireland,  73  Id.  100;  but  if  exemption  from 
personal  liability  is  sought  by  the  holders  of  stock  originally  issued  for  prop- 
erty, a  creditor  may  impeach  the  transaction  for  fraud:  Boynton  v.  Hatch, 
supra;  although  a  mere  mistake  or  error  of  judgment  by  the  trustees,  either 
as  to  the  necessity  of  the  purchase,  or  as  to  the  value  of  the  property  so  pur- 
chased, if  made  in  good  faith,  and  not  to  evade  the  statute,  will  not  subject 
a  holder  of  the  stock  issued  in  payment  of  the  property  purchased  to  such 
liability:  Schenckv.  Andrews,  57  N.  Y.  133;  Boynton  v.  Andreivs,  G3  Id.  93; 
Douglass  v.  Ireland,  supra. 

But  payment  of  stock  subscriptions  is  good,  as  against  creditors,  only  when 
made  in  money,  or  iu  what  may  fairly  be  considered  as  money's  worth:  Welh- 
erheey.  Baker,  35  N.  J.  Eq.  501.  Thus  where  a  corporation  was  organized 
for  the  manufacture  of  a  patented  article,  and  its  capital  stock  was  taken  by 
the  defendants  iu  exchange  for  their  interest  in  the  patent,  which  proved  to 
be  worthless,  the  defendants  having  paid  no  valiie  for  their  stock,  are  liable 
to  the  creditors  as  for  unpaid  subscriptions:  Chisholm  v.  Forny,  65  Iowa,  333; 
and  see,  to  the  same  effect,  Thurston  v.  Duffy,  38  Hun,  327.  The  trust  for  the 
benefit  of  creditors  of  a  corporation  in  unpaid  subscriptions  cannot  be  de- 
feated or  the  fund  impaired  by  any  simulated  or  pretended  payment  for  the 
stock,  or  any  device  short  of  actual  payment:  Sawyer  v.  Hoag,  17  Wall.  GIO; 
Crawford  v.  Eohrer,  59  Md.  599,  604;  and  see  Goodwin  v.  McGehee,  15  Ala. 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  819 

232,  246.  Any  arrangement,  therefore,  by  which  the  stock  is  but  nominally 
paid  for,  whether  in  money  or  property,  the  corporation  not  in  fact  getting 
the  beueiit  of  the  price  in  good  faith,  is  not  a  valid  payment  as  against  the 
creditors  of  the  corporation,  however  it  may  be  regarded  as  between  the  cor- 
poration and  the  stockholder:  Crawford  v.  Eohrer,  supra.  So  where  the  offi- 
cers of  a  corporation  made  an  arrangement  with  themselves  as  stockholders, 
whereby  paid-up  certificates  were  issued  to  themselves,  in  consideration  of 
real  estate  conveyed  at  a  priue  understood  to  be  many  times  its  real  value,  as 
between  such  stockholders  and  a  creditor,  the  stock  will  be  considered  paid 
only  to  the  extent  of  the  fair  value  of  the  property  conveyed:  Osgood  v.  Kinij, 
42  Iowa,  478;  and  "as  between  the  creditors  of  the  corporation  and  the  origi- 
nal holders  of  the  stock,  as  in  the  case  here,  it  in  no  manner  afifects  the 
rights  of  the  former  that  the  stock  has  been  issued  as  fully  paid-up  stock;  for 
their  rights  depend,  not  upon  the  mere  appearance  of  things,  but  upon  the 
actual  bona  Jide  payment  by  the  stockholder,  whether  that  payment  be 
alLged  to  have  been  made  in  money  or  property":  Crawford  v.  Rohrer,  59 
Md.  099,  G04. 

As  a  rule,  a  corijoration  cannot  issue  its  stock  at  less  than  the  par  value, 
a.3  fixed  by  the  charter:  Taylor  on  Corporations,  sgc.  702;  Haivleyv.  Upton, 
102  U.  S.  314;  Jaction  v.  Truer,  G4  Iowa,  4G9;  52  Am.  Rep.  449;  C/ioutcau 
V.  Dean,  7  Mo.  App.  210;  Kehlor  v.  Lademann,  11  Id.  550;  but  see  Christen- 
sen  v.  Eno,  100  N.  Y.  97  (where  unissued  shares  of  stock  were  transferred  by 
the  corporation  gratuitously,  without  creating  any  liabdity  in  the  transferee); 
and  In  re  South  Mountain  Consol.  Min.  Co.,  8  Saw.  3GG;  14  Fed.  Rep.  347, 
affirming  7  Saw.  30;  5  Fed.  Rep.  403;  Ross  v.  Silcer  and  Copper  Island  Min. 
Co.,  29  N.  W.  Rep.  591  (Minn.),  affirmed  on  rehearing  31  Id.  219  (cases  of 
mining  corporations  discussed  supra).  Compare  the  following  English  cases 
reaching  a  different  conclusion:  In  re  Dronfeld  Silkstone  Coal  Co.,  L.  R.  17 
Ch.  D.  7G;  In  re  Ambrose  Lake  T.  A  C.  Min.  Co.,  L.  R.  J 4  Ch.  D.  390;  In  re 
Ince  Hall  Rolling  Mills  Co.,  30  Week.  Rep.  945.  Thus  where  one,  by  his  con- 
tract of  subscription,  agreed  to  pay  but  twenty  per  cent  of  the  par  value  of 
the  stock,  which  purported  to  be  non-assessable,  he  can  nevertheless  be  com- 
pelled to  pay  the  remaining  eighty  per  cent  at  the  suit  of  the  company's 
assignee  in  bankruptcy:  Hawley  v.  Upton,  supra:  and  where  ten  thousand 
dollars  of  stock  was  issued  by  a  corporation  as  "full-paid"  to  an  officer 
thereof,  in  paycnent  of  services  rendered  by  him  valued  at  two  thousand 
five  hundred  dollars,  the  stock  being  taken  at  its  market  value  of  twenty- 
five  per  cent,  such  officer  was  nevertheless  held  liable  to  creditors  of  the  cor- 
poration to  the  extent  of  the  difference  between  the  value  of  his  services  and 
the  par  value  of  the  stock:  Chouteau  v.  Dean,  supra;  and  in  Jackson  v.  Truer, 
supra,  it  was  also  decided  that  where  stock  of  an  embarrassed  corporation 
was  issued  to  creditors  in  settlement  of  a  demand,  which  it  had  no  other 
means  of  paying,  at  a  certain  per  cent  of  the  nominal  value  of  the  stock,  that 
the  creditors  were  liable  for  the  unpaid  balance;  and  in  Flinn  v.  Datjlci/,  7 
Fed.  Rep.  785,  it  was  further  held  that  where  the  defendants  subscribed  to 
the  increased  capital  stock  of  an  embarrassed  corporation,  with  the  under- 
standing embodied  in  the  subscription,  assented  to  by  the  stockholders,  that 
they  were  to  receive  the  stock  at  sixty-six  and  two  thirds  cents  on  the  dollar, 
which  was  all  that  it  was  worth,  the  assignee  in  bankruptcy  might,  notwith- 
standing, collect  the  remaining  one  third  of  the  par  value  of  the  stock  for  the 
benefit  of  future  creditors;  but  that  the  arrangement  was  binding  upon  the 
stockholders,  because  they  assented  to  it,  and  it  was  not  a  fraud  upon  exist- 
ing creditors,  because  the  assets  of  the  corporation  were  increased  by  the 


820  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

amonnt  of  money  actually  paid  in,  and  to  that  extent  they  were  benefited 
by  the  subscription;  but.  on  the  other  hand,  in  Clark  v.  Bever,  31  Fed.  Rep, 
670,  it  was  decided  by  Love,  D.  J.,  in  an  elaborate  and  convincing  opinion, 
in  which  he  strongly  criticises  Jackson  v.  Traer,  supra,  tliat  while  an  agree- 
ment between  a  corporation  and  a  subscriber  by  which  the  latter  was  to  pay 
less  than  the  par  value  of  bis  stock  is,  in  general,  invalid  as  to  the  creditors 
of  the  corporation,  and  also  as  to  other  stockholders  who  did  not  consent 
thereto,  yet  if  the  agreement  would  prove  a  benefit  rather  than  an  injury  to 
the  creditors  and  stockholders,  they  cannot  complain.  Therefore,  where  a 
corporation  was  insolvent,  and  its  stock  worthless,  and  certain  of  its  credi- 
tors, in  payment  of  a  debt  due  them,  accepted  in  good  faith,  by  resolution 
spread  on  the  minutes  of  the  corporation,  unissued  stock  at  twenty  cents 
on  the  dollar,  they  are  not  liable  to  a  judgment  creditor  of  the  company  for 
the  eighty  cents  remaining  unpaid  on  each  dollar,  although  the  debt  on  which 
the  judgment  was  recovered  was  subsequently  contracted,  the  creditor  being 
assumed  to  have  bad  notice  of  the  transaction.  The  justice  and  good  sense 
of  this  decision  are  apparent. 

While  it  is  thus  true  that  a  corporation  cannot,  as  a  general  rule,  issue  its 
stock  at  less  than  the  par  value,  and  preclude  its  creditors  from  compelling 
the  payment  of  the  difference  between  the  par  value  and  the  amount  paid  for 
the  stock,  it  is  equally  true  that  purchasers  of  stock,  issued  as  full-paid,  in 
good  faith,  and  without  notice  that  it  was  not  in  fact  full-paid,  cannot  be  held 
for  the  unpaid  portion,  either  by  the  corporation,  or  its  representatives,  or 
its  creditors:  Cook  on  Stock  and  StockhoUlers,  sec.  50;  Thompson's  Liabdity 
of  Stockholders,  sec.  135;  2  Morawetz  on  Corporations,  sec.  830;  Taylor  on 
Corporations,  sec.  702;  2  Waterman  on  Corporations,  138;  Foreman  v.  Bige- 
low,  4  Cliff.  508;  Steacy  v.  LiUle  Rock  etc.  B.  B.,5  Dill.  348;  Phelan  v.  Hazard, 
5  IJ.  45;  Cleveland  Boiling  Mill  Co.  v.  Texas  etc.  B'l/,  27  Fed.  Rep.  250;  Brant 
v.  Ehlen,  59  Md.  1;  Keystone  Bridge  Co.  v.  McCluney,  8  Mo.  App.  496;  Er- 
shine  v.  Loeicenstein,  82  Mo.  301,  affirming  11  Mo.  App.  595;  Waterlvousey. 
Jamieson,  L.  R.  2  H.  L.  29.  Thus  it  is  said  in  Brant  v.  Ehlen,  supra,  that 
"where  shares  are  issued  by  the  company  to  the  subscriber  as  full-paid 
shares,  and  are  sold  by  the  subscriber  as  such,  there  is  no  ground  on  which 
a  promise  can  be  implied  on  the  part  of  the  purchaser,  without  notice,  to  be 
answerable,  either  to  the  company  or  to  its  creditors,  should  the  representa- 
tions on.  the  faith  of  which  he  purchased  prove  to  be  false.  Ho  could  not  be 
held  liable  on  the  ground  of  contract,  because  he  never  agreed  to  purchase 
any  other  shares  than  full-paid  shares;  and  if  it  be  said  that  the  shares  were 
fraudulently  issued,  he  could  not  be  held  liable  on  the  ground  of  fraud,  be- 
cause he  was  in  no  sense  a  party  to  the  fraud."  So  "  a  share  of  stock  in  the 
ordinary  form  is  to  be  taken  to  be  paid  up,  in  the  absence  of  anything  appear- 
ing to  the  contrary;  and  it  can  make  no  difference  whether  the  certificate 
says  on  its  face  that  the  stock  is  fully  paid,  or  says  nothing  about  it":  Key- 
stone Bridge  Co.  v.  McCluney,  8  Mo.  App.  490,  501.  The  presumption  is,  that 
a  certificate,  in  the  usual  form,  is  full-paid;  and  a  purchaser  who  takes  it 
without  notice  to  the  contrary  is  not  liable  to  creditors  as  for  unpaid  stock: 
Johnson  v.  Lullman,  15  Id.  55,  affirmed  in  88  Mo.  507.  But  a  certificate  that 
stock  is  "full-paid  stock  "  is  not  conclusive  as  against  the  creditors,  who  may 
show,  as  against  the  ori,^inal  holJer  from  the  corporation,  that  no  considera- 
tion was  paid  therefor:  A.  Wight  Co.  v.  Steinkemeyer,  6  Mo.  App.  574;  or  that 
only  a  part  of  the  par  value  of  the  stock  has  been  paid:  Pickering  v.  Temple- 
ton,  2  Id.  424;  and  where  the  words  "  non-assessable  "  are  written  or  printed 
across  the  face  of  certificates,  the  stockholders  are  nevertheless  liable  to  pay 


April,  1885.]    Thompson  v.  Reno  Savings  Bank.  821 

whatever  remains  unpaid  upon  the  stock  whenever  it  bccomL's  necessary  that 
such  payments  should  be  made  for  tlie  purpose  of  discharging  the  debts  of  the 
company:  Upton  v.  Burnham,  3  Biss.  520.  At  most,  the  legal  effect  of  the 
words  is  a  stipulation  against  liability  from  further  assessments  after  the  en- 
tire subscription  shall  liave  been  paid:  Upton  v.  Tribilcock,  91  U.  S.  45.  And 
where  stock,  in  the  contract  of  subscription,  purports  to  be  non-assessable, 
it  can  only  mean  that  no  assessment  would  be  made  beyond  the  percentage 
the  subscriber  had  specially  bound  himself  to  pay,  unless  the  legal  liabilities 
of  the  company  required  it:  Hawley  v.  Upton,  102  Id.  314,  316. 

Withdrawal  and  Release  of  Stockholders,  and  Forfeiture  of  Stock, 
AS  Affecting  Liability  for  Unpaid  Subscriptions.  —  It  is  clear  that  a 
share-holder  cannot  relieve  himself,  at  his  own  pleasure,  from  liability,  either 
to  the  corporation  or  to  its  creditors,  for  unpaid  subscriptions  by  any  at- 
tempted withdrawal  from  the  corporation:  United  Society  v.  President  etc.  of 
Eagle  Bank,  7  Conn.  456;  Trustees  of  Bishop's  Fund  v.  President  etc.  of  Eagle 
Bank,  7  Id.  476;  Ua^  v.  Flesher,  33  Ohio  St.  107,  112;  Chouteau  v.  Dean,  7 
Mo.  App.  210;  Haskell  V.  Sells,  14  Id.  91;  and  a  provision  in  the  charter  of  a 
corporation  that  the  stock  of  a  delinquent  subscriber  shall  be  forfeited,  being 
for  the  benefit  of  the  corporation,  and  not  for  the  stockholder,  is  not  to  be 
construed  as  a  privilege  of  the  stockholder  to  abandon  his  shares  at  will: 
Hightower  v.  Thornton,  8  Ga.  4S0;  52  Am.  Dec.  412.  And  since  the  unpaid 
subscriptions  constitute  a  trust  fund  for  the  benefit  of  creditors  of  the  corpo- 
ration, it  is  equally  clear  that  a  stockholder  cannot  be  altogether  released 
from  liability  for  iinpaid  subscriptions,  or  his  liability  therefor  limited,  by 
any  agreement  or  arrangement  between  himself  and  the  corporation  or  its 
agents,  or  by  any  resolution  adopted  by  its  directors,  or  by  the  stockholders 
themselves,  to  the  prejudice  of  its  creditors:  Cook  on  Stock  an. I  Stock- 
holders, sees.  108,  170;  Thompson's  Liability  of  Stockholders,  sec.  201;  2 
Morawetz  on  Corporations,  sees.  824,  841;  Taylor  on  Corporations,  sec.  745; 
note  to  Freeland  v.  McCullough,  G99,  700;  Burke  v.  Smith,  16  Wall.  390,  305, 
affirming  in  part  Putnam  v.  Neiv  Albany,  4  Biss.  365;  Upton  v.  Tribilcock,  91 
U.  S.  45;  Webster  v.  Upton,  91  Id.  65,  71;  County  of  Morgan  v.  Allen,  103  Id. 
498;  Scovillv.  Thayer,  105  Id.  14:3;  Upton  v.  Ilansbroujh,  3  Biss.  417;  Upton 
V.  Jackson,  1  Flipp.  413;  Mann  v.  Cooke,  20  Conn.  178;  Crandall  v.  Lincoln, 
52  Id.  73;  52  Am.  Rep.  560;  Zirkel  v.  Joliet  Opera  Bouse  Co.,  79  III.  334; 
Singer  v.  Given,  61  Iowa,  93;  Rider  v.  Morrison,  54  Md.  429,  444;  Farnsworth 
V.  Bobbins,  36  Minn.  369;  Vick  v.  La  Rochelle,  57  Miss.  602;  Gill  v.  Balis,  72 
Mo.  424;  Chouteau  Ins.  Co.  v.  Floyd,  74  Id.  280.  291;  Chouteau  v.  Dean,  7  Mo. 
App.  210;  Haskell  V.  Sells,  14  Id.  91;  Slee  v.  Bloom,  19  Johns.  456;  10  Ara. 
Dec.  273;  Sagory  v.  Dubois,  3  Sand.  Ch.  406;  Gaff  v.  Flesher,  33  Ohio  St.  107, 
112;  compare  Directors  etc.  v.  Kisch,  L.  11.  2  H.  L.  99;  Smith's  Case,  L.  R.  2 
Cli.  604.  And  where  persons  became  stockholders  of  a  corporation,  with  the 
understanding  that  calls  were  not  to  exceed  a  certain  jjer  cent,  and  after- 
wards calls  are  made  in  excess  of  that  amount,  to  compensate  for  which 
second-mortgage  bonds  were  issued  to  such  stockholders,  they  are  liable  to 
creditors  of  the  corporation,  as  for  unpaid  stock,  to  the  amount  realized  by  a 
Bale  of  the  bonds:  Skrainka  v.  Allen,  7  Mo.  App.  434,  affirmed  in  76  Mo.  3S4; 
compare  Keystone  Bridge  Co.  v.  Barston),  8  Mo.  App.  494.  So  a  stockholder 
cannot  bo  permitted  to  reduce  the  number  of  his  shares  of  stock,  with  the 
consent  of  the  stockholders  or  of  the  directors,  so  as  to  affect  the  riglits  of 
existing  creditors:  Payne  v.  BuUard,  23  Miss.  88;  55  Am.  Dec.  74;  .and  an 
agreement  between  the  officers  of  a  corporation  and  a  stockholder  to  consoli- 
date the  stock  held  Ijy  hiia  will  not  affect  the  rights  of  existing  creditors  of 


822  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

tlie  corporation,  or  of  the  other  stockholders,  who  were  not  parties  to  the 
arrangement:  Mann  v.  Curric.  2  Barlj.  294;  so  an  attempt  on  the  part  of  a 
portion  of  the  stockhoLlers  to  withdraw  from  it,  under  a  resolution  of  the 
board  of  directors,  before  all  the  debts  are  paid,  will  be  none  the  less  void  as 
to  the  creditors  of  the  corporation  because  enough  remains  to  meet  the  claims 
of  the  creditors:  QUI  v.  Balis,  72  Mo.  42 J. 

Under  certain  circumstances,  however,  the  agreement  or  arrangement  may 
be  effective  in  discharging  or  limiting  the  liability  of  stockholders  to  creditors. 
It  is  plain  that  if  a  creditor  be  a  consenting  party,  or  is  clearly  not  preju- 
diced, he  will  be  bound.  Thus  in  Slee  v.  Bloom,  19  Johns.  45G,  10  Am.  Dec. 
273,  where,  by  an  act  under  which  a  corporation  was  formed,  the  persona 
composing  the  company  at  the  time  of  its  dissolution  were  made  individually 
responsible  to  the  extent  of  their  stock  for  its  debts  then  due  and  owing,  it 
was  held  that  a  resolution  allowing  the  stockholders  to  forfeit  their  stock,  on 
the  payment  of  a  certain  per  cent,  was  void  as  against  a  creditor  who,  al- 
though a  trustee,  protested  against  the  resolution,  notwithstanding  he 
accepted  money  raised  under  it;  but  a  resolution  that  any  stockholder  pay- 
ing certain  sums  already  called  from  his  shares  should  not  be  proceeded 
against  for  any  further  calls,  exceijt  by  way  of  forfeiture  of  stock,  to  which 
the  creditor  assented,  discharged  those  who  complied  with  the  resolution 
from  further  responsibility  to  him;  and  in  Kenton  Furnace  R.  12.  etc.  Co.  v. 
McAlpin,  5  Fed.  Rep.  737,  it  was  held  that  a  corporation  might  agree,  in 
consideration  of  the  surrender  to  it  by  the  stockholders  of  accumulated  prof- 
its, and  of  the  increased  value  of  its  property,  to  treat  its  stock  as  fully  paid 
up,  and  issue  full-paid  certificates,  and  that  the  arrancjement  was  binding 
upon  the  corporation,  the  stockholders,  all  of  whom  assented  thereto,  exist- 
ing creditors  who  also  assented,  and  subsequent  creditors  with  notice,  but 
not  as  to  non-assenting  existing  creditors.  So  where  a  corporation,  by  reso- 
lution of  its  stockholders,  reduces  the  amount  of  its  capital  stock  and  issues 
full-paid  certificates  to  take  up  the  partly  paid  certificates  at  a  certain  pro- 
portion of  the  face  thereof,  it  is  held  that  the  reduction  of  the  stock  did  not 
relieve  those  who  were  stockholders  at  the  time  from  liability  on  the  contracts 
then  existing  against  the  company,  but  the  stockholJers  to  whom  full-paid 
certificates  were  issued  would  not  be  liable  on  contracts  made  after  the  date 
of  the  reduction:  In  re  State  Ins.  Co.,  11  Biss.  301;  14  Fed.  Rep.  301;  and  in 
Erskine  v.  Peck,  13  Mo.  App.  2S0,  affirmed  in  83  Mo.  4G5,  it  was  also  held 
that  one  who  surrendered  to  a  corporation  stock  issued  to  him  as  full-paid, 
but  for  which  he  had  paid  nothing,  and  which  tlie  corporation  again  issued 
for  value  to  honafide  subscribers,  was  not  liable  as  a  stockholder  to  one  who 
became  a  creditor  of  the  corporation  long  after  the  surrender,  the  corpora- 
tion, its  capital  stock,  and  the  security  of  its  creditors  suffering  thereby  no 
real  impairment  or  prejudice  by  the  transaction;  and  again,  in  Jolaison  v. 
Lullman,  15  Mo.  App.  55,  affirmed  in  88  Mo.  567,  it  was  held,  following 
this  latter  case,  that  a  stockholder  who  surrendered  unpaid  stock  to  the  cor- 
poration was  not  liable  to  a  corporate  creditor  whose  demand  accrued  after 
the  surrender.  So,  although  the  capital  stock  of  a  corporation  is  a  trust 
fund  for  the  benefit  of  creditors,  the  legislature  may  so  modify  the  cliarter 
as  to  relieve  stockholders  from  any  future  liability  on  their  subscriptions: 
Robinson  v.  Bank  of  Darien,  18  Ga.  (55;  but  evidently  this  would  impair  the 
obligation  of  contracts,  and  could  not  be  done  as  to  non-assenting  existing 
creditors;  but  an  act  of  tlie  legislature  authorizing  the  reduction  of  the  stock 
of  a  corporation  to  the  amount  paid  in  at  a  certain  time,  and  accepted  by  the 
stockholders,  will  relieve  the  latter  from  further  liability  as  to  creditors  who 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  823 

have  become  such  since  the  reduction:  Hepburn  v.  Comm'rs  of  Exchange  and 
BanJdnrj  Co.,  4  La.  Ann.  87;  Palfrey  v.  Spaulding,  7  Id.  363;  Stark  v.  Burke,  9 
Id.  .341. 

A  bona  fide  compromise  between  a  corporation  and  a  share-holder,  by  which 
tlie  subscription  of  the  latter  is  canceled,  furthermore,  is  binding  upon  the 
creditors  as  well  as  upon  the  corporation  itself :  Cook  on  Stock  and  Stock- 
holders, sec.  171;  Thompson's  Liability  of  Stockholders,  sec.  202;  2  Morawetz 
on  Corporations,  sec.  841;  Taylor  on  Corporations,  sec.  74G;  New  Albani/  v. 
Burke,  11  Wall.  96,  reversing  in  part  Putnam  v.  New  Albany,  4  Biss.  365; 
Steaey  v.  Little  Bock  etc.  B.  B.,  5  Dill.  348;  Gelpckev.  Blake,  19  Iowa,  263; 
Lord  Belhaven's  Case,  3  De  Gex,  J.  &  S.  41. 

If  the  shares  of  a  stockholder  have  been  validly  forfeited,  moreover,  for 
non-payment  of  calls,  under  a  power  conferred  upon  the  corporation  by  ita 
charter,  the  relation  between  the  stockholder  and  the  corporation  is  thereby 
terminated,  and  he  cannot  afterwards  be  held  liable  by  corporate  creditors 
for  unpaid  subscriptions,  in  the  absence  of  collusion:  Cook  on  Stock  and 
Stockholders,  sec.  127;  Thompson's  Liability  of  Stockholders,  sec.  193;  2 
Morawetz  on  Corporations,  sec.  857;  Taylor  on  Corporations,  sec.  746;  Allen 
V.  Montijomenj  R.  B.,  11  Ala.  437;  Mills  v.  Stewart,  41  N.  Y.  384;  Macauly 
V.  BoUnson,  18  La.  Ann.  619.  "The  power  of  declaring  a  forfeiture  of  shares 
is  conferred  upon  a  corporation  solely  for  the  purpose  of  compelling  the  sub- 
Bcribers  to  pay  their  dues  promptly,  and  thus  to  increase  the  amount  of  the 
common  fund.  It  was  not  conferred,  and  cannot  be  exercised,  for  the  pur- 
pose of  discharging  stock  subscribers  from  liability  to  creditors  in  case  the 
company  should  prove  a  failui-e":  2  Morawetz  on  Corporations,  sec.  857. 
Of  course  further  liability  to  the  corporation  itself  is  gone  by  the  forfeiture: 
Small  v.  Herkimer  Mfg.  Co.,  2N.  Y.  330;  Mechanics'  Foundry  etc.  Co.  v.  Hall, 
121  Mass.  272;  Asktoa  v.  Burhank,  2  Dill.  435;  King's  Case,  L.  R.  2  Ch.  714, 
719,  731;  KnigJu's  Case,  L.  R.  2  Ch.  321. 

Conditions  Limiting  or  Relieving  Liability  of  Subscribees  for 
Unpaid  Subscriptions. — Without  entering  into  any  discussion  of  condi- 
tional subscriptions  to  capital  stock  generally,  or  their  binding  force  upon  the 
corporation  or  other  share-holders  (see  note  to  Parker  v.  Thomas,  81  Am. 
Dec.  392;,  it  is  enough  for  our  present  purpose  to  state  the  very  evident  prop- 
osition that  a  subscription,  unconditional  ou  its  face,  cannot  be  controlled  or 
qualified,  as  to  creditors  of  the  corporation,  by  any  private  understanding  or 
agreement  between  the  subscriber  and  the  officers  or  other  agents  of  the  cor- 
poration, by  which  tlie  subscriber's  lialjility,  according  to  the  terms  of  the 
subscription,  is  released  or  in  any  way  lessened:  Jeivell  v.  Bock  Biver  Paper 
Co.,  101  111.  57;  Hickling  v.  Wil.son,  104  Id.  54;  Peychaud  v.  Hood,  23  La. 
Ann.  732;  Saffold  v.  Barnes,  39  Miss.  399;  Haskell  v.  Sells,  14  Mo.  App.  91; 
Burke  V.  Smith,  16  Wall.  390,  397,  affirming  iu  part  Putnam  v.  New  Albany,  4 
Biss.  365;  2  Morawetz  on  Corporations,  sec.  842;  Cook  on  Stock  and  Stock- 
holders, sees.  137,  138.  Aside  from  the  objection  that  the  general  rules  of 
evidence  will  not  permit  the  contract  of  subscription  to  be  thus  varied  or 
modified,  persons  dealing  with  the  corporation  have  a  right  to  rely  upon  the 
Bubscriptious  as  they  purport  to  be,  and  it  would  be  a  fraud  upon  them  to 
permit  a  subscriber  to  show  that  his  apparently  unconditional  subscription 
Was  in  fact  conditional.  It  has  even  been  held  that  a  subscriber  to  the  stock 
of  a  corporation  could  not,  in  an  action  against  the  stockholders  by  the  cor- 
porate creditors  to  compel  the  payment  of  unpaid  subscriptions,  set  up  a 
secret  collateral  agreement  between  himself  and  the  company,  by  which  his 
subscription  was  to  be  paiil  in  land  instead  of  money:  Noble  v.  Callender,  20 


824  Thompson  v.  Reno  SAvrNQS  Bank.        [Nevada, 

Ohio  St.  199;  and  that  an  agreement  incorporated  into  the  contract  of  sub- 
scription itself,  limiting  the  liability  of  the  subscribers  to  the  installments 
piid  by  them,  and  providing  that  the  stock  shall  be  non-assessable,  is  void  as 
against  the  creditors  of  the  corporation,  at  all  events  creditors  without  notice 
thereof:  Union  Al.  L.  Ins.  Co.  v.  Frcar  Stone  Mf<j.  Co.,  97  111.  537;  37  Am. 
Rep.  129.  The  failure  of  a  corporation  to  complete  the  work  for  which  the 
corporation  was  established,  within  the  period  named  by  its  agent  when  so- 
liciting subscriptions,  such  a  completion  not  having  been  made  a  condition  of 
the  subscriptions,  and  the  subscribers,  by  not  paying  the  subscriptions,  hav- 
ing retarded  the  work,  will  not  discharge  the  subscribers  from  their  statutory 
obligation  to  satisfy  the  claims  of  creditors:  Pickering  v.  Temjpleton,  2  Mo. 
App.  424.  Plainly,  a  subscriber  cannot  plead  in  avoidance  of  his  liability  to 
the  creditors  of  the  corporation  that  he  merely  signed,  at  the  request  of  the 
agent  of  the  company,  as  an  inducement  for  others  to  subscribe,  with  the 
understanding  that  when  this  end  had  been  served  his  name  should  come  off 
the  list:  Pickering  v.  Templeton,  supra.  If  one  who  makes  a  conditional  sub- 
scription desires  to  take  advantage  of  the  condition  which  has  not  been  com- 
plied with,  he  shoukl  promptly  require  the  subscription  to  be  canceled,  and 
not  wait  until  debts  have  accrued  against  the  company  before  taking  any  ac- 
tion: Lee  v.  Imhrie,  13  Or.  510. 

Fraud  and  Mistake  as  Affecting  Stockholders'  Liability  for  Un- 
paid Subscriptions.  — The  rule  that  a  contract  obtained  by  fraud  is  voidable 
at  the  election  of  the  defrauded  party  applies  to  the  contract  of  a  share- 
holder in  a  corporation.  Therefore  if  one  is  induced  to  subscribe  for  or 
purchase  shares  of  stock  of  a  corporation  through  the  fraud  of  its  agents, 
he  may  have  all  the  remedies,  affirmative  and  defensive,  against  the  corpora- 
tion which  he  might  have  had  against  a  principal  in  any  other  similar  case: 
See  Cook  on  Stock  and  Stockholders,  sees.  135  et  seq. ;  Thompson's  Lia- 
bility of  Stockholders,  sees.  142  et  seq.;  note  to  Parker  v.  Thomas,  81  Am. 
Dec.  392.  But  the  contract  entered  into  through  fi-aud  is  voidable  merely,  and 
not  absolutely  void.  It  is  valid  and  bindmg  until  the  defrauded  party  elects 
to  treat  it  as  void.  And  if  he  fails  to  repudiate  it  before  the  rights  of  inno- 
cent third  parties  have  intervened,  their  equities  to  treat  it  as  valid  may  bo 
superior  to  his  claim  to  avoid  it.  Thus  in  Upton  v.  Tnbiicock,  91  U.  S.  45, 
55,  Miller,  J.,  dissenting,  says:  "I  am  of  the  opinion  that  where  an  agent  of 
an  existing  corporation  procures  a  subscription  of  additional  stock  in  it  by 
fraudulent  representations,  the  fraud  can  be  relied  on  as  a  defense  to  a  suit 
for  unpaid  installments  when  suit  is  brought  by  the  corporation,  and  that 
if  the  stockholder  has  in  reasonable  time  repudiated  the  contract,  and  offered 
to  rescind  before  the  insolvency  or  bankruptcy  of  the  corporation,  the  de- 
fense is  valid  against  the  assignee  of  the  corporation."  Again,  Dillon,  J.,  in 
Upton  V.  Englehart,  3  Dill.  496,  499,  uses  the  following  language:  "The 
effect  of  fraud  practiced  to  induce  a  contract  to  subscribe  to  stock  or  pur- 
chase shares  is,  as  respects  the  company  and  the  person  deceived,  the  same 
as  in  other  contracts,  with  the  modifications  arising  from  the  peculiar  nature 
of  the  transaction  as  to  repudiating  or  rescinding  the  contract";  but  he  con- 
tinues, page  501:  "The  proposition  is  not  a  sound  one,  that  the  right  of  a 
person,  who  has  been  drawn  into  the  purchase  of  stock  by  the  fraud  of  a 
company  or  its  agents,  to  relief  is  as  great  against  creditors  as  it  would  be 
against  the  company.  If  the  contest  is  with  the  company,  it  is  essentially 
one  with  the  alleged  share-holder's  own  partners  or  associates,  and  if  their 
corporate  respresentative  or  its  agents  have  practiced  a  fraud  upon  him,  he 
is  entitled  to  relief  against  it.     But  if  a  person  has  accepted  a  certificate  of 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  825 

stock,  and  becomes,  to  all  external  appearance,  a  stockholder,  persons  may 
have  become  creditors  of  the  company  on  the  faith  of  his  membership,  and 
in  law  are  presumed  to  do  so,  and  as  they  cannot  know  the  manner  in  which 
he  was  induced  to  become  a  stockholder,  there  is  ground  to  maintain  that  as 
to  them  the  matter  is  immaterial. "  It  is  therefore  settled  that  if  a  share- 
holder, whose  subscription  was  obtained  through  the  fraud  of  the  company's 
agents,  has  not  been  vigilant  in  discovering  the  fraud  and  in  repudiating  the 
contract,  it  will  be  no  defense  as  to  creditors  of  the  corporation,  and  that 
in  general  it  will  be  too  late  for  him  to  set  up  the  fi'aud  after  the  corporation 
has  become  insolvent  or  bankrupt:  Ojiloie  v.  Knox  Ins.  Co.,  22  How.  3S0; 
Upton  v.  TrihHcoch,  91  U.  S.  45;  Chuhb  v.  Upton,  95  Id.  GG5,  GG7;  Upton  v. 
Englchart,  3  Dill.  496;  Farrar  v.  Walker,  3  Id.  50G,  note;  Upton  v.  Jaclcson,  1 
Flipp.  413;  Upton  v.  Hanshrowjli,  3  Biss.  417;  note  to  Germantown  Passenger 
IVy  V.  Fitler,  100  Am.  Dec.  556;  see  also,  in  England,  under  tlie  companies 
acts,  Oakes  v.  Turquand,  L.  R.  2  H.  L.  325,  the  leading  case;  Stone  v.  City 
and  County  Bank,  L.  R.  3  C.  P.  D.  307;  Henderson  v.  Royal  British  Bank,  7  El. 
&  B.  356;  Dossett  v.  Harding,  1  Com.  B.,  N.  S.,  524;  Parvis  v.  Harding,  1  Id. 
633;  Daniellv.  Royal  British  Bank,  1  Hurl.  &  N.  681;  Reese  River  etc.  Min.  Co. 
V.  Smith,  L.  R.  4  H.  L.  64;  McNeill's  Case,  L.  R.  10  Eq.  503;  Pugh  and  Shar- 
man's  Case,  L.  R.  13  Eq.  572;  Wright's  Case,  L.  R.  7  Ch.  60;  PeeVs  Case,  L.  R. 
2  Ch.  674;  Houldsiuorth  v.  City  of  Glasgow  Bank,  L.  R,.  5  App.  Cas.  317;  In  re 
jEtna  Ins.  Co.,  G  I.  R.  Eq.  298;  also  BroclweWs  Case,  4  Drew.  205;  Ayres 
Case,  25  Beav.  513;  Blake's  Case,  34  Id.  639;  and  see,  further,  Thompson's 
Liability  of  Stockholders,  sees.  143-150;  2  Morawetz  on  Corporations,  sees. 
839,  840;  Taylor  on  Corporations,  sec.  744;  Saffold  v.  Barnes,  39  Miss.  399; 
Schaeffer  v.  Missouri  Home  Ins.  Co.,  46  Mo.  248;  Briggs  v.  Cornwell,  9  Daly, 
436;  Turner  v.  Grangers'  L.  &  H.  Ins.  Co.,  65  Ga.  649;  38  Am.  Rep.  801; 
Hamilton  v.  Grangers'  L.  &  II.  Ins.  Co.,  67  Ga.  145.  Some  of  the  authorities 
seem  to  favor  the  view  that  in  no  case  can  fraud  in  obtaining  the  subscrip- 
tion be  set  up  by  the  subscriber  after  the  insolvency  or  bankruptcy  of  the 
corporation.  This  may  be  true  under  the  English  companies'  act  of  1862, 
by  which  it  appears  a  creditor  is  entitled  to  hold  every  share-holder  whose 
name  is  on  the  register  of  the  company  at  the  time  proceedings  are  instituted 
to  wind  up  the  company  for  insolvency;  but  in  America  there  seems  to  be  no 
reason  for  the  universality  of  the  rule.  Thus  in  Upton  v.  Englehart,  3  Dill. 
496,  505,  Dillon,  J.,  remarks:  "I  am  inclined  to  the  opinion  that  if  a  com- 
pany has  fraudulently  misrepresented  or  concealed  material  facts,  and  thus 
drawn  an  innocent  person  into  the  purchase  of  stock,  he  at  the  time  being 
guilty  of  no  want  of  reasonable  caution  and  judgment,  and  afterwards  guilty 
of  no  laches  in  discovering  the  fraud,  and  he  thereupon  without  delay  noti- 
fies the  company  that  he  repudiates  the  contract  and  offers  to  rescind  the 
purchase,  these  facts  concurring,  I  am  inclined  to  the  opinion  that  the  bank- 
ruptcy of  the  conjpany  subsequently  appearing  will  not  enable  the  assignee 
to  insist  that  the  purchase  of  stock  is  binding  upon  him." 

It  is  unnecessary  to  stop  to  inquire  what  constitutes  fraud  within  the 
meaning  of  the  foregoing  rules:  See  note  to  Parker  v.  Thomas,  81  Am.  Dec. 
385.  However,  it  may  here  be  noticed  that  misrepresentations  by  the  agent 
of  a  corporation  as  to  the  non-asscssability  of  its  stock,  beyond  a  certain 
amount,  being  held  to  be  a  misrepresentation  of  law  and  not  of  fact,  cannot 
be  availed  of  by  a  subscriber  in  a  suit  against  him  by  the  assignee  in  baidi- 
ruptcy  of  the  corporation  to  enforce  his  unpaid  subscriptions:  Upton  v.  Tri- 
bilcock,  91  U.  S.  45.  But  it  is  possible  for  the  agent  of  a  corporation,  formed 
in  one  state,  to  make  fraudulent  representations  concerning  the  laws  of  an- 


826  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

otlier  state,  and  the  provisions  of  the  charter  of  the  corporation  granted 
therein,  to  the  effect  that  the  stoek  is  non-assessahle;  and  if  the  subscriber 
relied  thereon,  he  is  entitled,  in  the  absence  of  laches  and  acquiescence,  to 
resist  further  payment:  Upton  v.  Enrjlehart,  3  Dill.  496,  501. 

The  case  of  a  subscription  entered  into  under  a  niistake  of  fact  is  prob- 
ably governed,  as  far  as  creditors  are  concerned,  by  tlie  same  general  prin- 
ciples which  govern  the  case  of  fraud.  In  order  to  take  advantage  of  it, 
the  subscriber  would  be  obliged  to  act  promptly.  But  in  an  action  against  a 
subscriber,  brought  by  the  assignee  of  a  bankrupt  corporation,  to  recover  for 
unpaid  subscriptions,  it  is  no  defense  for  the  subscriber  to  show  ignorance 
on  his  part  of  the  condition  and  circumstances  of  the  company  at  the  time 
of  subscribing:  Paynon  v.  Withers,  5  Biss.  C69;  and  of  course  it  would  be  no 
defense  that  he  was  ignorant  of  the  legal  effect  of  the  subscription  contract 
which  he  signs:  Ncio  Alhany  etc.  R.  R.  v.  Fields^,  10  Ind.  187;  Clear  v.  New- 
castle etc.  R.  li.,  9  Id.  488;  see  also,  on  this  question,  Thompson's  Liability 
of  Stockholders,  sec.  144;  Cook  o:i  Sto:;k  and  Stockholders,  sec.  19G. 

Stockholders  cannot  Set  off  Debts  Due  Them  by  Insolvent  Corpora- 
tion WHEN  Sued  for  Unpaid  Subscriptions. — Since  if  a  corporation  is 
insolvent,  each  creditor  is  equitably  entitled  to  receive  a  ratable  share  of  its 
assets,  it  follows  that  in  a  suit  by  judgment  creditors  of  an  insolvent  corpo- 
ration, whose  executions  have  been  returned  unsatisfied,  or  by  the  assignee  of 
a  corporation  in  bankruptcy  or  insolvency,  or  for  the  benefit  of  creditors, 
to  compel  the  payment  of  unpaid  subscriptions,  stockholders  cannot  set  off 
d2bt3  due  them  by  the  corporation:  Cook  on  Stock  and  Stockholders,  sec. 
193;  Thompson's  Liability  of  Stockholders,  sees.  382  et  seq. ;  2  Morawetz  on 
Corporations,  sec.  801;  Taylor  on  Corporations,  sec.  729;  2  Waterman  on  Cor- 
porations, 130;  Saivi/er  v.  Hoaij,  17  Wall.  CIO;  Scammon  v.  Kimball,  92  U.  S. 
3G2,  3GG;  Scovill  v.  Thayer,  105  Id.  143;  Wilbur  v.  Stockholders  of  Glen  Iron 
Works,  18  Nat.  Bank.  Reg.  178;  13  Phila.  479,  492;  Simjer  v.  Gii-en,  Gl  Iowa, 
93;  Williams  v.  Traphagen.  38  N.  J.  Eq.  57;  Lawrence  v.  Nelson,  21  N.  Y.  158; 
Hillier  V.  Alleijlieny  County  M.  Ins.  Co.,  5  Pa.  St.  470;  Macuynie  Savinjs  Bank 
V.  Bastian,  11  Rep.  785  (Pa.);  compare  Jarmans  Adnir  v.  Benton,  79  Mo.  148, 
Webber  V.  Leiyhton,  8  Mo.  App.  502,  Merchants  Ins.  Co.  v.  Hill,  12  Id.  148,  Sim- 
mons V.  Ileman,  17  Id.  444,  in  wliich  the  liability  for  unpaid  stock  was  enforced 
in  a  sjjecial  statutory  manner,  and  the  set-off  allowed.  The  above  rule  ap- 
plies in  England  to  limited  companies  in  winding  up  under  the  act  of  18G2: 
GrisselVs  Case,  L.  R.  1  Ch.  528,  536;  Barnett's  Case,  L.  R.  19  Eq.  449;  Calish- 
er's  Case,  L.  R.  5  Eq.  214;  Bluck  &  Co.'s  Case,  L.  R.  8  Ch.  254;  Mul/ord'a 
Case,  L.  R.  14  Ch.  D.  G34;  Gill's  Case,  L.  R.  12  Ch.  D.  755;  but  this  is  by  vir- 
tue of  statute.  "The  debts  must  be  mutual,"  says  Miller,  J.,  in  Sawyer  v. 
Iloay,  supra,  —  "must  be  in  the  same  right.  The  case  before  us  is  not  of 
that  character.  The  debt  which  the  appellant  owed  for  his  stock  was  a  trust 
fund,  devoted  to  the  payment  of  all  the  creditors  of  the  company.  As  soon 
as  the  company  became  insolvent,  and  this  fact  became  known  to  the  appel- 
lant, the  right  of  set-off  for  an  ordinary  debt  to  its  full  amount  ceased.  It 
became  a  fund  belonging  equally,  in  equity,  to  all  the  creditors,  and  could 
not  bo  appropriated  by  tlie  debtor  to  the  exclusive  payment  of  his  own  claim." 
"To  permit  him  to  set  off  the  debt  due  him,"  says  the  court,  in  Williams  v. 
Tniphayen,  supra,  "would,  where  the  corporation  is  insolvent,  manifestly 
give  him  a  preference  as  a  creditor.  To  this  he  is  not  entitled."  So  if  a 
judgment  creditor  of  a  corporation  who  files  a  bill  against  stockholders  to 
reach  the  unpaid  balance  due  on  their  subscriptions  is  himself  also  a  stock- 
holder, he  must  contribute  pari  passu  with  the  defendants  towards  the  liqui- 


1 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  827 

dation  of  his  demand:  Bisset  v.  Kentucky  River  Nav.  Co.,  15  Fed.  Rep.  353. 
But  ia  Wilbur  v.  Stockholders  of  Glen  Iron  Works,  supra,  it  was  held  that  if  the 
stockhohlors  prove  their  debts  in  bankruptcy,  deductions  equal  to  their  esti- 
mated respective  dividends  min;ht  perhaps  bo  made  from  the  amounts  of  the 
assignee's  demands  against  them  respectively  as  stockhohlcrs. 

See  post,  this  note,  as  to  the  right  of  set-ofF  in  actiona  by  creditors  of  cor- 
porations to  enforce  the  statutory  liability  of  stockholders  for  the  corporate 
debts. 

Stockholders  are  Estopped  from  Attacking  Validity  of  Corporate 
Organization,  etc.,  in  Scit  to  Compel  Payment  of  Unpaid  Scescrip- 
TIONS.  —  In  a  suit  by  or  on  behalf  of  creditors  of  a  corporation  to  compel  the 
payment  by  stockholders  of  unpaid  subscriptions,  it  is  no  defense  that  the 
corporation  was  not  legally  organized.  Having  dealt  with  it  as  a  valid  organi- 
zation, they  arc  estopped  from  alleging  that  it  is  not,  for  tlie  purpose  of  re- 
lieving themselves  from  liability:  Upton  v.  Ilnnshrouijh,  .3  Biss.  417;  G  ffv. 
Fiesher,  3.3  Ohio  St.  107;  this  is  especially  true  where  subscribers  have  been 
active  participants  in  the  mauagemunt  of  the  company's  affairs  for  years: 
HickUn'jv.  Wilson,  J 04  111.  54;  and  although  a  corporation  was  ousted  from 
the  franchise  of  being  a  corporatiou,  on  tjuo  warranto  it  was  held  tiiat  "the 
rights  of  the  creditors  of  the  company  and  the  liabilities  of  the  stockholders 
in  respect  to  the  payment  of  the  creditors  were  not  affected  by  the  judgment 
of  ouster":  Uoidandw.  Mcader  FurnUnre  Co.,  38  Ohio  St.  2G9,  272.  On  the 
other  hand,  a  creditor  cannot  attack  the  validity  of  a  corporate  organization 
for  the  purpose  of  holding  its  members  individually  liable  for  his  claim,  as 
members  of  an  unincorporated  association:  La/l/n  etc.  Poivdcr  Co.  v.  .iinslieimer, 
46  Md.  315;  24  Am.  Rep.  522.  On  the  same  principle,  where  the  stock  of  a 
corporation  was  attempted  to  be  increased,  those  who  become  subscribers  to 
or  purchaaers  thereof  are  estoppe<l  from  denying  the  regularity  of  the  pro- 
ceedings by  which  it  was  increased:  Chuhhv.  Upton,  95  U  S.  GG5;  Upton  v. 
IlaiuibroiKjh,  3  Biss.  417;  Uptonv.  Jackson,  I  Flipp.  413;  especially  where  they 
retain  their  stock,  and  continue  to  participate  in  the  profits  of  the  company, 
without  denying  tlieir  membership:  Pai/sou  v.  Wil/icrs,  5  Hhs.  20^;  Pajson  v. 
Stoever,  2  Dill.  427.  ^or  is  it  any  defense  that  the  subscription  is  not  I)ind- 
ing  because  the  whole  autliorized  stock  was  ujver  subscribed  for:  Farnsworth 
V.  Robhins,  3G  Minn.  3G9;  S.  P.,  Hiddinj  v.  Wilson,  104  111.  54.  But  in  Sco- 
villv.  Tlu'ijcr,  105  U.  S.  143,  it  was  hel.l  that  certificates  of  stock  issued  in 
excess  of  the  limit  imposed  by  the  charter  of  a  corporation  were  void,  and 
the  holders  of  them  were  not  entitled  to  the  rights  nor  subject  to  the  liabili- 
ties of  holders  of  authorized  stock;  and  a  holder  was  not  estopped  from  set- 
ting up  the  invalidity  of  such  unauthorized  stock,  in  an  action  against  him  to 
recover  the  balance  unpaid  thereon,  by  the  fact  that  he  attended  the  meet- 
ing at  which  it  was  voted  to  issue  the  same,  or  that  he  received  and  held  cer- 
tificates tlierefor,  or  that  the  officiTs  and  agents  of  the  company  represented 
its  capital  to  be  equal  to  the  amount  of  botli  its  authorized  and  unauthorized 
stock. 

As  to  estoppels  in  actions  by  creditors  of  corporations  to  enforce  the  statu- 
tory personal  liability  of  stockholders,  see  post,  this  note. 

Statute  of  Limitations  does  not  Run  aoain.st  Creditors'  Claims  for 
Unpaid  Subscriptions  until  Call  is  Made  or  Corporation  Ceases  to 
BE  GoiNO  Concern.  —  Lapse  of  time,  in  accordance  with  a  general  princi- 
ple of  equitable  jurisprudence,  may  preclude  creditors  of  a  corporation  from 
coming  into  equity  to  compel  the  payment  by  stockholders  of  unpaid  sub- 
Bcriptions:  Gilmore's  Ex'rs  v.  Bank  of  Cincinnati,  8  Ohio,  G2;  and  in  order 


828  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

that  other  creditors  of  a  corporation  may  participate  in  the  benefits  of  a  suit 
brought  by  one  creditor  to  enforce  the  payment  of  a  subscription  to  the 
capital  stock,  they  must  be  guilty  of  no  laches  in  asserting  their  rights  and 
complying  with  the  conditions  imposed  by  the  court  as  to  participation: 
Thomp.«on  v.  Reno  Sav.  Bank,  lONev.  291. 

It  has  been  asserted  that  a  creditor  of  a  corporation  will  be  barred  by  the 
statute  of  limitations  from  proceeding  against  stockholJers  for  unpaid  sub- 
scrij)tion3  whenever  the  company  itself  would  be  barred:  South  Carolina  M/g. 
Co.  V.  Bank  of  South  Carolina,  6  Rich.  Eq.  227;  but  in  McGinnis  v.  Barnes,  23 
Mo.  App.  413,  it  was  held  that  when  any  part  of  the  capital  stock  of  a  corpora- 
tion remains  unpaid  in  a  stockholder's  hands,"  he  is  a  trustee  thereof  for  the 
corporate  creditors  until  their  claims  are  satisfied;  and  the  statute  of  limita- 
tions, as  it  afifects  the  relations  between  stockholders  and  creditors,  is  to  be 
considered,  and  not  as  it  afi'ects  the  relations  between  stockholders  and  cor- 
poration; consequently,  although  the  statute  may  have  run  against  the  right 
of  the  corporation  to  enforce  a  stockholder's  liability  for  unpaid  subscriptions, 

—  running,  for  instance,  from  the  time  of  the  dissolution  of  the  corporation, 

—  a  creditor  may  have  a  subsisting  cause  of  action  against  the  stockholder, 
the  statute  running  from  the  time  his  claim  became  due  and  payable.  At 
all  events,  if  stock  is  payable  on  call,  as  is  usually  the  case,  the  statute  of 
limitations  does  not  run  against  the  right  of  creditors  to  enforce  payment  of 
unpaid  subscriptions  until  a  valid  call  has  been  made  by  the  directors  of  the- 
corporation  or  by  a  court  of  competent  jurisdiction,  or  at  least  some  au- 
thorized demand  has  been  made  iipon  the  share-holder,  or  perhaps,  otherwise, 
until  the  corporation  has  notoriously  ceased  to  be  a  going  concern:  Taylor  on 
Corporations,  sec.  709;  Thompson's  Liability  of  Stockholders,  sec.  291;  Cook 
on  Stock  and  Stockholders,  sec.  195;  Scovill  v.  Thayer,  105  U.  S.  143,  155; 
Curry  v.  Wqodward,  53  Ala.  371;  Harmon  v.  Page,  62  Cal.  448;  Glenn  v. 
Saxton,  08  Id.  353;  Glenn  v.  Williams,  CO  Md.  93;  Payne  v.  Bullanl,  23  Miss. 
88;  55  Am.  Dec.  74;  Thompson  v.  Beno  Sav.  Bank,  19  Nev.  171;  post,  p.  881; 
Allibonev.  Hager,  46  Pa.  St.  48;  Glenn  v.  Dorsheimer,  23  Fed.  Rep.  695;  24 
Id.  536;  Glenn  v.  Priest,  28  Id.  907;  compare  Hightower  v.  Thornton,  8  Ga. 
486,  502;  52  Am.  Dec.  412,  424;  First  National  Bank  v.  Greene,  64  Iowa, 
445.  A  call  made  by  a  court  of  competent  jnrisdiction,  as  a  court  of 
chancery  or  of  bankruptcy,  has  the  same  effect  to  set  the  statute  in  mo- 
tion as  if  made  by  the  officers  of  the  corporation:  Glenn  v.  Saxton,  Glenn 
V.  Williams,  Scovill  v.  Thayer,  supra.  In  Gletm  v.  Dorsheimer  and  Glenn 
V.  Priest,  supra,  it  was  expressly  held  that  where  an  insolvent  corpora- 
tion assigned  all  its  property  to  trustees  for  the  benefit  of  creditors,  in- 
cluding unpaid  stock  subscriptions,  and  ceased  to  do  business,  the  liability 
of  the  stockholders  upon  their  subscriptions  became  absolute,  and  the  stat- 
ute of  limitations  began  to  run  in  their  favor  at  once,  or  within  a  reasonable 
time  thereafter,  as  against  tlie  creditors  and  assignees.  Dicta  in  the  follow- 
ing cases  also  support  the  view  that  the  statute  is  set  in  motion  by  a  noto- 
rious   disbandonment  of    the    company  and  cesser   of    business:    Curry  v. 

Woodward,  Harmon  v.  Page,  Payne  v.  Bidlard,  supra;  see  also  Mitchell  v. 
Beckman,  64  Cal.  117;  but  in  Glenn  v.  Semple,  80  Ala.  159,  60  Am.  Rep.  92, 
it  was  held  that  where  a  corporation,  becoming  embarrassed,  executed  a 
deed  of  assignment  for  the  benefit  of  creditors,  not  having  called  in  all  the 
stock  subscribed,  the  statute  did  not  begin  to  run  in  favor  of  the  stock- 
holders from  the  date  of  the  assignment,  but  from  the  time  a  decree  is  after- 
wards rendered  by  a  court  of  equity  making  an  assessment,  SomerviUe,  J., 
saying:  "We  cannot  see  that  the  cessation  of  business  by  the  company,  and 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  829 

the  assignment  of  its  assets,  can  operate  on  any  just  principle  to  set  in  mo- 
tion the  running  of  the  statute  of  limitations  in  favor  of  stockholders,"  criti- 
cising some  remarks  in  Curnj  v.  Woocl/uard,  supra:  however,  in  this  case, 
there  seemed  to  have  been  no  proof  of  adisbandonment:  See  Mr.  Thompson's 
views  on  this  question  in  Thompson's  Liability  of  Stockholders,  sec.  291. 

See  further,  post,  this  note,  for  the  questions  concerning  the  statute  of 
limitations  in  actions  by  creditors  of  corporations  to  enforce  the  statutory 
liability  of  stockholders  for  corporate  debts. 

Miscellaneous  Defenses  in  Suit  against  Stockholders  to  Reach 
Unpaid  Subscriptions.  —  If  calls  were  made  and  remained  unpaid  prior  to 
the  bankruptcy  of  a  stockholder,  undoubtedly  they  would  be  covered  by  his 
discharge  in  bankruptcy;  but  such  discharge  is  no  bar  to  an  action  for  an  in- 
Btalhnent  subsequently  called  for,  the  unpaid  and  uncalled  subscription  not 
constituting  such  a  debt  or  liability  as  is  provable  against  his  estate  in  bank- 
ruptcy: Glenn  v.  Howard,  G5  Md.  40.  As  to  whether  or  not  the  discharge  of 
a  stockholder  in  bankruptcy  or  insolvency  will  affect  his  statutory  liability 
for  corporate  debts,  see  post. 

A  tender  during  the  solvency  of  a  corporation  by  a  subscriber  to  its  stock 
of  the  full  amount  of  his  subscription,  and  a  demand  for  the  issue  of  a  cer- 
tificate, which  were  refused  without  legal  cause,  it  is  held,  extinguished  the 
obligation  to  paj'^  the  subscription,  as  against  the  assignee  of  the  corporation, 
when  it  afterwards  became  insolvent:  Potts  v.  Wallace,  32  Fed.  Rep.  272. 

The  mere  change  of  the  name  of  a  corporation  does  not,  of  course,  relieve 
a  stockholder  from  liability  for  unpaid  subscriptions:  Glenn  v.  Springs,  26 
Fed.  Rep.  494;  Blackburn's  Case,  8  De  Gex,  M.  &  G.  177;  Thompson's  Lia- 
bility of  Stockholders,  sec.  111. 

"Who  are  Stockholders,  Liable  to  Creditors  for  Unpaid  Subscrip-  1 
TIONS.  — Stockholders  may  become  such  either  by  original  subscription,  by 
direct  purchase  from  the  corporation,  or  by  subsequent  transfer  from  the  i 
original  holders:  See  Webster  v.  Upton,  91  U.  S.  65,  67,  per  Strong,  J.  The  \ 
questions  arise,  When  does  the  liability  to  creditors  for  unpaid  subscriptions 
originally  attach,  and  when  does  the  liability  cease,  if  at  all,  by  subsequent 
transfer?  or,  in  other  words.  Who  are  the  stockholders  to  be  held  liable  to 
creditors  for  the  sums  remaining  unpaid  on  the  stock?  It  is  not  proposed  to 
here  discuss  the  general  questions  relating  to  subscriptions  to  stock,  which  will 
be  found  treated  in  the  note  to  Parker  v.  Tliomas,  SI  Am.  Dec.  392,  but  to 
notice  simply  those  riiles  which  specially  concern  the  subject  in  hand.  It 
may  be  premised  that  stockholders  are  equally  liable  for  unpaid  subscriptions, 
whether  they  became  such  by  original  subscription  or  by  subsequent  transfer:  1  i 
Ward  V.  Grisivoldrille  Mfg.  Co.,  16  Conn.  593,  598;  Webster  v.  Upton,  91  U.  S. 
65,  69.  But  plainly,  to  constitute  one  a  subscriber,  he  must  either  subscribe 
himself  or  authorize  some  one  to  subscribe  for  him,  or  afterwards  ratify  the 
unauthorized  subscription  made  in  his  name:  McClelland  v.  Whiteley,  11  Biss. 
444;  15  Fed.  Rep.  322;  but  if  one  signs  a  subscription-book  for  stock  in  a  con- 
templated corporation  to  induce  otliers  to  subscribe,  leaving  the  amount  of  his 
own  subscription  in  blank,  it  is  but  fair  to  hold  that,  as  to  creditors  of  the  com- 
pany, he  thereby  impliedly  authorizes  those  empowered  to  take  subscriptions 
to  fill  up  the  blank,  and  when  so  done,  such  subscriber  will  be  estopped  from 
questioning  their  authority  so  to  do:  Jewell  v.  Iiock  lliver  Paper  Co.,  101 
111.  57. 

It  is  settled  that  an  express  promise  to  pay  the  unpaid  balance  is  not 
necessary  to  render  either  the  original  holder  or  the  subsequent  transferee  of 
the  stock  liable  therefor:  Upton  v.  Tribilcock,  91  U.  S.  45;    Webster  v.  Upton, 


830  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

91  Id.  65,  69;  Sagory  v.  Dubois,  3  Sand.  Cli.  466;  Dayton  v.  Borst,  31  N.  Y. 
435;  Merrimac  Min.  Co.  v.  Levy,  54  Pa.  St.  227;  93  Am.  Dec.  697;  with  the 
exception  of  two  or  three  New  England  States:  See  Cook  on  Stock  and 
Stockholders,  sees.  68,  69.  "An  express  promise,"  says  Strong,  J.,  in  Wehater 
V.  Upton,  supra,  "is  almost  unknown,  except  in  the  case  of  an  original  sub- 
scription; and  oftener  than  otherwise  it  is  not  made  in  that.  The  subscriber 
merely  agrees  to  take  stock.  He  does  not  expressly  promise  to  paj  for  it. 
Practically,  then,  unless  the  ownership  of  such  stock  carries  with  it  the  legal 
duty  of  paying  all  legitimate  calls  made  during  the  continuance  of  the  owner- 
ship, the  fund  held  in  trust  for  creditors  is  only  that  portion  of  each  share 
which  was  paid  prior  to  the  organization  of  the  company';  in  many  cases 
not  more  than  five  per  cent;  in  the  present,  only  twenty."  And  again,  he 
says:  "  If  the  law  implies  a  promise  by  the  original  subscribers  to  pay  the 
full  par  value  when  it  may  be  called,  it  follows  that  an  assignee  of  the  stock, 
when  he  has  come  into  privity  with  the  company  by  having  stock  transferred 
to  him  on  the  company's  books,  is  equally  liable." 

In  genaral,  "the  acceptance  and  holding  of  a  certificate  of  shares  in  an  in- 
corporation makes  the  holder  liable  to  the  responsibilities  of  a  share-holder  ": 
Upton  v.  Trihilcoch,  91  U.  S.  45,  47;  Chubb  v.  Upton,  95  Id.  665;  Sanger  v. 
Upton,  91  Id.  56;  Thompson's  Liability  of  Stockholders,  sec.  105;  but  a  cer- 
tificate in  favor  of  an  original  subscriber,  or  a  new  certificate  in  favor  of  the 
subsequent  purchaser,  is  not  necessary  to  render  him  liable  for  unpaid  bal- 
ances: Hawleyv.  Upton,  102  U.  S.  314;  Upton  v.  Burnham,  3  Biss.  431,  520; 
Farrar  v.  Walker,  3  Dll.  506,  note;  Haskell  v.  Sells,  14  Mo.  App.  91;  and  see 
Cook  on  Stock  and  Stockholders,  sec.  192;  Thompson's  Liability  of  Stock- 
holders, sec.  106;  note  to  Franklin  Class  Co.  v.  Alexander,  9  Am.  Dec.  90; 
note  to  Freeland  v.  McCullowjIi,  43  Id.  697;  and  the  same  is  true  ■where  one 
is  sought  to  be  held  individually  liable  as  a  stockholder  for  the  debts  of  a 
corporation,  under  statute:  See  Mitchell  v.  Beckman,  64  Cal.  117;  Corwith  v. 
Culver,  69  111.  502;  Chaffm  v.  Cummmgs,  37  Me.  76,  83;  Ilawes  v.  Anglo-Saxon 
Petroleum  Co.,  101  Mass.  385,  395;  111  Id.  200;  Schaeffer  v.  Missouri  Home 
Ins.  Co.,  46  Mo.  248;  Spear  v.  Crawford,  14  Wend.  20;  28  Am.  Dec.  513; 
Burr  V.  Wilcox,  22  N.  Y.  551;  Wheeler  v.  Millar,  90  Id.  353;  Kcyscr  v.  Uitz, 
2  Mackey,  473;  and,  of  course,  a  subscriber's  liability  is  unafi"ected  by  his 
failure  to  meet  subsequent  calls:  Haskell  v.  Sells,  .'iupra;  and  to  the  same  ef- 
fect as  regards  statutory  personal  liability,  see  Mitchell  v.  Beekman,  64  Cal. 
117;  Chajinv.  Cummings,  37  Me.  76,  83;  Schaeffer  \.  Missouri  Home  Ins.  Co., 
46  Mo.  248;  Spear  v.  Crawford,  14  Wend.  20;  28  Am.  Dec.  513;  Wheeler  v. 
Millar,  90  N.  Y.  353;  unless  his  stock  has  been  forfeited  therefor:  See  supra, 
"Withdrawal  and  Release  of  Stockholders,  and  Forfeiture  of  Stock  as  Affecting 
Liability  for  Unpaid  Subscriptions";  note  to  Franklin  Glass  Co.  v.  Alexander, 
9  Am.  Dec.  90;  note  to  Freeland  v.  McCullough,  43  Id.  699;  nor  is  it  material 
that  he  never  participated  in  any  of  the  business  meetings  of  the  corporation; 
Haskell  v.  Sells,  supra. 

A  bouajide  transfer  of  stock,  perfected  upon  the  books  of  the  corporation, 
if  required,  discharges  the  transferrer  from  liability  to  the  corporation  and 
to  its  creditors,  for  installments  and  calls  becoming  due  thereafter:  Allen  v. 
Montgomery  R.  R.,  II  Ala.  437;  Billings  v.  Robinson,  94  N.  Y.  415;  Oilmore'a 
Exrs  v.  B  ink  of  Cincinnati,  8  Ohio,  62,  71 ;  Cook  on  Stock  and  Stockholders,  sec. 
2oo;  Thompson's  Liability  of  Stockholders,  sec.  210;  Taylo)  on  Corporations, 
sees. 747, 748;  unless,of  course,  the  charter  or  some  general  statute  provides  that 
they  shall  continue  liable;  but  the  liability  of  a  subscriber  will  not  be  discharged 
by  an  informal  ex  parte  transfer,  not  entered  upon  the  books  of  the  company. 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  831 

nor  recognized  by  it,  although  the  transfer  be  in  writing,  and  accompanied 
by  a  private  agreement  that  the  transferrer  should  not  be  liable  for  anything 
unpaid  on  the  shares:  Belts  Appeal,  115  Pa.  St.  88;  2  Am.  St.  Rep.  532;  and 
where  neither  the  charter  nor  the  by-laws  of  a  corporation  declared  that  its 
ehares  should  be  transferred  only  upon  its  books,  but  the  certificate  of  stock 
provided  that  the  shares  should  "be  transferable  only  on  the  books  of  the 
association,"  it  was  held,  in  an  action  brought  by  the  receiver  of  the  company 
for  unpaid  subscriptions,  that  the  liability  of  a  stockholder  continued  until  a 
transfer  was  made  on  the  books,  notwithstanding  he  had  previously  sold  and 
delivered  his  certificate  to  another,  who  had  drawn  the  dividends,  but  who 
had  not  had  the  stock  transferred  on  the  books  to  himself:  Cutting  v.  Damerel, 
23  Hun,  339.  But  it  may  here  be  remarked  that  the  transfer  of  stock  does 
not  always  relieve  the  transferrer  from  his  statutory  personal  liability  for  the 
debts  of  the  corporation:  deepest.  The  transfer  must  be  in  good  faith.  A 
stockholder  is  not  permitted  to  make  a  transfer  to  an  irresponsible  person  for 
the  purpose  of  escaping  liability  for  unpaid  subscriptions:  Rider  v.  MorrUon, 
64  Md.  429,  444;  Nathan  v.  Whitlock,  9  Paige,  152;  Mandion  v.  Firemen's  /?w. 
Co.,  11  Rob.  (La.)  177;  note  to  Freeland  v.  2IcCulloufjIi,43  Am.  Dec.  G99;  note 
to  Germantown  Passenger  R\j  v.  Filler,  100  Id.  556;  Cook  on  Stock  and  Stock- 
holders, sec.  265;  Thompson's  Liabdity  of  Stockholders,  sees.  211,  215;  2  Mora- 
wetz  on  Corporations,  sec.  858;  Taylor  on  Corporations,  sec.  749;  not  even 
with  the  consent  of  the  directors  of  the  corporation:  Nathan  v.  Whitlock, 
supra.  "The  capital  stock,  embracing  both  paid  and  unpaid  subscriptions, 
is  a  trust  fund  for  the  benefit  of  creditors  and  share-holders,  and  it  would  be 
inconsistent  with  the  nature  of  such  a  trust  to  permit  subscribers  to  transfer 
their  stock  to  insolvent  persons,  and  thus  escape  liability  for  the  payment  of 
their  subscription  ":  Rldtr  v.  Morrison,  supra.  A  like  rule  prevails  in  case  of 
the  statutory  individual  liability  of  stockholders  for  the  debts  of  a  corpora- 
tion: See  Bowden  v.  Jolimon,  107  U.  S.  251;  Bowden  v.  Santos,  1  Hughes,  158; 
Central  Agricultural  etc.  Ass'n  v.  Alabama  Gold  L.  Ins.  Co.,  70  Ala.  120;  Paine 
V.  Stewart,  33  Conn.  517;  Marcy  v.  Clark,  17  Mass.  330;  McClaren  v.  Franciscu,<t, 
43  Mo.  452;  Provident  Savings  Inst.  v.  Jackson  Place  Skating  etc.  Ritik,  52  Id. 
557;  Veillerv.  Brown,  18  Hun,  571;  Aidtmans  Appeal,  98  Pa.  St.  505;  Dauchy 
V.  Brown,  24  Vt.  197;  compare  Miller  v.  Great  Rcpuhlic  Ins.  Co.,  50  Mo.  55; 
and  see  also  the  following  cases,  in  which  the  transfer  was  taken  in  the  name 
of  an  irresponsible  person  by  the  purchaser  or  subscriber  fcr  the  purpose  of 
avoiding  statutory  liability:  Davis  v.  Stevens,  17  Blatchf.  259;  Case  v.  Small, 
4  Woods,  78;  10  Fed.  Rep.  722;  Castlemanv.  Holmes,  4  J.  J.  Marsh.  1;  Roman 
V.  Fry,  5  Id.  G34;  but  see  Anderson  v.  Philadelphia  Warehouse  Co.,  Ill  U.  S. 
479;  Magrudcrv.  Co&<o»,  44  Md.  349;  Holyoke  Bank.v.  Burnhum,  11  Cush.  183. 
As  to  the  effect  of  a  transfer  under  the  English  companies'  acts,  see  Hyanis 
Case,  1  De  Gex,  F.  &  J.  75;  Costcllos  Case,  2  Id.  302;  Budd's  Case,  30  Beav. 
143,  affirmed  in  3  De  Gex,  F.  &  J.  297;  Jessopp's  Case,  2  De  Gex  &  J.  638;  De 
Pass's  Case,  4  Id.  544;  Chinnock's  Case,  Johns.  714;  King's  Cn.se,  L.  R.  6  Cli. 
199;  Harrison's  Case,  Id.  286;  Ex  farte  Kintea,  L.  R.  5  Ch.  95;  Gilhert's  Ca.tr, 
Id.  559;    William's  Case,  L.  R.  1  Ch.  D.  576. 

As  a  stockholder  is  discharged  from  liability  for  future  installments  and 
calls  by  a  valid  transfer  of  his  stock,  in  good  faith,  so  his  transferee  becomes 
responsible  for  installments  falling  due  and  calls  made  while  he  retains  the 
ownership  of  the  stock:  Webster  v.  Upton,  91  U.  S.  65,  72;  Upton  v.  Hans- 
trough,  3  Biss.  417;  Mann  v.  Currie,  2  Barb.  294;  Merrimac  Min.  Co.  v.  Levy, 
54  Pa.  St.  227;  93  Am.  Dec.  697;  Bell's  Appeal,  115  Pa.  St.  88;  2  Am.  St. 
Rep.  532;  Lane's  Appeal,   105  Pa.    St.   49,    01;  Cook  on  Stock  and  Stock- 


832  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

holders,  sec.  256.  s^The  obligation  to  make  good  unpaid  portions  of  the  stock 
is  an  obligation  ■which  passes  with  the  stock  to  a  transferee,  the  original  holder 
being  relieved  from  further  liability,  unless,  in  exceptional  instances,  the  origi- 
nal holder  is,  notwithstanding,  liable  by  virtue  of  the  cliarter  or  some  general 
statutory  provision.  Thus  where  a  statute  provides  that  "on  any  assign- 
ment, the  assignee  and  assignor  shall  each  be  liable  for  any  installment  which 
may  have  accrued,  or  which  may  thereafter  accrue,"  while  an  assignment  of 
the  stock  may  operate  a  complete  transfer  of  title  as  between  assignor  and 
assignee,  it  does  not  release  the  assignor  from  his  liability  as  stockholder,  but 
he  remains  liable,  not  only  for  past  assessments,  but  for  any  future  assess- 
ments upon  the  stock,  though  the  assignee  becomes  liable  also:  McKim  v. 
Glenn,  66  Md.  479;  see  also  Belts  Appeal,  supra;  but  where  an  act  relating 
to  the  formation  of  corporations  provided  that  "all  sales  of  stock,  whether 
voluntary  or  otherwise,  transfer  to  the  purchaser  all  rights  of  the  original 
holder  or  person  from  whom  the  same  is  purchased,  and  subject  such  pur- 
chaser to  the  payment  of  any  unpaid  balance  due  or  to  become  due  on  such 
stock;  but  if  the  sale  be  voluntary,  the  seller  is  still  liable  to  existing  credi- 
tors for  the  amount  of  such  balance,  unless  the  same  be  duly  paid  by  such 
purchaser,"  the  statute  applies  to  such  only  as  are,  or  have  been,  holders  of 
the  legal  title  to  the  stock:  Branson  v.  Oregonian  B'y,  10  Or.  278.  If  a  cor- 
poration accepts  as  a  stockholder  one  to  whom  stock  has  been  transferred, 
by  entering  his  name  upon  the  books,  whether  he  requested  it  to  do  so  or 
not,  or  whether  he  ever  assented  tliereto,  he  then  becomes  liable  as  a  stock- 
bolder  for  the  unpaid  portion  of  the  stock:   Upton  v.  Biirnham,  3  Biss.  520. 

A  creditor  is  entitled  to  hold  him  liable  as  a  stockholder  who  appears  to  be 
the  legal  owner  of  the  stock;  and  it  may  be  that  although  a  transfer  has 
taken  place,  no  change  has  been  made  upon  the  books  of  the  corporation,  so 
that  the  transferrer,  and  not  the  transferee,  will  be  liable:  See  Tliompson's 
Liability  of  Stockholders,  sec.  178;  2  Mora  we  tz  on  Corporations,  sec.  852. 
On  the  same  principle,  one  who  stands  upon  the  books  of  the  corporation  as 
a  stockholder  may  be  proceeded  against  for  the  recovery  of  any  sum  due 
upon  the  stock,  although  he  in  fact  holds  such  stock  as  trustee  for  another: 
Thompson's  Liability  of  Stockholders,  sec.  179;  2  Morawetz  on  Corporations, 
sec.  852;  Mann  v.  Currie,  2  Barb.  294;  McKim  v.  Glenn,  66  Md.  479;  Grew  v. 
Breed,  10  Met.  569,  576;  Hoare's  Case,  2  Johns.  &  H.  229;  Bugj's  Case,  2 
Drew.  &  S.  452;  William's  Case,  L.  R.  1  Ch.  D.  576;  Kings  Case,  L.  R.  6  Ch. 
196;  MitclielVs  Case,  L.  R.  9  Eq.  196;  Chapman  and  Barkers  Case,  L.  R.  3  Eq. 
361;  or  as  collateral  security  for  a  debt  of  the  transferrer:  Tliompson's  Lia- 
bility of  Stockholders,  sec.  223;  2  Morawetz  on  Corporations,  sec.  852;  Tay- 
lor on  Corporations,  sec.  740;  Pidlman  v.  Upton,  96  U.  S.  328;  and  a  like 
rule  prevails  in  actions  to  enforce  the  personal  liability  of  stockholders  for 
the  debts  of  a  corporation  under  statutory  provisions:  See  National  Bank  v. 
Case,  99  U.  S.  628;  Bowden  v.  Farmers'  etc.  Bank,  1  Hughes,  307;  Moore  v. 
Jones,  3  Woods,  53;  Wheelock  v.  Kost,  77  111.  296;  Hale  v.  Walker,  31  Iowa, 
344;  Magruder  v.  Colston,  4:4:  Md.  349;  Crease  v.  Babcock,  10  Met.  524,  545; 
Grew  v.  Breed,  10  Id.  569,  576;  Holyoke  Bank  v.  Burnharn,  11  Cush.  183; 
Johnson  v.  Somermlle  Dyeing  Co.,  15  Gray,  216;  First  Nat.  Bank  v.  Bingham 
Mfg.  Co.,  121  Mass.  563;  Erskine  v.  Loewenstein,  82  Mo.  301,  affirming  11  Mo. 
App.  595;  Adderly  v.  Storm,  6  Hill,  624;  Rosevelt  v.  Brown,  11  N.  Y.  148; 
In  re  Empire  City  Nat.  Bank,  18  Id.  119,  223;  Aultman's  Appeal,  98  Pa.  St. 
505.  The  books  of  the  company  are  prima  facie  evidence  of  the  ownership 
of  stock  in  those  whose  names  appear  thereon  as  stockholders:  Note  to 
Franklin  Glass  Co.  v.  Alexander,  9  Am.  Dec.  96;  Tumbull  v.  Payson,  95  U.  S. 


April,  1885.]    Thompson  v.  Reno  Savings  Bank.  833 

418;  Glenn  v.  Springs,  26  Fed.  Rep.  494;  Cook  on  Stock  ami  Stockholders, 
sec.  73;  Taylor  on  Corporations,  sec.  740;  but  one  who  appears  to  be  a  stock- 
holder upon  the  books  may  show  that  his  name  is  there  without  right  or  au- 
thority: Webster  v.  Upton,  91  U.  S.  65,  72.  A  similar  ruling  is  made  under 
charters' and  general  statutes  imposing  a  personal  liability  upon  stockholders 
for  the  debts  of  the  corporation:  Iloagland  v.  Bell,  36  Barb.  57;  Thornton  v. 
Lane,  11  Ga.  459;  but  see  Mudgett  v.  Ilorrell,  33  Cal.  25,  which  denies  that 
the  books  are  admissible  in  evidence  at  all;  and  Stanley  v.  Stanley,  26  Me. 
191,  which  holds  them  to  be  conclusive. 

Powers  of  Assignees  for  Benefit  of  Creditors,  of  Assignees  in 
Bankruptcy,  and  of  Receivers,  with  Respect  to  Unpaid  Subscrip- 
tions. —  Unpaid  subscriptions  are  assets  wdiich  a  corporation  may  assign 
like  any  other  choses  in  action,  and  they  will  pass  to  the  assignee  under  a 
general  assignment  for  the  benefit  of  creditors:  Note  to  Germantown  Passenger 
li'y  V.  Fitler,  100  Am.  Dec.  556;  2  Morawetz  on  Corporations,  sec.  819; 
Schockley  v.  Fisher,  75  Mo.  498;  Eppright  v.  NicJcerson,  78  Id.  482;  Franklin  v. 
Me)ioivn,  10  Mo.  App.  570;  11  Id.  592;  Lionberger  v.  Broadtvay  Savings  Bank, 
10  Id.  499;  Haskell  v.  Sells,  14  Id.  91;  Germantown  Passenger  R'y  v.  Fitler, 
60  Pa.  St.  124;  100  Am.  Dec.  546;  West  Chester  etc.  R.  R.  v.  Thomas,  2  Phila. 
344;  who  may  maintain  a  bill  in  equity  to  recover  them:  Lionberger  v. 
Broadway  Savings  Bank,  supra;  notwithstanding  certain  creditors  of  the  cor- 
poration had  proceeded  by  motion,  under  the  statute,  against  the  stockholders: 
Id.;  and  after  the  assignment  creditors  cannot  proceed  by  motion:  Franklin 
V.  Menoivn,  supra.  A  court  of  equity  may  make  a  call  at  his  instance:  See 
Glenn  v.  Williams,  00  Md.  93;  which  is  binding  and  efiFective  upon  the 
stockholders  who  were  not  individually  parties  to  the  cause,  but  who  were 
represented  by  the  corporation:  Id.;  and  which  may  be  enforced  by  him 
in  another  state:  Id. 

Unpaid  subscriptions  also  pass  by  a  decree*  m  bankruptcy  or  insolvency  of 
the  corporation  to  the  assignee,  who  represents  both  corporation  and  credi- 
tors, and  who  alone  can  enforce  the  liability  of  the  stockholders:  Note  to 
Germantown.  Passenger  R'y  v.  Fitler,  100  Am.  Dec.  553,  556;  Thompson's  Lia- 
bility of  Stockholders,  sec.  341;  Pay  son  v.  Stoever,  2  Dill.  427;  La}ie  v.  Hicker- 
S071,  99  111.  284;  Hurd  v.  Talhnan,  60  Barb.  272;  Gllmore  v.  Bank  of  Cincinnati, 
8  Ohio,  71;  and  afi  the  corporation  might  have  sued  a  stockholder  at  law  for 
his  unpaid  and  payable  subscription,  the  assignee  in  bankruptcy,  succeeding 
to  its  rights,  has  the  same  remedy:  Sanger  v.  Upton,  91  U.  S.  50.  It  is  well 
settled  that  a'court  of  bankruptcy  has  the  same  power  as  a  court  of  equity 
to  make  an  assessment  iipon  the  stockholders:  2  Morawetz  on  Corporations, 
sec.  822;  Sanger  v.  Upton,  91  U.  S.  56;  Turnbullv.  Payson,  95  Id.  418;  Pay- 
son  V.  Stoever,  2  Dill.  427;  Wilbur  v.  Stockholders  of  Glen  Iron  Work^,  18  Nat. 
Bank.  Reg.  178;  13  Phila.  479;  notwithscanding  a  provision  in  the  contract  of 
subscription  and  in  the  stock  certificates  that  the  unpaid  balance  was  to  be  paid 
on  tlie  call  of  the  directors,  "when  ordered  by  a  vote  of  the  majority  of  the 
stockholders  themselves":  Upton  w  Hansbrough,  3  Biss.  417;  and  the  order 
of  the  court  directing  a  payment  is  conclusive  in  a  suit  by  the  assignee  to 
enforce  it:  Sanger  v.  Upton,  91  U.  S.  56;  Webster  v.  Upton,  91  Id.  05,  71; 
Pullman  v.  Upton,  96  Id.  328,  329;  Payson  v.  Stoever,  2  Dill.  427;  and  it  is 
not  necessary  that  the  stockholders  should  have  received  actual  notice  of 
the  application  for  the  order:  Id.;  Upton  v.  Burnha/n,  3  Biss.  520;  Upton  v. 
Hansbrough,  3  Id.  417. 

If  a  receiver  has  been  appointed,  the  suit  to  compel  the  stockholders  to  pay 
their  unpaid  subscriptions  should  be  prosecuted  in  his  name,  unless  some 
Am.  St.  Rep.,  Vol.  III.  — :3 


834  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

suflBcient  cause  is  shown  to  the  contrary:  Thompson's  Liability  of  Stock- 
holders, sec.  340;  Cook  on  Stock  and  Stockholders,  sec.  208;  2  Morawetz  on 
Corporations,  sec.  867;  Taylor  on  Corporations,  542;  note  to  Gerrnantocn 
Passenjer  Ry  v.  Filler,  100  Am.  Dec.  533;  Hightower  v.  Thornton,  8  Oa.  483; 
52  Am.  Dec.  412;  EanUne  v.  Elliott,  16  N.  Y.  377;  Cleveland  noliiiuj  Mill 
Co.  V.  Texas  etc.  H'l/,  27  Fed.  Rep.  250.  A  court  of  chancery  may  make  a 
call  at  his  instance:  Glenn  v.  Soule,  22  Id.  417.  He  may  recover  the  balance 
unpaid  on  subscriptions  without  any  previous  call  having  been  i:iade  by  the 
corporation:  Winans  v.  McKean  R.  R.  etc.  Co.,  G  Elatchf.  215;  but  to  enable 
him  to  sue  at  law,  a  call  or  assessment  by  the  corporation  itself  or  some  com- 
petent court  is  necessary:  Chandlery.  Siddle,  3  Dill.  477;  Glenn  v.  Sotde,  22 
Fed.  Rep.  417,  418;  Chandler  v.  Keith,  42  Iowa,  99.  The  order  is  bmdlug, 
although  the  stockholders  are  not  made  actual  parties  to  the  proceedings: 
Glenn  v.  Soule,  supra;  but  see  Lainar  Ins.  Co.  v.  Hildreth,  55  Iowa,  248.  The 
receiver  or  assignee  in  bankruptcy  of  a  foreign  corporation  may  maintain  an 
action  against  a  resident  stockholder,  if  the  corporation  itself  could  have 
maintained  it  had  the  stockholder  been  a  citizen  of  the  state  in  which  it  was 
domiciled:  Thompson's  Liability  of  Stockholders,  sec.  81 ;  Cook  on  Stock  and 
Stockholders,  sec.  208;  Dayton  v.  Borst,  31  N.  Y.  435;  Patterson  v.  LT/nde,  112 
111.  196,  206. 

It  may  be  remarked  in  this  connection  that  the  statutory  liability  of  stock- 
holders is  not  an  asset  of  the  corporation,  and  therefore  cannot  be  assigned 
by  the  corporation  for  the  benefit  of  creditors:  Wrhjlit  v.  McCormark,  17  Ohio 
St.  86;  and  for  the  same  reason  it  cannot  be  enforced  by  the  assignee  in 
bankruptcy:  Dutcher  v.  Marine  Nat.  Bank,  12  Blatchf.  435;  Bristol  v.  Snn- 
ford,  12  Id.  341;  or  by  the  receiver:  Jacohsonx.  Allen,  20  Id.  525;  12  Fed. 
Rep.  454;  Wincockv.  Turpin,  96  111.  135;  Mason  v.  New  York  Silk  M/j.  Co., 
27  Hun,  307;  Farnsworthv.  Wood,  91  N.  Y.  308;  unless  tlie  statute  otherwise 
expressly  provides:  See  Walker  v.  Grain,  17  Barb.  11;  Ilcrldmer  County  Bank 
V.  Furman,  17  Id.  116,  119;  Story  v.  Furman,  26  N.  Y.  214, 


Statutory  Liability  of  Stockholders  to  Creditors  for  Corporate 
Debts.  — The  policy,  so  generally  existing  in  America,  of  imposing  a  greater 
or  dififerent  liability  upon  stockholders  of  corporations  in  favor  of  corporate 
creditors  than  that  existing  under  the  rules  of  equity  for  unpaid  subscrip- 
tions has  been  very  fruitful  of  litigation. 

Stockholders  are  not  Individually  Liable  at  Common  Law  for 
Debts  of  Corporation. — At  the  common  law,  it  is  well  settled  that  the 
stockholders  or  members  of  a  corporation  are  not  individually  liable  for  its 
debts:  Note  to  Freeland  v.  McCullouijh,  43  Am.  Dec.  694;  note  to  Prince  v. 
Lynch,  99  Id.  433;  Cook  on  Stock  and  Stockholders,  sec.  212;  Tlionipjon's 
Liability  of  Stockholders,  sec.  4;  Angell  and  Ames  on  Corporations,  sees.  591, 
595;  Boone  on  Corporations,  sec.  126;  Field  on  Corporations,  sees.  55-74; 
2  Morawetz  on  Corporations,  sees.  779,  869;  Taylor  on  Corporations,  sec. 
700;  Smith  v.  Huckabee,  53  Ala.  191,  193;  Jones  v.  Jarman,  34  Ark.  323,  328; 
French  v.  Teschemaker,  24  Cal.  518,  540;  Green  v.  Beck/nan,  59  Id.  545,  548; 
Wardv.  Griswoldville  Alfg.  Co.,  16  Conn.  593,  599;  Shaw  v.  Boylan,  16  lad. 
384;  Hampson  v.  Weave,  4  Iowa,  13,  15;  Adams  v.  Wiscasset  Bank,  1  Me.  361; 
10  Am.  Dec.  88;  Vose  v.  Grant,  15  Mass.  505;  Spear  v.  Grant,  16  Id.  9;  Trus- 
tees of  Free  Schools  v.  Flint,  13  Met.  539,  541;  Gray  v.  Coffin,  9  Cush.  192; 
Erickson  v.  Nesmith,  4  Allen,  233,  234;  Essex  Co.  v.  Lawrence  Machine  Shop, 
10  Id.  352;  Inhabitants  of  Norton  v.  Hodges,  100  Mass.  241;  Salt  Luke  City 
Nat.  Bank  v.  Hendrickson,  40  N.  J.  L.  52;  Freeland  v.  McCullough,   1  Denio, 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  835 

414,  422;  43  Am.  Dec.  685,  688;  Seymour  v.  Siurgess,  26  N.  Y.  134;  Atwood  v. 
Rhode  Island  Arjricidtural  Bank,  I  R.  I.  376,  386;  Woods  v.  Wkh,  7  Lea,  40, 
45;  Soulfi  Carolina  Mfij.  Co.  v.  Bank  of  South  Carolina,  6  Rich.  Eq.  227;  Bird 
V.  Calrert,  22  S.  C.  292,  296;  Walker  y.  Lewis,  49  Tex.  123;  Dauchyv.  Brown,  24 
Vt.  197;  Ninurky.  Mingo  Iron  Works  Co.,  25  W.  Va.  184,  199;  Terry  v.  Little, 
101  U.  S.  216,  217;  United  States  v.  Knox,  102  Id.  422,  424;  Knower  v.  Haines, 
31  Fed.  Rep.  513,  514.  iSo  far  as  this  question  is  concerned,  the  corporation 
13  an  entity  distinct  from  its  members,  and  its  debts  are  therefore  not  the 
debts  of  its  members.  The  capital  stock  is  the  source  of  its  credit;  and  when 
the  share-holders  have  paid  in  the  capital  which  they  agreed  to  contribute, 
their  liability  ceases.  It  is  true,  as  has  been  shown  above,  that  unpaid  sub- 
scriptions may  be  reached  by  the  corporate  creditors  in  equity;  but  such  a 
proceeding  is  simply  to  reach  assets  of  the  corporation,  and  is  in  no  sense 
enforcing  a  personal  liability  for  its  debts.  Any  individual  liability  of  stock- 
holders for  the  debts  of  the  corporation  must  therefore  in  some  way  be  spe- 
cially imposed. 

Liability  for  Debts  of  Corporations  can  be  Imposed  upon  Stock- 
holders, AS  Such,  only  by  Constitutions,  Charters,  or  Statutes.  — 
Liability  for  the  debts  of  a  corporation  cannot  be  imposed  upon  non-assent- 
ing stockholders  or  members  by  a  mere  bydaw,  in  the  absence  of  statute: 
Note  to  Frerland  v.  McCullowjli,  43  Am.  Dec.  694;  Trustees  of  Free  Schools  v. 
Flint,  13  Met.  539;  Reid  v.  Eatonton  Mfg.  Co.,  40  Ga.  98;  2  Am.  Rep.  563; 
nor  by  a  resolution  adopted  by  the  governing  body  of  a  corporation:  Vincent 
v.  Clirjinian,  10  Gill  &  J.  279;  nor  does  any  personal  liability  attach  to  the 
stockholders  of  a  bank  by  reason  of  the  words  "individual  property  of  stock- 
hoh'.ers  liable,"  appearing  upon  the  face  of  bills  issued  by  it:  Lowry  v.  Inman, 
46  N.  Y.  119,  125;  and  the  fact  that  a  by-law  purporting  to  impose  an  indi- 
vidual liability  upon  the  stockholders  has  been  printed  and  distributed  to 
the  public  will  not  bind  the  stockholders  as  stockholders,  although  it  might 
possibly  as  individuals:  Reid  v.  Eatonton  Mfg.  Co.,  supi-a:  so,  it  seems,  if 
members  of  a  corporation  sign  a  by-law  which  pledges  them  to  be  liable  "  in 
their  individual  as  well  as  their  collective  capacity  "  for  all  moneys  lent  to 
the  corporation,  in  order  to  enable  the  corporation  to  obtain  a  loan,  and 
the  by-law  is  used  for  that  purpose,  it  gives  a  right  of  action  against  the 
signers  in  favor  of  one  who  was  induced  to  advance  money  upon  its  *credit: 
Flint  V.  Pierce,  99  Mass.  68,  71;  and,  it  seems,  that  if  the  members  of  a  cor- 
poration, finding  it  unable  to  pay  all  its  debts,  agree  among  themselves  to 
contribute  proportionally  to  their  stock  to  make  good  the  deficit,  such  agree- 
ment is  binding  upon  them:  R.'pley  v.  Sampson,  10  Pick.  371,  373;  but  an 
oral  promise  of  a  member  of  a  corporation  to  pay  its  debts,  being  within  the 
statute  of  frauds,  will  not  bind  him:  Trustees  of  Free  SchooU  v.  Flint,  13  Met. 
539;  and  where  money  was  loaned  to  a  corporation  on  its  bond  and  mort- 
gage, and  the  stockholders  became,  by  contract,  sureties  for  the  repayment 
of  the  loan,  other  creditors  of  the  company  have  no  equity  to  comcel  the 
lender  to  exhaust  his  remedy  against  the  sureties  before  resorting  to  the 
company  for  payment:  South  Carolina  Mfg.  Co.  v.  Bank  of  South  Carolina,  6 
Rich.  Eq.  227.  While,  tlierefore,  a  stockholder  may  so  act  towards  credi- 
tors of  a  corporation,  by  means  of  a  by-law  or  otherwise,  as  to  be  estopped 
from  denying  an  individual  liability  to  the  creditors  who  have  relied  thereon, 
and  while  he  may  become  a  surety  for  the  corporation,  he  is  not,  properly 
speaking,  liable  as  a  stockholder  in  such  cases,  but  as  an  individual.  And 
as  tlie  liability  for  the  debts  of  a  corporation  did  not  rest  upon  its  stock- 
holders or  members  at  the  common  law,  and  could  not  be  imposed  upon  them 


836  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

as  such  by  a  by-law  of  the  company,  it  follows  that  the  liability  cau  only 
arise  by  virtue  of  constitutional  provisions,  special  charters,  general  acts  of 
incorporation,  or  other  statutes.  Sometimes  the  liability  is  imposed  in  one 
of  these  ways,  sometimes  in  another. 

See  further,  as  to  the  constitutionality  of  statutes  imposing  a  liability 
upon  stockholders  for  corporate  debts,  j;os<,  "Legislative  Power  to  Impose, 
Repeal,  or  Modify  Statutory  Liability  of  Stockholders  for  Corporate  Debts." 

Statxttes  Imposing  Liability,  whether  SxpacTLY  or  Liberally  Con- 
strued. —  Whether  the  provision  of  a  charter  or  other  statute  which  imposes 
a  personal  liability  upon  the  stockholders  of  a  corporation  for  the  payment 
of  its  debts  is  to  be  strictly  or  liberally  construed,  is  a  question  upon  which 
the  cases  are  not  agreed.  It  is  held  by  one  line  of  cases  that  such  provisions 
are  remedial,  and  therefore  should  be  liberally  construed:  Freeland  v.  Mc- 
Cttllough,  1  Denio,  412;  43  Am.  Dec.  G85;  Marion  Township  etc.  Draining  Co. 
V.  Norris,  37  Ind.  424,  429;  Gauchv.  Harrison,  12  III.  App.  457,461;  com- 
pare Carver  v.  Braintree  Mfg.  Co.,  2  Story,  432;  but  another  line  of  cases 
maintains  that,  being  in  derogation  of  the  common  law,  such  provisions 
should  be  strictly  construed:  Gray  v.  Coffin,  9  Cush.  192;  Dane  v.  Dane 
Mfg.  Co.,  14  Gray,  488,  489;  Potter  v.  Stevens  MacJdne  Co.,  127  Mass.  592; 
Moyer  v.  Pennsylvaiiia  State  Co.,  71  Pa.  St.  293,  297;  Appeal  of  Means,  85 
Id.  75,  78;  O'Reilly  v.  Bard,  105  Id.  569,  573;  Salt  Lake  City  Nat.  Bank  v. 
Hendrickson,  40  N.  J.  L.  52;  Nimick  v.  Mingo  Iron  Works  Co.,  25  W.  Va.  184, 
199;  and  see  Chase  v.  Lord,  77  N.  Y.  1;  6  Abb.  N.  C.  258;  while  still  an- 
other holds  that  a  reasonable  or  sensible  construction  is  to  be  adopted: 
Carver  v.  Braintree  Mfg.  Co.,  2  Story,  432,  447;  Mokelumne  Hill  etc.  Co.  v. 
Woodbury,  14  Cal.  265,  266;  Bohn  v.  Brown,  33  Mich.  257;  Lane  v.  Morris,  8 
Ga.  475;  Itigallsv.  Cole,  47  Me.  540;  and  see  also  Dewey  v.  Sf.  Alhans  Trust 
Co.,  57  Vt.  332;  Weigley  v.  Coal  Oil  Co.,  5  Phila.  67;  and  this  latter  is  the 
preferable  doctrine;  for,  "in  construing  a  statutory  provision  imposing  indi- 
vidual liability  upon  the  members  of  a  corporation,  it  is  the  duty  of  the  courts 
to  ascertain  and  carry  out  the  intention  of  the  legislature.  To  lay  down  any 
arbitrary  rule  for  the  construction  of  a  particular  class  of  statutes  is  mani- 
festly contrary  to  reason,  and  can  only  lead  to  error  and  perversion  of  jus- 
tice ":  2  Morawetz  on  Corporations,  sec.  880;  and  see,  favoring  this  view, 
Thompson's  Liability  of  Stockholders,  sec.  52;  note  to  Freeland  v.  McCidlough, 
43  Am.  Dec.  696;  contra.  Cook  on  Stock  and  Stockholders,  sec.  214.  This 
class  of  statutes  should  be  here  carefully  distinguished  from  another  class, 
which  impose  a  personal  liability  for  the  debts  of  the  corporation  upon  trus- 
tees or  other  oflBcers,  and  sometimes  upon  stockholders,  because  of  the  failure 
to  conform  to  some  special  requirement;  such  statutes,  being  penal,  are 
held  to  require  a  strict  construction:  Esmond  v.  Billiard,  16  Hun,  65;  Cndy 
V.  Smith,  12  Neb.  628,  630;  Cable  v.  McCune,  26  Mo.  371.  "But  even  here," 
says  Mr.  Thompson,  "it  is  believed  that  the  rule,  properly  understood,  and 
applied  so  as  not  to  transcend  the  scope  of  judicial  power,  goes  no  further 
than  to  hold  that,  where  the  statute  is  penal,  courts  will  hesitate  more  about 
enlarging  the  meaning  of  doubtful  terms  than  where  it  is  remedial  ":  Thomp- 
son's Liability  of  Stockholders,  sec.  54.  « 

Extent,  in  General,  of  Individual  Liability  for  Debts  of  Corpora- 
tion. —  The  extent  of  the  liability  imposed  upon  stockholders  for  corporate 
debts  varies  greatly  with  the  different  constitutional  provisions,  special 
charters,  general  acts  of  incorporation,  and  other  statutes. 

Constitutional  Provi-iions,  and  Legislation  thereunder.  — If  a  constitution  pro- 
vides for  the  individual  liability  of  stockholders  for  corporate  debts,  ques- 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  837 

tions  may  arise  as  to  whether  or  not  the  provision  is  self-executory,  and  as 
to  the  extent  of  the  legislative  powers  under  it.  Tliese  questions  must  be 
determined  by  the  language  of  the  provision  itself.  Thus  a  section  of  a 
constitution  which  says  that  "each  stockholder  of  a  corporation  shall  be 
individually  and  personally  liable  for  his  proportion  of  all  its  debts  and 
liabilities "  is  not  self-excuting,  but  legislation  is  necessary  to  give  it  a 
reasonable  and  practical  operation:  French  v.  Teschemaker,  24  Cal.  518;  see 
also  Morleyy.  Thayer,  3  Fed.  Rep.  737;  compare  Peck  v.  Miller,  39  Mich. 
594;  but,  on  the  other  hand,  a  section  which  reads,  "each  stockholder  shall 
be  liable  over  and  above  the  stock  by  him  or  her  owned,  and  any  amount 
unpaid  thereon,  to  a  further  sum  at  least  equal  in  amount  to  such  stock,"  is 
self-executing  to  the  extent  of  the  minimum  liability  prescribed  by  it: 
Jones  V.  Jarman,  34  Ark.  323.  It  results  that,  if  a  constitution  provides 
that  the  stockholders  shall  be  individually  liable  for  the  corporate  debts,  but 
does  not  fix  the  extent  of  the  liability  or  provide  means  of  enforcing  it,  it  is 
competent  for  the  legislature  to  determine  how  far  stockholders  shall  be 
liable,  cind  in  what  manner  the  liability  shall  be  enforced:  French  v.  Tesche- 
maker, 24  Cal.  518;  Larrabee  v.  Baldwin,  35  Id.  155;  Diverseij  v.  Smith,  103 
Dl.  378,  385;  Hampson  v.  Weare,  4  Iowa,  13;  Milrcy  v.  Spurr  Mountain  Iron 
Min.  Co.,  43  Mich.  231;  compare  Peck  v.  Miller,  39  Id.  594;  for  instance,  if 
it  is  said,  as  above,  that  each  stockholder  of  a  corporation  shall  be  indi- 
vidually liable  "  for  his  proportion  of  all  its  debts  and  liabilities,"  the  legis- 
lature may  make  each  stockholder  liable  for  his  share  of  all  the  debts  of  the 
corporation  contracted  while  he  was  a  stockholder:  Larrabee  v.  Baldwin, 
supra;  and  if  tlie  provision  is  to  the  effect  that  the  stockholders  "  shall  be 
subject  to  such  liabilities  and  restrictions  as  shall  be  provided  by  law,"  the 
legislature  may  enact  that  when  no  corporate  property  can  be  found  on 
which  to  levy  execution,  the  acting  manager  or  a  member  of  the  corporation 
may  be  notified  to  show  cause  why  the  individual  property  of  the  members 
should  not  be  made  liable:  Hampnon  v.  Weare,  supra;  and  under  such  a  pro- 
vision, every  stockholder  takes  his  stock  subject  to  be  affected  by  whatever 
legislation  in  that  regard  the  legislature  may  deem  necessary;  and  therefore 
statutes  imposing  a  personal  liability  upon  stockholders  for  future  corporate 
debts  are  free  from  constitutional  objections:  Weidiivjerv.  Spruance,  101  111. 
278;  Shufeldtv.  Carver,  8111.  App.  545,  548;  but  while  the  legislature  can  thus 
provide  for  the  liability  under  such  constitutional  provisions,  a  statute  which 
attempts  to  relieve  stockholders  from  liability  would  plainly  be  void:  Central 
Agricultural  etc.  Ass'nv.  Alabama  Gold  L.  Ins.  Co.,  70  Ala.  120;  French  v. 
Teschemaker,  24  Cal.  518,  544,  553;  Milroy  v.  Spurr  Mountain  Iron  Min.  Co., 
43  Mich.  231.  Besides  such  questions  as  the  foregoing,  a  further  question  as 
to  the  meaning  of  the  constitutional  provision  may  arise.  Tlius  where  it  is 
provided  that  "in  no  case  shall  any  stockholder  be  individually  liable  in  any 
amount  over  and  above  the  amount  of  the  stock  owned  by  him  or  her,"  a 
stockholder  is  not  liable  for  a  debt  of  the  corporation,  it  is  held,  when  his 
stock  is  fully  paid  up:  Sch-icker  v.  Ridimjs,  65  Mo.  208;  Gausen  v.  Buck,  08 
Id.  545;  but  compare  the  cases,  post,  this  head,  under  similar  statutory  pro- 
visions; but  where  it  is  said  that  "the  stockholders  of  all  corporations  and 
joint-stock  associations  shall  be  individually  liable  for  all  labor  performed  lor 
Buch  corporation  or  association,"  the  individual  liability  under  the  section 
means  a  liability  beyond  that  of  members  of  the  corporation:  Milroy  v.  Spurr 
Mountain  Iron  Min.  Co.,  43  Mich.  231. 

Liability  to  Extent  of  Unpaid  Subscriptions.  —  As  before  stated,  the  extent 
of  the  liability  imposed  upon  stockholders  for  the  debts  of  corporations  varies 


838  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

greatly.  In  some  instances,  constitutions  and  statutes  provide  that  the 
stockholders  shall  be  liable  to  the  creditors  of  the  company  to  the  amount 
unpaid  on  their  stock;  and  when  this  is  the  case,  it  is  obvious  that  no  new 
right  or  liabilily  is  created,  but  simply  an  old  one  preserved:  Patterson  v. 
Lynde,  106  U.  S.  5i9;  112  111.  19G,  204,  207;  Bush  v.  Cartwright,  7  Or.  329; 
Brundagev.  Monumental G.  &  S.  Min.  Co.,  12  Id  322;  M'dUv.  Steiuart,  41  N.  Y. 
384,  389;  Stephens  v.  Fox,  83  Id.  313.  A  simple  and  less  expensive  remedy 
to  enforce  this  pre-existing  liability  than  that  given  in  courts  of  equity,  in- 
dependent of  the  statute,  may  be  the  result:  See  Mills  v.  Stewart,  Stephens  v. 
Fox,  supra;  but,  otherwise,  one  must  proceed  inequity,  it  is  held,  in  the  usual 
manner,  to  compel  the  payment  of  the  unpaid  subscriptions:  Patterson  v, 
Lijnde,  Bush  v.  Cartioright,  Brundage  v.  Monumental  G.  li:  S.  Min.  Co.,  supra: 
but  see  Hodges  v.  Silver  IJill  Min.  Co.,  9  Or.  200,  204.  Under  such  a  pro- 
vision, a  question  may  occur  as  to  whether  or  not,  in  particular  instances, 
anything  remains  unpaid;  or,  in  other  words,  in  what  manner  may  payments 
of  stock  subscriptions  be  made:  See  Boynton  v.  Hatch,  47  N.  Y.  225;  Schenclc 
V.  Andrews,  57  Id.  133;  Boynton  v.  Andrews,  63  Id.  93;  Douglass  v.  Ireland, 
73  Id.  100.  This  question  must  be  answered  upon  the  general  principles 
heretofore  discussed  iu  connection  with  the  right  of  creditors  of  corporations 
to  compel  the  payments  of  unpaid  subscriptions:  See  supra,  "Payment  of 
Shares,  how  Made." 

Unlimited  Liability.  — Sometimes  a  general  liability  for  all  the  debts  of  the 
corporation  is  imposed.  Thus  where  an  act  under  which  a  corporation  was 
formed  provided  that  the  stockholders  "shall  be  jointly  and  severally  liable 
in  their  individual  capacities  and  estates  for  all  debts,  contracts,  or  other  lia- 
bilities of  the  said  company,  contracted  or  incurred  during  the  time  such 
stockholders,  respectively,  own  their  stock,  or  are  beneficially  interested 
therein,"  the  stockholders  are  liable  for  all  debts  contracted  while  they 
were  stockholders,  although  they  had  paid  up  all  their  stock:  Patterson  v. 
Wyomissing  Mfg.  Co.,  40  Pa.  St.  117;  see  also,  in  this  connection,  Marsh  v. 
Burroughs,  1  Woods,  403;  and  where,  by  the  Revised  Statutes  of  New  Hamp- 
shire, a  creditor  of  a  corporation  could  recover  his  whole  debt  from  any  one 
or  more  of  the  stockholders,  who  were  to  seek  contribution  from  the  others, 
but,  by  an  amendment,  proceedings  against  stockholders  was  required  to  be  by 
bill  in  chancery,  in  such  a  proceeding  an  equitable  contribution  is  to  be  made 
by  the  court  between  all  the  stockholders,  as  far  as  may  be:  Erickson  v.  Nes- 
mith,  46  N.  H.  371. 

Liability  Limited  to  *' Extent"  or  ^^ Amount"  of  Stock.  —  Generally,  how- 
ever, a  limited  liability  only  for  the  corporate  debts  is  imposed  upon  stock- 
holders. Under  one  statutory  form,  a  liability  for  the  debts  of  the  corpo- 
ration upon  stockholders  to  the  "extent"  or  "amount"  "of  their  stock"  is 
provided  for;  and  this  is  interpreted  to  mean  a  liability  to  the  extent  of  the 
nominal  or  face  value  of  the  stock,  witlaout  reference  to  the  amount  that  may 
liive  been  paid  in  thereon:  Bnggs  v.  Penniman,  8  Cow.  387;  IS  Am.  Dec.  454; 
Li  re  Empire  City  Bank,  18  N.  Y.  119,  218;  Sackett's  Harbour  Bank  v.  Blake, 
3  Rich.  Eq.  225;  Root  v.  Sinnock,  120  111.  350;  60  Am.  Rep.  558;  Pettihone  v. 
McGraio,  6  Mich.  441;  contra,  Lewis  v.  St.  Charles  County,  13  Mo.  App.  48, 
overruling,  5  Id.  225,  and  holding  that  the  payment  to  the  corporation  of 
the  full  amount  of  a  stockholder's  subscription  was  a  complete  defense  to  an 
action  against  him  by  a  corporate  creditor;  and  see  Schricker  v.  Ridings,  65 
Mo.  208;  Gausen  v.  Buck,  68  Id.  545.  In  Ohio  the  constitution  provides  that 
"in  all  cases  each  stockholder  shall  be  liable  over  and  above  the  stock  by  him 
or  her  owned,  and  any  amount  unpaid  thereon,  to  a  further  sum  at  least  equal 


I 


4 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  839 

in  amount  to  such  stock  ";  and  under  this  it  was  held,  in  A  uUman^s  Appeal, 
as  Pa.  St.  505,  that  the  liability  not  only  existed  in  respect  of  stock  subscribed 
for,  but  also  in  respect  of  stock  distributed  as  a  stock  dividend,  notwith- 
standing the  statute  under  which  a  corporation  was  organized  used  the  word 
"subscribed"  instead  of  " owned, "  in  a  section  providing  for  individual  lia- 
bility. Under  this  form,  by  which  stockholders  are  made  liable  to  the  extent 
or  amount  of  their  stock  for  the  debts  of  a  corporation,  each  stockholder,  to 
tlie  extent  of  his  stock,  is  liable  for  the  entire  corporate  indebtedness:  Wc.hrman 
V.  Realcirt,  1  Cin.  Sup.  Ct.  230;  although  as  between  the  stockholders  there 
is  an  equity  to  have  a  contribution  in  proportion  to  the  amount  of  stock 
owned  by  each:  Id.;  but  the  payment  of  a  judgment  recovered  by  a  creditor 
of  the  corporation  against  him  for  an  amount  equal  to  the  amount  of  stock 
held  by  him  extinguishes  his  liability:  Buchanan  v.  Meisser,  105  111.  G38; 
Thehn.i\.  Smiley,  110  Id.  31G;  Woodruff  etc.  Iron  Worhsv.  Chittenden,  4:  Hosw. 
406;  Mathez  v.  Keidig,  72  N.  Y.  100;  and  the  same  is  true  of  a  judgment 
confessed  for  such  amount  by  a  stockholder  in  favor  of  a  bona  fide  creditor 
of  the  corporation:  Manvill  v.  Roever,  11  Mo.  App.  317;  or  of  a  voluntary 
payment  to  a  creditor:  Buchanan  v.  Meisser,  supra;  Mathez  v.  Neidig,  supra; 
Garrison  v.  Howe,  17  N.  Y.  458;  and  therefore  where  a  stockholder's  liability 
is  thus  discharged,  one  to  whom  he  transfers  his  stock  will  take  it  freed  from 
further  liability:  Thebus  v.  Smiley,  supra;  but  it  is  held  the  payment  by  a 
stockholder  of  a  sum  equal  to  the  amount  of  his  stock  to  the  firm  of  wliich  he 
is  a  member,  in  satisfaction  of  a  debt  due  from  the  corporation  to  the  iirm, 
will  not  release  him  from  liability,  since  the  firm  could  not  maintain  an 
action  at  law  against  him:  Buchanan  v.  3Ieisser,  supra;  nor  can  a  stockholder 
discharge  himself  by  buying  up  debts  owing  by  the  corporation,  equal  to  the 
amount  of  his  liability,  at  a  discount:  Thompson  v.  Meisser,  108  111.  359;  so 
where,  before  judgment  was  obtained  against  a  stockholder,  in  an  action 
against  him  by  a  creditor  of  an  insolvent  bank,  the  stockliolder  agreed  with 
a  friend  that  if  the  latter  would  buy  up  claims  against  tlie  bank  to  the 
amount  of  the  defendant's  liability,  the  defendant  would  confess  judgment, 
which  understanding  was  carried  out  by  the  purchase  of  claims  at  a  discount, 
and  such  judgment  satisfied,  the  judgment  and  satisfaction  cannot  be  pleaded 
in  bar  to  the  action:  Manville  v.  Karst,  5  McCrary,  142;  16  Fed.  Rep.  173. 
As  to  a  stockholder's  right  to  set  ofif  a  debt  due  him  by  the  corporation,  in  an 
action  by  a  creditor,  see  post.  If  a  stockholder,  by  his  laches,  permits  several 
cl  lims  against  the  corporation,  in  excess  of  his  liability  as  a  stockliolder,  to 
ripen  into  judgments  against  him,  he  cannot  require  the  judgment  creditors 
to  interplead  concerning  the  rights  which  they  have  of  enforcing  their  judg- 
ments: Hodgson  v.  Cheever,  9  Mo.  App.  565. 

LicJiility  Limited  "in  Proportion"  to  Amount  of  Slock.  —  Under  another 
statutory  form,  tlie  stockholders  are  made  liable  for  the  debts  of  the  cor- 
poration "in  proportion"  to  the  amount  of  their  stock.  Thus  where  the 
charter  of  a  banking  corporation  provided  that  the  stockliolders  should  be 
personally  liable  "  in  proportion  to  the  amount  of  shares  and  tlie  value  there- 
of," held  by  them  "for  the  ultimate  redemption  of  its  bills  or  notes,"  a  stock- 
holder is  plainly  not  liable  for  the  ultimate  redemption  of  all  the  bills  and 
notes  of  the  corporation,  but  for  a  part  only,  bearing  the  same  proportion  to 
the  aggregate  amount  of  unredeemed  paper  that  his  stock  does  to  the  entire 
capital  stock  of  the  corporation:  Adkins  v.  Thornton,  19  Ga.  325,  .328;  Branch 
V.  Baker,  53  Id.  502,  512;  the  liability  of  each  stockholder  is,  therefore,  to  be 
a.5ccrtained  and  fixed  by  the  following  proportion:  as  the  whole  capital  stock 
is  to  the  entire  outstanding  circulation,  so  is  each  stockholder's  shares  to  his 


840  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

part  to  be  redeemed:  Robinson  v.  Lane,  19  Ga.  337.  But  where  it  is  provided 
that  "each  stockholder  of  the  company  shall  be  individually  and  personally 
liable  for  such  proportion  of  all  its  debts  and  liabilities  as  the  amount  of  its 
capital  stock  owned  by  him  bears  to  the  whole  of  the  capital  stock,"  it  is 
then  only  necessary,  in  an  action  by  a  creditor  of  a  corporation  against  a 
Btockholder,  to  ascertain  the  whole  amount  of  tlie  capital  stock  of  the  com- 
pany, the  amount  owned  by  the  stockholder,  and  the  amount  of  indebtedness 
of  the  company  to  the  creditor  suing:  Morrow  v.  Superior  Court,  64  Cal.  383. 
In  such  cases  as  the  above,  the  value  of  the  stock  is  to  be  estimated  accord- 
ing to  the  valuation  placed  upon  it  by  the  charter:  Lane  v.  Morris,  10  Ga. 
162;  and  where,  as  in  the  Georgia  cases,  the  amount  of  outstanding  indebt- 
edness is  a  necessary  element  in  ascertaining  a  stockholder's  liability,  any 
legitimate  evidence  should  be  received  in  fixing  the  fact:  Robinson  v.  Lane, 
19  Id.  337.  Ihe  liabdity  is  a  several  one,  and  therefore  one  stockholder  is 
not  bound  to  make  good  an  insolvent  stockholder's  portion:  Adhins  v.  Thorn- 
ton, 19  Id.  325,  328;  Crease  v.  Bahcoch,  10  Met.  524,  557,  5GS;  see  also  United 
States  V.  Knox,  102  U.  S.  422,  425;  and  the  liability  is  not  increased  by  the 
fact  that  the  corporation  is  to  a  considerable  extent  the  owner  of  its  own 
stock:  Crease  v.  Babcocl;  10  Met.  524,  555;' see  also  United  States  \.  Knox, 
102  U.  S.  422,  425.  But  any  creditor  whose  demand  is  sufBcient  may  collect 
from  any  stockholder  the  entire  amount  of  the  latter's  liability,  and  there- 
upon the  stockholder's  liability  to  other  creditors  ceases:  Larrabee  v.  Bald- 
win, 35  Cal.  155;  Lane  v.  Harris,  IG  Ga.  217;  but  compare  Cal.  Civ.  Code, 
sec.  322;  and  see  Morrow  v.  Superior  Court,  supra:  so  if  a  stockholder  has 
otherwise  paid  his  proportion  of  the  outstanding  indebtedness  to  one  creditor, 
he  is  discharged  from  liability  to  the  other  creditors:  Belcher  v.  Wilcox,  40 
Ga.  391;  Jones  v.  Wiltherger,  42  Id.  575;  Branch  v.  Baler,  53  Id.  502,  512; 
and  if  he  has  paid  less  than  the  whole  amount  of  his  liability,  it  will  be  a  good 
defense  pro  tanto:  Belcher  v.  Wilcox,  Branch  v.  Baker,  supra;  but  after  suit 
has  been  commenced  against  him  by  one  creditor,  he  cannot  defeat  it  by  pay- 
ing other  creditors,  even  though  he  pay  the  full  amount  of  his  liability:  Jones 
V.  Wlliberger,  supra.  "Whatever  satisfies  or  extinguishes  the  debt  aa  to  the 
corporation,  extinguishes  also  the  liability  of  the  stockholders,  because  the 
creditor  can  claim  only  one  satisfaction  of  the  debt":  Young  v.  Rosenbaum, 
39  Cal.  646,  654;  San  Jos6  Savings  Bank  v.  Pharis,  58  Id.  380.  Therefore, 
where  the  debt  has  been  partly  satisfied  by  a  forced  sale  of  property  pledged 
and  mortgaged  by  the  corporation,  a  stockholder  is  liable  only  for  his  pro- 
portion of  the  indebtedness  remaining:  San  Jose  Savings  Bank  v.  Pharis,  supra. 
But  the  fact  that  holders  of  unpaid  stock  of  a  banking  corporation  have  sev- 
erally redeemed  their  shares  of  the  bills  of  the  bank,  under  the  charter  which 
provides  that  the  persons  and  property  of  the  stockholders  should  be  liable 
for  the  redemption  of  the  bills  and  notes  of  the  bank,  in  proportion  to  the 
number  of  shares  which  they  hold,  does  not  release  them  from  liability  for 
the  amounts  due  on  their  stock  subscriptions:  Marsh  v.  Burrouglis,  1  Woods, 
463. 

Liability  Contingent  on  Certain  Fact  or  Event.  —  Sometimes  the  stockholders 
are  made  absolutely  liable  to  the  "extent"  or  "amount"  of  their  stock,  or 
"in  proportion  "  to  tlie  amount  of  their  stock;  but  sometimes  it  is  provided 
that  they  shall  be  so  liable  simply  "until  the  whole  amount  of  the  capital 
stock  shall  have  been  paid  in,"  or  that  they  shall  be  liable  in  the  event  or 
contingency  of  a  "dissolution,"  "failure,"  and  the  like.  The  foregoing  gen- 
eral principles  apply  to  such  cases;  but  some  special  questions  have  arisen. 
If  stockholders  are  made  liable  to  the  amount  of  their  stock  until  the  whole 


i 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  841 

amount  of  the  capital  stock  shall  have  been  paid  in,  the  liability  plainly  de- 
pends upon  whether  or  not  the  capital  stock  has  all  been  paid  up.  If  it  has 
not  been  so  paid,  a  stockholder  is  liable  to  the  full  amount  of  his  shares,  not- 
withstanding he  may  himself  have  fully  paid  up  his  stock:  Butler  v.  Walker, 
80  ni.  345;  Tibbalh  v.  Lihby,  87  Id.  142;  and  his  liability  is  in  uo  way  affected 
by  the  amount  of  capital  that  at  any  time  may  remain  unpaid:  Nor r is  v.  John- 
son, 34  Md.  485;  Norris  v.  Wrenschall,  34  Id.  492;  but  the  liability  ceases 
when  the  whole  amount  of  capital  is  paid  in,  and  is  consequently  ended 
when  so  paid  after  the  commencement  of  the  action  and  before  trial: 
Booth  V.  Campbell,  37  Id.  522.  Generally,  where  the  liability  thus  depends 
upon  the  payment  of  the  whole  amount  of  the  capital  stock,  a  certificate  is 
also  required  to  be  made  and  recorded.  And  it  is  held  that  the  certificate 
made  and  recorded  as  prescribed  is  conclusive  evidence,  for  the  stockholders, 
of  the  facts  therein  stated,  so  far  as  to  exempt  them  from  personal  liability 
for  the  subsequent  debts  of  the  company:  Stedman  v.  Eoeleth,  G  Met.  114. 
Where  a  statute  makes  the  stockholders  liable  for  all  debts  due  from  the 
corporation  at  the  time  of  its  dissolution,  it  does  contemplate  a  dissolution 
only  as  at  common  law,  but  a  practical  dissolution,  which  occurs  ' '  whenever 
the  corporation  becomes  a  nominal,  inert  body,  its  property  and  funds  gone, 
and  it  is  reduced  to  insolvency,  rendering  legal  remedies  against  it  fruitless 
and  unavailing":  Central  Agricultural  etc.  Ass'n  v.  Gold  L.  Ins.  Co.,  70  Ala. 
120;  so  a  suspension  of  specie  payments  by  a  banking  corporation,  and  a  re- 
fusal to  pay  specie  generally,  when  demanded,  is  a  "failure"  within  the 
meaning  of  its  charter  making  the  stockholders  liable  in  the  event  of  a  fail- 
ure: Lane  v.  Morrix,  8  Ga.  4G8,  476;  although  the  bank  continued  banking 
operations  for  some  years  after  the  suspension  of  specie  payments:  Terry  v. 
Calnan,  13  S.  C.  220;  and  where  the  charter  of  a  bank  provided  that  the  in- 
dividual property  of  the  stockholders  should  be  bound  for  the  ultimate  re- 
demption of  its  bills,  in  proportion  to  the  number  of  shares  held  by  them 
respectively,  the  liability  arises  when  the  bank  refuses  or  ceases  to  redeem, 
and  is  notoriously  and  continuously  insolvent:  Terry  v.  Tubman,  92  U.  S. 
156;  Terry  v.  Anderson,  95  Id.  628,  632.  If  the  charter  of  an  insurance 
company  provides  that  "in  all  cases  of  losses  exceeding  the  means  of  the 
corporation,  each  stockholder  shall  be  held  liable  to  the  amount  of  unpaid 
stock  held  by  him,"  it  is  necessary,  in  an  action  brought  against  a  stock- 
holder, that  the  declaration  should  aver  that  the  losses  of  the  company,  or 
its  liabilities,  exceed  its  assets:  Blair  v.  Gray,  104  Id.  769. 

Liability  under  National  Banking  Act.  — The  act  of  Congress  of  1864  pro- 
vides that  the  share-holders  of  a  national  bank  shall  be  "  individually  respon- 
sible, equally  and  ratably,  and  not  one  for  another,  for  all  contracts,  debts, 
and  engagements  of  such  association  to  the  extent  of  the  amount  of  tlieir 
stock  therein,  at  the  par  value  thereof,  in  addition  to  the  amount  invested  in 
such  shares."  Under  this  act,  it  is  further  left  to  the  comptroller  of  the  cur- 
rency to  determine  when  it  is  necessary  to  institute  proceedings  against  the 
stockholders  to  enforce  their  personal  liability,  and  tlie  extent  to  which 
the  liability  shall  be  enforced,  and  his  order  is  conclusive  upon  the  stock- 
holders: Kennedy  v.  Gibson,  8  Wall.  498;  Casey  v.  Galli,  94  U.  S.  673;  Xa- 
tional  Bank  v.  Case,  99  Id.  628;  Bailey  v.  Saioyer,  4  Dill.  463.  Creditors  of 
an  insolvent  national  bank  cannot  proceed,  under  this  act  of  1864,  directly 
in  their  own  names  against  the  stockholders.  The  receiver  appointed  by 
the  comptroller  is  the  proper  party  to  institute  all  suits,  and  it  is  not  neces- 
sary to  make  either  the  bank  or  the  creditors  parties  to  the  action:  Kenndy 
v.  Gibson,  sup7-a.     But  under  the  amendatory  act  of  1876,  the  authority  of 


842  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

the  comptroller  to  appoint  a  receiver  to  wind  up  the  afifairs  of  a  liank,  after 
a  receiver  has  been  appointed  by  the  court,  and  steps  taken  under  a  credi- 
tor's bill  to  enforce  the  share-hulders'  liability,  as  permitted  by  the  amend- 
ment, is  doubtful:  Harvey  v.  Lord,  11  Biss.  144;  10  Fed.  Rep.  236.  The 
method  of  adjusting  the  liability  of  the  stockholders  was  given  as  follows 
in  United  States  v.  Knox,  102  U.  S.  422,  425,  by  Mr.  Justice  Swayne:  "  In 
the  process  to  be  piirsued  to  fix  the  amount  of  the  separata  liability  of  each 
of  the  share-holders,  it  is  necessary  to  ascertain:  1.  The  whole  amount  of  the 
par  value  of  all  the  stock  held  by  all  the  share-holders;  2.  T!io  amount  of  the 
deficit  to  be  paid  after  exhausting  all  the  assets  of  the  bank;  3.  Then  to  ap- 
ply the  rule  that  each  sharediolder  shall  contribute  such  sum  as  will  bear  the 
same  proportion  to  the  whole  amount  of  the  deficit  as  his  stock  bears  to  the 
whole  amount  of  the  capital  stock  of  the  bank  at  its  par  value.  There  is  a 
limitation  of  this  liability.  It  cannot  in  the  aggregate  exceed  the  entire 
amount  of  the  par  value  of  all  the  stock.  The  insolvency  of  one  stockholder, 
or  his  being  beyond  the  jurisdiction  of  the  court,  does  not  in  any  wise  affect 
the  liability  of  another;  and  if  the  bank  itself,  in  such  case,  holds  any  of  its 
stock,  it  is  regarded  in  all  respects  as  if  such  stock  were  in  the  hands  of  a 
natural  person,  and  the  extent  of  the  individual  liability  of  the  other  stock- 
holders is  computed  accordingly."  Compare  Crease  v.  Bahcoch,  10  Met.  524, 
555;  Adkins  v.  Thornton,  19  Ga.  325,  328. 

Liability  for  Dehts  Due  Laborers  and  Servants,  and  for  Other  Special  Debts. 
—  Sometimes  a  special  statutory  liability  is  imposed  upon  the  stockholders  of 
a  corporation  for  debts  due  its  "laborers"  and  "servants."  The  general 
meaning  of  these  words  is  well  indicated  in  the  following  quotations:  "The 
word  '  laborer '  in  the  statute  must  probably  be  restricted  to  mean  manual 
work;  but  '  servant '  cannot  be  confined  to  a  mere  menial  service.  '  Laborer ' 
is  more  distinctive  than  'servant,'  and  embraces  a  smaller  class;  the  former 
comprehending  such  only  as  perform  labor  with  their  hands,  while  the  latter 
includes  also  such  as  do  menial  services":  Ilovey  v.  Ten  Broech,  3  Robt.  316, 
320.  "  That  term  [servant]  is  one  in  general  use.  In  common  parlance  it  is 
understood  to  relate  and  apply  only  to  a  person  rendering  service  of  a  sub- 
ordinate, but  not  necessarily  of  a  menial,  character  to  an  employer,  varying 
in  its  nature  according  to  the  business  or  occupation  in  which  it  is  rendered, 
and  not  to  extend  to  and  include  every  employee  or  party  who  does  wark  for 
another.  The  context  in  which  it  is  used,  in  tlie  section  referred  to,  being 
associated  with  'laborers'  and  'apprentices,'  indicates  that  it  was  intended 
to  apply  to  a  person  employed  to  devote  his  time  and  render  his  service  in 
the  performance  of  w^ork  similar  in  its  general  character  to  that  done  by 
those  employees":  Hill  v.  Spencer,  Gl  N.  Y.  274,  278,  per  Lott,  Ch.  C.  In 
accordance  with  these  principles,  a  contractor  for  the  construction  of  a  part 
of  a  railroad,  or  who  contracts  for  and  furnishes  the  labor  and  services  of 
others,  or  of  teams,  is  not  a  laborer  or  servant:  Aikin  v.  Wasson,  24  Id.  482; 
Balch  V.  Neio  York  etc.  R.  R.,  46  Id.  521;  Peck  v.  Miller,  39  Mich.  594;  Tay- 
lor V.  Mainmariwj,  48  Id.  171;  nor  is  a  general  mining  agent  or  superin- 
tendent: ndl\.  Spencer,  61  Id.  274;  Deanx.  De  Wolf,  16  llun,  186;  Kramer 
V.  Ruckel,  17  Id.  463;  compare  Sleeper  v.  Goodwin,  67  Wis.  577;  nor  a  bo'^k- 
keeper  and  general  manager:  Wakefeld  v.  Fanjo,  90  N.  Y.  213;  nor  the  sec- 
retary of  a  corporation:  Coffin  v.  Reynolds,  37  Id.  640;  Viele  v.  ire//.s,  9  Abb. 
N.  C.  277;  contra,  Richardson  v.  Ahendroth,  43  Barb.  162;  although  he  also 
acted  as  book-keeper:  Viele  v.  Wells,  supra;  nor  is  a  consulting  engineer: 
Ericsson  v.  Brown,  38  Barb.  390;  nor  an  assistant  chief  engineer:  Brockway 
V.  Inna,  39  Mich.  47;  33  Am.  Rep.  348;  but  a  civil  engineer  and  a  rodman 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  843 

are  servants:  Conant  v.  Van  Schaick,  24  Barb.  87;  so  is  a  civil  engineer  and 
traveling  agent  employed  at  a  fixed  salary:  Williamson  v.  Wadsworth,  49  Id. 
294;  and  one  who  acts  as  a  sort  of  engineer  and  a  sort  of  foreman,  showing 
the  men  how  to  work  and  working  with  them,  and  during  the  absence  of  the 
superintendent,  acting  in  the  latter  capacity:  Vincent  \.  Bam  ford,  42  How.  Pr. 
109;  12  Abb.  Pr.,  N.  S.,  252;  1  Jones  &  S.  50G;  so  one  is  both  a  laborer  and 
a  servant,  where  he  acts  as  a  book-keeper  and  overseer,  working  also  with 
the  men,  althougli  employed  at  a  yearly  salary:  Ilove//  v.  Te7i  Broech,  3  Robt. 
31G;  so  also  is  one  who,  for  a  yearly  salary,  payable  monthlj',  or  as  he  Wanted 
his  pay,  acted  as  foreman,  took  part  in  the  manual  labor,  kept  the  time  of 
the  men,  solicited  orders,  collected  bills,  and  did  whatever  was  required  of 
him:  Short  v.  Medherry,  29  Hun,  39;  and  a  superintendent  or  foreman, 
though  he  performs  no  manual  labor,  was  held  to  bo  a  servant  within  the 
meaning  of  a  statute  which  makes  stockholders  personally  liable  for  all  debts 
which  may  be  due  and  owing  "clerks,  servants,  and  laborers":  Sleeper  v. 
Goodwin,  G7  Wis.  577;  but  a  traveling  salesman  is  not  a  "  laborer  "  within 
the  meaning  of  a  provision  that  stockholders  shall  be  individually  liable  "for 
all  labor  performed  "  for  the  corporation:  Peck  v.  Miller,  39  Mich.  594;  and 
a  corporation  aggregate  cannot  be  an  employee  of  another  corporation  within 
the  meaning  of  a  statute  which  provides  that  stockholders  shall  be  individu- 
ally liable  for  all  debts  due  and  owing  "laborers,  servants,  apprentices,  and 
employees  ":  Dukes  v.  Love,  97  Ind.  341.  The  question  is  one  of  construction 
and  interpretation.  Wliere  an  act  under  which  a  corporation  was  formed 
provided  that  the  stockholders  should  be  liable  for  all  the  debts  due  and 
owing  laborers  and  servants,  after  an  execution  returned  unsatisfied,  to  the 
amount  due  on  such  execution,  in  an  action  by  a  judgment  creditor  of  the 
corporation  to  enforce  the  personal  liability  of  a  stockholder,  the  mere  proof 
that  a  judgment  was  obtained  against  the  company,  and  an  execution  re- 
turned unsatisfied  is  not  enough;  the  plaintiff  must  also  prove  that  the  debt 
for  which  judgment  was  recovered  was  of  the  sort  named  in  the  statute: 
Conant  v.  Van  Schaick,  24  Barb.  87;  and  where  an  act  provided  that  the  stock- 
holders should  be  liable  for  debts  due  and  owing  laborers,  servants,  and  ap- 
prentices for  services  performed  for  the  corporation,  but  that  they  should 
only  be  liable  for  debts  contracted  by  the  company,  "which  are  to  be  paid 
within  one  year  fro:n  the  time  the  debb  is  contracted,  and  on  which  a  suit  is 
brought  against  the  company  within  one  year  after  the  debt  bscomes  due,"  a 
stockholder  is  liable  for  the  salary  or  wages  of  a  servant  or  laborer,  payable 
by  the  year,  for  which  a  siait  is  brought  against  the  company  within  a  year 
after  the  same  became  due,  although  the  employment  was  to  continue  indefi- 
nitely: Jlovey  V.  Ten  Broerk,  3  Robt.  31G.  The  right  of  action  given  to  la- 
borers and  servants  by  the  foregoing  statutes  is  not  a  personal  privilege  given 
to  them  alone,  but  may  be  assigned:  Kraitscr  v.  Riickel,  17  Hun,  4G3. 

In  some  instances,  a  somewhat  different  liability  from  the  above  is  im- 
posed; as  where  the  act  under  which  a  corporation  was  formed  provided  that 
the  stockholders  "shall  hereafter  be  jointly  and  severally  liable  in  their  indi- 
vidual ca[)acities  only  for  debts  due  to  miners,  quarrymen,  and  other  laborers 
employed  by  such  companies,  and  for  machinery,  provisions,  merchandise, 
country  produce,  and  materials  furnished  for  said  companies  ";  under  which 
it  was  held  that  the  act  contemplated  an  ordinary  sale  and  delivery  to  the 
company  in  the  course  of  its  usual  business:  IFcms  v.  Mauch  Chunk  Iron  Co., 
58  Pa.  St.  295;  and  that  the  liability  of  a  stockholder  did  not  extend  to  the 
C£ise  of  a  promissory  note  held  by  a  third  person,  although  given  for  mate- 
rials used  by  the  company  in  manufacturing:    iVeiyhlei/  v.  Coal  Oil  Co.,  5 


844  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

Phila.  67;  but  where  a  merchant,  upon  orders  of  a  corporation,  furnished 
merchandise  to  its  employees,  and,  by  arrangement,  the  company  took  up  the 
orders  monthly  by  giving  its  not^s,  such  transaction  is  within  the  act:  Reading 
Industrial  Mf(j.  Co.  v.  Graeff,  (34  Pa.  St.  395.  A  similar  charter  provision  to  the 
foregoing  was  held,  by  a  very  strict  construction,  not  to  include  hauling  with 
one's  own  team,  repairing  wagons  used  by  the  company,  lumber  for  erecting 
machinery,  feed  for  horses  of  tlie  company,  powder  and  fuse  for  blasting, 
and  tools:  Moyer  v.  Pennsylvania  Slate  Co.,  72  Pa.  St.  293. 

What  are  " Debts"  for  Which  Stockholders  are  Liable.  — In  determining  for 
what  obligations  of  a  corporation  the  stockholders  are  made  individually  re- 
sponsible, it  is  the  duty  of  the  courts,  as  in  other  cases,  to  ascertain  the  in- 
tention of  the  legislature,  and  then,  if  possible,  to  carry  out  such  intention. 
It  is  competent  for  the  law-making  power  to  impose  a  liability  upon  stock- 
holders for  the  torts  as  well  as  the  contracts  of  a  corporation,  and  if  this  be 
the  .intent,  effect  should  be  given  it  in  the  one  case  as  miich  as  in  the  other. 
Cliarters  and  statutes,  however,  provide  that  stockholders  shall  be  liable  for 
the  "debts,"  or  "debts  and  contracts,"  or  "debts  contracted,"  by  tlie  cor- 
poration; and  the  generally  accepted  doctrine  is,  that  such  expressions  refer 
to  obligations  incurred  by  the  corporation  ex  contractu,  and  not  to  liabilities 
for  torts  committed  by  the  company's  agents  or  servants:  2  Morawetz  on 
Corporations,  sec.  880;  Taylor  on  Corporations,  sec.  734;  Tliompson's  Lia- 
bility of  Stockholders,  sees.  57,  58;  note  to  Prince  v.  Lynch,  99  Am.  Dec. 
435;  Proprsof  Mill  Dam  Foundry  Co.  v.  Hovey,  21  Pick.  417;  Child  v.  Bos- 
ton etc.  Iron  Works,  137  Mass.  516;  50  Am.  Rep.  328;  Heacoch  v.  Sherman, 
14  Wend.  58;  Doolittle  v.  Marsh,  11  Neb.  243;  Bohn  v.  Brown,  33  Mich.  257; 
Cable  V.  McCune,  26  Mo.  371;  72  Am.  Dec,  214;  and  see  Cable  v.  Gaty,  34 
Mo.  573;  although  the  tortious  conduct  might  have  been  considered  as  a 
breach  of  contract:  See  Bohn  v.  Brown,  Heacoch  v.  Sherman,  Cable  v.  Mc- 
Cune, supra;  and  although  a  judgment  has  been  recovered  against  the  cor- 
poration, upon  which  the  stockholders  are  sought  to  be  held:  Bohn  v.  Brown, 
supra;  compare  Child  v.  Boston  etc.  Iron  Works,  supra.  But  in  Carver  v. 
Braintree  Mfg.  Co.,  2  Story,  432,  Mr.  Justice  Story  thought  the  word  "debt," 
in  a  statute  of  Massachusetts,  was  to  be  taken  in  its  broadest  sense  as  em- 
bracing any  just  demands,  whether  growing  out  of  contract  or  out  of  tort; 
and  he  therefore  held  it  to  embrace  a  claim  for  unliquidated  damages  for  the 
infringement  of  a  patent;  but  see  Child  v.  Boston  etc.  Iron  Works,  supra. 
However,  a  claim  for  a  breach  of  warranty  of  title  of  a  chattel  is  a  "debt": 
Dryden  v.  Kellogg,  2  Mo.  App.  87;  but  not  such  a  debt  as  is  to  be  paid  within 
one  year  from  the  time  it  was  contracted,  within  the  meaning  of  an  act  de- 
claring that  "  no  stockholder  shall  be  personally  liable  for  the  payment  of  any 
debt  contracted  by  any  company  formed  under  the  charter,  which  is  not  to 
be  paid  within  one  year  from  the  time  the  debt  is  contracted "':  Id.  If  a 
statute  provides  that  the  stockholders  shall  be  liable  for  all  "debts  and  con- 
tracts "  of  the  corporation,  clearly  it  is  not  necessary  that  a  clakn  against  the 
corporation  should  be  liquidated  in  order  to  charge  the  stockholders:  Haynes 
V.  Brown,  36  N.  H.  545.  A  judgment  is  not  a  "debt":  Larrabee  v.  Baldwin, 
35  Cal.  155;  and  see  Bohn  v.  Brown,  33  Mich.  257;  compare  Child  v.  Boston 
etc.  Iron  Works,  137  Mass.  516;  50  Am.  Rep.  328. 

It  might  be  noticed  here  that  the  members  of  a  corporation  established 
under  the  laws  of  one  state  are  liable  upon  contracts  entered  into  by  the  cor- 
poration in  another  state,  with  citizens  of  that  state,  in  like  manner  and  to 
the  same  extent  as  upon  contracts  entered  into  in  the  state  where  the  corpo- 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  845 

ration  is  established,  with  citizens  thereof:  HutcJdns  v.  New  England  Coal 
Min.  Co.,  4  Allen,  580. 

Interest  and  Costs. — If  the  principal  of  the  original  judgment,  which  has 
been  obtained  against  the  corporation,  together  with  interest,  does  not  ex- 
haust the  sum  for  which  a  stockholder  is  liable,  the  judgment,  plainly,  should 
carry  interest  as  in  other  cases:  Grundv.  Tucker,  5  Kan.  70.  "Moreover, 
if  the  creditor  is  kept  out  of  his  money  through  the  refusal  of  the  stockholder 
to  pay  when  demand  is  made  upon  him,  he  ought  to  receive  interest  during 
the  time  he  has  been  thus  wrongfully  delayed,  although  such  interest,  to- 
gether with  the  principal,  make  a  sum  in  excess  of  the  amount  for  which  the 
stockholder  otherwise  would  have  been  liable ":  Thompson's  Liability  of 
Stockholders,  sec.  374.  It  has  been  therefore  held  that  interest  will  run 
against  the  stockholder  from  the  time  of  the  commencement  of  the  suit 
against  him,  that  being  the  time  when  the  liability  can  be  said  to  attach  to 
him,  although  it  results  in  charging  him  with  a  sum  beyond  that  for  which 
he  was  individually  liable:  Thompson's  Liability  of  Stockholders,  sec.  374; 
Burr  V.  Wikvx,  22  N.  Y.  551;  Handy  v.  Drayer,  89  Id.  334;  Wehrman  v. 
Reakirt,  1  Ciu.  Sup.  Ct.  230;  2Iasonv.  Alexander,  44  Ohio  St.  318;  but  not  from 
the  date  of  the  original  liability  of  the  company,  or  any  other  previous  time: 
Wehrman  v.  Reahirt,  Burr  v.  Wilcox,  supra;  compare  Grand  Rapids  Sav.  Bank 
V.  Warren,  52  Mich.  557;  Cleveland  v.  Burnham,  64  Wis.  347;  although  where 
a  referee  computed  the  interest  on  the  plaintiff's  demand  from  the  date  on 
which  it  became  due  the  company,  instead  of  from  the  date  of  the  commence- 
ment of  the  action,  but  the  indebtedness  was  less  than  the  defendant's  lia- 
bility as  a  stockholder,  and  the  allowance  of  interest  did  not  swell  it  beyond 
that  limit,  there  was  held  to  be  no  error:  Wheeler  v.  Millar,  90  N.  Y.  353. 
So  it  is  held,  under  the  national  ba-king  act,  that  interest  runs  from  the 
date  of  the  comptroller's  order,  the  amount  due  from  the  stockholders  being 
then  liquidated  and  payable:  Casey  v.  Galli,  94  U.  S.  673.  But  in  Cole  v. 
Butler,  43  Me.  401,  Sackett's  Harbour  Bank  v.  Blake,  3  Rich.  Eq.  225,  Manger 
V.  Jacohson,  99  111.  349,  interest  was  denied  where  the  amount  of  the  re- 
covery would  thereby  exceed  the  stockholder's  original  liability,  Dunkin, 
C.  J.,  in  the  case  from  Richardson,  placing  much  stress  upon  the  words  "no 
further,"  in  the  New  York  statute  of  1811,  in  question  in  the  case,  which 
provided  that  the  stockholders  should  be  responsible  "to  the  extent  of 
their  respective  shares  of  stock,  and  no  further."  And  if  a  statute  makes 
the  stockholders  of  a  bank  liable  to  creditors  "in  proportion  "  to  their  stock, 
for  the  payment  of  unpaid  bills,  at  the  time  the  charter  expires,  interest, 
either  from  the  time  of  dissolution,  or  from  the  time  of  the  filing  of  a  bill  in 
equity  against  them  will  not  be  allowed,  since  no  stockholder  can  tell  how 
much  he  is  to  pay,  or  to  whom,  until  it  is  a-scertainod  by  .suit:  Crease  v. 
Babcock,  10  Met.  524,  568;  Grew  v.  Breed,  10  Id.  569,  571. 

It  has  also  been  held  that  a  stockholder,  made  severally  liable  for  the  debts 
of  a  corporation,  is  also  responsible  for  the  costs  of  a  proceeding  taken  against 
him  by  a  creditor,  although  he  is  thereby  compelled  to  pay  a  sum  in  excess  of 
his  original  liability:  Orose  v.  Hilt,  36  Me.  22;  Cole  v.  Butler,  43  Id.  401 ;  on 
the  pnuciple  that  he  should  have  paid  the  amount  for  which  lie  was  liable  to 
the  creditor,  without  putting  the  creditor  to  the  expense  of  a  suit;  although 
it  has  been  held  that  a  judgment  against  a  stockholder  must  not  include  any 
part  of  the  costs  of  a  proceeding  against  the  corporation:  Bailey  v.  Bancker, 
3  Hdl,  188;  Rorke  v.  Thomas,  56  N.  Y.  559,  565;  but  see  Grand  Rapids  Sav. 
Bank  v.   Warren,  52  Mich.  557. 


846  Thompson  v.  Reno  Savings  Bank,        [Nevada, 

Xature  of  Statutory  Liability  op  Stockholders  for  Corporate 
Debts.  —  The  nature  of  the  liability  for  the  debts  of  a  corporation,  imposed 
upon  stockholders  for  the  benefit  of  creditors  by  constitutions,  special  char- 
ters, general  acts  of  incorporation,  and  other  statutes,  has  been  much  dis- 
cussed, but  in  the  main  the  principles  are  well  settled. 

fs  Contract  Liability. — A  distinction  should  be  noticed  at  the  outset  be- 
tween the  usual  liability  imposed  upon  stockholders  for  the  corporate  debts, 
and  the  liability  occasionally  imposed  upon  the  officers  of  a  corporation  for 
its  debts,  because  of  their  failure  or  neglect  to  perform  some  duty  with  which 
they  are  charged,  which  liability  is  also  sometimes  extended  to  the  corpora- 
tors and  stockholders  generally.  In  the  latter  case,  the  liability  is  penal  in 
its  nature:  Note  to  Ilodfjes  v.  New  England  Screw  Co.,  53  Am.  Dec.  051; 
Bird  V.  Ilayden,  2  Abb.  Pr.,  N.  S.,  61;  Ilalsey  v.  McLean,  12  Allen,  4:18; 
Cable  V.  McCune,  26  Mo.  371,  380;  72  Am.  Dec.  2U,  215;  S.nith  v.  Steele,  8 
Neb.  115;  while  in  the  former  it  is  well  settled  the  liability  is  not  in  the 
nature  of  a  penalty,  but  of  a  contract.  "This  liability  is  in  reality  the 
result  of  an  agreement  or  contractual  relation  formed  between  the  share- 
holders and  creditors  of  the  corporation.  Whether  this  agreement  be  called 
a  contract  or  not  is  merely  a  matter  of  definition.  It  may  not  be  a  contract 
according  to  the  technical  rules  of  the  common  law;  but  it  contains  every 
essential  element  of  a  contract,  and  it  is  legally  binding  by  virtue  of  statu- 
tory enactment":  2  Morawetz  on  Corporations,  sec.  872.  "A  personal  lia- 
bility of  stockholders  for  the  debts  of  a  corporation,  in  virtue  of  the  charter, 
is  not  in  the  nature  of  penalty  or  forfeiture,  and  does  not  exist  solely  as  a 
liability  imposed  by  statute.  It  is  not  enforced  simpl}'  as  a  statutory  obliga- 
tion, but  is  regarded  as  voluntarily  assumed  by  the  act  of  becoming  a  stock- 
holder. By  such  act,  he  assents  to  be  bound,  or  that  his  property  shall  be 
charged  with  debts  of  the  corporation,  to  the  extent  and  in  the  manner  jire- 
Bcribed  by  the  act  of  incorporation":  Lowrij  v.  Imnan,  46  N.  Y.  119,  125, 
per  Allen,  J.;  compare  Keyserv.  Hitz,  2  Mackey,  473,  -per  Cox,  J.;  and  see 
also  note  to  Prince  v.  Lynch,  99  Am.  Dec.  433.  Therefore,  the  liability  is 
Buch  as  fairly  to  come  within  the  spirit  and  intent  of  an  act  to  facilitate  the 
recovery  of  judgments  in  suits  "where  the  cause  of  action  is  a  contract": 
Norrisv.  Wrenschall,  34  Md.  492;  and  falls  within  a  section  of  the  statute  of 
limitations  providing  that  ' '  actions  of  debt  grounded  upon  any  lending  or  con- 
tract, without  specialty,  "shall  be  brought  within  a  certain  period  of  time:  Car- 
rol v.  Green,  92  U.  S.  509;  Terry  v.  Calnan,  13  S.  C.  220;  and  see  Bullard  v. 
Bell,  1  Mason,  243;  compare  Atwood  v.  RJiode  Island  AjricuUural  Bank,  1 
R.  I.  376;  Hawkins  v.  Furnace  Co.,  40  Ohio  St.  507;  and  not  within  a  section 
providing  for  the  limitation  of  actions  "upon  any  statute  made  or  to  be 
made  for  any  forfeiture  or  cause,  the  benefit  and  suit  whereof  is  limited  to 
the  party  aggrieved  ":  Corning  v.  McCuUouyh,  1  N.  Y.  47;  49  Am.  Dec.  287; 
overruling,  in  this  particular,  Frtzland  v.  McCulloujh,  1  Denio,  412;  43  Am. 
Dec.  G85;  compare  Gridiey  v.  Barnes,  103  111.  211;  Lawkr  v.  Bun,  7  Ohio  St. 
340.  It  is  not  a  penalty,  and  therefore  enforceable  only  in  a  court  of  law: 
Queenan  v.  Palmer.  117  111.  619.  And  the  liability,  being  in  effect  a  liability 
upon  contract,  cannot  be  discharged  by  a  subsequent  transfer  of  the  stock: 
Brown  v.  Hitchcock,  36  Ohio  St.  667,  668;  Hanjer  v.  Cleveland,  36  Md.  476; 
see  ]'Ost:  and  this  being  the  nature  of  tlie  liability,  the  assignee  of  the 
obligation  of  a  corporation  takes  all  the  rights  of  the  assignor:  Blakeman  v. 
Benton,  9  Mo.  App.  107;  and  a  stockholder  who  has  been  held  liable  can 
niaiiitaiu  an  action  against  other  stockholders  for  a  contribution:  Aspinwo.ll 
V.   Sacchi,   iil  N.   Y.   331;    and  see  jpost.     Furthermore,   as  respects   an  ex- 


4 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  847 

isting  creditor,  it  is  part  of  the  obligation  of  his  contract,  within  the  con- 
stitution of  the  United  States,  and  not  subject  to  repeal  or  modification  by 
a  state  statute:  Hawthorne  v.  Calef,  2  Wall.  10;  Stoi-y  v.  Furman,  25  N.  Y. 
214,  221;  Taw  Hook  v.  Whitlocl,  26  Wend.  43;  37  Am.  Dec.  246;  Provident  Sav. 
IntfUution  V.  Jackson  Place  Skating  etc.  Rink,  52  Mo.  552;  St.  Louis  P'y  Supplies 
Co.  V.  Harbine,  2  Mo.  App.  134;  Blakeman  v.  Benton,  9  Id.  107;  compare  Coj^n 
V.  Rich,  45  Me.  507;  71  Am.  Dec.  559;  Cummings  v.  Maxwell,  45  Me.  190;  Story 
V.  Furman,  25  N.  Y.  214,  221;  Walker  v.  C rain,  17  Barb.  119,  129;  Jermain's 
Adnir  v.  Benton,  79  Mo.  148;  Merchants'  Ins.  Co,  v.  Hill,  86  Id.  466,  aflBrming 
12  Mo.  App.  148.  Not  being  penal,  it  may  be  enforced  against  a  stockholder 
outsicre  of  the  state  where  the  corporation  is  formed:  Flash  v.  Conn,  10  Fla.  428; 
20  Am.  Rep.  721 ;  109  U.  S.  371 ;  Cuykendall  v.  Miles,  10  Fed.  Rep.  342;  Howell 
V.  Manjlesdorf,  33  Kan.  194,  199;  Hodgson  v.  Cheever,  8  Mo.  App.  318;  AuU- 
man's  Appeal,  98  Pa.  St.  505;  Lowry  v.  Inman,  46  N.  Y.  119;  and  see  Woods 
V.  Wicks,  7  Lea,  40;  note  to  Prince  v.  Lynch,  99  Am.  Dec.  433;  unless  there 
are  difHculties  of  procedure  in  the  way:  Lowry  v.  Inman,  supra;  Christensen 
V.  Eno,  106  N.  Y.  97;  Nimick  v.  Mingo  Iron  Works  Co.,  25  W.  Va.  184; 
Ericksony.  Nesmilh,  15  Gray,  221;  4  Allen,  233;  and  see  note  to  Prince  v. 
Lynch,  99  Am.  Dec.  433;  compare  Drinkwater  v.  Portland  Marine  R'y,  18  Me. 
35.  And  being  a  contract  liability,  it  survives  against  the  personal  repre- 
sentatives of  a  deceased  stockholder:  Richmond  v.  Irons,  121  U.  S.  27;  Irons 
V.  Manufacturers  Nat.  Bank,  21  Fed.  Rep.  197,  198;  Chase  v.  Lord,  77  N.  Y. 
1;  6  Abb.  N.  C.  258;  Manville  v.  Edgar,  8  Mo.  App.  324;  but  see  Child  v. 
Coffin,  17  Mass.  64;  Ripley  v.  Sampson,  10  Pick.  371,  372;  Dane  v.  Dane  Mfg. 
Co.,  14  Gray,  488;  Cummings  v.  Wright,  11  Mo.  App.  348;  Donnelly  v. 
Hodgson,  13  Id.  15;  and  compare  Diversey  v.  Smith,  103  111.  378. 

Is  for  Exclusive  Benefit  of  Creditors.  —  The  statutory  liability  of  stock- 
holders is  solely  for  the  benefit  of  the  creditors  of  the  corporation.  There- 
fore the  corporation  cannot  enforce  it  by  assessment:  Cook  on  Stock  and 
Stockholders,  sec.  216;  2  Morawetz  on  Corporations,  sec.  809;  Winsted  v. 
Buskirk,  17  Ohio  St.  113;  Liberty  Female  College  Ass'n  v.  Watkins,  70  Mo.  13; 
and  see  Wincock  v.  Turpin,  96  111.  135;  Atwood  v.  Rhode  Island  Agricultural 
Bank,  1  R.  I.  370;  nor  can  the  corporation  assign  it  to  trustees  for  the  bene- 
fit of  creditors:  Cook  on  Stock  and  Stockholders,  sec.  216;  Thompson's 
Liability  of  Stockholders,  sec.  342;  2  Morawetz  on  Corporations,  sec.  869; 
Taylor  on  Corporations,  sec.  721;  Wright  v.  McCormack,  17  Ohio  St.  86;  nor 
can  the  liability  be  enforced  by  the  assignee  in  bankruptcy  of  the  corpora- 
tion: Dutcher  v.  Murine  Nat.  Bank,  12  Blatchf.  435;  Bristol  v.  Sanford,  12 
Id.  341;  nor  by  a  receiver  of  the  corporation:  Cook  on  Stock  and  Stock- 
holders, sec.  210;  Thompson's  Liability  of  Stockholders,  sec.  342;  2  Morawetz 
on  Corporations,  sec.  869;  Taylor  on  Corporations,  sec.  721;  note  to  Prince  v. 
Lynch,  99  Am.  Dec.  434;  Jacobsonv.  Allen,  20  Blatchf.  525;  12  Fed.  Rep.  454; 
Wincock  V.  Tu)-pin,  96  111.  135;  Mason  v.  New  Torh  Silk  Mfg.  Co.,  27  Hun,  307; 
Cuykendall  v.  Corning,  88  N.  Y.  129;  Farnsworth  v.  Wood,  91  Id.  308;  unleso, 
by  statute,  the  receiver  is  vested  with  the  right  to  enforce  the  liability  on  be- 
half of  creditors:  Walker  v.  Crain,  17  Barb.  11;  Herkimer  County  Bank  v. 
Furman,  17  Id.  116,  119;  Story  v.  Furman,  26  N.  Y.  214;  Kennedy  v.  Gibson, 
8  Wall.  498;  Irons  v.  Manufacturers'  Nat.  Bank,  27  Fed.  Rep.  591,  affirm- 
ing 17  Id.  308;  21  Id.  197;  Richmond  v.  Irom,  121  U.  S.  27.  Indeed,  the 
fact  that  a  corporation  has  gone  into  bankruptcy,  or  into  the  hands  of  a 
receiver,  fixes  the  liability  of  stockholders  to  creditors:  Tibballs  v.  Lihby, 
87  111.  142;  Areiv:  v.  Weir,  89  Id.  25;  Wincock  v.  Turpin,  96  Id.  135. 
"Neither  a  receiver,  nor  an  assignee  in  bankruptcy,  nor  an  assignee  under 


848  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

a  voluntary  general  assignment  for  the  benefit  of  creditors,  each  of  whoai  rep- 
resents creditors  as  well  as  the  insolvent,  acquires  any  right  to  enforce  a 
collateral  obligation  given  to  a  creditor,  or  to  a  body  of  creditors,  by  a  third 
person,  for  the  payment  of  the  debts  of  the  insolvent":  Jacobsonv.  Allen, 
supra,  per  Wallace,  J.  The  distinction  between  the  liability  of  stock- 
holders with  respect  to  unpaid  subscriptions,  and  their  statutory  liabiHty, 
will  at  once  be  observed;  for,  as  shown  supra,  unpaid  subscriptions  are 
assets  which  a  corporation  may  assign  for  the  benefit  of  creditors,  and  they 
may  be  collected  by  an  assignee  of  the  corporation  in  bankruptcy  or  insol- 
vency, or  by  a  receiver  of  the  corporation. 

Again,  if  the  liability  is  imposed  in  favor  of  certain  creditors  only,  no 
others  can  enforce  it:  Wincoch  v.  Turpin,  96  111.  135;  Farnsworth  v.  Wood, 
91  N.  Y.  308;  in  which  latter  case  it  is  said:  "The  liability  does  not  exist 
in  favor  of  the  corporation  itself,  nor  for  the  benefit  of  all  its  creditors,  but 
only  in  favor  of  such  creditors  as  are  within  the  prescribed  conditions.  It 
is  not  a  general  right,  but  one  which  attaches  to  the  particular  creditors 
only  who  are  within  the  conditions,  and  is  to  be  enforced  by  these  in  their 
own  right  and  for  their  own  special  benefit."  And  creditors,  in  order  to 
enforce  the  liability,  need  not  be  original  creditors,  but  the  liability  of  a 
stockholder  is  equally  great  to  pay  the  assignee  of  a  debt  against  the  cor- 
poration as  the  assignor:  Came  v.  Brigham,  39  Me.  35;  Blalceman  v.  Benton, 
9  Mo.  App.  107;  Crease  v.  Bahcock,  10  Met.  524,  560;  Grew  v.  Breed,  10  Id. 
669,  579;  although  in  Gaiich  v.  Harrison,  12  HI.  App.  457,  it  was  held  that  a 
creditor  should  be  allowed  only  the  amount  he  actually  paid  for  the  claims 
which  he  had  purchased;  contra.  Grew  v.  Breed,  10  Met.  569,  579. 

May  he  Waived  by  Creditors.  —  Since  the  statutory  liability  of  stockholders 
for  the  coiporate  debts  is  for  the  benefit  of  creditors  of  the  corporation, 
it  may  be  waived  by  a  creditor  by  express  contract  with  the  corporation: 
Cook  on  Stock  and  Stockholders,  sec.  217;  Thompson's  Liability  of  Stock- 
holders, sec.  75;  2  Morawetz  on  Corporations,  sec.  871;  Taylor  on  Corpora- 
tions, sec.  735;  Robinson  v.  Bidwell,  22  Cal.  379,  388;  French  v.  Teschemnker, 
24  Id.  518;  Basshor  v.  Forbes,  36  Md.  154,  166;  Brown  v.  Eastern  Slate  Co., 
134  Mass.  590;  see  also  In  re  Athenceum  etc.  Society,  3  De  Gex  &  J.  660; 
Halket  V.  Merchant  Traders^  etc.  Association,  13  Q.  B.  960;  Dnrhanis  Case,  4 
Kay  &  J.  517;  although  the  liability  is  founded  upon  a  constitutional  pro- 
vision: Robinson  V.  Bidwell,  French  v.  Teschemaker,  supra;  "and  it  is  equally 
free  from  doubt  that  it  may  be  waived  by  conduct  on  the  part  of  the  creditor, 
either  at  the  time  of  making  the  contract  or  subsequently,  indicating  a  clear 
understanding  between  the  contracting  parties  that  the  creditor  is  to  look 
only  to  the  corporate  funds,  and  not  to  the  individual  liability  of  the  share- 
holders": Thompson's  Liability  of  Stockholders,  sec.  75.  Therefore  a  stock- 
holder, liable  on  notes  of  the  corporation,  is  released  from  liability,  where, 
after  the  transfer  of  his  stock,  the  creditor  gave  up  the  notes  to  the  company, 
and  took  new  notes,  especially  if  done  for  the  purpose  of  absolving  the  stock- 
holder from  liability:  New  England  Commercial  Bank  v.  Newport  Steam  Fac- 
tory, 6  R.  I.  154;  75  Am.  Dec.  688. 

Stockholders  are  not  Sureties  or  Guarantors.  —  It  has  sometimes  been  asserted 
that  the  individual  liability  assumed  by  the  stockholders  of  a  corporation  for 
the  security  of  its  creditors  was  that  of  guarantors  or  of  sureties:  Mass  v. 
McCull&uyh,  5  Hill,  131;  Hanson  y.  Donkersley,  37  Mich.  184;  Peck  v.  Miller, 
39  Id.  594,  597;  Milroy  v.  Spurr  Mountain  Iron  Min.  Co.,  43  Id.  231,  238; 
Grand  Rapids  Sav.  Bank  v.  Warren,  52  Id.  557,  561;  Grew  v.  Breed,  10  Met. 
569,  575;  Hicks  v.  Burns,  38  N.  H.  141;  Patterson  v.  Wyomissing  Mfg.  Co.,  40 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  849 

Pa.  St.  117;  and  that  therefore  a  judgment  against  tUe  corporation  was  not 
even  prima  facie  evidence  of  the  debt  in  an  action  against  a  stockholder:  Mosi 
V.  McCullowjh,  supra;  sed  qu.;  see  note  to  Charles  v.  Hoskins,  83  Am.  Dec.  380; 
and  see  post;  and  a  stockholder  was  discharged  from  liability  by  the  credi- 
tor's extending  the  time,  and  accepting  the  note  of  the  corporation:  Hanson 
V.  Donhersley,  supra;  and  see  Grew  v.  Breed,  supra;  and  no  action  could  be 
maintained  against  a  stockholder  without  notice  of  the  neglect  of  the  corpo- 
ration to  pay  the  debt:  Hiclcs  v.  Burns,  supra;  but  compare  Norris  v.  Wren- 
schall,  34  Md.  492,  499.  But,  on  the  other  hand,  it  has  been  expressly  denied 
that  stockholders  are  sureties  or  guarantors:  Harger  v.  McCullowjh,  2  Denio, 
119;  Moss  V.  Averill,  10  N.  Y.  449;  Moss  v.  McCullough,  7  Barb.  279;  Ault- 
mans  Appeal,  98  Pa.  St.  505;  Craicfs  Appeal,  92  Id.  396;  Perkins  v.  Sanders, 
56  Miss.  733;  3Iokelurnne  Hill  etc.  Co.  v.  Woodbury,  14  Cal.  265;  Davidson  v. 
Rankin,  34  Id.  503;  Prince  v.  Lynch,  38  Id.  528;  99  Am.  Dec.  427;  Young  v. 
Rosenbaum,  39  Cal.  646;  Sonoma  Valley  Bank  v.  Hill,  59  Id.  107;  and  there- 
fore stockholders  are  not  discharged  by  the  creditor's  giving  time  to  the 
corporation:  Harger  v.  McCullough,  supra;  AuUmans  Appeal,  supra;  virtually 
overruling  Moss  v.  McCullough,  Patterson  v.  Wyomissing  Mfg.  Co.,  .tupra;  and 
being  original  debtors,  scire  facias,  to  enforce  payment  of  a  judgment  against 
the  corporation,  will  not  lie  against  the  stockholders:  Southmayd  v.  Russ,  3 
Conn.  52.  Mr.  Morawetz  says:  "It  is  a  truth,  which  no  legislative  act  or 
judicial  decision  can  alter,  that  a  corporation  consists  of  its  share-holders, 
and  that,  when  share-holders  become  individually  liable  for  debts  of  their 
corporation,  they  become  individually  liable  for  debts  which  they  themselves 
owe  in  a  corporate  capacity.  This  individual  liability  may  be  in  some  re- 
spects similar  to  that  of  suretyship,  but  it  is  certain  that  the  share-holders 
are  not  in  fact  sureties,  within  the  accepted  meaning  of  that  term ":  2 
Morawetz  on  Corporations,  sec.  879.  And  Mr.  Taylor  observes:  "That  it  is 
not  the  liability  of  guarantors  seems  too  evident  to  require  arguement.  Sure- 
tyship is  a  legal  institution  composed  of  peculiar  rules,  based  on  the  general 
notion  that  a  surety  is  a  man  conferring  a  benefit  and  receiving  none  in  re- 
turn": Taylor  on  Corporations,  sec.  715.  Some  of  the  confusion  of  ideas 
seems  to  have  resulted  from  the  fact  that  in  many  states,  either  by  virtue  of 
positive  statutory  provisions,  or  otherwise,  stockholders  are  not  primarily 
liable,  but  judgment  is  first  required  to  be  obtained  against  the  corporation, 
and  execution  returned  unsatisfied,  before  they  can  be  held,  —  a  proposition 
which  has  no  necessary  connection  with  suretyship  or  guaranty. 

Stockholders,  whether  Liable  as  Partners.  —  It  is  frequently  stated  that  the 
statutory  liability  of  stockholders  for  the  debts  of  a  corporation  is  that  of 
partners  or  members  of  an,  incorporated  association,  to  the  extent  indicated 
by  the  law-making  power:  Mokclumne  Hill  etc.  Co.  v.  Woodbury,  14  Cal.  265; 
Southmayd  v.  Ru^s,  3  Conn.  52;  Dcming  v.  Bull,  10  Id.  409;  Paine  v.  Stewart, 
33  Id.  517;  Buchanan  v.  Meisser,  105  111.  638;  Thompson  v.  Meisser,  108  Id. 
359;  Gauch  v.  Harrison,  12  111.  App.  457,  401;  Perkins  v.  Sanders,  56  Miss. 
733;  Erickson  v.  Nesmith,  40  N.  H.  371;  Allen  v.  Seawall,  2  Wend.  327;  6  Id. 
335;  Lindsay  v.  Hyatt,  4  Edw.  Ch.  97,  100;  Moss  v.  Oakleij,  2  Hill,  265,  269; 
Bailey  v.  Bancker,  3  Id.  188;  38  Am.  Dec.  675;  Harger  v.  McCullough,  2 
Denio,  119,  124;  Corning  v.  McCullough,  1  N.  Y.  47;  40  Am.  Dec.  287;  Story 
v.  Fnrman,  25  N.  Y.  214,  221,  222;  Wile^i  v.  Suydani,  64  Id.  173,  176;  Wait 
V.  Ferguson,  14  Abb.  Pr.  379;  Worrall  v.  Judson,  5  Barb.  210,  212;  Moss  v. 
McCullough,  7  Id.  279;  Conant  v.  Van  Schaick,  24  Id.  87,  96;  Ricliardson 
V.  Abendroth,  43  Id.  162;  ConUiu  v.  Furman,  57  Id.  484,  489;  8  Abb.  Pr., 
N.  S.,  161,  160;  Clark  v.  Myers,  11  Hun,  608;  King  v.  Duncan,  38  Id.  461, 
AM.  St.  Rep.,  Vol.  III.  —54 


850  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

464;  New  England  Commercial  Bank  v.  Newport  Steam  Factory,  6  R.  I.  154; 
75  Am.  Dec.  688;  Planters'  Bunk  v.  Bivinrjsville  Cotton  Mfg.  Co.,  10  Rich.  95; 
Coleman  v.  White,  14  Wis.  700;  80  Am.  Dec.  797;  Merchants'  Bank  v.  Chandler, 
19  Wis.  434,  437.  And  it  has  therefore  been  frequently  held  that  one 
stockholder  who  is  a  creditor  of  the  corporation  cannot  maintain  an  action 
at  law  against  the  others  to  enforce  their  individual  liability:  Bailey  v. 
Bancker,  3  Hill,  188;  38  Am.  Dec.  625;  Wait  v.  Ferguson,  14  Abb.  Pr.  379; 
Richardsonv.  Ahendroth,  43  Barb.  162;  Beers  v.  Waterhury,  8  Bosw.  396,  413; 
Clark  V.  Myers,  11  Hun,  60S;  Thompson  v.  Meisser,  108  111.  359;  Perkins  v. 
Sanders,  56  Miss.  733;  compare  Woodrnff  etc.  Iron  Works  v.  Chittenden,  4 
Bosw.  406;  Smith  v.  Londoner,  5  Col.  365.  His  remedy  is  in  equity  for  a  con- 
tribution. It  has  even  sometimes  been  said  that  stockholders  are  not  n.ade 
liable,  but  left  liable,  for  the  corporate  indebtedness:  See  Corning  v.  JlcCnl- 
lough,  1  N.  Y.  47;  49  Am.  Dec.  287;  Story  v.  Fnrman,  25  N.  Y.  214.  222; 
Buchanan  v.  Meisser,  105  III.  638;  but  this  is  palpably  erroneous,  and  over- 
looks the  indisputable  rule  of  the  common  law  that  stockholders  were  not 
liable  for  the  debts  of  the  corporation.  ISIr.  Morawetz  thus  observes,  with 
reference  to  the  doctrine  in  question:  "Share-holders  in  a  corporation  are 
undoubtedly  partners  within  a  broad  meaning  of  the  term,  and  this  is  true 
whether  they  are  subject  to  a  special  individual  liability  to  creditors  or  not. 
But  it  is  equally  a  fact  that  they  are  not  partners  within  the  narrow  meaning 
of  the  term  'partners'  under  the  common  law.  The  very  objectof  an  act  of 
incorporation  is  to  enable  the  share-holders  to  form  an  association  which  is 
not  a  common-law  partnership,  and  is  not  subject  to  the  technical  rules  of 
the  common  law.  The  fact  that  the  share-holders  in  a  corporation  are  sub- 
ject to  an  individual  liability  to  creditors  would  merely  constitute  one  point 
of  resemblance  between  the  association  and  a  common-law  partnership,  but  it 
would  not  render  the  association  a  common-law  partnership,  nor  would  it 
make  the  share-holders  common-law  partners.  To  reason  that  because  the 
liability  of  the  share-holders  under  the  statute  resembles  the  liability  of  part- 
ners under  the  common  law,  therefore  it  must  be  governed  by  the  technical 
rules  of  the  common  law  applicable  to  the  liability  of  partners,  indicates  a 
confusion  of  ideas  ":  2  Morawetz  on  Corporations,  sec.  878.  "  Share-holders," 
says  Mr.  Taylor,  "are  not,  like  partners,  each  other's  agents;  unlike  part- 
ners, they  may  transfer  their  shares  at  will;  then,  ordinarily,  even  in  respect 
of  his  statutory  liability,  a  share-holder  cannot  be  sued  until  the  creditor  has 
exhausted  his  legal  remedies  against  the  corporation;  and  finally,  under  some 
statutes,  a  share -holder  may  be  sued  alone,  though  in  the  end  he  is  entitled 
to  contribution  from  his  fellow-share-holders.  Undoubtedly  there  remains 
the  main  resemblance  between  the  liability  of  partners  and  the  sta't.atory 
liability  of  share-holders,  —  that  a  share-holder,  as  well  as  a  partner,  is  liable 
individually  for  the  debts  of  the  corporation  or  firm,  —  a  resemblance  which  is 
especially  prominent  in  the  unlimited  liability  of  a  share-holder,  who,  like  a 
partner,  may  be  obliged  to  pay  all  the  debts  of  the  concern.  And  the  danger 
lies  here,  lest  with  eyes  fixed  on  this  main  resemblance,  courts  overlook 
minute  differences,  and  in  consequence  fail  to  do  accurate  justice  ":  Taylor 
on  Corporations,  sec.  716. 

Liahility,  wlietlier  Primary,  or  Subject  to  Proceedings  First  Taken  against 
Corporation.  —  If  no  statutory  condition  is  imposed  requiring  creditors  to 
first  proceed  against  the  corporation,  the  individual  liability  of  stockholders 
is  regarded  as  primary;  and  therefore  an  action  to  enforce  the  liability  is 
maintainable  without  having  obtained  a  judgment  against  the  corporation, 
and  an  execution  returned  unsatisfied:  Spence  v.  Shapard,  57  Ala.  598;  David- 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  851 

son  V.  Rankin,  34  Cal.  503;  Young  v.  Rosenhmim,  39  Id.  646;  Fai/monville  v. 
McCollmiijh,  59  Id.  285;  Morrow  v.  Superior  Court,  64  Id.  383;  Culver  v.  Third 
Nat.  Bank,  64  111.  528;  Queenan  v.  Palmer,  117  Id.  619,  629;  Todhunter  v. 
Randolph,  29  Ind.  275;  Marion  Township  etc.  Drainimj  Co.  v.  Nori-is,  37  Id. 
424;  Sha/er  V.  Morinritij,  46  Id.  9;  Marshall  v.  Harris,  bo  Iowa,  182;  Perkins 
V.  Church,  31  Barb.  84;  McMahon  v.  il/acy,  51  N.  Y.  155,  160;  Planters'  Bank 
V.  Birin'jsville  Cotton  Mf<j.  Co.,  10  Rich.  95;  Bird  v.  Cofoej-<,  22  S.  0.  292; 
Cleveland  v.  Marine  Bank,  17  Wis.  545;  Merchants'  Bank  v.  Chandler,  19  Id. 
434,  545;  Sleeper  v.  Goodwin,  67  Wis.  577,  586;  see  also  Manufacturimj  Co. 
V.  Bradley,  105  U.  S.  175;  and  if  a  judgment  is  recovered  against  the  cor- 
poration, the  stockholders  cannot  be  sued  thereon:  Trippe  v.  ffuncheon,  82 
Ind.  307;  so  it  is  no  defense  that  property  given  in  pledge  by  the  corporation 
remains  in  the  creditor's  hands  undisposed  of:  Sonoma  Valley  Bank  v.  Hill, 
59  Cal.  107;  nor  is  the  creditor  obliged  first  to  exhaust  his  remedy  against 
the  sureties  on  the  note  of  the  corporation  on  which  he  sues  before  calling 
on  the  stockholders:  Connecticut  River  Savings  Bank  v.  Fiske,  60  N.  H.  363; 
nor  is  it  an  objection  to  the  maintenance  of  a  suit  against  the  st  )ckholders 
that  the  plaintiffs  have  commenced  an  action  against  the  corporation  for  the 
recovery  of  the  same  debt:  Id.;  and,  it  is  held,  a  release  by  a  creditor  of  a 
stockholder's  liability  for  the  debt  discharges  the  corporation  and  the  other 
stockholders  to  the  same  extent  as  the  one  to  whom  the  release  was  exe- 
cuted: Prince  v.  Lynch,  38  Cal.  528;  99  Am.  Dec.  427;  so  the  indebtedness 
for  which  a  stockholder  is  sought  to  be  charged  cannot  be  shown  by  entries 
in  the  books  of  the  corporation,  made  by  its  employees:  Neilson  v.  Crawford, 
52  Cal.  248;  Haynes  v.  Brown,  36  N.  H.  545;  Eager  v.  Cleveland,  36  Md. 
476;  but  see  McHose  v.  Wheeler,  45  Pa.  St.  32.  However,  the  cases  are  not 
agreed;  and  under  the  same  circumstances,  the  liability  is  held  not  to  be  a 
primary  resource  or  fund  for  the  payment  of  the  corporate  debts,  but  that 
the  legal  remedies  must  first  be  exhausted  against  the  corporation:  W rigid 
V.  McCormick,  17  Ohio  St.  8G;  Brown  v.  Hitchcock,  36  Id.  667,  676;  Hawkins 
V.  Furnace  Co.,  40  Id.  507,  513;  Wehrman  v.  Reakirt,  1  Cin.  Sup.  Ct.  230; 
Appeal  of  Means,  85  Pa.  St.  75;  Craig's  Appeal,  92  Id.  396;  Cambridge  Water 
Works  v.  Somerville  Dyeing  etc.  Co.,  4  Allen,  239;  Harper  v.  Union  Mfg.  Co., 
100  111.  225;  and  see  2  Morawetz  on  Corporations,  sec.  883;  Cook  on  Stock  and 
Stockholders,  sec.  221;  note  to  Prince  v.  Lynch,  99  Am.  Dec.  434,  favoring  this 
view.  Here,  again,  such  a  construction  should  be  adopted  as  will  best  eflectaate 
the  legislative  intent.  Very  generllay,  however,  a  creditor  is,  either  expressly 
or  by  necessary  implication,  required  to  obtain  a  judgment  against  the  cor- 
poration, and  have  an  execution  issued  thereon  returned  unsatisfied,  as  a  pre- 
requisite to  proceeding  against  a  stockholder  to  enforce  his  statutory  liability: 
See  Hastings  v.  Harding,  2  Dill.  99,  105;  Touceyv.  Bowen,  1  Biss.  81;  Thorn- 
ton V.  'Lane,  11  Ga.  459;  Hanson  v.  Donkersley,  37  Mich.  184;  Freeland  v, 
McCullough,  1  Denio,  412;  43  Am.  Dec.  685;  Patterson  v.  Wyonmsing  Mfg.  Co., 
40  Pa.  St.  117;  Dauchy  v.  Brown,  24  Vt.  197;  and  where  an  act  requires  the 
recovery  of  a  judgment,  and  the  return  of  an  execution  unsatisfied,  as  a  con- 
dition precedent  to  an  action  against  a  stockholder,  the  complaint  must 
allege  these  steps  to  have  been  taken:  Lindsley  v.  Simonds,  2  Abb.  Pr.,  N.  S., 
69.  But  where  the  required  proceedings,  as  to  obtaining  a  judgment  against 
the  corporation,  and  having  an  execution  returned  nulla  bona,  or  as  to  insti- 
tuting suit  against  the  corporation  within  a  limited  period  of  time,  as  some- 
times provided,  would  be  impossible  or  nugatory,  they  are  excused:  See 
Shell: ngtoa  v.  Howland,  53  N.  Y.  371;  Kincaid  v.  Divinetle,  59  Id.  548;  as 
where  the  corporation  is  notoriously  insolvent:  Hoilgesv.  Silver  JJ ill  aMih.  Co., 


852  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

9  Or.  200;  or  is  thrown  into  bankruptcy:  ShelUngton  v.  Howland,  53  N.  Y. 
371;  titate  Savings  Assn  v.  Kellogg,  52  Mo.  583;  Dryden  v.  Kellogg,  2  Mo. 
App.  87;  but  see  BirmingJiam  yat.  Bank  v.  Mosser,  14  Hun,  G05;  Tarhell  v. 
Page,  24  111.  46;  Fourth  Nat.  Bank  v.  FrancUyn,  120  U.  S.  747;  or  is  in  the 
hands  of  a  receiver:  Paine  v.  Stewart,  33  Conn.  516.  It  is,  however,  held 
that  a  judgment  and  execution  returned  nulla  bona  are  only  evidence  of,  and 
constitute  one  kind  of  proof  of,  insolvency:  Hodges  v.  Silver  Hill  Min.  Co., 
supra;  and  that  it  might  be  shown  by  any  competent  evidence  that  the  cor- 
poration had  no  goods  on  which  a  levy  could  be  made:  3Iarks  v.  Hardy,  12 
Mo.  App.  595;  and  it  was  sufficient  if  it  be  shown  that  execution  issued 
against  the  corporation,  and  that  there  was  no  property  whereon  to  levy  it, 
though  the  return  of  nulla  bona  on  the  execution  be  made  before  the  return 
day:  Id.;  but  these  are  extreme  cases.  On  the  other  hand,  as  to  whether 
the  return  nulla  bona  is  conclusive  against  the  stockholder  that  no  property 
existed,  see  Chaffin  v.  Cummings,  37  Me.  76;  Lane  v.  Harris,  16  Ga.  217.  It 
has  been  held  that  if  the  statute  requires  a  judgment  and  execution  against 
the  corporation  before  the  stockholders  can  be  charged  with  their  individual 
liability,  a  judgment  and  execution  in  the  state  where  the  corporation  was 
formed  are*  contemplated,  and  therefore  necessary:  Eocky  Mountains  Nat. 
Bank  v.  Bliss,  89  N.  Y.  338;  Dean  v.  Mace,  19  Hun,  391;  Viele  v.  Wells,  9 
Abb.  N.  C.  277;  as  to  whether  this  is  so  in  equitable  proceedings  by  credi- 
tors to  compel  the  payment  of  unpaid  subscriptions,  see  Patterson  v.  Lynde, 
112  111.  196,  204;  Bank  of  Virginia  v.  Adams,  1  Pars.  Sel.  Cas.  534;  and  in 
suits  for  the  same  purpose  by  receivers  and  assignees  for  the  benefit  of  credi- 
tors in  other  states:  Glenn  v.  Williams,  60  Md.  93;  Dayton  v.  BorM,  31  N.  Y. 
435,  438;  Patterson  v.  Lynde,  112  III.  196,  206,  discussed  supra. 

Under  some  statutes,  creditors  are  obliged  to  bring  suit  against  the  corpo- 
ration, as  above  intimated,  within  a  limited  period  of  time,  before  proceeding 
against  the  stockholders  individually:  See  Hastings  v.  Harding,  2  Dill.  99; 
SheUingtonv.  Howland,  53  N.  Y.  371;  Birmingham  National  Bank  v.  Mosser,  14 
Hun,  605;  State  Savings  Ass'n  v.  Kellogg,  52  Mo.  583;  Dryden  v.  Kellogg,  2 
Mo.  App.  87;  and  where  it  is  provided  that  no  stockholder  shall  be  person- 
ally liable  for  the  payment  of  any  debt  contracted  by  the  company,  which  is 
not  paid  within  one  year  from  the  time  the  debt  is  contracted,  nor  unless  a 
suit  for  the  collection  of  the  debt  shall  be  brought  against  the  company 
within  one  year  after  the  debt  shall  become  due,  the  liability  of  a  stock- 
holder cannot  be  renewed  or  extended  by  any  renewal  or  extension  of  tho 
indebtedness  which  the  creditor  niaj'  make  with  the  corporation,  as  by  the 
acceptance  of  the  creditor's  note:  Parrott  v.  Colby,  6  Hun,  55,  affirmed  in 
71  N.  Y.  597.  In  other  cases,  a  special  demand  upon  the  corporation  is  re- 
quired. And  where  a  statute  provides  that  no  suit  to  enforce  the  individual 
liability  of  a  stockholder  for  the  debts  and  contracts  of  the  corporation 
"shall  be  commenced  until  after  a  Idgal  demand  of  payment  thereof  shall 
have  been  made  upon  the  company,"  the  demand  must  be  a  personal  one, 
so  that  payment  might  be  made  at  once:  Haynes  v.  Brown,  36  N.  H.  545; 
Connecticut  River  Savings  Bank  v.  Fiske,  CO  Id.  363,  308. 

Liability,  whether  Joint,  Several,  or  Joint  and  Several.  —  In  the  consideration 
of  the  extent  of  the  liability  of  stockholders  for  the  debts  of  the  corporation 
under  a  particular  statutory  provision,  the  manner  of  its  enforcement,  the 
parties  to  tlie  action,  and  the  judgment  which  should  be  rendered  therein,  it 
is  frequently  material  to  inquire  as  to  whether  the  liability  imposed  is  joint, 
several,  or  joint  and  several.  It  may  be  here  remarked  that  the  liability  of 
a  stockholder  for  unpaid  subscriptions  ia  necessarily  several.     He  becomes  a 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  853 

several  debtor  of  the  corporation  by  bis  contract  of  subscription,  or  by  as- 
Buming  the  obligations  of  such  contract  by  afterwards  purchasing  the  stock. 
At  law,  his  subscription  is  enforceable  against  him  solely  by  the  corporation 
or  its  representatives;  and  in  equity  the  liability  does  not  cease  to  be  sev- 
eral, although  in  a  creditor's  suit  others  may  be  joined  with  him:  See  Hatch 
V.  Dana,  101  U.  S.  205,  210.  So  where  the  constitution  of  a  state  provides 
that  the  stockholders  "shall  be  liable  for  the  indebtedness  of  such  corpo- 
ration to  the  amount  of  their  stock  subscribed  and  unpaid,"  the  liability  of  a 
stockholder  is  likewise  several:  Hodges  v.  Silver  Hill  Min.  Co.,  9  Or.  200. 
But  whether  the  statutory  liability  of  a  stockholder  be  joint,  several,  or  joint 
and  several,  depends  upon  no  such  principle,  but  solely  upon  the  language  of 
the  charter  or  other  statute.  The  question,  as  in  other  cases,  is  one  of  con- 
struction and  interpretation.  In  some  instances  it  is  settled  by  language 
which  leaves  little  or  no  doubt.  Were  the  view  that  stockholders  are  liable 
as  partners  carried  out  to  its  logical  extent,  they  would  be  jointly  liable,  so 
that  they  would  have  to  be  united  as  parties  defendant  in  actions  to  enforce 
their  liability,  and  a  joint  judgment  would  be  entered  up  against  them.  If 
no  limit,  as  is  sometimes  the  case,  is  placed  upon  the  liability  of  the  stock- 
holders, but  they  are  made  personally  liable  for  the  debts  of  the  corporation 
without  limit,  plainly  the  liability  should  be  held  to  be  joint,  with  all  its 
consequences:  Shafer  v.  Moriarity,  40  Ind.  9;  Deming  v.  Bull,  10  Conn.  409; 
compare  Von  Glahn  v.  Harris,  73  N.  C.  323;  Von  Glahi  v.  De  Rossett,  70  11. 
292,  293. 

But  if  the  liability  of  stockholders  is  confined  to  the  "extent"  or 
"amount"  of  their  stock,  or  is  "in  proportion"  to  their  stock,  the  liability, 
being  unequal  and  limited,  is  several:  Shafer  v.  Moriarity,  46  lud.  9;  Paine 
V.  Stewart,  33  Conn.  517;  Bank  of  Poujhkeepsie  v.  Ibboison,  24  Wend.  473; 
Ohio  Life  In^.  Ji-  T.  Co.  v.  Merchants'  Ins.  .fr  T.  Co.,  11  Humph.  1,  33;  53 
Am.  Dec.  742;  Crease  v.  Bahcocl;  10  Met.  524,  557,  568;  Perry  v.  Turner,  55 
Mo.  418,  420;  Pettibone  v.  McGraw,  6  Mich.  441;  Lane  v.  Harris,  16  Ga.  217: 
Adkins  v.  Thornton,  19  Id.  325,  328;  although  some  cases,  in  holding  the  lia- 
bility to  be  several,  have  placed  considerable  stress  upon  the  statutory  form 
which  imposes  a  liability  upon  "each"  stockholder  in  a  certain  amount: 
Wright  V.  McCormack,  17  Ohio  St.  80;  Umstedw.  Buskirk,  17  Id.  113;  Broivn 
V.  Hitchcock,  36  Id.  667,  681;  Wehrman  v.  Reakirt,  1  Cin.  Sup.  Ct.  230;  and 
see  also  McCartliy  v.  Lavasche,  b9  111.  270;  31  Am.  Rep.  83;  Vick  v.  Lane,  56 
Miss.  681;  and  it  therefore  follows  that  where  an  action  at  law  is  possible  it 
can  be  sustained  only  against  a  single  stockholder:  Perry  v.  Turner,  55  Mo. 
418, 426;  or  if  the  stockholders  be  joined,  upon  equitable  considerations,  a  judg- 
ment in  solido  cannot  be  entered  against  them:  Crease  v.  Babcock,  10  Met.  524, 
557,  568;  Vick  v.  Lane,  56  Miss.  681;  and  see  Paine  v.  Stewart,  33  Conn.  517; 
and  a  stockholder's  liability  is  not  extended  becaiise  other  stockholders  can- 
not be  reached  by  process,  or  are  insolvent:  Crease  v.  Babcock,  supra;  Adkins 
V.  Thornton,  19  Ga.  325,  328.  Of  course  if  the  charter  of  a  corporation  pro- 
vides that  the  stockholders  shall  be  "  severally  and  individually  "  liable,  the 
liability  is  several:  See  Flash  v.  Conn,  109  U.  S.  371;  Culver  v.  Third  Nat. 
Bank,  64  111.  528;  Wincock  v.  Turpin,  96  Id.  135;  Norris  v.  Johnson,  34  Md. 
485;  Norris  v.  Wrenschall,  34  Id.  492;  Weeks  v.  Love,  50  N.  Y.  568;  Mathezv. 
Neidig,  72  Id.  100;  Pfohl  v.  Simpson,  74  Id.  137;  so  the  liability  is  several 
under  the  national  banking  act,  which  provides  that  the  stockholders  "  shall 
be  held  individually  responsible,  equally  and  ratably,  and  not  one  for 
another":  Kennedy  v.  Gibson,  8  Wall.  498,  505;  United  States  v.  Knox,  102 
U.  S.  422;  Bailey  v.  Sawyer,  4  Dill.  463. 


854  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

It  is  sometimes  provided  that  the  stockholders  shall  be  "jointly  and  sev- 
erally "  liable  for  the  debts  and  contracts  of  the  corporation:  See  Grund  v. 
Tucker,  5  Kan.  70;  Hicks  v.  Burns,  38  N.  H.  141;  Burnapv.  Ilaskins  Steam 
Engine  Co.,  127  Mass.  5S6;  Hall  v.  Klinck,  25  S.  C.  348;  60  Am.  Rep.  505; 
and  see  the  expressions  that  stockholders  are  "jointly  and  severally  liable 
as  partners,"  used  in  Perkins  v.  Sanders,  56  Miss.  733;  Thompson  v.  Meisser, 
108  111.  359;  but  where  the  statute  further  enacted  that  "such  sums  as  may 
be  decreed  to  be  paid  by  the  stockholders  in  such  suit  in  equity  shall  be  as- 
sessed upon  them  in  'proportion  to  the  amounts  of  stock  by  them  respectively 
held  at  the  time  when  the  suit  in  which  said  judgment  was  recovered  was  be- 
gun, but  no  stockholder  shall  be  liable  to  pay  a  larger  sum  than  the  amount 
of  stock  held  by  him  at  that  time  at  its  par  value,"  a  stockholder  is  not  liable 
for  the  whole  debt  of  a  corporation  in  solido,  but  is  liable  severally  for  a  pro 
rata  part  of  the  whole  amount,  in  proportion  to  the  stock  held  by  him:  Bur- 
nap  V.  Hashins  Steam  Engine  Co.,  supra;  and  although  the  Civil  Code  of  Cali- 
fornia provides  that  "any  creditor  of  the  corporation  may  institute  joint  or 
several  actions  against  any  of  its  stockholders  for  the  proporticn  of  his  claim 
payable  by  each,"  stockholders  are  not  made  jointly  liable  to  each  of  the 
creditors  of  the  corporation;  and  the  amount  of  the  creditor's  demand  against 
each  stockholder  determines  the  court  in  which  the  creditor  may  seek  to  en- 
force such  stockholder's  liability:  Derby  v.  Stevens,  64  Cal.  287. 

How  Statutory  Liability  of  Stockholders  for  Corporate  Debts  is 
Enforced. — If  the  charter  of  a  corporation,  or  some  general  statute,  pre- 
scribes a  special  mode  of  enforcing  the  individual  liability  of  the  stockholders, 
it  is  well  settled,  upon  the  principle  that  where  a  statute  confers  a  right  and 
also  prescribes  a  remedy,  that  remedy,  and  that  only,  can  be  pursued,  that 
the  liability  can  be  enforced  in  no  other  way:  Fourth  Nat.  Bankw.  Francklyn, 
120  U.  S.  747;  Knowlton  v.  AcMey,  8  Cush.  93;  Allen  v.  Wahh,  25  Minn.  543; 
Johnson  v.  Fischer,  30  Id.  173;  Pattejson  v.  Lane,  35  Pa.  St.  275;  Brinliam  v. 
Wellershurrj  Coal  Co.,  47  Id.  43;  Youghiogheny  Shaft  Co.  v.  Erans,  72  Id.  331; 
O'Reilly  V.  Bard,  105  Id.  569,  574,  575;  Moies  v.  Sprague,  9  R.  I.  541;  Dauchy 
V.  Brown,  24  Vt.  197;  Windham  Provident  Inst.  v.  Sprague,  43  Id.  502,  510; 
Nimich  V.  Mingo  Iron  Works  Co.,  25  W.  Va.  184,  204;  2  Morawetz  on  Corpo- 
rations, sec.  893;  but  see  Ejc  parte  Van  Piper,  20  Wend.  614;  Lionberger  v. 
Broadway  Savings  Bank,  10  Mo.  App.  499;  and  the  remedy  must  be  strictly 
pursued:  Hoard  v.  Wilcox,  47  Pa.  St.  51;  Mansfield  Iron  Works  v.  Willcox, 
52  Id.  377,  378;  Lanes  Appeal,  105  Id.  49,  58;  O'Reilly  v.  Bard,  105  Id.  569, 
574.  See,  as  construing  such  statutes  prescribing  a  special  manner  of  enfor- 
cing the  stockholder's  liability,  Leland  v.  Marsh,  16  Mass.  389;  Stedman  v. 
Eveleth,  6  Met.  114;  Holyoke  Bank  v.  Goodman  Paper  Mfg.  Co.,  9  Cush.  576; 
Farnum  v.  Ballard  Vale  Machine  Shop,  12  Id.  507,  508;  Bobbins  v.  Justices  etc. 
of  Superior  Court,  12  Gray,  225,  226;  Richmond  v.  Willis,  13  Id.  182;  Johnson 
v.  Somerville  Dyeing  etc.  Co.,  15  Id.  216;  Erskine  v.  Loewenstein,  82  Mo.  301, 
affirming  11  Mo.  App.  595.  It  is  also  sometimes  provided  that  proceedings 
to  enforce  the  individual  liability  of  stockholders  shall  be  in  equity:  See  Had- 
ley  V.  Russell,  40  N.  H.  109;  Erickson  v.  Nesmith,  46  Id.  371;  Rice  v.  Merrimac 
Hosiery  Co.,  56  Id.  114;  Connecticut  River  Savings  Bank  v.  Fiske,  60  Id.  363; 
Erickson  v.  Nesmith,  15  Gray,  222;  Irons  v.  Manufacturers'  Nat.  Bank,  27  Fed. 
Rep.  591,  affirming  17  Id.  308;  21  Id.  197;  Richmond  v.  Irons,  121  U.  S.  27; 
in  which  case  undoubtedly,  on  the  same  principle,  a  stockholder  must  be 
pursued  in  equity. 

Thus  far,  there  is  no  dispute;  but  if  no  special  remedy  for  enforcing  the 
liability  of  stockholders  be  provided,  the  cases  are  extremely  conflicting  as  to 


d 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  855 

whether  the  remedy  is  at  law  or  in  equity,  or  is  at  either  law  or  equity.  If 
no  new  right  is  created,  but  the  liability  of  stockholders  for  unpaid  subscrip- 
tions is  simply  preserved,  then  the  remedy  of  a  creditor  is  in  equity,  and  not 
at  law,  as  it  would  have  been  independently  of  the  statutory  provision:  Pat- 
terson V.  Lynde,  106  U.  S.  519;  112  111.  196,  204,  207;  Bmh  v.  Cartwright,  7 
■Or.  329;  Brundage  v.  Monumental  G.  &  S.  Min.  Co.,  12  Id.  322;  and  see  Cor- 
nelVs  Appeal,  114  Pa.  St.  153,  163;  Crawford  v.  Rohrer,  59  Md.  599;  and 
compare  Hodges  v.  Silver  Hill  Min.  Co.,  9  Or.  200,  204;  although  it  is  held 
that  where  a  statute  provides  that  the  stockholders  of  a  corporation  "shall 
be  severally  individually  liable  to  the  creditors  of  the  company  in  which 
they  are  stockholders,  to  the  amount  of  unpaid  stock  held  by  them  respect- 
ively, for  all  debts  and  contracts  made  by  such  company,"  a  creditor  may 
maintain  an  action  at  law  against  an  individual  stockholder,  and  recover  to 
the  amount  of  unpaid  stock  held  by  him:  Smith  v.  Londoner,  5  Col.  365;  and 
see  Mills  v.  Stewart,  41  N.  Y.  384,  389;  Griffith  v.  Mangam,  73  Id.  611; 
Stephens  v.  Fox,  83  Id.  313. 

In  some  cases  it  is  held  that  the  individual  liability  of  stockholders  must 
be  enforced  in  equity.  Thus  where  the  charter  of  a  bank  provided  that  the 
stockholders  "shall  be  bound  respectively  for  all  the  debts  of  the  bank  in 
proportion  to  their  stock  holden  therein,"  it  was  held  that  the  proper  action 
was  in  equity,  and  not  at  law:  Pollard  v.  Bailey,  20  Wall.  520,  Waite,  C.  J., 
saying:  "The  provision  for  a  proportionate  liability  is  equivalent  to  a  pro- 
vision for  an  appropriate  form  of  equitable  action  to  enforce  it.  The  case  is 
dififcrcut  from  what  it  would  be  if  the  charter  had  provided  generally  that 
all  stockholders  should  be  individually  liable  for  the  payment  of  the  debts. 
The  cases  from  New  York  cited  upon  the  argument,  and  which  are  supposed 
to  be  in  opposition  to  the  view  we  have  taken,  involved  the  consideration  of 

such  a  liability After  an  examination  of  the  several  sections  of  this 

charter,  it  cannot  for  a  moment  be  doubted  that  it  was  not  only  the  intention 
to  provide  for  a  proportionate  liability,  but  for  a  pi-o  rata  distribution  among 
the  different  creditors  according  to  their  several  priorities.  Every  provision 
i.^  entirely  inconsistent  with  the  idea  that  one  creditor  could,  by  an  individ- 
ual suit,  appropriate  to  himself  the  entire  benefit  of  the  security,  and  exclude 
all  others.  A  common  fund  was  created  for  the  common  benefit,  to  be  col- 
lected and  distributed  by  the  receiver,  who  was  made  the  common  agent  of 
all.  There  was  no  liability  except  for  the  deficiency.  That  was  to  be  appor- 
tioned and  collected  for  the  common  benefit."  See  also,  to  the  same  effect, 
Terry  ST.  Tubman,  92  U.  S.  156,  161;  Cuykendall  v.  Miles,  10  Fed.  Rep.  342, 
344;  Terry  v.  Martin,  10  S.  C.  263;  but  compare  Banh  of  United  States  v. 
Dallam,  4  Dana,  574;  Morrow  v.  Superior  Court,  64  Cal.  383. 

Again,  where  the  charter  of  a  banking  corporation  provided  that  on  failure 
of  the  bank  each  stockholder  should  be  liable  individually  for  a  sum  not  ex- 
ceeding twice  the  amount  of  his  shares,  a  suit  iu  equity  was  held  to  be  the 
appropriate  mode  of  enforcing  the  liability:  Terry  v.  Little,  101  U.  S.  216, 
the  court  saying:  "The  remedy  must  always  be  such  as  is  appropriate  to  the 
liability  to  be  enforced.  The  statute  which  creates  the  liability  may  declare 
the  purposes  of  its  creation,  and  provide  directly  or  indirectly  a  remedy  for 
its  enforcement.  If  the  object  is  to  provide  a  fund  out  of  which  all  creditors 
are  to  be  paid  share  and  share  alike,  it  needs  no  argument  to  show  that  one 
creditor  should  not  bo  permitted  to  appropriate  to  himself,  without  regard  to 
the  rights  of  others,  that  which  is  to  malie  up  the  fund  ";  and  see  also  Milli 
V.  Scott,  99  Id.  25;  Smith  v.  Huckahee,  53  Ala.  191;  Jones  v.  Jarman,  34  Ark. 
323;   Peck  v.  Miller,  39  Mich.  594;  Harris  v.  First  Parish  in  Dorchester,  23 


856  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

Pick.  112;  Wedw.rbee  v.  BaJcer,  35  N.  J.  Eq.  501;  Wright  vi  McCormach,  17 
Ohio  St.  8G;  Umsted  v.  Buskirl;  17  Id.  113;  Brown  v.  Hitchcock,  36  Id.  667, 
6SI;  WeUrmanv.  Reakirt,  1  Cin.  Sup.  Ct.  230;  Atwood  v.  Rhode  Island  Agri- 
cultural Bank,  1  R.  I.  376;  Coleman  v.  White,  14  Wis.  700;  80  Am.  Dec.  797; 
aud  see //arper  v.  Union  Mfg.  Co.,  100  111.  225;  Rounds  v.  McCormick,  114 
Id.  252;  Von  Glahn  v.  Harrh,  73  N.  C.  323;  Von  Glahn  v.  Lattimer,  73  Id. 
833;  Fore  Glahn  v.  Z)e  Rossett,  76  Id.  292;  in  which  latter  cases  the  charter 
provided  for  a  liability  "to  creditors,"  and  effect  was  given  to  that  expres- 
sion. 

In  some  of  the  earlier  Illinois  cases,  the  remedy  against  a  stockholder  made 
severally  liable  was  held  to  be  exclusively  at  law,  on  the  principle  that  where 
a  statute  creates  a  right  or  liability  the  remedy  is  at  law,  unless  the  statute  pro- 
vides otherwise:  McCarthy  v.  Lavasclie,  89  111.  270;  31  Am.  Rep.  83;  Hull  v. 
Burtis,  90111.  213;  Wincockv.  Turpin,  96  Id.  135;  Lane  v.  Nickerson,  99 Id.  284, 
287;  but  the  court  has  receded  from  this  position:  Fames  v.  Doris,  102  Id. 
350;  Tunesmav.  SchuUler,  114  Id.  156;  compare  Harper  y.  Union  Mfg.  Co., 
100  Id.  226;  Rounds  v.  McCormick,  114  Id.  252;  Queenanv.  Palmer,  117  Id. 
619.  And  it  might  be  here  noticed  that  the  suit  by  the  receiver  of  a  national 
bank  to  enforce  the  assessment  made  by  the  comptroller  of  the  currency  is 
at  law:  Casey  v.  Galli,  94  U.  S.  673;  Bailey  v.  Sawyer,  4  Dill.  463;  but  com- 
pare Kennedy  v.  Gibson,  8  Wall.  498,  505;  although  by  the  amendment  of 
1876  the  individual  liability  of  stockholders  might  be  enforced  by  a  bill  in 
equity  filed  by  any  creditor:  See  Irons  v.  Mrnufacturers'  Nat.  Bank,  27  Fed. 
Rep.  591,  affirming  17  Id.  308;  21  Id.  197;  Richmond  \.  Irons,  121  U.  S.  27. 

But  according  to  many  authorities,  if  it  be  provided  generally  that  the 
stockholders  shall  be  individually  liable  for  the  debts  of  the  corporation,  and 
especially  if  it  be  provided  that  they  shall  be  "severally,"  or  "jointly  and 
severally, "  liable,  a  creditor  may  sue  either  at  law  or  in  equity,  according 
to  the  nature  of  the  relief  desired  or  made  necessary  by  the  circumstances  of 
the  case:  See  Manufacturing  Co.  v.  Bradley,  105  U.  S.  175,  182;  Fla.<ih  v. 
Conn,  109  Id.  371;  Morrow  v.  Superior  Court,  64  Cal.  383;  Adkinsv.  Thornton, 
19  Ga.  325;  Culver  v.  Third  Nat.  Bank,  61  111.  528;  Eames  v.  Doris,  102  Id. 
350;  Tunesmav.  Schuttler,  114  Id.  156;  Grund  v.  Tucker,  5  Kan.  70;  Bank  of 
United  States  v.  Dallam,,  4  Dana,  574;  Norris  v.  Johmon,  34  Md.  485;  Norris 
V.  Wrenschall,  34  Id.  492;  Vick  v.  Lane,  56  Miss.  681;  Perry  v.  Turner,  55 
Mo.  418,  426;  Hodgson  v.  Cheever,  8  Mo.  App.  318;  Briggs  v.  Penniman,  & 
Cow.  387;  18  Am.  Dec.  454;  Bink  of  Poughkeepsie  v.  Ihhotson,  24  Wend.  473; 
Masters  v.  Rossie  Lead  Min.  Co.,  2  Sand.  Ch.  301;  Bogardus  v.  Rosendale  Mfg. 
Co.,  7  N.  Y.  147;  Garrison  v.  Howe,  17  N.  Y.  458,  463;  Weeks  v.  Love,  50 
N.  Y.  568;  Mathezv.  Neidig,  72  Id.  100;  Griffith  v.  Mangam,  73  Id.  611;  Pfohl 
v.  Simpson,  74  Id.  137;  Hallx.  Klinck,  25  S.  C.  348;  60  Am.  Rep.  505;  com- 
pare Young  v.  Neio  York  etc.  Steamship  Co.,  15  Abb.  Pr.  69;  10  Id.  229,  231. 
But  a  stockholder  who  is  also  a  creditor  of  the  corporation  cannot  maintain 
an  action  at  law  against  the  other  stockholders,  but  must  proceed  in  equity 
for  a  contribution:  See  Bailey  v.  Bancker,  3  Hill,  188;  38  Am.  Dec.  625;  Waif. 
V.  Ferguson,  14  Aljb.  Pr.  379;  Richardson  v.  Ahendroth,  43  Barb.  162;  Beers  v. 
Waterbury,  8  Bosw.  396,  413;  Clark  v.  Myers,  11  Hun.  60S;  Thompson  v. 
Meisser,  108  111.  359;  Perkins  v.  Sanders,  56  Miss.  733;  compare  Woodruff  etc. 
Iron  Worki  v.  Chittenden,  4  Bosw.  406;  Smith  v.  Londoner,  5  Col.  365;  and, 
on  the  other  hand,  if  a  stockholder  is  a  creditor  of  the  corporation  to  the 
amount  of  his  liability,  no  action  at  law  can  be  maintained  against  him  by 
another  creditor,  since  he  has  an  interest  in  the  fund  sued  for,  the  amount  of 
which  can  only  be  determined  by  an  accounting,  wliich  cannot  be  had  in  such 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  857 

an  action:  Garmon  v.  Howe,  17  N.  Y.  458,  463;  Mathez  v.  Niedhj,  72  N.  Y. 
100;  and  see  Agate  v.  Sands,  73  Id.  G20;    Wheeler  v.  Millar,  90  Id.  353. 

If  the  liability  can  be  enforced  at  law,  debt  will  lie,  if  the  sum  to  be  re- 
covered i3  cei'tain:  BuUardv.  Bell,  1  Mason,  243;  but  not  if  the  amount  to 
be  recovered  is  not  certain,  and  cannot  be  readily  reduced  to  certainty:  Carrol 
y.  Green,  92  U.  S.  509,  513. 

It  has  been  held  that  a  judgment  creditor  could  unite  in  the  same  action 
a  claim  to  enforce  the  statutory  liability  of  the  stockholders  for  the  debts  of 
the  corporation,  with  a  claim  to  compel  payment  of  unpaid  subscriptions: 
Warner  v.  Callender,  20  Ohio  St.  190;  but  not  with  a  claim  against  the  same 
persons,  as  officers,  for  failure  to  comply  with  some  statutory  duty:  Mappier 
V.  Mortimer,  11  Abb.  Pr.,  N.  S.,  455,  459;  Cambridge  Water  Worlsv.  Somer' 
ville  Dyeing  etc.  Co.,  14  Gray,  193. 

Parties  in  Actioxs  to  Enforce  Statutory  Liability  of  Stockholders 
FOR  Corporate  Debts. — The  foregoing  discussions  as  to  the  nature  of  a 
stockholder's  statutory  liability,  and  how  it  may  be  enforced,  leave  little  to  be 
added  concerning  parties.  Wherever  it  is  held  that  the  proceeding  against 
the  stockholders  must  be  in  equity,  either  because  some  statutory  provision 
preserves  simply  the  liability  to  the  extent  of  the  vmpaid  subscriptions,  or 
because  it  expressly  requires  a  suit  to  be  brought  in  equity,  or  because  a  pro- 
portionate liability  is  imposed,  or  a  fund  provided  for,  the  rules  heretofore 
given  under  the  head  "  Parties  to  Bill  in  Equity  "  to  compel  the  payment  of 
unpaid  subscriptions  will  apply;  all  the  creditors  should  be  parties  plaintiff, 
or  the  suit  should  be  in  behalf  of  all:  2  Morawetz  on  Corporations,  sec.  902; 
Brundage  v.  Monumental  G.  d;  S.  Min.  Co.,  12  Or.  322;  Crease  v.  Bahcock,  10 
Met.  524,  531;  Greio  v.  Breed,  10  Id.  569,  575;  First  National  Banh  v.  Ilingham 
Mfg.  Co.,  127  Mass.  563;  Jones  v.  Jarman,  34  Ark.  323;  Harperv.  Union  Mfg. 
Co.,  loom.  225;  Wetherbeev.  Baker,  35  N.  J.  Eq.  501;  VonGlahnv.  Harris, 
73  N.  C.  323;  Von  Glahn  v.  Lattimer,  73  Id.  333;  Von  Glahn  v.  De  Rossett,  76 
Id.  292;  Wright  v.  McCormaclc,  17  Ohio  St.  86;  Umsted  v.  Buskirh,  17  Id.  113; 
Brown  v.  Hitchcock,  36  Id.  667,  681;  Wchrman  v.  Reakirt,  1  Cin.  Sup.  Ct.  230; 
Coleman  v.  White,  14  Wis.  700;  80  Am.  Dec.  797;  but  see  Cornell's  Appeal, 
114  Pa.  St.  153,  163;  all  the  stockholders  should  be  joined  as  parties 
defendant,  unless  it  be  impossible,  useless,  or  impracticable:  2  Morawetz 
on  Corporations,  sec.  902;  Hadlcy  v.  Russell,  40  N.  H.  109;  Erickson  v.  Nes- 
m?<A,  46Id.  371;  RiccY.  Merrimac  Hosienj  Co.,  56  Id.  114,  128;  Connecticut 
River  Savings  Bank  v.  Fiske,  60  Id.  363,  368;  Jones  v.  Jarman,  34  Ark. 
323;  Umstedv.  Buskirk,  17  Ohio  St.  113;  Coleman  v.  White,  14  Wis.  700;  80 
Am.  Dec.  797;  Von  Glahn  v.  Harris,  73  N.  C.  323;  Von  Glahn  v.  De  Rossett, 
70  Id.  292,  293;  compare  Brundage  v.  Momimental  G.  d-  S.  Min.  Co.,  12  Or. 
322;  and  see  Cornell's  Appeal,  114  Pa.  St.  153,  163;  Pettibone  v.  McGraio,  6 
Mich.  441;  and  the  corporation  should  be  made  a  co-defendant:  2  Morawetz 
on  Corporations,  sec.  903;  Umsted  v.  Buskirk,  17  Ohio  St.  113;  Coleman  v. 
White,  14  Wis.  700;  80  Am.  Dec.  797;  Jones  v.  Jarman,  34  Ark.  323;  Wether- 
beev.  Baker,  35  N.  J.  Eq.  501;  and  see  Thompson  v.  Jewell,  43  Mich.  240. 

If  the  liability  of  stockholders  is  several,  it  is  not  possible,  unless,  perhaps, 
permitted  by  statute,  to  join  them  as  defendants  in  an  action  at  law  to  enforce 
the  liability,  but  each  creditor  has  a  remedy  against  each  stockholder:  Abbott  v. 
Aapimvall,  2G  Barb.  202;  Morrow  v.' Superior  Court,  G4Cal.  383;  if  it  be  joint, 
they  must  all  be  sued  jointly:  Allen  v.  Sewall,  2  Wend.  327;  and  see  Over- 
myer  v.  Cannon,  82  Ind.  457;  and  if  joint  and  several,  a  joint  action,  or  sev- 
eral actions,  may  be  instituted:  Lai-rahee  v.  Baldwin,  35  Cal.  155. 

In  Ohio,  if  stock  is  transferred  after  a  debt  is  contracted,  the  assignees 


858  TnoMPsar^  v.  Reno  Savings  Bank.        [Nevada, 

should  be  made  parties  defendant  in  a  suit  in  equity  to  enforce  the  individual 
liability  of  the  assignors,  the  assignees  being  bound  to  discharge  the  liability, 
as  between  themselves  and  the  assignors:  Wheeler  v.  Faurot,  37  Ohio  St.  2G; 
and  see  Bonewitz  v.  Vaji  Wert  County  Bank,  41  Id.  78. 

JnDGMENT   AGAINST     CORPORATION,    WHETHER     CONCLUSIVE     IN    ACTION   TO 

E"^F0RCE  Stockholder's  Statutory  Liability.  —  It  has  already  been 
shown  that  a  judgment  against  a  corporation  is  conclusive,  in  the  absence  of 
fraud  or  want  of  jurisdiction,  in  a  creditor's  suit  against  the  stockholders  to 
compel  the  payment  of  their  unpaid  subscriptions,  so  as  to  dispense  with  fur- 
ther proof  of  the  creditor's  claims.  On  principle,  there  is  no  reason  why  this 
rule  should  not  apply  in  actions  to  enforce  the  statutory  liability  of  stock- 
holders. It  makes  no  difference  whether  or  not  a  judgment  against  the  cor- 
poration is  required  to  be  obtained  as  a  prerequisite  to  the  enforcement  of 
such  liability.  A  judgment  against  the  corporation  is  really  a  judgment 
against  the  stockholders  in  their  corporate  capacity,  and  the  stockholders  are 
amply  represented  in  the  action.  Tlie  weight  of  authority  is  decidedly  in 
favor  of  this  view:  Cook  on  Stock  and  Stockholders,  sec.  222;  2  Morawetz  on 
Corporations,  sec.  886;  Slee  v.  Bloom,  20  Johns.  669;  Moss  v.  Oakley,  2  Hill, 
265;  Moss  v.  MeCulloujh,  7  Barb.  279,  290;  Moss  v.  Averill,  10  N.  Y.  449, 
452;  Belmont  v.  Coleman,  21  Id.  96;  Conklin  v.  Furman,  57  Barb.  484;  8  Abb. 
Pr.,  N.  S.,  161;  Hovey  v.  Ten  Broeck,  3  Robt.  316,  319;  Donworth  v.  Cool- 
baiKjh,  5  Iowa,  300;  Corse  v.  Sanford,  14  Id.  235;  Came  v.  Brlgham,  39  Me. 
35;  Cole  v.  Butler,  43  Id.  401;  Milliken  v.  Whitehouse,  49  Id.  527;  Grund  v. 
Tucker,  5  Kan.  70;  Coalfield  Co.  v.  Peck,  98  111.  139;  Wilson  v.  Stockholders 
of  Pittshurgh  etc.  Coal  Co.,  43  Pa.  St.  424;  Cleveland  v.  Marine  Bank,  17  Wis. 
545;  Merdtants'  Bank  v.  Chandler,  19  Id.  545.  Some  few  of  these  cases  say 
the  judgment  is  prima  facie  evidence,  but  only  impeachable  for  fraud  or  want 
of  jurisdiction,  which,  however,  is  simply  stating  the  rule  in  another  form. 
Nevertheless,  some  authorities  hold  the  judgment  to  be  to  all  intents  and  pur- 
poses prima  facie:  IJoagland  v.  Bell,  30  Barb.  57;  Schaeffer  v.  Missouri  Home 
Ins.  Co.,  46  Mo.  248;  Grand  Rapids  Saivngs  Bank  v.  Warren,  52  Mich.  557; 
and  see  Stephens  v.  Fox,  83  N.  Y.  313;  and  some  hold  that  it  is  not  even 
prima  facie:  Moss  v.  McCullough,  5  Hill,  131;  Strong  v.  Wheaton,  38  Barb.  616; 
and  see  also  Miller  v.  White,  50  N.  Y.  137;  McMahon  v.  Macy,  51  Id.  155, 
162-165;  Union  Bank  v.  Wa7ido  Mining  etc.  Co.,  17  S.  C.  339;  Chestnut  v. 
Pennell,  92  111.  55;  Whitman  v.  Cox,  26  Me.  335;  and  Merrill  v.  President  etc. 
of  Suffolk  Bank,  31  Id.  57,  50  Am.  Dec.  649,  overruling  the  same. 

Who  are  Stockholders  Personally  Liable  for  Corporate  Debts. — 
In  General,  how  One  Becomes  Stockholder.  —  Some  of  the  rules  which  will 
be  given  under  this  head,  because  announced  in  cases  involving  the  individual 
liability  of  stockholders  for  the  debts  of  corporations  under  charters  and 
statutes,  are  of  a  general  nature,  and  will  equally  apply  to  cases  where  credi- 
tors are  seeking  to  compel  stockholders  to  pay  their  unpaid  subscriptions  by 
equitable  proceedings,  while  other  rules  are  entirely  special.  It  has  been 
held  that  where  the  act  under  which  a  corporation  was  formed  provided  that 
the  trustees  and  "  corporators  "  should  be  individually  liable  for  its  debts 
until  the  whole  of  the  capital  subscribed  shall  have  been  paid  in,  and  a  cer- 
tificate thereof  recorded,  the  word  "  corporators  "  does  not  include  stock- 
holders: Chase  v.  Lord,  77  N.  Y.  1;  6  Abb.  N.  C.  258;  but  per  contra,  the 
word  "corporators,"  in  a  similar  act,  was  held  to  be  used  in  the  sense  of 
ehare-holders,  and  not  that  of  commissioners  or  promoters  in  the  organiz- 
ing of  the  corporation:  Gulliver  v.  Boelle,  100  111,  141;   Shufeldt  v.  Carver,  8 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  859 

111.  App.  545.  Such  questions  must  evidently  be  decided  upon  a  reading  of 
the  entire  act. 

It  has  been  stated  ante,  under  the  division,  "Who  are  Stockholders  Liable 
to  Creditors  for  Unpaid  Subscriptions, "' that  stockholders  may  become  such 
either  by  original  subscription,  by  direct  purchase  from  the  corporation,  or 
by  subsequent  transfer  from  the  original  holders.  But  it  is  not  necessary, 
in  an  action  to  enforce  the  individual  liability  of  stockholders,  for  the  plain- 
tiff to  state  the  particular  manner  in  which  the  defendants  acquired  their 
stock.  The  averment  that  they  were  stockholders  is  sufBcicnt:  Overmycr  v. 
Cannon,  82  Ind.  457.  If  all  the  capital  stock  of  a  corporation  is  subscribed 
for  and  taken  at  the  time  the  articles  of  incorporation  are  filed,  no  subse- 
quent subscribers,  by  merely  writing  their  names  in  the  corporation-book, 
and  affixing  a  number  of  shares  to  their  respective  names,  can  acquire  a  right 
to  any  shares  of  stock,  or  become  by  such  act  stockhohlers  of  the  corpora- 
tion, and  liable  as  such  for  its  debts:  Lathrop  v.  Kneeland,  4G  Barb.  432. 
Plainly,  one  who  never  accepts,  but  refuses  to  accept,  any  stock  in  a  corpo- 
ration is  not  a  stockholder,  even  though  the  secretary  enters  his  name  in  the 
books  as  such:  Mudijett  v.  Ilorrel,  33  Cal.  25.  So  a  mere  charge  of  shares 
of  stock  to  a  certain  person  made  upon  the  stock -book  of  a  corporation,  with- 
out some  evidence  that  such  person  admitted  the  charge  to  have  been  cor- 
rectly made,  or  sanctioned  the  same,  cannot  make  him  the  owner  thereof, 
so  as  to  render  him  individually  liable  to  creditors  of  the  corporation:  Foider 
V.  Ludwig,  34  Me.  455,  459;  but  if  a  person  named  as  a  member  in  the  cer- 
tificate required  by  an  act  relating  to  corporations  to  be  made  out,  acknowl- 
edged, and  recorded,  and,  in  the  charter  obtained  thereunder,  afterwards  acts 
as  a  member,  or  does  uot  disavow  the  relation  as  soon  as  he  discovers  the 
use  made  of  his  name,  he  cannot  evade  his  liability  as  a  member  under  the 
act,  merely  by  showing  that  he  was  not  in  fact  a  subscriber,  and  never  paid 
in  any  stock:  McIIose  v.  Wheeler,  45  Pa.  St.  32.  Mere  irregularities  in  be- 
coming a  stockholder,  however,  cannot  avail  him  as  a  defense  to  his  statutory 
liability,  if  the  corporation  had  waived  the  irregularities,  and  recognized  him 
as  a  legal  stockholder:  Ilobjohe  Bank  v.  Goodman  Paper  Mfj.  Co.,  9Cush.  576. 
Where  executors,  without  authority,  made  an  investment  in  the  stock  of  a 
corporation,  the  estate  cannot  be  held  liable  as  a  stockholder  for  corporate 
debts:  Diven  v.  Lee,  3G  N.  Y.  302.  But  one  who  permits  himself  to  be 
represented  on  the  books  of  a  corporation  as  a  stockholder,  and  holds  an 
office  to  which  no  one  but  a  stockholder  ia  eligible,  cannot  escape  responsi- 
bility for  the  debts  of  the  company  by  showing  that  the  stock  stamling  in 
his  name  was  transferred  to  him  simply  to  enable  him  to  become  an  officer 
of  the  company:  Wolf  v.  St.  Louis  Independent  Water  Co.,  15  Cal.  319;  nor  is 
it  any  defense  to  an  action  by  creditors  of  a  corporation  against  subscribers 
to  its  stock,  that  the  defendants  subscribed  as  agents  of  the  corporation, 
which  it  was  to  hold  and  sell  at  pleasure  for  its  benefit:  AUihone  v.  Ilaijer, 
46  Pa.  St.  48.  Where  a  partnership  owns  stock  in  an  insolvent  corporation, 
a  member  of  the  firm  will  be  liable  to  an  execution,  under  the  statutes  of 
Missouri,  against  himself  individually,  as  a  stockholder,  upon  the  motion  of 
a  creditor  of  the  corporation,  in  all  casiis  where  the  firm  would  be  subject  to 
such  liability:  Bray's  Adin'r  v.  Seligman's  Adm'r,  75  Mo.  31.  "Each  mem- 
ber of  a  partnership  is  liable  for  the  indebtedness  of  the  firm." 

As  in  the  case  of  creditors  seeking  to  compel  the  payment  by  stockholders 
of  unpaid  subscriptions,  so  in  proceedings  by  creditors  to  enforce  the  statu- 
tory personal  liability  of  share-holders  for  the  debts  of  the  corporation,  it  is 
nettled  that  a  subscriber  for  shares  is  responsible  as  a  stockholder,  although. 


860  Thompson  v.  Reno  Savings  Bank.        [Ne 

no  certificate  has  been  issued  to  him:  Mitchell  v.  Beckman,  64  Cal.  117;  CoT' 

with  V.  Culver,  69  111.  502;  Chaffin  v.  Cummings,  37  Me.  76,  83;  Hawes  v.  Anglo- 
Saxon  Petroleum  Co.,  101  Ma-^s.  385,  395;  111  Id.  200;  Schaefferv.  Missouri 
Home  Ins.  Co.,  46  Mo.  248;  Spear  v.  Crawford,  14  Wend.  20;  28  Am.  Dec. 
613;  Burr  v.  Wilcox,  22  N.  Y.  551;  Wheeler  v.  Millar,  90  Id.  353;  note  to 
Franklin  Glass  Co.  v.  Alexander,  9  Am.  Dec.  96;  note  to  Freeland  v.  McCul- 
lough,  43  Id.  697;  Cook  on  Stock  and  Stockholders,  sec.  192;  Thompson's 
Liability  of  Stockholders,  sec.  106;  and  although  the  stock  has  not  even  been 
divided  into  shares:  Hawes  v.  Anglo-Saxon  Petroleum  Co.,  supra;  so  where  a 
savings  bank  is  converted  into  a  national  bank,  neither  the  rights  nor  the  lia- 
bilities of  the  stockholders  are  affected  by  the  mere  omission  to  issue  a  new 
form  of  stock  certificate  to  them:  Keyser  v.  Hitz,  2  Macke^',  473.  Nor,  of 
course,  is  the  liability  of  the  subscriber  affected  by  the  fact  that  he  has  not 
paid  for  his  stock:  Mitchell  \.  B edema n,  64  Cal.  117;  Cliaffiny.  Cummings,  37 
Me.  76,  83;  Schaeffer  v.  Missouri  Home  Ins.  Co.,  46  Mo.  248;  Spear  v.  Crawford, 
14  Wend.  20;  28  Am.  Dec.  513;  Wheeler  v.  Millar,  90  N.  Y.  353;  note  to 
Freeland  v.  McCullough,  43  Am.  Dec.  697. 

Transfer  —  Stockholders  when  Debt  was  Contracted  or  Action  Brought. — 
Where  the  stock  has  been  transferred,  the  question  of  the  party  liable  has 
been  much  disputed.  If  the  charter  or  other  statute  simply  provides  that 
"the  stockholders  "  shall  be  personally  liable  for  the  debts  of  the  corpora- 
tion, then,  according  to  a  respectable  line  of  cases,  only  those  who  were 
stockholders  at  the  time  the  debt  was  contracted,  and  not  those  who  became 
such  afterwards,  are  liable:  Moss  v.  Oahley,  2  Hill,  265;  Judson  v.  Rossie 
Galena  Co.,  9  Paige,  598;  38  Am.  Dec.  569;  Haryer  v.  McCullouyh,  2  Denio, 
119,  122;  Tracy  V.  Yates,  18  Barb.  152;  Phillips  v.  Therasson,  11  Hun,  141; 
Williams  V.  Hanna,  40  Ind.  535;  Chesley  v.  Pierce,  32  N.  H.  388;  Larrahee  v. 
Baldwin,  35  Cal.  155;  Norris  v.  Johnson,  34  Md.  485;  Norris  v.  Wrenschall,  34 
Id.  492;  and  see  Fleeson  v.  Savage  S.  M.  Co.,  3  Nev.  157;  Windham  Provident 
hist,  for  Savings  v.  Spragiie,  43  Vt.  502;  Cal.  Civ.  Code,  sec.  322;  but  compare 
Freeland  v.  McCullough,  1  Denio,  412;  43  Am.  Dec.  685;  McCullough  v.  Moss, 
5  Denio,  567;  Sayles  v.  Bates,  15  R.  I.  342;  Root  v.  Sinnoclc,  120  111.  350;  60 
Am.  Rep.  558.  So  where  the  charter  of  a  banking  corporation  provided  that 
if  the  corporation  should  refuse  or  neglect  to  pay  its  bills  on  demand,  "the 
original  stockholders,  their  successors,  assigns,  and  the  members  of  the  said 
corporation,"  should,  in  their  private  capacities,  be  jointly  and  severally 
liable  to  the  holder,  it  was  held  that  only  such  of  the  original  stockholders, 
their  successors  and  assigns,  as  were  members  of  the  corporation  when  the 
payment  of  the  bills  were  refused  are  liable:  Bond  v.  Appleton,  8  Mass.  472; 
5  Am.  Dec.  111.  The  reasons  for  this  rule  are  stated  by  Bronson,  J.,  in  the 
loading  case  of  Moss  v.  Oahley,  supra,  as  follows:  "A  man  who  purchases 
stock  and  comes  into  a  corporation  after  it  has  been  engaged  in  business  may 
often  be  deceived  in  relation  to  the  number  and  magnitude  of  its  debts.  But 
while  he  is  a  stockholder,  he  can  know  something  about  the  extent  of  obliga- 
tion contracted  by  the  company,  and  is  not  wholly  without  the  means  of 
exerting  an  influence  over  those  who  manage  its  concerns;  and  as  to  those 
who  may  deal  with  the  corporation,  they  bestow  their  labor  or  part  with 
their  property  on  the  credit  of  those  who  are  known  to  be  stockholders  "; 
and  again,  by  Worden,  J.,  in  Williams  v.  Hanna,  supra:  "The  holder  of  stock 
in  a  corporation  has  a  voice  in  conducting  the  affairs  of  the  corporation,  so 
far,  at  least,  as  the  selection  ot  its  officers  is  concerned,  and  has  the  means  of 
knowing  the  situation  of  its  affairs  and  business,  and  he  should  not  be  per- 
Hftitted  to  avoid  his  liability  for  the  debts  of  the  corporation  by  transferring 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  861 

his  stock  to  another  person.  On  the  other  hand,  the  purchaser  of  stock  who 
has  previously  had  no  connection  with  the  corporation  has  not  the  means  of 
knowing  very  definitely  the  amount  of  debts  owed  by  the  corporation.  He 
may  know  the  market  value  of  the  stock,  but  this  furnishes  no  very  safe 
criterion  by  which  to  determine  the  amount  of  indebtedness.  The  creditor, 
if  he  looks  to  the  individual  liability  of  the  stockholders  at  all,  looks  to  those 
who  are  stockholders  at  the  time  he  lends  his  credit,  and  to  those  he 
should  be  content  to  look  for  the  collection  of  his  debt." 

According  to  this  view,  it  results  that  a  stockholder  cannot  relieve  himself 
from  liability  for  debts  already  incurred  by  a  transfer  of  his  stock:  See  Weh- 
man  v.  Rcahirt,  1  Cin.  Sup.  Ct.  230,  237;  Brown  v.  Hitchcoclc,  SGOhio  St.  G67; 
but  decided  under  a  different  theory;  but  for  debts  contracted  by  the  com- 
pany after  he  parts  with  his  stock,  he  is  not  liable:  Matthews  v.  Alhei't,  24  Md. 
627.  The  complaint  or  declaration  must  show  that  the  defendant  was  a 
stockholder  when  the  debt  was  contracted:  Younj  v.  New  Yorh  etc.  Steam- 
ship Co.,  10  Abb.  Pr.  229;  15  Id.  G9;  Weher  v.  FickeT/,  47  Md.  19G.  But 
where  the  act  under  which  a  corporation  was  formed  provided  that  the 
stockholders  should  be  liable  to  the  creditors  of  the  company  for  all  debts 
made  by  it,  a  person  who  was  not  a  stockholder  at  the  time  a  contract 
was  made  is  liable  for  installments  falling  due  thereunder  after  he  be- 
came and  while  he  continued  to  be  a  stockholder:  McMasterw.  Davidson,  29 
Hun,  542;  and  where  a  statute  provided  that  a  retiring  member  of  a  corpo- 
ration shall  be  liable  only  for  a  "debt"  contracted  by  it  while  he  was  a 
member,  since  rent  does  not  accrue  to  the  lessor  as  a  debt  until  the  lessee  has 
enjoyed  the  use  of  the  land,  no  action  can  be  maintained  against  a  stock- 
holder of  a  corjjoration  which  had  leased  certain  premises  for  the  rent  of 
a  quarter  which  commenced  after  he  sold  his  stock,  although  the  lease  was 
executed  before  such  sale:  Bordman  v.  Osborn,  23  Pick.  295;  and  since  a 
debt  is  merged  in  a  judgment  recovered  thereon,  a  stockholder  of  a  corpora- 
tion, who  had  ceased  to  be  a  member  thereof  prior  to  the  rendition  of  a  judg- 
ment against  the  corporation,  cannot  be  summoned,  under  the  Massachusetts 
statute,  in  an  action  upon  the  judgment  against  the  corporation,  although  he 
was  liable  on  the  original  debt,  having  been  a  stockholder  when  the  debt 
was  contracted:  Handrahan  v.  Cheshire  Iron  Works,  4  Allen,  39G;  Mason  v. 
CJiesJdre  Iron  Woi'ls,  4  Id.  398,  399.  So  when  the  debt  of  a  corporation  is  set- 
tled by  its  negotiable  note,,  and  that  note,  when  due,  is  taken  up  by  another 
note,  the  original  liability  being  extinguished,  in  the  absence  of  anytliing 
to  the  contrary,  the  date  of  the  second  note  must  be  treated  as  the  time 
when  the  indebtedness  accrued,  so  far  as  relates  to  the  liability  of  the  stock- 
holders: Milliken  v.  Whiteliome,  49  Me.  527;  see  also  Wheeler  v.  Faurot,  37 
Ohio  St.  26. 

Under  some  charters  and  general  statutes,  on  the  other  hand,  the  time  when 
the  debt  was  contracted  is  not  the  criterion  by  which  to  determine  who  are 
liable  as  stockholders  therefor.  Thus,  in  an  early  case  in  Connecticut,  it  was 
held  that  where  the  charter  of  a  corporation  provided  that  "  the  persons  and 
property  of  the  members  of  said  corporation  shall,  at  all  times,  be  liable  for 
all  debts  due  by  said  corporation, "  persons  who  were  members  at  the  time 
the  debt  was  contracted,  but  had  transferred  their  stock  before  the  com- 
mencement of  the  action,  were  not  liable:  President  etc.  of  Middleton  Bank  v. 
Magill,  5  Conn.  28;  compare  Demiivj  v.  Bull,  10  Id.  409;  and  where  a  statute 
under  which  a  corporation  was  formed  provided  that  tlie  stockholders  "  shall 
be  individually  responsible,  to  the  amount  of  their  respective  shares  of  stock, 
for  all  its  indebtednees  and  liabilities  of  every  kind,"  it  was  decided  that  it 


8G2  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

■vras  not  the  stockholders  at  the  time  the  deht  accnicfl,  but  the  stockholders 
at  the  time  the  action  is  commenced,  who  were  individually  responsible: 
Cleveland  v.  Burnham,  55  Wis.  598;  but  these  cases  are  at  variance  with  the 
niimerous  others  cited  ante.  If,  however,  it  is  provided,  as  in  an  early  statute 
of  Massachusetts  (act  of  1808,  c.  G5,  sec.  6),  that  an  execution  issued  against 
a  manufacturing  corporation,  if  not  satisfied  within  fourteen  days  after  de- 
mand made  upon  the  president,  treasurer,  or  clerk  of  such  corporation,  may 
be  levied  upon  the  body  or  estate  of  any  member  or  members,  there  is  more 
reason  in  holding  that  this  must  be  understood  to  be  such  as  were  members 
at  the  time  of  the  commencement  of  the  action:  Child  v.  Cojjin,  17  Mass.  64; 
Ri'pley  v.  Sampson,  10  Pick.  371,  372;  and  therefore,  if  a  member  died  before 
the  commencement  of  the  action,  the  execution  could  not  be  levied  upon  his 
estate,  no  proceedings  against  executors  or  administrators  having  been  pro- 
vided: Id.;  but  see  Marcy  v.  Clark,  17  Mass.  330,  where  it  is  said  that  the 
execution  might  be  levied  upon  him  who  was  a  member  at  the  time  of  the 
levy;  and  where  a  constitutional  provision  says  that  "in  all  cases  each  stock- 
holder shall  be  individually  liable "  in  a  certain  amount  for  the  debts 
of  the  corporation,  and  a  statute  under  it  enacts  that  "  if  any  execu- 
tion shall  have  been  issued  against  the  property  or  effects  of  a  corporation, 
and  if  there  cannot  be  found  whereon  to  levy  such  execution,  then  such 
execution  may  be  issued  against  any  of  the  stockholders "  to  the  ex- 
tent of  such  amount,  the  liability  attaches  to  those  who  are  actual 
stockholders  when  the  execution  is  issued,  and  not  to  those  who  were  stock- 
holders when  the  debt  was  contracted,  and  who  have  transferred  their  stock 
in  good  faith  to  responsible  parties:  McClarea  v.  Franciscus,  43  Mo.  452; 
but  it  is  held  that,  under  these  provisions,  the  liability  of  a  stockholder  is 
measured  by  the  number  of  shares  held  by  him  at  the  date  of  the  return  of  the 
execution  against  tlie  corporation  nulla  bona,  and  not  by  the  number  he  held 
when  the  motion  for  execution  against  him,  as  further  required  to  be  made  by 
the  statute,  was  filed:  Skrainka  v.  Allot,  76  Mo.  384,  reversing,  in  this  particu- 
lar, 7  Mo.  App.  384.  So  where  a  statute  of  Maine  (1836,  c.  200)  provided  that 
"in  case  of  deficiency  of  attachable  corporate  property  or  estate,  the  indi- 
vidual property,  rights,  and  credits  of  any  stockholder  shall  be  liable  to  the 
amount  of  his  stock  for  all  debts  of  the  corporation  contracted  prior  to  the 
transfer  thereof  for  the  term  of  one  year  after  the  record  of  the  transfer  in 
the  books  of  the  corporation,  and  for  the  term  of  six  months  after  judg- 
ment recovered  against  said  corporation,  in  any  suit  commenced  within  the 
year  aforesaid, "  a  stockholder  may  be  liable,  although  the  debt  was  contracted 
before  he  became  such:  Longley  v.  Little,  26  Me.  162;  and  where  the  charter 
of  a  corporation  provided  that  "each  stockholder  shall  be  liable  to  double  the 
amount  of  stock  held  or  owned  by  him,  and  for  three  months  after  giving  no- 
tice of  transfer,"  the  provision  has  reference  to  the  continuance  of  the  liability, 
and  not  to  the  time  within  which  an  action  shall  be  instituted,  and  a  stockholder 
is  plainly  liable  for  debts  incurred  while  a  member,  and  for  those  incurred 
for  three  months  after  he  gives  notice  of  the  transfer  of  his  stock:  Fuller  v. 
Ledden,  87  111.  310;  Ihdlv.  Burtis,  90  Id.  213;  so,  also,  where  the  charter  of 
a  bank  declared  that  no  stockholder  should  be  relieved  from  personal  liability 
for  the  ultimate  redemption  of  bills  and  notes  issued  by  the  bank  by  the  sale 
of  his  stock  until  he  shall  have  caused  to  be  given  sixty  days'  notice  of  said 
sale  in  some  public  gazette  of  the  state,  and  in  case  of  the  failure  of  the  bank, 
all  the  stockholders  who  may  have  sold  their  stock  at  any  time  within  six 
months  prior  to  said  failure  shall  be  liable  in  the  same  manner  as  if  they  had 
not  sold  their  stock,  all  the  stockholders  who  have  given  the  required  notice 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  863 

are  exempt,  unless  a  failure  occur  within  six  months  thereafter,  and  ail  the 
other  stockhol.lers  are  liable,  whether  they  have  transferred  their  stock  or  not: 
Lanr  v.  Morris,  8  Ga.  4GS;  Thornton  v.  Lane,  11  Id,  459;  under  the  English 
companies  act  of  1832,  also,  past  members  remain  liable  to  creditors  for  a 
limited  period  of  time. 

It  has  aho  been  held  that  certain  acts  of  incorporation  and  other  statutes 
impose  a  liability  for  the  debts  of  the  corporation  upon  both  stockholders 
wiio  were  such  when  the  debts  were  contracted  and  stockholders  who  are 
such  when  the  action  is  brought.  Thus  it  is  held  that  where  a  statute  pro- 
vides that  "all  members"  or  "all  stockholders,"  shall  be  individually  liable, 
those  who  were  such  when  the  debt  was  contracted,  and  also  those  who  are 
such  when  the  action  i3  brought,  are  liable:  Curtis  v.  Harloio,  12  Met.  3; 
IJolyoke  Bank  v.  Burnham,  11  Cush.  183;  Johnson  v.  Somervilk  Dyeing  Hr. 
Co.,  15  Gray,  21 G;  Brown  v.  Hitchcock,  36  Ohio  St.  G67;  Wheeler  v.  Faurot,  37 
Id.  2G;  Bonno/tzv.  Van  Wert  County  Bank,  41  Id.  78;  Mason  v.  Alexander, 
44  Id.  318,  338;  but  see  Reederv.  Maranda,  66  Ind.  485;  the  courts  finding 
this  interpretation  in  the  use  of  the  word  "all"  by  the  legislature;  and  the 
same  result  has  been  reached  in  a  few  cases  where  the  charters  or  statutes 
simply  provided  that  "the  members  "or  "  the  stockholders  "  should  be  liable: 
Saylesv.  Bates,  15  R.  I.  342;  Freeland  v.  McCullough,  1  Denio,  414,  425;  43 
Am.  Dec.  G85;  Hoot  v.  Sinriock,  120  111.  350;  60  Am.  Rep.  558;  but  see 
supra,  the  many  contrary  cases.  It  is  evident,  according  to  this  ruling,  that 
a  stockholder  is  not  relieved  from  liability  for  debts  of  the  corporation 
incurred  while  he  was  such  by  a  subsequent  transfer  of  his  stock:  Brown  v. 
irdchcork,  36  Ohio  St.  GG7;  Mason  v.  Alexander,  44  Id.  318,  338;  Wehrman  v. 
Rcakirt,  1  Ciu,  Sup.  Ct.  230,  237;  but  he  is  not  liable  for  debts  contracted  before 
he  became  a  stockholder,  if  his  membership  ceased  before  the  debts  became 
payable  and  action  brought:  IJolyoke  Bank  v.  Burnham,  11  Cush.  183;  Sayles 
v.  Bates,  15  R.  I.  342;  note  to  Prince  v.  Lynch,  99  Am.  Dec.  434;  so  the  lia- 
bility of  stockholders  for  debts  of  the  corporation  incurred  during  their 
ownership  of  stock  for  which  the  promissory  notes  of  the  corporation  were 
given,  is  discharged  by  the  cancellation  of  such  notes  and  the  execution  of 
new  notes  in  payment  of  the  debt,  after  the  stockholders  ceased  to  be  such: 
Wheeler  v.  Faurot,  37  Ohio  St.  2G;  and  see  MilUken  v.  Whitehouse,  49  Me.  627, 
And  while  it  is  thus  held  that  stockholders  who  were  such  when  a  debt  was 
contracted,  and  those  who  are  such  when  action  is  brought,  are  liable,  the  ex- 
tent of  the  liability  is  not  increased,  whether  the  stockholder  first  liable  re- 
tained the  stock  or  transferred  it,  and  the  successive  assignees  or  holders,  by 
accepting  the  stock,  and  the  benefits  arising  therefrom,  impliedly  undertake 
to  indemnify  or  discharge  the  assignor  from  the  liability  which  attached  to 
him  while  he  held  the  stock:  Brown  v.  Hitchcock,  36  Ohio  St.  667;  Wheeler  \. 
Faurot,  37  Id.  26.  As  to  when  debts  are  to  be  regarded  as  contracted,  it  was 
held  that  when  debts  of  a  corporation  were  paid  with  the  proceeds  of  bonds 
issued  by  the  corporation,  the  debts  represented  by  the  bonds  were  con- 
tracted as  and  when  the  bonds  were  issued:  Sayles  v.  Bates,  15  R.  I.  342. 

Each  of  these  three  diverging  views  as  to  the  liability  of  stockholders  iu 
case  of  a  transfer  of  stock  has  a  decided  argumeut  in  its  favor.  The  reasons 
in  support  of  the  first  view,  holding  only  those  liable  who  were  stockholders 
when  the  debt  was  contracted,  have  already  been  given.  The  subsequent 
transferees  are  here  the  favored  parties;  while  the  second  rule,  which  con- 
fines the  liability  to  those  who  are  stockholders  when  the  action  is  com- 
menced, favors  the  prior  holders;  and  the  third  decidedly  favors  the  credi- 
tors, in  giving  them  a  recourse,  not  only  against  those  who  were  stockholders 


834  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

when  the  debt  was  contracted,  but  those  who  are  such  when  the  liability  is 
sought  to  be  enforced.  The  opinion  of  Mr.  Morawetz,  who  favors  liability 
in  point  of  time  when  the  action  is  commenced,  is  worthy  of  quotation:  "  If 
it  were  held  that  each  creditor  of  the  corporation  may  pursue  these  particu- 
lar persons  who  happened  to  be  share-holders  when  the  indebtedness  arose, 
whether  he  has  contmued  to  be  a  share-holder  or  not,  it  would  often  become 
a  matter  of  extreme  difficulty,  amounting  to  a  practical  impossibilty,  to 
adjust  the  rights  of  the  past  and  present  share-holders;  and  there  would  be 
no  object  to  be  gained  by  adopting  such  a  rule.  The  substantial  rights  of 
creditors  are  protected  by  the  rule  which  invalidates  a  transfer  as  to  credi- 
tors unless  a  solvent  transferee  is  substituted  in  place  of  the  transferrer; 
moreover,  it  cannot  fairly  be  claimed  that  a  person  dealing  with  a  corpora- 
tion, organized  on  the  usual  plan  in  the  United  States,  deals  on  the  faith  of 
the  surety  offered  by  the  individuals  who  happen  to  be  share-holders  at  the 
time ":  2  Morawetz  on  Corporations,  sec.  888.  However,  the  question  is 
one  of  construction  and  interpretation;  and  sometimes  all  difficulty  is  ob- 
viated by  an  express  provision  of  the  charter  or  statute  which  leaves  no  doubt 
as  to  the  legislative  intent. 

Transfe?;  when  Effective  to  Relieve  from  Liability.  —  Since  a  transfer  of 
stock  may,  in  the  absence  of  anything  to  the  contrary  contained  in  the  char- 
ter or  in  some  general  statute,  operate  to  relieve  the  holder  from  debts  there- 
after incurred,  or  even,  under  some  of  the  foi-egoing  authorities,  for  existing 
debts,  it  becomes  material  to  inquire  lander  what  circumstances  the  transfer 
is  eflfective  for  this  purpose.  As  a  general  rule,  those  who  appear  upon  the 
books  of  the  corporation  at  the  time  the  liability  attaches  are  primarily  lia- 
ble. While,  therefore,  a  transfer  may  be  good  as  between  the  parties  them- 
selves, unless  it  be  consummated  in  the  form  required  by  the  charter  or 
by-laws  of  the  corporation,  by  a  change  upon  books  of  the  company,  the  trans- 
ferrer who  still  appears  to  be  a  stockholder  when  the  liability  attaches  is  lia- 
ble: Shellington  v.  Howland,  53  N.  Y.  371;  Worrall  v.  Judson,  5  Barb.  210; 
McClaren  v.  Franciscvs,  43  Mo.  452,  468;  Pullis  v.  Frandscus,  43  Id.  469; 
A.  Wight  Co.  v.  Steinhemeyer,  6  Mo.  App.  574;  Irons  v.  Manufacturers'  Nat. 
Bank,  27  Fed.  Rep.  591;  17  Id.  308;  Richmond  v.  Irons,  121  U.  S.  27;  but  if 
no  record  of  the  transfer  is  required  by  the  charter  or  by-laws,  it  is  held  that 
a  stockholder  may  be  relieved  from  liability  by  a  transfer  of  his  stock,  al- 
though the  transfer  was  never  registered:  Sayles  v.  Bates,  15  R.  I.  342.  In 
Whitney  v.  Butler,  118  U.  S.  655,  it  was,  however,  held  that  the  responsibil- 
ity of  the  seller  of  stock  of  a  national  bank  ceased  upon  his  surrender  of  the 
certificate  to  the  bank,  and  the  delivery  to  its  president  of  a  power  of  attor- 
ney sufficient  to  effect  a  transfer  of  the  stock  on  the  books  of  the  bank,  al- 
though no  formal  transfer  had  been  made.  As  to  whether  the  purchaser  of 
stock  can  be  held  liable  as  a  stockholder  before  a  formal  transfer  to  him  upon 
the  books  of  the  corporation,  see  Cleveland  v.  Burnham,  64  Wis.  347,  in  which 
the  liability  seems  to  have  been  denied.  Clearly,  where  stock  is  transferred 
by  one  person  to  another,  without  the  knowledge  or  consent  of  the  latter, 
such  transferee  cannot  be  held  liable  as  a  stockholder  unless  he  acquiesced 
in  the  transfer  after  notice  thereof:  Robinson  v.  Lane,  19  Ga.  337.  Where 
shares  of  stock,  with  other  property,  were  allotted  to  a  widow  out  of  her 
husband's  estate,  and  an  order  of  distribution  made,  and  the  estate  settled, 
she  having  assented  to  the  order,  and  accepted  a  part  of  the  property  so  al- 
lotted, it  was  held  that  she  became  a  stockholder,  and  liable  as  such  to  a 
creditor  of  the  corporation:  Coquard  v.  Marshall,  14  ^o.  App.  80;  and  the 
same  result  was  reached  where  an  executrix,  who  inventoried  stock  as  be- 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  865 

longing  to  the  estate,  received  the  stock  as  residuary  legatee,  and  collected 
dividends  thereon,  either  as  executrix  or  legatee:  Boeder  v.  Knobel,  12  Id. 
587;  although  in  both  cases  no  transfer  had  been  made  on  the  books  of  the 
company,  and  although  the  creditors  failed  in  both  to  prove  up  their  claims 
against  the  decedents'  estates;  but  in  Simmons  v.  EUis,  17  Id.  470,  a  distrib- 
utee of  the  estate  of  a  deceased  stockholder,  no  portion  of  the  stock  .having 
been  distributed,  was  held  not  liable. 

Stoclc  Held  as  Collateral  Security,  or  in  Representative  Capacity.  —  In  accord- 
ance with  the  foregoing  general  rule,  one  to  whom  stock  has  been  transferred 
upon  the  books  of  a  corporation,  and  who  appears  thereon  as  a  stockholder 
when  the  liability  attaches,  is  liable  as  a  stockholder,  although  the  transfer 
was  made  as  collateral  security:  National  Bank  v.  Case,  99  U.  S.  628;  Bowden 
V.  Farmers'  etc.  Bank,  1  Hughes,  307;  Moore  v.  Jones,  3  Woods,  53;  Wheeloch 
v.  Kost,  11  111.  296;  Hale  v.  Walker,  31  Iowa,  344;  Magruder  v.  Colston,  44 
Md.  349;  Crease  v.  Babcock,  10  Met.  524,  545;  Grew  v.  Breed,  10  Id.  509,  576; 
Holyoke  Bank  v.  BurnJiam,  11  Cush.  183;  Jolmsonv.  Somerville  Dyeing  etc.  Co., 
15  Gray,  210;  First  Nat.  Bank  v.  Hingharn  Mfg.  Co.,  127  Mass.  563;  Adderly 
V.  Storm,  6  Hill,  624;  Rosevelt  v.  Brown,  11  N.  Y.  148;  In  re  Empire  City  Nat. 
Bank,  18  Id.  119,  223;  Aultmans  Appeal,  98  Pa.  St.  505;  Erskine  v.  Lowen- 
stein,  82  Mo.  301,  affirming  11  Mo.  App.  595;  Thompson's  Liability  of  Stock- 
holders, sec.  223;  Taylor  on  Corporations,  sec.  741;  and  this,  although  the 
debt  to  secure  which  the  stock  was  transferred  is  in  fact  paid:  Bowden  v. 
Farmers^  etc.  Bank,  Johnson  v.  Somerville  Dyeing  etc.  Co.,  Erskine  v.  Lowen- 
stein,  supra.  The  same  rule  prevails  in  suits  by  creditors  of  corporations,  or 
in  their  behalf,  to  compel  the  payment  by  stockholders  of  unpaid  subscrip- 
tions: See  supra;  Pullman  v.  Upton,  96  U.  S.  328.  But,  in  accordance  with 
the  same  rule,  a  holder  of  stock  as  collateral  security,  to  whom  the  stock  has 
not  been  transferred  upon  the  books  of  thfy  corporation,  is  hot  liable  as  a 
stockholder:  Henkle  v.  Salem  Mfg.  Co.,  39  Ohio  St.  547.  The  general  rule 
likewise  applies  when  the  stock  is  held  as  trustee  for  others:  Grew  v.  Breed, 
10  Met.  569,  576;  and  see,  to  the  same  effect,  supra,  Mann  v.  Currie,  2  Barb. 
294,  and  McKim  v.  Glenn,  06  Md.  479.  under  the  general  liability  of  stockholders 
to  creditors  for  unpaid  subscriptions;  although,  it  has  been  held,  the  trust 
appeared  upon  the  books  of  the  corporation:  Greio  v.  Breed,  supra.  Some- 
times, however,  statutes  provide  that  persons  holding  stock  in  a  representa- 
tive capacity,  such  as  trustees,  executors,  and  guardians,  and  persons  holding 
stock  as  collateral  security,  shall  not  be  personally  liable  as  stockholders,  but 
the  person  or  estate  represented,  or  the  pledgor,  as  the  case  may  be,  shall  be 
liable.  Under  such  a  statute,  it  has  been  held  that  where  one  was  sought  to 
be  individually  charged  as  a  stockholder,  evidence  was  projjer,  upon  his  part, 
to  show  that  an  assignment  of  stock,  absolute  upon  its  face,  was  in  fact  given 
and  held  as  collateral  security  only:  McMahon  v.  Macy,  51  N.  Y.  155;  Bur- 
ytsa  v.  Seligman,  107  U.  S.  20;  Union  Savings  Ass'n  v.  Seligman,  92  Mo.  635; 
1  Am.  St.  Rep.  776.  But  one  who  subscribes  for  stock  in  his  own  name,  for 
the  benefit  of  another,  is  held  not  to  be  exempted  from  individual  liability  as 
a  trustee  under  the  New  York  act  of  1848:  Stover  v.  Flack,  30  Id.  64.  It 
was  at  one  time  held  in  Missouri,  under  such  a  statutory  exception,  that  the 
statute  had  no  application  to  stock  which  was  not  issued  in  the  usual  course 
of  business,  and  therefore  it  did  not  exempt  from  liability  persons  holding  as 
collateral  security  unsubscribed  stock  issued  to  them  by  a  corporation:  Gris- 
wold  v.  Seligman,  72  Mo.  110;  Fisher  v.  Seligman,  75  Id.  13,  reversing  7  Mo. 
App.  383;  but  these  cases  have  been  overruled,  and  it  is  now  held  that  persons 
to  whom  a  corporation  itself  pledges  its  stock  are  within  the  exemption: 
Am.  St.  Kep.,  Vol.  III.  — 55 


866  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

Burgess  v.  Seligman,  107  U.  S.  20;  Union  Savings  Ass'n  v.  Seligman,  92  Mo. 
635;  1  Am.  St.  Rep.  776;  and  under  these  latter  rulings,  the  act  of  voting  the 
stock,  by  the  persons  so  holding  it,  will  not  make  them  absolute  stockhold- 
ers, either  as  between  themselves  and  the  corporation,  or  as  between  them- 
selves and  corporate  creditors:  Compare  Fisher  v.  Seligman,  supra. 

Transfer  must  be  Bona  Fide.  —  In  order,  in  any  event,  that  a  stockholder 
may  relieve  himself  from  individual  liability  to  creditors  of  a  corporation  for 
its  debts,  the  transfer  must  be  bona  fide.  A  transfer  of  stock  to  an  irrespon- 
sible person,  for  the  purpose  of  escaping  personal  liability  to  creditors,  is,  as 
to  them,  inoperative  and  void:  Bowden  v.  Johnson,  107  U.  S.  251;  Bowden  v. 
Santos,  1  Hughes,  158;  Central  Agricultural  etc.  Ass'n  v.  Alabama  Gold  L. 
Ins.  Co.,  70  Ala.  120;  Painev.  Steioart,  33  Conn.  517;  Marcyv.  Clark,  17  Mass. 
330;  McClaren  v.  Franciscus,  43  Mo.  452;  Provident  Savings  Inst.  v.  Jackson 
Place  Skating  etc.  Rink,  52  Id.  557;  Veiller  v.  Brown,  18  Hun,  571;  Aultrnann 
Appeal,  98  Pa.  St.  505;  Dauchy  v.  Brown,  24  Vt.  197;  Cook  on  Stock  and 
Stockholders,  sec.  265;  and  see  also,  to  the  same  effect,  under  the  general  lia- 
bility of  stockholders  for  unpaid  subscriptions.  Rider  v.  Morrison,  54  Md.  429, 
444;  Nathan  v.  Whitlock,  9  Paige,  152;  Mandion  v.  Firemen  s  Ins.  Co.,  11  Rob. 
(La.)  177;  but  if  tlie  transfer  be  made  honestly,  and  without  any  intention  of 
defeating  the  creditors,  the  mere  fact  that  the  purchaser  was  insolvent  at  the 
time  is  not  sufficient  to  hold  the  transferrer  still  liable  for  the  debts:  Miller  v. 
Great  Republic  Ins.  Co.,  50  Mo.  55;  the  question  is,  whether  or  not  the  trans- 
fer was  fraudulent;  so  a  husband  who  in  good  faith  assigns  to  his  wife,  who 
is  capable  by  statute  of  becoming  a  stockholder,  his  stock  in  a  solvent  corpo- 
ration is  relieved  from  further  liability  as  a  stockholder:  Simmons  v.  Dent,  16 
Mo.  App.  288.  On  the  same  principle  a  purchaser  of  stock  who  has  it 
transferred  upon  the  books  of  the  corporation  from  the  seller  to  an  irrespon- 
sible third  person,  in  order  to  avoid  the  individual  liability  of  a  stockholder, 
is  nevertheless  liable  so  long  as  he  remains  the  actual  owner  of  the  stock: 
Davis  V.  Stevens,  17  Blatchf.  259;  Case  v.  Small,  4  Woods,  78;  10  Fed.  Rep. 
722;  and  one  who  subscribes  to  stock  in  the  names  of  infants,  for  the  purpose 
of  avoiding  individual  responsibility,  is,  notwithstanding,  responsible:  Castle- 
man  V.  Holmes,  4  J.  J.  Marsh.  1;  Roman  v.  Fry,  5  Id.  634.  But  it  is  never- 
theless held  that  a  pledgee  of  stock  in  a  national  bank  who,  in  good  faith 
and  with  no  fraudulent  intent,  takes  the  stock  in  the  name  of  an  irresponsi- 
ble trustee,  for  the  avowed  purpose  of  avoiding  liability  as  a  share-holder, 
and  who  exercises  none  of  the  powers  or  rights  of  a  stockholder,  incurs  no 
liability  as  such  to  creditors  of  the  bank  in  case  of  its  failure:  Anderson  v. 
Philadelphia  Warehouse  Co.,  Ill  U.  S.  479;  and  a  sale  of  the  stock,  under  an 
authority  conferred  by  the  terms  of  a  pledge,  is  not  obnoxious  to  the  charge 
of  having  been  done  in  fraud  of  creditors,  although  its  leading  object  and 
purpose  may  have  been,  on  the  part  of  the  pledgees,  to  avoid  liability  under 
the  national  banking  act:  Magruder  v.  Colston,  44  Md.  349;  so  a  retransfer 
on  the  books  of  the  corporation  of  shares  of  stock  by  the  vendee  to  the  ven- 
dor, in  pursuance  of  an  agreement  to  do  so,  made  contemporaneously  with  the 
original  transfer  from  the  vendor  to  the  vendee,  terminates  the  vendee's  indi- 
vidual liability  as  a  stockholder  for  the  debts  of  the  company,  although  made 
for  that  very  purpose:   Holyoke  Banh\.  Bumham,  11  Cush.  183. 

Stock-books  as  Evidence  of  Ownership. — The  stock-books  of  a  corporation 
are  generally  held  to  be  prima  facie  evidence  of  the  ownership  of  stock  in 
those  whose  names  appear  thereon  as  stockholders  for  the  purpose  of  char- 
ging them  individually  with  the  corporate  debts:  Hoagland  v.  Bdl,  36  Barb. 
57;  Thornton  v.  Lane,  II  Ga.  459;  compare  Stanley  v.  Stanley,  26  Me.   191; 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  867 

and  see,  to  the  same  effect,  in  proceedings  to  charge  stockholders  with  unpaid 
subscriptions,  Turnhull  v.  Payson,  95  U.  S.  41S;  Webster  v.  Upton,  91  Id.  Go, 
72;  Glenn  v.  Springs,  26  Fed.  Rep.  494;  but  in  Mudgett  v.  fforrell,  33  Cal.  25, 
it  was  held  that  where  a  statute  provides  that  the  stock-book  "  shall  be  pre- 
sumptive evidence  of  the  facts  therein  stated  in  any  action  or  proceeding 
against  the  company,  or  against  any  one  or  more  stockholders,"  the  book  is 
nevertheless  not  admissible  in  evidence  in  an  action  by  a  creditor  of  the  cor- 
poration against  one  claimed  to  be  a  stockholder,  for  the  purpose  of  proving 
that  he  is  such;  and  in  fixing  the  ownership  of  stock,  it  is  not  competent  to 
give  in  evidence  the  declarations  of  the  officers  and  agents  of  the  company  for 
that  purpose:  Rohinson  v.  Lane,  19  Ga.  337. 

Bill  for  Discovery  of  Stockholders.  —  A  bill  for  discovery  of  the  individual 
members  of  a  corporation  made  liable  by  statute  for  its  debts  has  been  held 
sustainable  by  the  creditors:  President  etc.  of  Middletown  Bank  v.  Russ,  3  Conn. 
145;  Bogardus  v.  Rosendale  Mfg.  Co.,  7  N.  Y.  147;  probably  an  unnecessary 
and  obsolete  proceeding  everywhere  at  the  present  day;  and,  to  the  same  eflFect, 
in  proceedings  by  creditors  to  reach  unpaid  subscriptions,  see  Morgan  v.  New 
York  etc.  R.  R.,  10  Paige,  290;  40  Am.  Dec.  244;  Miers  v.  Zaiiesville  etc. 
Turnpike  Co.,  U  Ohio,  273. 

Married  Women  are  Suhjecl  to  Statutory  Liability  of  Stockliolders  for  Cor- 
porate Debts.  —  Since  a  married  woman  may  become  the  owner  of  stock  of  a 
corporation,  and  since  the  liability  of  stockholders  for  the  debts  of  the  cor- 
poration is  a  statutory  liability,  and  incident  to  the  ownership  of  stock,  it  is 
settled  that  a  married  woman  is  subject  to  such  liability:  Sayles  v.  Bates,  15 
R.  I.  342;  Keyser  v.  Hitz,  2  Mackey,  473;  Anderson  v.  Line,  14  Fed.  Rep. 
405;  In  re  Reciprocity  Bank,  22  N.  Y.  9;  Simmons  v.  Dent,  12  Mo.  App.  288. 

Lkgislative  Power  to  Impose,  Repeal,  or  .Modify  Statutory  Liabil- 
ity OF  Stockholders  for  Corporate  Debts.  —  As  has  already  been  stated, 
a  statute,  or  an  ordinance  of  a  state  constitution,  which  repeals  a  former 
statute  or  constitutional  provision  making  the  stockholders  of  a  corporation 
individually  liable  for  its  debts,  or  which  reduces  the  extent  of  the  liability 
by  amendment,  is,  as  respects  creditors  whose  debts  were  contracted  prior  to 
its  passage,  in  derogation  of  the  constitution  of  the  United  States,  and  void: 
Thompson's  Liability  of  Stockholders,  sec.  71;  Hawthorne  v.  Calef,  2  Wall.  10; 
Provident  Savings  Inst.  v.  Jackson  Place  Skating  etc.  Rink,  52  Mo.  552;  Jer- 
mans  Adnir  v.  Benton,  79  Id.  148;  St.  Louis  Railway  Supplies  Co.  v.  Ilarbine, 
2  Mo.  App.  134;  compare  Robinson  v.  Bank  of  Darien,  18  Ga.  65;  although 
the  holder  of  evidences  of  debt  against  the  corporation  became  such  after  the 
modification:  Blakeman  v.  Benton,  9  Mo.  App.  107;  but  a  creditor  may  waive 
his  right  to  claim  the  constitutional  protection:  Van  Hook  v.  Whillock,  26 
Wend.  43;  37  Am.  Dec.  246;  and  where  the  individual  liability  imposed  bj' 
a  constitution  was  lessened  by  un  amendment,  a  stockholder  who  becomes 
such  after  the  amendment  is  not  liable,  according  to  the  original  form  of  the 
provision,  for  debts  owing  by  the  corporation  prior  to  the  amendment:  Ochil- 
tree V.  Iowa  Railroad  Contracting  Co.,  54  Mo.  113;  affirmetl  in  Ochiltree  v.  Rad- 
road  Co.,  21  Wall.  249.  But  a  statute  which  affects  the  remedy  of  the  cred- 
itor merely  is  not  invalid:  Thompson's  Liability  of  Stockholders,  sec.  73; 
Merchants'  Ins.  Co.  v.  Hill,  86  Mo.  466,  affirming  12  Mo.  App.  148;  Cummings 
v.  Maxwell,  45  Me.  190;  CoJJin  v.  Rich,  45  Id.  507;  71  Am.  Dec.  559;  Sto)-y  v. 
Furmxin,  25  N.  Y.  214;  Penniman,  Petitioner,  11  R.  I.  333;  compare  Walker 
V.  Crain,  17  Barb.  119,  129, 

Aa  far  as  the  power  of  the  legislature  to  impose  an  individual  liability  upon 
the  stockholders  of  an  existing  corporation  is  concerned,  there  is  no  doubt 


868  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

that  if  the  right  has  been  reserved,  it  may  be  exercised:  Weidenger  v.  Spruancr, 
101  111.  278;  Fn  re  Empire  City  Bank,  18  N.  Y.  119;  Bailey  v.  Hollister,  26  Id. 
112;  and  where  the  charter  of  a  corporation  provided  "  that  no  stockholder 
of  the  corporation  hereby  created  shall  be  liable,  in  his  individual  capacity, 
for  any  debt  or  liability  of  said  company  beyond  the  amount  of  stock  held  by 
him,"  the  section  is  one  of  limitation  and  restriction  only,  and  a  stockholder 
cannot  claim  that  a  subsequent  statute  fixing  the  liability  to  that  amount, 
and  prescribing  a  mode  of  enforcing  it,  impaired  the  obligation  of  his  con- 
tract: Gridley  v.  Barnes,  103  111.  211;  Arenz  v.  Weir,  89  Id.  25-28.  But  it 
has  been  held,  in  cases  where  there  was  no  such  reservation,  that  a  statute 
which  makes  the  stockholders  of  an  existing  corporation  liable  for  its  future 
debts  was  a  valid  exercise  of  the  legislative  power:  Gray  v.  Coffin,  9  Cush. 
192,  200;  Stanley  V.  Stanley,  26  Me.  191;  Coffin  v.  Rich,  45  Id.  507;  71  Am. 
Dec.  559;  but  it  would  be  otherwise  if  the  charter  imposed  a  liability,  and 
provided  that  the  charter  should  not  be  altered  or  amended  except  by  the 
consent  of  a  majority  of  the  stockholders,  and  subsequently  a  greater  liability 
was  imposed,  to  which  the  stockholders  never  assented:  Steacy  v.  Little  Rock 
etc.  R.  R.,5  Dill.  348.  And  in  Ohio  it  was  held  that  a  statute  which  author- 
ized assessments  against  stockholders,  who  have  paid  the  full  amount  of  their 
subscriptions,  without  their  consent,  was  a  law  impairing  the  validity  of  the 
stockholders'  contract  with  the  company,  and  therefore  unconstitutional: 
Ireland  v.  Palestine  etc.  Turnpike  Co.,  19  Ohio  St.  369;  but  Mr.  Thompson 
' '  cannot  avoid  thinking  that  this  case  is  based  on  an  erroneous  premise, 
namely,  that  for  all  purposes  a  corporation  is  a  distinct  person  from  the 
members;  whereas,  the  sound  doctrine  is,  that  they  are  distinct  only  for  cer- 
tain purposes  of  convenience  in  the  transaction  of  business,  and  in  the  admin- 
istration of  justice  ":  Thompson's  Liability  of  Stockholders,  sec.  67. 

Statutory  Liability  of  Stockholders  for  Corporate  Debts,  whether 
MAY  BE  Enforced  Outside  of  State  in  Which  Corporation  is  Organ- 
ized. —  It  has  been  heretofore  seen  that  certain  cases  maintain  that  the 
judgment  against  the  corporation  which  ci-editors  are  required  to  obtain 
before  proceeding  in  equity  to  compel  stockholders  to  pay  their  unpaid  sub- 
scriptions must  be  a  judgment  of  the  state  in  which  the  creditor's  suit  is 
commenced:  Pattersonv.  Lynde,  112  111.  196,  204;  Bank  of  Virginia  v.  Adams, 
1  Pars.  Sel.  Cas.  534;  which  means  a  denial  of  the  right  to  file  a  creditor's  bdl 
outside  of  the  state  in  which  the  corporation  is  formed,  —  the  court  hav- 
ing no  jurisdiction  over  foreign  corporations;  but  that  a  receiver  or  an  as- 
signee for  the  benefit  of  creditors  may  maintain  an  action  at  law  to  recover 
unpaid  subscriptions  against  a  stockholder  in  another  state:  Patterson  v. 
Lynde,  112  111.  196,  206;  Dayton  v.  Borst,  31  N.  Y.  435,  438;  Glenn  v.  Wil- 
liams, 60  Md.  93.  It  has  also  been  seen  that  the  usual  statutory  liability  of 
stockholders  for  the  debts  of  the  corporation  is  not  in  the  nature  of  a  pen- 
alty, but  of  a  contract,  and  that  it  may  therefore  be  enforced  in  a  state  other 
than  that  in  which  the  corporation  was  created:  Flash  v.  Conn,  16  Fla.  428; 
26  Am.  Rep.  721;  109  U.  S.  371;  Cuykendall  v.  Miles,  10  Fed.  Rep.  342; 
Howell  V.  Manglesdorf,  33  Kan.  194,  199;  Hodgson  v.  Cheever,  8  Mo.  App. 
318;  Aultman's  Appeal,  98  Pa.  St.  505;  and  see  Woods  v.  Wicks,  7  Lea,  40; 
Drinkwater  v.  Portland  Marine  R'y,  IS  Me.  35;  differing  from  the  case  where 
a  liability  for  debts  is  imposed  u.pon  officers  of  a  corporation,  and  sometimes 
upon  the  stockholders  also,  for  the  failure  or  neglect  to  comply  with  some 
duty  imposed:  See  Cook  on  Stock  and  Stockholders,  sec.  218;  Thompson's 
Liability  of  Stockholders,  sec.  82;  but  it  is  equally  well  settled  that  if  a 
special  remedy  is  given  creditors  against  the  stockholders,  it  cannot  be  en- 


April,  1885.]     Thompson  i\  Reno  Savings  Bank.  869 

forced  in  another  state:  Lowry  v.  Inman,  46  N.  Y.  119;  CliH^tenscn  v.  Eno, 
106  Id.  97;  Nimick  v.  Minrjo  Iron  Works  Co.,  25  W.  Va.  184;  even  if  the 
remedy  provided  be  a  suit  in  equity,  because  of  the  inherent  difficulties  of 
first  obtaining  a  judgment  against  the  corporation,  and  next  making  tlie 
corporation  a  party  to  the  bill:  Erickson  v.  Nesmith,  4  Allen,  233;  Nimick  v. 
Mirujo  Iron  Works  Co.,  25  W.  Va.  184;  and  see  Erickson  v.  Nesmith,  15  Gray, 
221;  see  also  Cook  on  Stock  and  Stockholders,  sec.  219.  So  where  an  act 
under  which  a  corporation  is  formed  requires,  as  a  condition  precedent  to  the 
bringing  of  an  action  against  a  stockholder  to  enforce  his  individual  liability, 
that  judgment  shall  be  recovered  against  tlie  corporation,  and  execution 
issued  and  returned  unsatisfied,  a  judgment  in  and  an  execution  issued  out 
of  a  court  of  the  state  in  which  the  corporation  exists  are  contemplated: 
Rocky  Mountains  Nat.  Bank  v.  Bliss,  89  N.  Y.  338;  Dean  v.  Mace,  19  Hun, 
391;  Viele  v.  Wells,  9  Abb.  N.  C.  277. 

Survival  of  Statutory  Liability  for  Corporate  Debts  again.st  De- 
cedent Stockholder's  Personal  Representatives. — Since  the  general 
individual  liability  of  stockholders  for  the  corporate  debts  is  a  contract 
liability,  and  not  a  penalty,  it  survives  as  against  the  personal  representatives 
of  a  deceased  stockholder:  Eidiniond  v.  Irons,  121  U.  S.  27;  Irons  v.  Manu- 
facturers'  Nat.  Bank,  21  Fed.  Rep.  197,  198;  Manville  v.  Eclrjar,  8  Mo.  App. 
324;  and  see  Cltase  v.  Lord,  77  N.  Y.  1;  6  Abb.  N.  C.  258;  compare  Diversey  v. 
Smith,  103  111.  378;  but  as  to  whether  the  peculiar  remedy  provided  against 
stockholders  in  Massachusetts  and  Missouri  can  be  enforced  against  the 
estate  of  a  deceased  stockholder,  see  Child  v.  Coffin,  17  Mass.  04;  Ripley  v. 
Sampson,  10  Pick.  371,  372:  Dane  v.  Dane  Mfy.  Co.,  14  Gray,  488;  Ciwuninr/s 
V.  Wright,  11  Mo.  App.  348;  Donnelly  v.  Hodjson,  13  Id.  ^15;  although  it 
may  be  that  if  the  liability  is  joint,  upon  the  death  of  a  stockholder  the 
liability  at  law  remains  only  against  the  survivors:  New  England  Commercial 
Bankv.  Newport  Steam  Factory,  6  R.  I.  154;  75  Am.  De.  C88;  but  the  credi- 
tor may  proceed  against  the  estate  of  the  deceased  stockholder  in  equity: 
Id.  If  claims  against  decedents  are  required  to  be  presented  to  the  personal 
representatives  for  allowance,  the  claim  against  a  deceased  stockholder  must 
be  so  presented:  Davidson  v.  Rankin,  34  Cal.  503;  compare  Boeder  v.  Knohel, 
12  Mo.  App.  587;  Coqiiard\.  Marshall,  14  Id.  80;  but  unpaid  capital  of  a 
corporation  being  a  trust  fund  for  the  benefit  of  creditors,  it  is  properly  no 
part  of  a  deceased  stockholder's  estate,  and  therefore  a  creditor  of  the  corpo- 
ration can  maintain  a  suit  against  the  stockholder's  personal  representatives 
to  compel  the  payment  of  his  unpaid  subscription  without  presenting  any 
demand  to  the  representatives  for  allowance:  Thompson  v.  Reno  Sav.  Bank, 
19  Nev.  242,  post,  p.  883. 

Priority  of  Creditor  First  Suing  Stockholder  to  Enforce  Statu- 
tory Liability  for  Corporate  Debts. — Where  sepai-ate  actions  by  cred- 
itors of  corporations  are  permitted  to  enforce  the  statutory  liability  of 
stockholders  for  the  corporate  debts,  it  is  a  general  rule  that  the  creditor 
first  suing  thereby  acquires  a  priority  over  other  creditors  with  respect  to 
the  stockholder  sued:  Cook  on  Stock  and  Stockholders,  sec.  228;  Thompson's 
Liability  of  Stockholders,  sec.  424;  Cole  v.  Butler,  43  Me.  401;  Imjalls  v.  Cole, 
47  Id.  530,  541;  Jones  v.  Weltherger,  42  Ga.  575;  Lowry  v.  Parsons,  52  Id. 
350;  Thebus  v.  Smiley,  110  111.  310;  and  therefore  a  stockholder,  after  notice 
of  such  a  suit,  cannot  defeat  the  suing  creditor  by  paying  the  claims  of  other 
creditors  to  the  extent  of  his  liability:  Jones  v.  Weltberger,  Cole  v.  Butler, 
Thebus  v.  Smiley,  supra;  but  in  City  of  Chicago  v.  Hall,  103  111.  342,  it  was 
held  that  the  mere  institution  of  a  suit  at  law  by  one  of  several  creditors  of 


870  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

an  insolvent  bank  to  enforce  the  personal  liability  of  a  stockholder  for  the 
payment  of  his  claim  did  not  give  him  a  prior  right  or  lien  on  the  fund,  when 
collected,  to  the  exclusion  of  all  other  creditors  of  the  bank;  and  the  fact 
that  such  creditor  was  prevented  from  obtaining  final  judgment  in  his  suit 
by  injunction  on  bill  filed  by  other  creditors  made  no  difiference;  and  in  State 
Savings  Ass'n  v.  Kelloyg,  G3  Mo.  540,  it  was  also  held  that  the  institution  of  a 
suit  against  a  stockholder  for  a  corporate  debt  did  not  operate  as  a  lien  upon 
his  liability,  so  as  to  hold  him  therefor  against  a  senior  judgment  and  execu- 
tion obtained  in  another  action  commenced  later;  and  see  also  Marks  v. 
Mulhall,  13  Mo.  App.  590;  Bittnerv.  Lee,  25  Id.  559.  But  "when  the  pro- 
ceeding to  enforce  the  statutory  liability  is  in  equity,  there  can  be,  upon 
plain  principles,  no  priority  among  creditors":  Cook  on  Stock  and  Stock- 
holders, sec.  228. 

Actions  by  Stockholders  against  Other  Stockholders  —  Contribu- 
tion. —  T^  has  already  been  observed  that  stockholders  made  individually 
liable  for  corporate  debts  are  considered  partners  to  such  an  extent  that  one 
stockholder  who  is  also  a  creditor  of  the  corporation  cannot  maintain  an 
action  at  law  against  other  stockholders:  Bailey  v.  Bancher,  3  Hill,  188;  38 
Am.  Dec.  C25;  Wait  v.  Ferguson,  14  Abb.  Pr.  379;  Beers  v.  Waterbury,  8 
Bosw.  396,  413;  Richardson  v.  Abendroth,  43^Barb.  162;  Clark  v.  Myers,  11 
Hun,  GOS;  Thompson  v.  Meisser,  108  111.  359;  Perkins  v.  Sanders,  56  Miss. 
733;  compare  Woodruff  etc.  Iron  Works  v.  Chittenden,  4  Bosw.  406;  and,  at  all 
events,  even  if  the  rule  be  not  placed  on  this  ground,  there  are  inherent  diffi- 
culties in  the  suit  at  law:  See  Mathez  v.  Neidig,  2  N.  Y.  100,  104;  Garrison  v. 
Hoive,  17  Id.  458,  463.  But  where  a  stockholder  is  thus  a  creditor,  or  where 
he  has  been  couipelled  to  pay  more  than  his  share  of  a  debt  of  the  corporation 
to  a  creditor,  he  has  a  claim  for  contribution  in  equity  against  the  other 
stockholders,  who  are  liable  for  the  debt:  Beers  v.  Waterbury,  Clark  v.  Myers, 
Perkins  v.  Sanders,  supra;  Judsonv.  Eossie  Galena  Co.,  9  Paige,  598,  633;  33 
Am.  Dec.  509;  Aspinwall  v.  Torrance,  1  Lans.  381;  Garrison  v.  Howe,  17 
N.  Y.  458,  463;  Aspinwall  v.  Sacchi,  57  Id.  331;  Mathez  v.  Neidig,  72  Id.  100, 
104;  and  see  Polk  v.  Reynolds,  54  Ind.  449;  Ward  v.  Polk,  70  Id.  309;  Cook 
on  Stock  and  Stockholders,  sec.  229.  He  has,  however,  it  is  held,  no  right 
against  another  stockholder,  under  a  statute  making  stockholders  liable  to 
creditors  of  the  corporation  to  an  extent  equal  to  their  unpaid  subscriptions, 
while  his  own  subscription  remains  unpaid:  Weber  v.  Fickey,  47  Md.  196; 
Franklin  v.  Menown,  10  Mo.  App.  570.  So  it  has  been  held  that  a  suit  in 
equity  for  contribution,  brought  by  a  member  of  a  corporation  who  had  paid 
a  debt  of  a  corporation,  against  other  mambers,  cannot  be  maintained  until 
the  complainant  had  first  applied  and  exhausted  all  property  of  the  corpora- 
tion: Grayv.  Coffin,  9  Cush.  192.  But  in  Smitli  v.  Londoner,  5  Col.  365,  it  was 
decided  that  where  a  statute  provided  that  the  stockholders  of  a  corporation 
"shall  be  severally  individually  liable  to  the  creditors  of  the  company  in 
which  they  are  stockholders,  to  the  amount  of  unpaid  stock  held  by  them 
respectively,  for  all  debts  and  contracts  made  by  such  company,"  a  stock- 
holder, who  was  also  a  creditor,  but  who  had  paid  in  full  for  his  stock,  and 
consequently  was  not  individually  liable  for  the  debts  of  the  company,  might 
maintain  an  action  at  law  against  another  stockholder,  and  recover  to  the 
amount  of  unpaid  stock  held  by  him.  As  to  the  right  of  a  stockholder  to 
enforce  contribution  under  special  statutes,  see  Andrews  v.  Callender,  13  Pick. 
484;  Thayer  v.  Union  Tool  Co.,  4  Gray,  75;  Potter  v.  Stevens  Machine  Co.,  127 
Mass.  592;  34  Am.  Rep.  42§;  Brinham  v.  Wellersburg  Coal  Co.,  47  Pa.  St.  43. 

If  a  stockholder  himself  cannot  proceed  in  a  special  way,  provided  by  stat- 


April,  1885.]     Thompson  v.  Reno  Savings  Bank.  P71 

nte,  against  other  stockholders,  one  to  whom  he  has  assigned  his  claim  for 
the  sole  purpose  of  enforcing  such  liability  stands  in  no  better  position: 
Thayer  v.  Union  Tool  Co.,  4  Gray,  75;  Potter  v.  Stevens  Machine  Co.,  127 
Mass.  592;  34  Am.  Rep.  428;  and  see  also  Richardson  v.  Ahendroth,  43  Barb. 
162. 

The  liability  for  contribution  is  co-extensive  with  the  liability  for  the  debt; 
and  therefore  all  persons  who  are  so  liable  are  proper  contributors:  Sayles  v. 
Boies,  15  R.  I.  342. 

Stockholder'.s  Right  to  Set  off  Debt  Due  Him  by  Corporation  in 
Action  to  Enforce  his  Statutory  Liability.  —  It  has  been  heretofore 
shown  that  a  stockholder  cannot  set  off  a  debt  due  him  by  the  corporation  in 
a  creditor's  suit  to  compel  the  payment  of  his  unpaid  subscriptions.  It 
would  seem  that  a  like  rule  should  obtain  in  equitable  actions  against  stock- 
iholders  to  enforce  their  statutory  liability,  where  it  is  held  that  the  statute 
creates  a  fund  out  of  which  the  creditors  are  to  be  paid  ratably:  See  Cook 
on  Stock  and  Stockholders,  sec.  227;  2  Morawetz  on  Corporations,  sec.  898; 
also  In  re  Em-pi)  e  City  Bank,  18  N.  Y.  119,  227;  Buchanan  \.  Meisser,  105111. 
«38;  Thompson  v.  Meisser,  108  Id.  359;  TheJms  v.  Umiley,  110  Id.  31G;  Bur- 
nap  V.  Haskins  Steam  Engine  Co.,  127  Mass.  686;  Mattltews  v.  Albert,  24  Md. 
527;  compare  Brigrjs  v.  Penniman,  8  Cow.  387;  18  Am.  Dec.  454;  but  the 
cases  are  far  from  satisfactory;  and  in  New  York,  in  actions  to.  enforce  the 
liability  of  stockholders  under  the  act  of  1848,  by  which  they  are  made 
"severally  individually  "  liable  to  the  creditors  of  the  company  to  an  amount 
equal  to  the  amount  of  stock  held  by  them  respectively,  it  is  held  by  recent 
cases  that  if  the  stockholder  sued  is  himself  a  creditor  of  the  corporation  to 
an  amount  equal  to  his  statutory  liability,  he  may  set  up  that  fact  as  an  equi- 
table defense;  but  not  where  tlie  amount  of  his  claim  is  less  than  such  lia- 
bility: Malhcz  V.  Neidig,  72  N.  Y.  100,  105;  Agate  v.  Sand^,  73  Id.  620; 
Wheeler  v.  Millar,  90  Id.  353.  Thus,  says  Finch,  J.,  in  Wheeler  v.  Millar, 
supra:  "If  the  stockholder  sued  is  himself  such  creditor  to  an  amount  equal- 
ing his  statutory  liability,  he  has  quite  as  good  a  right  to  the  fund  which  is 
pursued  as  the  pursuer.  Indeed,  he  has  the  better  right,  because  it  is 
already  in  his  possession,  and  it  would  be  inequitable  to  take  it  from  him  for 
tlie  benefit  of  another  creditor  who  has  no  superior  equity.  But  the  stock- 
holder must  be  really  a  creditor  of  the  company.  He  must  stand  in  a  rela- 
tion to  it  which  in  equity  and  justice  is  as  strong  as  that  of  the  assailant. 
....  But  here  the  facts  show  that  the  stockholder  is  not  a  creditor  when 
accounts  are  adjusted,  and  has  no  equity  against  the  fund  in  his  hands.  He 
is  bound  first  to  pay  his  own  debt  to  the  company,  and  is  in  the  end  not  its 
creditor  at  all.  If,  after  paying  his  debt,  the  company  still  owed  him,  to  the 
extent  of  that  balance,  he  would  have  an  equitable  defense.  But  the  bal- 
ance is  the  other  way.  Equitably  he  is  the  debtor  of  the  company,  with  his 
claim  against  it  extinguished,  and  has  nothing  upon  which  to  found  an  equi- 
table claim  against  the  statutory  liability."  See  slso  Remington  v.  King,  11 
Abb.  Pr.  278.  In  Missouri,  in  the  special  statutory  proceeding  against  a 
stockholder,  he  is  allowed  to  offset  a  debt  due  him  from  the  corporation:  Jer- 
man's  Adnir  v.  Benton,  79  Mo.  148;  Webber  v.  Leighton,  S  Mo.  App.  502;  Mer- 
chants^ Ins.  Co.  v.  Hill,  12  Id.  148;  but  where  an  unsatisfied  judgment  in 
favor  of  a  stockholder  and  against  the  corporation  has  been  allowed  as  a  set- 
off in  a  former  proceeding  by  another  creditor  against  such  stockholder,  this 
cannot  avail  in  a  subsequent  proceeding  against  him,  such  judgment  having 
been  in  the  meantime  satisfied:  Simmonds  v.  Ileman,  17  Id.  444.  And  in 
•Georgia,  applying  the  principle  that  a  stockholder  may  reduce  or  discharge 


872  Thompson  v.  Reno  Savings  Bank.        [Nevada, 

his  proportionate  individual  liability  by  payment  to  one  creditor  before  suit 
brought  by  another,  it  is  held  that  a  bona  Jide  debt  of  a  stockholder  against 
the  corporation  may  be  set  ofif  by  him  in  a  suit  to  enforce  his  liability:  Boyd 
V.  Hall,  56  Ga.  563. 

Estoppels  in  Actions  to  Enforce  Statutory  Liability  of  Stock- 
holders FOR  Corporate  Debts. — As  in  the  case  of  creditor's  suits  to  compel 
the  payment  of  unpaid  subscriptions  by  stockholders,  in  actions  to  enforce 
their  statutory  liability  for  the  corporate  debts,  they  are  estopped  from  deny- 
ing that  the  corporation  was  legally  organized:  Corwith  v.  Culver,  69  111.  502; 
Whtclock  V.  Rod,  11  Id.  296;  McCarthy  v.  Lavasche,  89  Id.  270;  31  Am  Rep. 
83;  Sha/er  v.  Moriarity,  46  Ind.  9;  Hager  v.  Cleveland,  36  Md.  476;  Hammond 
V.  Strau.'i,  53  Id.  1,  15;  Eaton  v.  Aspinwall,  19  N.  Y.  119;  Ahhott  v.  Aspinwall, 
26  Id.  202;  Aspinwall  v.  Sacchi,  57  Id.  331;  Perkins  v.  Hatch,  4  Hun,  137; 
McHose  V.  Wheeler,  45  Pa.  St.  32;  Slocum  v.  Providence  Steam  etc.  Co.,  10 
R.  I.  112;  Keyser  v.  Hitz,  2  Mackey,  473;  Casey  v.  Galli,  94  U.  S.  673;  and 
where  an  attempt  has  been  made  to  increase  the  capital  stock  of  a  corporation, 
stockholders  who  have  voted  for  the  increase,  accepted  their  share  of  the  ad- 
ditional stock,  and  received  dividends  thereon,  as  against  creditors  are  es- 
topped from  questioning  the  validity  of  the  increase  to  escape  their  individual 
liability:  Veeder  v.  Mudyett,  95  N.  Y.  295. 

Statute  of  Limitations  in  Actions  to  Enforce  Stockholder's  Stat- 
utory Liability.  —  Where  the  liability  of  a  stockholder  is  immediate  and 
primary,  and  not  contingent  upon  obtaining  a  judgment  against  the  corpora- 
tion, the  statute  of  limitations  plainly  begins  to  run  against  the  stockholder  at 
the  same  time  it  begins  to  run  against  the  corporation:  Cook  on  Stock  and 
Stockholders,  sec.  227;  Mitchell  v.  Bechnan,  64  Cal.  117;  Stillphenv.  Ware,  45 
Id.  116;  and  see  Conklin  v.  Furman,  57  Barb. 484;  8  Abb.  Pr.,  N.  S.,  161,  affirmed 
in  4S  N.  Y.  527;  but  where  a  creditor  is  firstobliged  to  obtain  a  judgment  on  his 
claim  against  the  corporation,  and  have  an  execution  issued  thereon  and  re- 
turned unsatisfied,  the  statute  does  not  begin  to  run  in  favor  of  a  stockholder  un- 
til the  return  of  the  execution:  Cook  on  Stock  and  Stockholders,  sec.  227;  Handy 
V.  Draper,  89  N.  Y.  334;  and  see  ShelUnyton  v.  Howland,  53  Id.  371.  Where 
the  individual  liability  of  stockholders  arose  under  the  charter,  "upon  failure 
of  the  bank,"  the  liability  gave  at  once  the  right  to  sue,  and  consequently 
the  statute  began  to  run  at  the  same  time:  Carrol  v.  Green,  92  U.  S.  509,  51 1; 
and  see  Godfrey  v.  Terry,  97  Id.  171;  Terry  v.  McLure,  103  Id._  442. 

The  liability  of  the  stockholder  has  been  held  to  be  a  liability  "created  by 
law,"  within  the  meaning  of  a  section  of  the  statute  of  limitations:  Green  v. 
Beckman,  59  Cal.  545;  Moore  v.  Boyd,  15  Pac.  Rep.  670  (Cal. );  Haivkins  v.  Fur- 
nace Co.,  40  Ohio  St.  507;  and  to  be  a  debt  grounded  upon  a  "  contract  without 
specialty  ":  Terry  v.  Calnan,  13  S.  C.  220;  Carrol  v.  Green,  92  U.  S.  509;  and 
a  debt  "founded  on  specialty  ":  Atwood  v.  Rhode  Island  Agricultural  Bank,  1 
R.  I.  376;  Bullard  v.  Bell,  1  Mason,  243;  but  not  a  liability  upon  a  "statute" 
for  a  "forfeiture":  Corning  v.  McCnllough,  1  N.  Y.  47;  49  Am.  Dec.  287; 
overruling  Freeland  v.  McCidlough,  1  Denio,  412;  43  Am.  Dec.  685;  and  hold- 
ing that  the  only  limitation  provided  for  a  suit  against  a  stockholder  was 
six  years,  within  which  actions  of  account,  assumpsit,  or  on  the  case  founded 
on  any  contract  or  liability,  express  or  implied,  are  to  be  commenced;  but  see 
Lawler  v.  Burt,  1  Ohio  St.  340;  and  compare  Gridley  v.  Barnes,  103  111.  211. 

Stockholder's  Discharge  in  Bankruptcy  as  Affecting  Statutory  Lia- 
bility FOR  Corporate  Debts.  — A  discharge  in  bankruptcy  releases  a  share- 
holder of  a  national  bank  from  his  statutory  liability  to  creditors  of  the  bank, 
where,  at  the  time  of  his  discharge,  the  claims  of  the  creditors  were  proT- 


July,  1885.]  State  v.  Nevin.  873 

able,  and  not  merely  contingent:  Irons  v.  Manufacturers'  Nat.  Bank,  27  Fed. 
Rep.  591;  17  Id.  308.  But  it  ia  otherwise  held,  the  liability  of  stockholders 
for  the  debts  of  the  corporation  is  not  a  "  debt "  which  can  be  proved  against 
their  estates  in  insolvency:  Kelton  v.  Phillips,  3  Met.  61;  Bangs  v.  Lincoln, 
10  Gray,  600. 


State  v.  Nevin. 

[19  Nevada,  162.] 

Public  Officers  Who  are  Intrusted  with  Public  Funds,  and  required 
to  give  bonds  for  the  faithful  discharge  of  their  official  duties,  are  not 
mere  bailees  of  the  money,  to  be  exonerated  by  the  exercise  of  ordinary 
care  and  diligence.  Their  liability  is  fixed  by  their  bonds;  and  the  fact 
that  money  is  stolen  from  them,  without  any  fault  or  negligence  upon 
their  part,  does  not  release  them  from  liability  thereon. 

Bond  Requiring  Faithful  Performance  of  Official  Duty  is  as  Bind- 
ing upon  the  principal  and  hia  sureties  as  if  all  the  statutory  duties  of 
the  officer  were  inserted  in  it. 

County  Treasurer  is  Required  to  Safely  Keep  Public  Money,  by  the 
Compiled  Laws  of  Nevada,  and  pay  it  out  only  as  provided  by  law. 

State  is  not  Compelled  to  Wait  until  Close  of  County  Treasurer's 
Term  of  Office  before  commencing  an  action  upon  his  bond,  where  he 
admits  the  defalcation,  and  claims  the  right  to  interpose  the  defense  of  a 
robbery  of  the  funds. 

Action  against  the  county  treasurer  and  his  sureties  upon 
his  oflQcial  bond.     The  facts  are  stated  in  the  opinion. 

W.  E.  F.  Deal  and  William  Woodburn,  for  the  appellants. 

W.  H.  Davenport,  attorney-general,  and  J.  A.  Stephens,  district 
attorney,  for  the  respondent. 

By  Court,  Hawley,  J.  This  action  was  brought  against  the 
county  treasurer  of  Storey  County,  and  the  sureties  upon  his 
official  bonds,  to  recover  an  amount  of  money  admitted  to  be 
deficient  in  the  accounts  of  the  county  treasurer.  The  answer 
alleges  that  the  money  was  forcibly  taken  by  robbers  from  the 
treasurer  and  carried  away  by  irresistible  force,  "  without  any 
fault  or  negligence  or  want  of  reasonable  care  or  diligence  in 
the  preservation  and  care  of  said  sum  of  money,  so  that  said 
sum  of  money  was  entirely  lost  to  the  treasury  of  said  county, 
and  no  part  thereof  has  ever  been  recovered."  The  district 
court  sustained  a  demurrer,  which  was  interposed  to  this  an- 
swer, upon  the  ground  that  the  facts  stated  did  not  constitute 
any  defense  to  the  cause  of  action. 

Was  this  ruling  of  the  court  correct  ?  The  conditions  named 
in  the  ofiicial  bonds  "  is  such  that  if  the  above-boundcn  Den- 


\  MERICAN  STATE  REPOH'l  S 

HUTZLER  -v.   PHILLIPS. 

[2H  South  Cakolina,    )W,\ 

Equitable  Mortgage. 


Feb.  1887.]      Hutzler  Brothers  v.  Phillips.  687 

We  take  occasion,  however,  to  add,  with  a  view  to  avoid 
prejudice,  that  our  decision  is  based  upon  the  case  as  now  pre- 
sented, and  upon  the  assumption  (in  the  absence  of  any  alle- 
gation to  the  contrary)  that  the  conveyance  to  Harriet  M. 
Ketchin  is  a  valid  conveyance.  Should  that  conveyance  be 
impeached  for  fraud  or  other  good  ground,  a  different  ques- 
tion, as  to  the  right  of  appellant  to  the  homestead,  would  arise, 
as  to  which  we  do  not  now  propose  to  indicate  any  opinion. 

The  judgment  of  this  court  is,  that  the  judgment  of  the  cir- 
cuit court  in  the  case  first  above  mentioned  be  reversed,  and 
that  the  case  be  remanded  to  that  court  for  such  further  pro- 
ceedings as  may  be  necessary  to  carry  out  the  views  herein 
announced.  And  the  judgment  of  this  court  is,  that  the 
judgment  of  the  circuit  court  in  the  second  case  above  stated 
be  affirmed. 


Judgment  Lien  does  not  Attach  to  Homestead  while  it  is  held  and 
occupied  as  Buch:  Bliss  v.  Clark,  89  Am.  Dec.  330;  McDonald  v.  Badijer,  83 
Id.  123,  note  129;  Cummimjs  v.  Loikj,  85  Id.  502,  and  note  504;  note  to  Blue 
V.  Blue,  87  Id.  278. 

Homestead  Right  is  not  Subject  to  Judgment  Liens,  and  it  may  be 
transferred  in  fee,  free  from  any  encumbrance  existing  at  the  date  of  convey- 
ance: McDonald  v.  Crandall,  92  Am.  Dec.  112,  note  116,  117;  Cummtnys  v. 
Lon'j,  85  Id.  502;  5/i.ss  v.  Clark,  89  Id.  330,  and  note  335;  Freeman  on  Exe- 
cutions, sec.  239. 

Homestead  is  not  Generally  Subject  to  Sale  under  Execution: 
See  note  to  Blue  v.  Blue,  87  Am.  Dec.  273,  collecting  numerous  cases;  Higgs 
V.  Sterling,  1  Am.  St.  Rep.  554;  McCracken  v.  Adler,  2  Id.  340,  note  342. 

Injunction  will  Issue  to  Prevent  Cloud  on  Title  at  execution  sale: 
Note  to  Carlin  v.  Hudson,  G2  Am.  Dec.  523  et  seq. ;  Freeman  on  Executions, 
sees.  438,  439;  or  equity  will  remove  a  cloud  so  created  on  a  homestead: 
Note  to  Blue  v.  Blue,  87  Am.  Dec.  273;  but  iu  Kentucky  the  granting  of  such 
an  injunction  is  confined  by  statute  to  the  court  which  rendered  the  judgment 
on  which  the  execution  issued:  C.  0.  d-  S.  E.  R.  Co.  v.  Reasor,  84  Ky.  369. 


Hutzler  Brothers  v.  Phillips. 

[2&  SouTU  Carolina,  136.] 

EviDENCB  NOT  OBJECTIONABLE  ON  Ground  OF  INTEREST.  —  Conversations 
of  a  creditor  with  a  debtor  since  deceased  are  admissible  in  an  action  by 
creditors  against  the  heirs  of  deceased,  the  witness,  and  other  creditors. 

KviDENOB  OF  Statements  Made  by  Partners,  that  certain  real  estate 
standing  in  the  name  of  their  copartner  was  partnership  property,  is  inad- 
missible as  against  an  individual  mortgage  creditor  of  such  copartner, 
when  such  statements  were  not  brought  home  to  the  mortgagee  at  tho 
time  of  the  execution  of  the  mortgage. 


688  HuTZLER  Brothers  v.  Phillips.     [S.  Carolina, 

EgurrABLB  Mortgage.  — Where  Title  Deeds  abb  Deposited  as  Present 
•Security,  and  with  intent  thereby  to  create  a  lien  upon  the  land  therein 
conveyed,  an  equitable  mortgage  is  created  notwithstanding  the  statute 
of  frauds. 

Equitable  Mortgage  is  not  Created  by  the  deposit  of  title  deeds  in 
pursuance  of  a  parol  agreement  to  make  a  mortgage. 

Equitable  Mortgage,  What  does  not  Create.  —  Where  title  deeds 
are  deposited  with  an  attorney  to  have  an  actual  mortgage  prepared  for 
execution  to  accomplish  a  loan  in  accordance  with  an  oral  agreement  to 
that  effect,  and  after  preparation  the  mortgage  is  not  executed  nor  deliv- 
ered on  account  of  the  death  of  the  debtor,  an  equitable  mortgage  is  not 
created,  though  the  debtor  has  received  the  money. 

Partnership  Creditors,  in  Absence  of  Lien  in  Favor  of  Individual 
Creditoks,  may  share  pro  rata  in  the  individual  property  of  the  part- 
ners after  exhausting  the  partnership  assets. 

C.  S.  Nettles  and  R.  W.  Boyd,  for  the  plaintiffs. 

/.  N.  Nathans,  for  Louis  Cohen  &  Co. 

Simpson,  C.  J.  C.  Phillips,  Leonard  Phillips,  and  Leopold 
Phillips,  father  and  sons,  were  copartners,  doing  business  as 
merchants  in  the  town  of  Florence,  in  this  state,  under  the 
name  of  C.  Phillips  and  Sons.  During  the  existencp  of  this 
partnership,  C.  Phillips,  the  father,  negotiated  a  loan  of  five 
thousand  dollars  from  the  defendants,  Louis  Cohen  &  Co.,  of 
Charleston,  with  the  understanding  and  agreement  that  said 
loan  was  to  be  secured  by  a  mortgage  of  certain  real  estate 
situated  in  Florence,  the  titles  to  which  were  in  the  name  of 
the  said  C.  Phillips,  except  one  portion,  to  which  he  had  a  bond 
for  titles  from  one  McRary,  under  a  contract  to  purchase, 
upon  which  a  part  of  the  purchase-money  had  been  paid.  In 
pursuance  of  this  agreement  the  title  deeds,  having  been 
placed  in  the  hands  of  the  said  Louis  Cohen  for  examination, 
were  turned  over  to  their  attorney,  J.  N.  Nathans,  Esq.,  who 
drew  a  bond  and  mortgage  as  agreed  upon.  These  papers 
were  at  once  forwarded  to  C.  Phillips  at  Florence  by  express, 
but  for  some  reason  the  package  remained  in  the  office  for 
some  days  uncalled  for.  In  the  mean  time,  however,  the  five 
thousand  dollars  had  been  advanced  by  Cohen  &  Co.  on  drafts 
of  C.  Phillips  and  Sons,  drawn  (as  stated)  at  the  request  of  the 
said  C.  Phillips.  When  the  package  containing  the  bond  and 
mortgage  aforesaid  was  at  length  received,  C.  Phillips  was 
quite  ill,  and  he  died  within  a  few  days,  leaving  the  bond  and 
mortgage  unexecuted.  Leonard  Phillips  also  died  within  two 
or  three  months  after  the  death  of  his  father,  leaving  the  de- 
fendant Leopold  sole  survivor  of  the  firm.     Shortly  after  the 


Feb.  1887.]      Hutzler  Brothers  v.  Phillips.  689 

death  of  the  said  C.  Phillips  and  Leonard  Phillips,  to  wit, 
on  the  6th  of  March,  1884  (the  said  C.  Phillips  having  died 
in  October  previous,  and  Leonard  Phillips  in  January,  1884), 
their  heirs  and  distributees,  in  order  to  secure  the  payment  of 
the  said  five  thousand  dollars  to  Cohen  &  Co.,  united  in  a 
mortgage  of  the  real  estate  herein  mentioned  to  the  said 
Cohen  &  Co.,  which,  on  the  8th  of  March,  was  placed  on 
record  in  the  clerk's  office  for  Darlington  County. 

After  the  death  of  his  copartners,  Leopold  was  left  in  charge 
as  survivor,  and  the  plaintiffs,  not  being  satisfied  with  his 
management,  instituted  the  action  below,  in  which  they 
prayed,  in  their  own  behalf  and  in  behalf  of  the  other  creditors 
of  C.  Phillips  and  Sons,  an  injunction,  the  appointment  of  a  re- 
ceiver, an  accounting  from  Leopold,  and  especially  that  the 
real  estate  described  in  the  complaint  (to  wit,  the  real  estate 
embraced  in  the  mortgage  hereinabove  mentioned)  be  ad- 
judged to  belong  to  the  firm  of  C.  Phillips  and  Sons,  and  there- 
fore assets  for  the  payment  of  their  debts,  and  that  the  same 
be  sold  to  that  end;  and  also  that  McRary  be  required,  upon 
payment  made  to  him  of  the  balance  of  the  purchase-money 
of  the  land  under  contract  of  sale  to  C.  Phillips,  to  convey  the 
same  to  the  receiver  as  assets  also  of  the  said  firm.  The  de- 
fendants denied  that  the  real  estate  mentioned  was  the  prop- 
erty of  the  firm,  and  claimed  that  it  belonged  entirely  to  C. 
Phillips,  their  father.  They  denied,  also,  the  allegation  of 
fraud  in  connection  with  the  loan  of  five  thousand  dollars 
by  Cohen  &  Co.,  and  the  execution  of  the  papers  intended  to 
secure  the  same;  and  Cohen  &  Co.  claimed  the  benefit  of  an 
equitable  mortgage  growing  out  of  the  deposit  of  titles,  under 
the  facts  as  stated  above. 

The  circuit  judge,  his  honor  T.  B.  Fraser,  found  as  matters 
of  fact,  that  the  real  estate  mentioned  belonged  to  C.  Phillips 
individually,  and  was  not  partnership  property,  and  that 
there  was  no  fraud  in  the  transaction  with  Cohen  &  Co.  He 
also  adjudged,  as  matter  of  law,  that  an  equitable  mortgage 
had  arisen  in  favor  of  Cohen  &  Co.,  to  the  benefit  of  which 
they  were  entitled,  in  preference  to  plaintiffs  and  other  cred- 
itors. He  further  adjudged,  that  if  there  had  been  no  trans- 
action between  C.  Phillips  and  Cohen  &  Co.,  creating  a  lien 
on  the  real  estate,  then  Cohen  &  Co.  would  stand  as  an  indi- 
vidual creditor  of  C.  Phillips,  and  in  that  event  he  would  hold 
that  while  the  creditors  of  the  firm  were  bound  to  exhaust  the 
partnership  assets,  they  would  then  have  the  right  to  share 

Am.  St.  Kep.,  Vol.  IV.  — 44 


690  HuTZLER  Brothers  r.  Phillips.     [S.  Carolina, 

pro  rata  with  the  individual  creditors  the  individual  estate  of 
the  deceased  partners. 

The  plaintiffs'  appeal  questions  the  rulings  of  his  honor  as 
to  the  competency  of  certain  testimony,  which  will  be  noticed 
below.  Also  the  findings  of  fact  of  his  honor  as  to  the  alleged 
fraud,  as  to  the  real  estate  not  being  partnership  property,  and 
as  to  the  knowledge  of  Cohen  &  Co.  that  said  real  estate  had 
been  represented  to  the  plaintiffs  as  partnership  property,  and 
also  his  holding  in  reference  to  the  equitable  mortgage  by  the 
deposit  of  the  title  deeds  and  its  application  to  this  case.  The 
defendants  Cohen  &  Co.  excepted,  on  the  ground  that  his 
honor  "  seemed  to  hold  that  the  real  estate  of  C.  Phillips, 
though  individual  property,  is  not  first  applicable  to  the  pay- 
ment of  the  said  Cohen  &  Co.,  as  individual  creditor,  in  priority 
to  partnership  creditors  of  C.  Phillips  and  Sons." 

We  do  not  feel  authorized  to  disturb  the  findings  of  fact  by 
his  honor.  There  is  no  patent  error  in  these  findings,  nor  is 
the  weight  of  the  testimony  against  them.  As  to  the  real  es- 
tate being  partnership  property,  the  evidence  is,  that  the  titles 
were  certainly  in  C.  Phillips  when  the  copartnership  was 
formed,  and  there  was  no  express  change  subsequent  thereto. 
No  do  we  find  any  testimony  that  it  was  the  intention  of  the 
parties  to  embrace  the  real  estate  as  a  portion  of  the  partner- 
ship property.  The  firm  seems  to  have  been  an  ordinary  mer- 
cantile firm,  having  no  connection  with  the  purchase  and  sale 
of  real  estate.  As  to  the  alleged  conspiracy  and  fraud  between 
Cohen  &  Co.  and  C.  Phillips  and  Sons,  seeking  to  put  the  said 
real  estate  beyond  the  reach  of  the  creditors  of  the  firm,  we 
see  nothing  to  overthrow  the  findings  of  his  honor  thereon. 
Nor  does  it  appear  that  Cohen  &  Co.  had  any  information  that 
the  plaintifis  had  been  informed  that  said  real  estate  belonged 
to  the  firm. 

Nor  was  there  error  in  the  rulings  of  his  honor  upon  the 
competency  of  certain  testimony  offered.  The  testimony  of 
Louis  Cohen  relating  to  conversations  and  transactions  be- 
tween himself  and  C.  Phillips  was  objected  to  as  obnoxious  to 
section  400  of  the  code.  This  testimony  not  being  against  any 
one  belonging  to  the  classes  mentioned  by  this  section ,  there 
was  no  error  in  admitting  it:   Cantey  v.  Whitaker,  17  S.  C.  530. 

Certain  testimony  as  to  statements  made  by  the  sons,  copart- 
ners, that  the  real  estate  in  question  was  partnership  property, 
was  excluded  as  to  Cohen  &  Co.,  on  the  ground  that  said  state- 
ments had  not  been  brought  home  to  them  before  their  claim 


Feb.  18S7.]      HuTZLER  Brothers  v.  Phillips  691 

originated,  the  court  holding  that  they,  Cohen  &  Co.,  had  the 
right  to  deal  with  C.  Phillips  in  reference  to  property  standing 
in  his  name  as  his  own,  the  record  showing  that  this  real 
estate  belonged  to  C.  Phillips,  and  there  being  no  record  of  a 
transfer  to  the  copartnership.  The  reasons  given  by  his  honor 
eeem  to  be  sufficient. 

The  main  question  in  the  case  is  the  one  in  reference  to  the 
equitable  mortgage.  And  this  involves  the  consideration  of 
the  three  following  points:  1.  What  is  this  doctrine  of  equi- 
table mortgages,  created  by  the  deposit  of  title  deeds?  2.  Does 
it  exist  in  this  state?  and  3.  If  so,  do  the  facts  of  this  case 
entitle  Cohen  &  Co.  to  its  benefit? 

The  leading  case  upon  this  doctrine  in  England  is  the  case 
of  Russel  V.  Eussel,  1  Bro,  C.  C.  229.  In  fact,  it  is  from  this 
case  we  first  hear  of  it.  It  was  followed  by  Birch  v.  Ellames, 
2  Anstr.  429,  and  although  it  has  been  violently  attacked  and 
denounced  as  pernicious  by  eminent  English  judges,  and  espe- 
cially by  Lord  Eldon  and  Sir  William  Grant,  yet  it  now  seems 
to  be  well  settled  and  firmly  established  in  the  English  law, 
and  in  many  of  the  American  states,  to  a  certain  extent,  to 
wit,  where  the  title  deeds  are  deposited  as  a  present  security, 
and  with  the  intent  thereby  to  give  a  lien  upon  the  land,  such 
deposit  shall  operate  as  an  equitable  mortgage,  notwithstand- 
ing the  statute  of  frauds.  The  English  courts,  however,  have 
manifested  a  determined  disposition  to  keep  within  the  letter  of 
the  precedents,  and  not  to  give  the  doctrine  further  extension. 
And  accordingly  they  have  held  that  a  mere  parol  agreement 
to  make  a  mortgage,  or  to  deposit  a  deed  for  that  purpose,  will 
not  give  any  title  in  equity.  There  must  be  an  actual  and 
bona  fide  deposit  of  the  title  deeds  with  the  mortgagee  himself 
in  order  to  create  the  lien.  These  positions  will  be  found  sus- 
tained, we  think,  in  the  following  English  cases:  Ex  parte 
Whithread,  19  Ves.  209;  Ex  parte  Langston,  17  Id.  230;  Lord 
Ellenborough  in  Doe  v.  HanJce,  2  East,  481;  Ex  parte  Kensing- 
ton., 2  Vcs.  &  B.  79;  Ex  parte  Coomhe,  4  Madd.  249;  Lucas  v. 
Dorrien,  7  Taunt.  279;  Ex  parte  Cor.iing,  9  Ves.  117.  Also  in 
4  Kent's  Com.  151,  and  Washburn  on  Real  Property. 

It  appears  from  these  authorities  that  in  England,  and  also 
in  several  of  the  states,  that  where  the  title  deeds  are  actually 
deposited  by  the  debtor  with  his  creditor  upon  an  advance  of 
money,  and  perhaps  even  for  an  antecedent  debt,  as  a  security, 
that  the  equitable  mortgage  will  arise  without  more;  the  de- 
posit standing  in  the  place  of  an  actual  mortgage,  and  dis- 


692  HuTZLEii  Brothers  v.  Phillips.     [S.  Carolina, 

pen  sing  with  the  necessity  of  the  execution  of  such  mortgage. 
But  will  the  deposit  of  title  deeds  for  the  purpose  of  having  an 
actual  mortgage  prepared  for  execution  in  accordance  with  an 
agreement  to  that  effect  raise  the  equitable  mortgage?  In 
other  words,  where  money  is  proposed  to  be  lent  upon  the 
security  of  a  mortgage  to  be  actually  executed  and  delivered, 
and  the  titles  are  placed  in  the  hands  of  an  attorney  to  pre- 
pare the  mortgage  so  as  to  accomplish  the  loan,  which,  al- 
though prepared,  yet  the  debtor,  from  accident  or  some  other 
cause,  fails  to  execute  and  deliver,  although  he  has  received 
the  money,  —  will  these  facts  create  the  mortgage? 

Mr.  Washburn  says:  "  To  give  the  effect  of  a  lien  to  the  pos- 
session of  title  deeds,  it  must  be  shown  afSrmatively  that  they 
were  deposited  as  a  bona  fide,  present,  immediate  security.  If 
left,  for  instance,  with  the  attorney  for  the  purpose  of  his  draw- 
ing a  mortgage  which  had  been  agreed  upon  by  the  parties,  it 
will  not  be  sufficient.  Mere  possession,  even  by  a  creditor,  is 
not  enough":  2  Washburn  on  Real  Property,  89.  See  cases 
referred  to  in  note  by  Mr.  Washburn.  And  in  Ex  parte  Bol- 
ton, 2  Cox,  243,  it  was  held  "  that  the  delivery  of  title  deeds  to 
an  attorney  to  prepare  a  mortgage  deed  does  not  amount  to 
an  equitable  mortgage;  otherwise,  if  deposited  expressly  as  a 
security  for  a  debt."  We  think  the  weight  of  authority  is 
against  this  doctrine  being  applied  to  cases  with  facts  like 
those  suggested,  and  that  an  equitable  mortgage  resulting 
from  a  deposit  of  title  deeds  can  exist  only  where  such  deposit 
is  the  matter  relied  upon  without  anything  further  being  done. 

Does  this  doctrine  exist  in  South  Carolina?  We  have  been 
referred  to  no  case  where  the  question  has  been  squarely  made, 
but  it  seems  that  the  possibility  of  such  mortgages  has  been 
recognized  in  three  of  our  cases,  to  wit:  Welsh  v.  Usher,  2  Hill 
Ch.  170;  Harper  v.  Barsh,  10  Rich.  Eq.  154;  Boyce  v.  Shiver, 
3  S.  C.  528.  And  although,  perhaps,  the  question  was  not 
absolutely  necessary  to  the  decision  of  the  points  actually  in- 
volved in  these  cases,  yet  we  are  disposed  to  regard  the  recog- 
nition made  as  sufficient  to  the  extent  as  above. 

Do  the  facts  of  the  case  bring  it  under  the  doctrine  as  above? 
Clearly  not.  The  title  deeds  were  not  deposited  as  an  imme- 
diate security,  nor  did  Cohen  &  Co.  rely  upon  them  in  the 
least  as  giving  in  themselves  the  lien  which  he  wanted,  and 
for  which  he  contracted.  They  were  placed  in  his  hands  as 
affording  the  information  upon  which  a  bond  and  mortgage 
were  to  be  drawn.     These  papers  were  actually  drawn  and 


i 


Feb.  1887.]     Hutzler  Brothers  v.  Phillips.  693 

sent,  doubtless  witb  the  titles,  to  C.  Phillips  for  formal  execu- 
tion, but  which  his  sickness  and  death  prevented.  With  these 
facts,  we  do  not  see  how  it  can  be  said  that  the  title  deeds  had 
been  deposited  in  order  to  raise  by  the  deposit  an  equitable 
mortgage. 

We  concur  with  the  circuit  judge,  that  in  the  absence  of  a 
lien  in  favor  of  an  individual  creditor,  partnership  creditors, 
after  exhausting  partnership  assets,  may  share  pro  rata  in  the 
individual  property  of  the  partners.  The  English  rule  upon 
this  subject  is  to  apply  the  joint  estate  to  the  joint  debts,  and 
the  separate  estate  to  the  separate  debts,  though  this  rule  has 
not  met  the  uniform  approval  of  all  the  English  judges.  Lord 
Thurlow  disregarded  it  in  the  case  of  Ex  parte  Hodgson,  2  Bro. 
C.  C.  5,  and  Lord  Eldon  failed  to  give  it  his  cordial  approval. 
It  may,  however,  be  regarded  as  the  established  rule  in  the 
English  law.  In  this  state,  from  1804  to  1827,  the  English 
rule  as  above  seems  to  have  been  followed.  During  this  period 
there  are  three  cases  sustaining  this  view:  Tunno  v.  Trezevant, 
2  Desaus.  Eq.  264,  decided  in  1808;  Woddrop  v.  Price,  3  Id. 
207,  decided  in  1811,  and  the  case  of  Sniffer  and  Paxton  v, 
Sass,  decided  in  1827,  found  in  a  note  to  Kuhne  v.  Law,  14 
Rich.  20. 

But  afterwards,  from  3827  to  1866,  our  courts  held,  in  sub- 
stance, that  while  private  creditors  had  the  right  generally  to 
throw  the  copartnership  creditors  upon  copartnership  assets  in 
the  first  instance  on  the  two-fund  doctrine,  yet  that  copartner- 
ship creditors,  after  exhausting  copartnership  assets,  had  the 
right  to  share  the  individual  assets  pro  rata  with  the  individ- 
ual creditors.  During  this  period,  the  leading  cases  on  this 
subject  were:  Wardlaw  v.  Gray,  Dud.  Eq.  112,  decided  in 
1837;  Gowan  v.  Tunno,  Rich.  Eq.  Cas.  369,  in  1832;  Fleming 
V.  Billings  and  BelJc,  9  Rich.  Eq.  149;  Gadsden  v.  Carson,  9 
Id.  252;  70  Am.  Dec.  207;  and  Wilson  v.  McConnell,  9  Id.  500, 
in  1856  and  1857, — in  all  of  which  the  rule  as  above  stated 
was  recognized  as  the  settled  law  of  the  state. 

Roberts  v.  Roberts,  8  Rich.  15,  in  1854,  held  that  of  two  exe- 
cutions of  same  date,  one  in  favor  of  partnership  creditors 
and  the  other  in  favor  of  separate  creditors,  and  both  levied 
on  separate  property,  the  execution  of  the  separate  creditors 
should  prevail;  but  in  1866  this  was  overruled  by  the  court  of 
errors,  and  in  Kuhne  v.  Law,  14  Rich.  28,  1866,  which  was  a 
contest  between  a  senior  copartnership  judgment  creditor  and 
a  junior  separate  judgment  creditor,  over  the  proceeds  of  the 


694  HuTZLEii  Brothers  v.  Piiilltps.     [S.  Carolina, 

separate  property  of  the  debtor  by  rule  against  the  sheriff  in 
behalf  of  the  separate  creditor  to  have  said  proceeds  applied 
to  his  judgment,  the  court  held,  Roberts  v.  Roberts,  supra,  hav- 
ing been  in  substance  overruled,  that  a  separate  creditor 
could  not  set  up  any  equity,  even  if  he  had  any,  in  a  law 
court;  that  in  such  courts  the  liens  could  only  be  looked  at, 
and  that  they  should  be  satisfied  according  to  their  priority, 
and  the  rule  was  dismissed.  In  that  casp  it  was  stated  by 
Judge  Wardlaw,  in  delivering  the  opinion,  that  the  court  of  er- 
rors, when  Roberts  v.  Roberts,  supra,  was  considered,  attained  no 
satisfactory  conclusion  respecting  the  rule  which  should  pre- 
vail in  equity  in  the  distribution  of  separate  effects  between 
separate  and  partnership  creditors.  But  the  judges,  he  said, 
were  nearly,  if  not  entirely,  uaanimous  in  the  opinion  that  at 
law  the  supposed  preference  given  to  a  separate  creditor  should 
not  be  allowed  to  prevail  against  a  prior  lien  acquired  by  a  part- 
nership creditor.  In  Adickes  v.  Lowry,  15  S.  C.  136,  the  pres- 
ent court,  Mr.  Justice  Mclver  delivering  the  opinion,  said: 
"This  question  seems  yet  open  in  this  state." 

The  above  is  the  state  of  the  authorities  upon  this  subject. 
Under  the  circumstances,  we  think  the  weight  of  authority  is 
in  favor  of  the  rule  as  decided  below  by  the  circuit  judge. 
Certainly  from  1832  to  1866,  from  Gowan  v.  Tunno  to  Kuhne 
V.  Law,  supra,  in  the  courts  then  under  the  direction  of  the 
most  eminent  jurists  that  have  ever  adorned  the  bench  in  this 
state,  such  was  regarded  to  be  the  rule.  It  was  so  announced 
in  all  of  these  cases  without  hesitation  or  qualification,  and  it 
seems  to  us  that  the  case  of  Kuhne  v.  Law,  supra  (from  which 
it  seems  that  a  doubt  first  came),  upon  a  careful  considera- 
tion of  the  principle  decided  there,  instead  of  raising  a  doubt, 
should  have  affirmed  the  rule.  It  was  there  held,  as  we  have 
stated,  that  a  senior  copartnership  judgment  creditor  had  pri- 
ority to  a  junior  separate  judgment  creditor  upon  separate 
property.  Now,  unless  each  of  these  creditors  had  an  equal 
claim  upon  the  separate  property  before  judgment,  or  in  other 
words,  an  equal  right  to  seek  payment  out  of  the  separate 
property,  it  is  not  clear  how  either  could  get  priority  by  ob- 
taining judgment  in  advance  of  the  other. 

If  separate  creditors  have  a  right  as  a  principle  of  equity 
or  law  to  postpone  copartnership  creditors  as  to  separate  as- 
sets, a  judgment  obtained,  as  it  seems  to  us,  by  the  copartner- 
ship creditor  would  be  subject  to  that  right,  and  could  not 
have  a  lien  prior  thereto.     We  think  the  true  doctrine  is  as 


Feb.  1887.]      Hutzler  Brothers  v.  Phillips.  695 

stated  by  the  circuit  judge,  with  the  right  of  the  separate 
creditor,  if  any  equity  exists  in  his  behalf,  such  as  two  funds, 
to  throw  the  copartnership  creditor  on  the  partnership  assets 
in  the  first  instance;  but  after  the  partnership  assets  have 
been  fully  and  fairly  exhausted,  to  come  in  pro  rata  with  the 
separate  creditor.  This  seems  to  be  the  weight  of  authority 
with  us. 

Besides,  a  debt  contracted  by  a  copartnership  is  not  only  a 
debt  of  the  firm,  but  a  debt  in  substance  of  each  individual 
member  of  the  firm,  and  the  property  of  the  firm,  and  of 
each  member,  is  liable  for  it;  but  the  property  of  the  firm  is 
not  liable  for  the  separate  debt  of  a  member, — only  the  inter- 
est of  the  member  is  liable,  which  is  nothing  until  the  firm 
debts  are  paid.  So  that,  because  a  copartnership  creditor  haa 
an  exclusive  claim  upon  the  firm  property,  it  does  not  follow 
that  a  separate  creditor  should  have  an  exclusive  claim  upon 
the  separate  property.  In  the  first  case,  the  effect  of  the  con- 
tract is  to  pledge,  as  a  basis  of  credit,  both  partnership  and 
private  property;  in  the  second  case,  the  separate  property 
alone  gives  the  credit.  And  as  to  partnership  property,  there 
is  no  separate  property  until  the  debts  are  paid,  which  is  liable 
to  both  partnership  and  separate  debts  by  contract:  Kuhne  v. 
Law,  supra. 

While,  as  we  have  said,  we  do  not  think  that  an  equitable 
mortgage  was  created  in  this  case  under  the  facts  in  favor  of 
Cohen  &  Co.,  yet  there  was  a  state  of  facts  which  presents  a 
very  strong  case  for  specific  performance;  or  at  least,  had  C. 
Phillips  lived,  and  after  receiving  the  five  thousand  dollars 
from  Cohen  &  Co.  he  had  refused  to  execute  the  mortgage 
prepared  and  agreed  upon,  Cohen  &  Co.,  as  against  him,  would 
have  had  a  strong  equitable  claim  for  specific  performance; 
or  if  the  transaction,  instead  of  being  a  loan  to  be  secured  by 
mortgage,  had  been  a  contract  of  purchase  by  Cohen  &  Co., 
witli  the  purchase-money  paid  down  in  full,  and  Phillips  had 
died  before  the  execution  of  the  conveyance  promised,  could 
not  the  titles  have  been  demanded  successfully  from  the  heirs? 
Or  at  least,  if  the  heirs  afterwards  had  voluntarily  executed  such 
conveyance,  could  it  be  assailed  except  by  subsequent  creditors 
without  notice  or  for  fraud?  How  far  this  principle  might 
operate  in  a  mortgage  transaction  like  that  before  the  court, 
where  the  heirs  have  voluntarily  come  forward  and  have  at- 
tempted to  carry  out  the  contract  of  their  ancestor  (see  Tibbetts 
V.  Lancjlcy  Mjg.  Co.,  12  S.  C.  468),  we  are  not  now  at  liberty 


696  HuTZLER  Brothers  v.  Phillips.     [S.  Carolina, 

to  consider,  as  this  question  was  not  passed  upon  or  consid- 
ered by  the  circuit  judge.  We  think,  however,  without  ex- 
pressing any  opinion  in  reference  to  it,  that  it  is  one  which 
Cohen  &  Co.  should  have  the  opportunity  of  making  before 
the  circuit  judge,  and  to  this  end  the  case  should  be  remanded. 
It  is  the  judgment  of  this  court  that  the  judgment  below 
be  reversed,  on  the  ground  of  error  in  the  ruling  of  the  circuit 
judge  as  to  the  equitable  mortgage  claimed  by  Cohen  &  Co-^ 
and  while  affirming  the  rulings  of  his  honor  in  other  respects, 
that  the  judgment  below  be  vacated,  and  the  case  be  remanded 
for  further  hearing,  in  accordance  with  the  principles  herein 
above. 


Me.  Justice  McIver  dissented,  upon  the  ground  that,  in  his  judgment, 
an  equitable  mortgage  cannot  be  created  by  the  deposit  of  title  deeds  in 
South  Carolina. 

Partnership  Creditor  has  Equal  Right  with  individual  creditor  to 
share  equally  with  him  in  individual  partnership  property  after  exhausting 
the  partnership  property:  Gadsden  v.  Carson,  70  Am.  Dec.  207,  and  note  210. 

Equitable  Mortgage  is  Created  by  an  agreement  to  give  a  mortgage, 
or  by  a  mortgage  defectively  executed,  or  by  an  imperfect  attempt  to  exe- 
cute a  mortgage:  Love  v.  Water  &  M.  Co.,  91  Am.  Dec.  602;  Martin  v.  Nixon, 
92  Mo.  26. 

Equitable  Mortgage,  What  Constitutes.  —  There  are  many  methods 
of  creating  equitable  mortgages,  almost  as  many  as  there  are  different  ways 
in  which  contracts  securing  or  pledging  some  interest  in  lands  may  be  made; 
and  it  does  not  seem  even  necessary  that  such  contract  should  in  its  express 
terms  create  a  security,  for  equity  will  very  often  imply  this  from  the  nature 
of  the  dealings  between  the  contracting  parties.  Therefore,  any  deed  or  writ- 
ten contract  used  by  the  parties  for  the  purpose  of  pledging  real  estate,  or 
some  interest  therein,  as  security  for  a  debt  or  obligation,  which,  though  in- 
formal and  insufficient  as  a  common-law  mortgage,  by  its  terms  shows  that 
the  parties  intended  that  it  should  operate  as  a  lien  or  charge  upon  specific 
real  property,  will  constitute  an  equitable  mortgage,  and  may  be  enforced  as 
such  in  a  court  of  equity.  In  other  words,  the  attempt  to  create  a  security  in 
legal  form  upon  such  property  having  failed,  effect  is  given  to  the  intention 
of  the  parties  in  interest,  and  the  lien  which  they  designed  to  call  into  being 
is  enforced  as  an  equitable  mortgage.  Any  agreement  between  such  parties, 
showing  an  intention  to  create  a  lien,  may  in  equity  be  a  mortgage:  Hopt  v. 
Carwithen,  21  W.  Va.  516-521;  Moore  v.  Lackey,  53  Miss.  85;  Richardson  v. 
Barrick,  16  Iowa,  407;  Robinson  v.  Farrelly,  16  Ala.  472;  Dunman  v.  Coleman, 
59  Tex.  199;  Flagij  v.  Mann,  2  Sum.  486-533;  Fisk  v.  Sleicart,  24  Minn.  97; 
Newlin  v.  McAfee,  64  Ala.  357.  Whenever  the  real  nature  of  the  transac- 
tion between  the  parties  is  confessedly  that  of  a  loan  of  money  advanced 
upon  the  security  of  real  estate,  whatever  the  form  of  the  instrumeut  taken 
as  security",  it  is  treated  as  a  mortgage  in  equity,  and  no  terms  or  words  used 
therein  will  be  allowed  to  change  its  character  or  to  cut  off  the  right  of  re- 
demption: Robinson  v.  Farrelly,  16  Ala.  472;  Flarj(j  v.  Mann,  2  Sum.  533; 
Dunman  v.  Coleman,  59  Tex.  199;  Fisk  v.  Stewart,  24  Minn.  97;  Anthony  v. 


Feb.  1887. J      HuTZLEK  Brothers  v.  Phillips.  697 

Anthony,  23  Ark.  479;  Moore  v.  Lackey,  53  Miss.  91.  An  equitable  mortgage 
may  arise  from  a  deposit  of  title  deeds,  from  the  non-payment  of  purchase- 
money,  from  an  imperfectly  executed  mortgage  deed:  Oak  v.  Morris,  29 
N.  J.  Eq.  222;  or  an  agreement  in  writing  to  give  a  mortgage,  a  mortgage 
defectively  executed,  an  imperfect  attempt  to  appropriate  specific  property 
to  the  discharge  of  a  particular  debt,  and  in  other  ways  which  will  be  treated 
hereafter:  See  Daggett  v.  Rankin,  31  Cal.  322. 

Deposit  cf  Title  Deeds.  —  An  equitable  mortgage  may  be  created  by  the  de- 
posit of  the  title  deeds  to  a  legal  or  an  equitable  estate  as  a  present  security 
for  the  payment  of  money;  and  it  is  now  settled  in  England,  beyond  ques- 
tion, that  if  the  debtor  deposits  his  title  deeds  to  an  estate  with  his  creditor 
as  security  for  an  antecedent  debt,  or  when  a  loan  of  money  is  made,  it  will 
constitute  a  valid  agreement  for  a  mortgage  in  equity  as  between  the  parties, 
and  is  not  within  the  operation  of  the  statute  of  frauds:  Eussel  v.  Russel, 
1  Bro.  Ch.  269;  Birch  v.  Ellames,  2  Anstr.  427;  Ex  parte  Coming,  9  Ves. 
117;  Whitebread  v.  Jordan,  1  Younge  &  C.  303;  Hales  v.  Berchem,  2  Vern. 
618;  Ex  parte  Mountford,  14  Ves.  606;  Ex  parte  Langston,  17  Id.  228;  Pavn 
V.  Smith,  2  Mylne  &  K.  417;  Keys  v.  Williams,  3  Younge  &  C.  55;  Loi> 
don  Banking  Co.  v.  RatcUffe,  6  App.  Cas.  722;  National  Bank  v.  Cherry, 
L.  R.  3  P.  C.  C.  299;  Ex  parte  Ilolthausen,  L.  R.  9  Ch.  App.  728;  Mande- 
ville  V.  Welch,  5  "Unieat.  277;  Ex  parte  Whitehread,  19  Ves.  209;  Ex  parte 
Coombe,  4  Madd.  249;  Baynard  v.  WooUey,  20  Beav.  586;  Ex  parte  Hooper,  1 
Mer.  7;  Ex  parte  Kensington,  2  Ves.  &  B.  83.  By  making  such  deposit,  the 
mortgagor  agrees  that  whatever  interest  he  holds  in  the  land  shall  be  liable 
for  the  debt;  and  that  he  will  make  a  conveyance  sufficient  to  vest  siTch  in- 
terest in  the  mortgagee,  and  bind  what  interest  he  has  in  the  property  de- 
scribed in  the  title  deeds:  Pryce  v.  Bury,  2  Drew.  41.  But  he  does  not 
thereby  agree  to  make  perfect  title,  but  merely  to  give  effect  to  the  interest 
held  at  the  time,  or  acquired  afterwards  during  the  deposit,  by  removal  of 
an  encumbrance  or  otherwise:  Ex  pai-te  Bisdee,  1  Mont.  D.  &  D.  333.  It 
does  not  seem  necessary  that  all  the  deeds  of  the  title  be  deposited;  but  the 
deeds  deposited  must  be  material  to  the  title,  and  the  deposit  must  be  made 
to  create  a  mortgage:  Lacon  v.  Allen,  3  Drew.  582.  However,  if  the  deposit 
is  accompanied  by  any  written  instrument,  the  terms  of  the  latter  must  l)e 
referred  to  to  ascertain  the  exact  nature  of  the  deposit:  Shaio  v.  Foster, 
L.  R.  5  H.  L.  Cas.  321.  It  is  not  necessary  that  the  deed  deposited  show  title 
in  the  depositor  by  including  the  deed  by  which  he  acquired  title:  Roberts  v. 
Croft,  24  Beav.  223;  2  De  (lex  &  J.  1.  The  deposit  of  title  deeds  for  the 
purpose  of  having  a  mortgage  jjrepared  will  create  an  equitable  mortgage: 
Ex  parte  Hooper,.  1  Mer.  7;  19  Ves.  477;  Hockley  v.  Bantock,  1  Russ.  141. 
Where,  in  such  case,  nothing  in  writing  accompanies  the  deposit,  a  mortgage 
will  l)e  presumed  as  the  intention  of  the  parties;  but  this  may  be  rebutted 
by  parol  evidence:  Ex  parte  Langston,  17  Ves.  227.  The  rule  is  otherwise 
when  a  writing  is  lodged  with  the  deposit:  Ex  parte  Coombe,  17  Ves.  369; 
Baynard  v.  Woolley,  20  Beav.  583. 

Where  a  citizen  of  a  foreign  country  makes  a  deposit  of  his  title  deeds  in 
England  as  security  for  money  advanced,  his  contract  is  controlled  by  the 
law  of  the  latter  place,  though  the  law  of  his  domicile  would  not  create  a 
mortgage  by  such  deposit:  Ex  parte  HoUhausen,  L.  R.  9  Ch.  App.  722. 
While  the  above  authorities  hoKl  that  an  equitable  mortgage  results  from  a 
deposit  of  title  deeds  when  such  deposit  is  relied  upon  without  anytliing 
further  being  done,  still  parol  agreements  to  make  a  mortgage,  or  to  make 
deposit  of  title  deed  for  that  purpose,  will  not  ordinarily  be  enforced;  but  to 


698  HuTZLEB  Brothers  v.  Phillips.     [S.  Carolina,- 

be  valid,  the  deposit  must  be  bonajide  as  a  present  security,  and  made  with 
intent  to  create  a  lien  upon  the  land:  See  Norris  v.  Wilkinson,  12  Ves.  197. 
And  though  thia  doctrine  is  firmly  established,  the  courts  have  gone  no  fur* 
ther,  and  they  now  recognize  the  rule  with  hesitation  and  disapprobation, 
and  evince  a  strong  desire  to  lessen  rather  than  to  enlarge  its  operation. 
This  method  of  creating  a  lien  on  land  is  peculiarly  adapted  to  England, 
where,  in  the  absence  of  laws  requiring  the  registration  of  instruments  of  con- 
veyance, the  possession  of  title  deeds  is  the  only  evidence  of  the  ownership  of 
land,  and  there  no  conveyance  of  the  estate  can  be  made  without  such  deeds. 
No  one  is  presumed  to  have  the  right  to  their  possession  unless  he  also  has 
an  equitable  or  legal  title  to  the  land  described  therein,  and  their  exhibition 
when  a  conveyance  is  executed  is  the  only  safeguard  in  the  hands  of  the  ven- 
dee that  the  valid  title  is  in  the  vendor.  No  necessity  for  this  rule  exists  in 
the  United  States.  Here  the  system  of  registry  laws  dispenses  with  the 
necessity  of  any  exhibition  of  title  deeds,  and  supplies  all  evidence  necessary 
to  protect  the  parties  to  the  conveyance.  Here  the  public  records  furnish  at 
once  a  full  and  true  statement  of  the  present  condition  of  the  title  and  all 
legal  rights  to  land;  and  if  the  original  conveyance  is  ever  lost  or  destroyed,  a 
copy  from  the  records  takes  its  place  for  all  intents  and  purposes:  Prohascov. 
Johnson,  2  Disn.  98.  Therefore  no  equitable  mortgage  is  created  in  Ohio  by 
the  deposit  of  the  title  deeds,  even  if  accompanied  by  a  parol  agreement  that 
such  was  the  purpose  of  the  deposit:  Probasco  v.  Johnson,  supra.  The  Eng- 
lish doctrine  is  generally  repudiated  in  the  United  States,  espt^cially  when  it 
is  sought  to  sustain  as  a  mortgage  a  parol  agreement  or  implied  promise  in 
connection  with  the  deposit  of  the  title  deeds:  Gothard  v.  Flynn,  25  Miss.  58; 
Shitzv.  Dieffenhach,  3  Pa.  St.  233;  Sidney  v.  Stevenson,  11  Phila.  178;  Meador 
v.  Meador,  3  Heisk.  5G2;  Vanmeter  v.  McFadden,  8  B.  Mon.  438.  These 
courts  rest  their  decisions  on  the  ground  that  to  sustain  such  mortgages 
would  be  to  violate  the  statute  of  frauds. 

It  is  held  in  Gardner  v.  McClure,  6  Minn.  250,  that  the  deposit  of  title 
deeds  to  laud  as  security  for  a  debt,  even  when  accompanied  by  a  written 
instrument  stating  that  the  deposit  is  made  as  a  lien  on  the  land,  will  not 
create  an  equitable  mortgage,  but  merely  a  lien  on  the  deeds.  On  the  other 
hand,  some  cases  arc  found  which  recognize  the  rule  that  the  mere  deposit 
of  title  deeds  to  secure  the  payment  of  borrowed  money  constitutes  an  equita- 
ble mortgage:  Carpenter  v.  Black  Haivh  etc.  Co.,  Co  N.  Y.  43-51;  Jackson  v. 
Parkhurst,  4  Wend,  309-376;  Rockwell  v.  Ilobhy,  2  Sand.  Ch.  9;  Gale  v.  Mor- 
ris, 29  N.  J.  Eq.  222;  Griffin  v.  Griffii},  18  Id.  104;  Boyce  v.  Shiver,  3  S.  0. 
528.  Thus  it  is  held  in  Carey  v.  Rawson,  8  Mass.  158,  that  a  sealed  agree- 
ment that  a  deed  should  be  executed  and  deposited  with  a  third  person  until 
money  borrowed  by  the  grantee  from  the  grantor  should  be  repaid  or  until  a 
day  specified,  and  upon  default  that  it  should  be  delivered  to  the  grantor 
with  right  of  entrj%  constitutes  an  equitable  mortgage.  And  again  it  was 
said,  in  Jarvis  v.  Butcher,  16  Wis.  308,  that  the  deposit  of  title  deeds  of  an 
equitable  or  legal  estate  creates  an  equitable  mortgage,  which  must  be  fore- 
closed in  equity  to  establish  the  lien,  and  for  a  sale  if  the  debt  and  interest 
are  not  paid  by  a  certain  day.  See  also  Mowry  v.  Wood,  12  Id.  413.  The 
deposit  and  assignment  of  land  certificates  made  absolute  in  form,  but  in 
fact  as  security  for  debts  owing  and  advances  made,  constitute  an  equitable 
mortgage,  which  may  be  foreclosed  and  the  certificates  sold  to  satisfy  the 
claim:  Case  v.  McCabe,  35  Mich.  100.  The  deposit  of  title  deeds  as  security 
for  money  owing  creates  an  equitable  mortgage  in  Pennsylvania,  as  between 
the  parties  to  tlie  deposit,  but  if  not  recorded,  it  amounts  to  nothing  but  an 


M 


Feb.  1887.]     Hutzler  Brothers  v.  Phillips.  69& 

tinrecorded  mortgage:  Luclis  Appeal,  44  Pa.  St.  519;  and  will  be  postponed 
to  a  subsequent  mortgage  in  favor  of  a  mortgagee  without  actual  notice:  Ed- 
wards V.  Trumbull,  50  Icl.  509. 

Conditional  Sale.  —  A  court  of  equity  will  often  pronounce  that  to  be  an 
equitable  mortgage  which  the  parties  have  put  in  the  form  of  a  conditional 
sale,  and  if  the  transaction  resolves  itself  into  a  security,  no  matter  what  its 
form  may  be,  nor  by  what  name  the  parties  may  choose  to  call  it,  it  is  in  equity 
a  mortgage:  Flarjj  v.  Mann,  2  Sum.  490;  Dunman  v.  Coleman,  59  Tex.  199; 
McNamara  v.  Culver,  22  Kan.  661;  Davis  v.  Slonestreet,  4  Ind.  101;  Dowjherty 
V.  McColgan,  6  Gill  &  J.  275;  Palmer  v.  Howard,  1  Am.  St.  Rep.  60,  and 
note  63;  Conway  v.  Alexander,  7  Cranch,  218.  As  was  said  in  Dunman  v. 
Coleman,  supra,  equity  will  sustain  a  contract  creating  a  lien  upon  prop- 
erty as  a  mortgage,  whenever  it  appears  that  the  parties  intended  it  as  such, 
though  neither  the  word  "lien"  nor  "mortgage"  appears  iu  the  contract,  if 
from  its  character  it  is  manifest  that  it  was  the  intention  of  the  parties  that 
the  specific  property  should  constitute  a  security  for  the  performance  of  tha 
obligation.  In  all  doubtful  cases,  the  contract  will  be  considered  as  a  mort- 
gage rather  than  a  sale,  because  such  a  construction  will  be  most  apt  ta 
attain  the  ends  of  justice  and  prevent  fraud  and  oppression:  Ilonorev.  Hatch- 
ings, 8  Bush,  688;  McNeill  v.  Norswortlaj,  39  Ala.  156;  Poindexter  v.  McCan- 
non,  1  Dev.  Eq.  373;  Wilson  v.  Giddinjs,  28  Ohio  St.  554;  Ti-ucks  v.  Lindsey, 
18  Iowa,  504;  Hickman  v.  Cantrell,  9  Yerg.  171;  30  Am.  Dec.  396;  Reedv. 
Reed,  75  Me.  271;  Brant  v.  Robertson,  16  Mo.  129;  Brown  v.  Dewey,  2  Barb. 
28;  Rich  v.  Doane,  45  Vt.  125.  The  distinction  between  an  equitable  mort- 
gage and  a  conditional  sale  is  this:  that  wliere  the  debt  forming  the  consid- 
eration for  the  conveyance  still  subsists,  or  the  money  is  advanced  as  a  loan, 
with  a  personal  liability  on  the  part  of  the  borrower,  and  by  the  terms  of  the 
conveyance  the  land  is  to  be  reconveyed  on  payment  of  the  money,  equity 
will  regard  it  as  a  mortgage.  But  where  the  relation  of  debtor  and  creditor 
is  extinguished  or  never  existed,  and  the  grantor  has  the  privilege  of  refund- 
ing by  a  given  time  if  he  pleases,  and  thereby  entitling  himself  to  a  reconvey- 
ance, the  agreement  is  a  conditional  sale:  Slowey  v.  McMurray,  27  Mo.  113; 
72  Am.  Dec.  251;  Saxton  v.  Hitchcock,  47  Barb.  220;  Hoopes  v.  Bally,  28 
Miss.  328;  Glover  v.  Payn,  19  Wend.  518;  He7ilcy  v.  Hotalimj,  41  Cal.  22; 
Marjee  v.  Catcldwj,  33  Miss.  672;  Alstin  v.  Cundlff,  52  Tex.  453;  Hay 9  v. 
Carr,  83  Ind.  275;  Page  v.  Foster,  7  N.  H.  392;  Steele  v.  Steele,  4  Allen,  417. 

When  any  doubt  exists  whether  the  instrument  creates  a  mortgage  or  is 
a  conditional  sale,  the  intention  of  the  parties  should  govern,  and  should 
be  ascertained  by  considering  their  situation,  the  surrounding  facts,  as  well 
as  from  the  face  of  the  writing:  Cornell  v.  Hall,  22  Mich.  377;  Stryker  v. 
Hershy,  38  Ai-k.  264;  Hughes  v.  Sheriff,  19  Iowa,  335;  Brown  v.  Dewey,  2 
Barb.  28;  Heath  v.  Willia.m,  30  Ind.  495;  Rich  v.  Doanc,  25  Vt.  125;  Brant 
V.  Robertson,  16  Mo.  129;  Oldham  v.  Halley,  2  J.  J.  Marsh.  114.  When 
the  intention  of  the  parties  ia  not  apparent  from  the  face  of  the  instru- 
ment, its  construction  should  be  left  to  the  jury  to  bo  determined,  under 
proper  instructions,  from  all  the  facts  and  circumstances  of  the  case:  Al- 
stin V.  Cundiff,  52  Tex.  453;  Hudson  v.  Wilkinson,  45  Id.  444.  Adequacy  or 
inadequacy  of  price  paid,  and  the  existence  of  an  obligation  to  repay  the 
purchase-money,  are  important  facts  to  l)e  taken  into  consideration,  though 
they  are  not  conclusive:  Drown  v.  Dewey,  2  Barb.  28;  Brumjield  v.  Boutall, 
24  Hun,  451;  Horn  v.  KeteWis,  46  N.  Y.  605.  When  the  price  named  is 
grossly  inadequate,  the  conveyance  will  be  considered  a  mortgage:  Elliott  v. 
Maxwell,  7  Irod.  Eq.  246;  Reed  v.  Reed,  75  Me.  264;    Wilson  v.  Giudings,  28 


700  HuTZLER  Brothers  v.  Phillips.     [S,  Carolina^ 

Oliio  St.  554;  Bridges  v.  Linder,  GO  Iowa,  190;  and  see  Campbell  v.  Dearborn^ 
109  Mass.  130;  Brant  v.  Robertson,  16  Mo.  130.  The  character  of  tha  convey- 
ance becomes  fixed  at  its  inception.  If  it  was  not  then  intended  as  a  mort- 
gage, it  can  never  become  such  by  any  subsequent  act  of  the  parties:  Hale  v. 
Jeioell,  22  Am.  Dec.  212;  Kearney  \.  Macomb,  16  N.  J.  Eq.  189;  Sivetland  v. 
Swetland,  3  Mich.  482.  But  if  it  is  then  a  mortgage,  the  right  of  redemption 
cannot  be  restricted  by  any  contemporaneous  agreement  by  the  mortgagor: 
Reed  v.  Reed,  75  Me.  264.  Parol  evidence  is  always  admissible  in  equity  to 
ascertain  whether  or  not  it  was  the  intention  of  the  parties  that  the  instru- 
ment should  constitute  a  mortgage  or  a  conditional  sale:  Reed  v.  Reed,  lo  Me. 
264;  Ahtiny.  Cundiff,  52  Tex.  452;  Trucks  v.  Lindsey,  18  Iowa,  504;  McNa- 
mara  v.  Culver,  22  Kan.  661 ;  note  to  Hale  v.  Jewell,  22  Am.  Dec.  215.  The 
topic  here  under  consideration  is  treated  at  considerable  length  in  the  note 
to  Chise's  Case,  17  Am.  Dec.  300  et  seq. 

Agreement  to  Give  Mortgage.  — The  doctrine  is  frequently  asserted  that  an 
agreement  to  give  a  mortgage,  based  upon  sufficient  consideration,  will  be 
treated  in  equity  as  a  mortgage,  upon  tlae  theory  that  equity  considers  that 
done  which  by  agreement  is  to  be  done:  Daggett  v.  Ranlcin,  31  Cal.  321-826; 
Remington  v.  Higglns,  54  Id.  620;  Racoidllai  v.  Sansevain,  32  Id.  377;  Cotterell 
v.  Long,  20  Ohio,  464;  Delaire  v.  Read,  3  Desaus.  Eq.  74;  Boehl\.  Wadgymar,. 
54  Tex.  589;  Matter  of  Howe,  1  Paige,  125;  Starts  v.  Redficld,  52  Wis.  349; 
Burdick  v.  Jackson,  7  Hun,  448;  Richardson  v.  Hamlett,  33  Ark.  237;  Carter 
V.  Holman,  60  Mo.  498.  It  is  not  absolutely  necessary  that  the  agreement 
should  be  in  writing,  for  if  it  is  in  parol  and  in  respect  to  land,  it  cannot  be 
avoided  in  equity  when  there  has  been  a  part  performance  of  it:  Burdich 
V.  Jackson,  7  Hun,  488;  Freeman  v.  Freeman,  43  N.  Y.  34;  3  Am.  Rep.  657; 
and  specific  performance  of  such  parol  contract  will  be  decreed  in  equity: 
Dean  v.  Anderson,  34  N.  J.  Eq.  496.  In  such  cases  the  contract  must  be 
sufficiently  clear  and  definite  to  enable  the  court  to  give  eflfect  to  the  un- 
derstanding of  the  parties:  McCUntock  v.  Laing,  22  Mich.  212.  Where  in 
pursuance  of  the  parol  promise  the  promisor  has  in  fact  executed  the  agree- 
ment by  tlie  delivery  of  a  formal  mortgage,  such  agreement  is  not  within  the 
statute  of  frauds,  but  is  as  efi"ectual  for  all  intents  and  purposes  as  if  it  had 
been  originally  reduced  to  writing  by  the  parties:  Burdick  \.  Jackson,  7  Hun, 
488;  Dodge  v.  Wellman,  1  Abb.  App.  512;  Carr  v.  Carr,  4  Lans.  314;  Mc- 
Burney  v.  Wellman,  42  Barb.  390.  An  instrument  cannot  be  held  to  be  an 
equitable  mortgage  which  contains  a  description  totally  insufficient,  and 
which  neither  conveys  nor  purports  to  convey  or  mortgage  the  land.  Such 
an  instrument  does  not  create  any  lien:  Langley  v.  Vaughn,  10  Heisk.  553. 
The  agreement  must  show  an  intention  to  create  a  lien,  and  such  lien  must 
have  a  specific  reference,  and  must  necessarily  apply  to  some  designated 
property  iu  being  or  in  expectancy,  clearly  and  unmistakablj^;  and  unless  such 
agreement  clearly  describes  or  designates  particular  lands,  it  will  be  regarded 
as  a  mere  executory  contract,  and  will  be  enforced  as  such:  Seymour  v.  Can- 
andaigua  etc.  Co.,  25  Barb.  284.  However,  an  equitable  lien  or  mortgage  may 
arise  out  of  an  agreement  to  give  a  mortgage  on  one  of  several  houses  to  be 
built  on  certain  land,  although  the  particular  house  is  not  designated  in  the 
agreement:  Payne  v.  Wilson,  74  N.  Y.  348;  Kendall  v.  Niebuhr,  13  Jones  &  S. 
542. 

An  agreement  to  execute  a  mortgage  inprcesenti,  where  the  actual  execution 
fails  through  inadvertence,  does  not  constitute  such  equitable  mortgage  or 
lien  as  will  prevail  as  against  subsequent  judgment  creditors:  Price  v.  Cutis, 
29  Ga.  142;  74  Am.  Dec.  52.     But  such  an  instrument  will  be  enforced  in 


Feb.  1887.]      Hutzler  Brothers  v.  Phillips.  701 

equity  as  a  specific  lieu  against  the  land  as  against  the  parties  executing  it, 
and  third  parties  having  actual  notice  thereof:  Racouillat  v.  Sansevain,  32 
Cal,  376.  So,  also,  where  the  equitable  owner  of  the  land  assents  in  writing 
that  the  holder  of  the  legal  title  may  hold  it  as  security  for  the  payment  of 
money  borrowed  by  such  owner  of  a  third  person,  this  is  sufficient  to  create 
an  equitable  mortgage  on  the  land  for  the  benefit  of  the  creditor:  Chadivick 
V.  Clapp,  69  111.  119.  And  again,  a  mortgage  executed  by  a  party  to  him- 
self as  guardian,  to  secure  moneys  belonging  to  his  ward,  is  regarded  in 
equity  as  a  valid  security  against  the  guardian,  and  is  given  effect  for  the 
purpose  of  protecting  the  interests  of  the  wards;  and  after  a  sale  of  the  mort- 
gaged premises,  a  judgment  of  foreclosure  estops  the  parties  from  questioning 
the  mortgage,  and  vests  the  legal  title  in  the  purchaser:  Lt/on  v.  Lyon,  67 
N.  Y.  250.  An  agreement  on  the  back  of  a  note,  making  it  a  charge  upon 
particular  lands,  is  an  equitable  mortgage;  and  it  was  held  that  in  this  way 
an  agreement  intended  as  a  revival  of  a  mortgage  note  which  had  been  paid 
may  be  rendered  effectual,  though  not  effectual  to  revive  the  mortgage  lien: 
Peckham  v.  Haddock,  36  111.  38.  In  Oilson  v.  Gilson,  4  Allen,  115,  it  waa 
held  that  an  agreement  under  seal,  but  not  acknowledged,  by  which  the 
signer  agrees  to  maintain  his  father  and  mother  during  their  lives,  and  as 
security  for  the  fulfillment  of  the  agreement  conveys  to  them  a  life  lien  or 
dower  of  maintenance  in  lands,  constitutes  an  equitable  mortgage.  And 
again,  where,  upon  receiving  a  grant  of  land,  the  grantee  executed  an  agree- 
ment, not  under  seal,  to  support  and  maintain  the  grantor,  pledging  the  pro- 
duce of  the  land,  or  in  lieu  thereof  the  land  itself,  this  was  held  an  equitable 
mortgage:  Chase  v.  Peck,  21  N.  Y.  581.  A  written  agreement  by  the  owner 
to  pay  the  occupant  of  land  a  certain  sum,  provided  that  when  the  land  waa 
sold  to  realize  the  amount  the  occupant  would  surrender  possession,  and  in 
the  mean  time  giving  him  the  occupancy  iu  lieu  of  paying  interest  ou  the 
sum,  is  an  equitable  mortgage  as  to  the  parties  and  purchasers  with  notice: 
Blackburn  v.  Tweedie,  60  Mo.  505. 

So  an  equitable  mortgage  is  created  by  a  provision  in  a  deed  that  the 
grantee  shall  pay  certain  legacies  which  are  a  charge  upon  the  property 
conveyed:  Stewart  v.  Ilutcliings,  6  Hill,  143.  So  is  an  instrument  by 
which  a  corporation  pledges  its  real  property  for  the  fulfillment  of  a  contract, 
and  it  is  not  rendered  void  because  the  property  is  pledged  without  specifi- 
cation, or  the  amount  secured  is  not  stated,  nor  the  time  for  redemption 
fixed:  Mohile  etc.  R.  R.  Co.  v.  Talman,  15  Ala.  472.  The  same  is  true  of  an 
instrument  reciting  that  the  maker  had  employed  counsel  to  prosecute  a 
claim  to  land,  and  promising  the  payment  of  certain  money  out  of  the 
land  when  the  litigation  was  ended:  Jackson  v.  Carswell,  34  Ga.  279.  The 
same  rule  applies  to  an  agreement  in  a  lease  creating  a  lien  in  favor  of  the 
lessor  for  the  faithful  performance  of  the  obligation  to  pay  rent:  Wldtimj  v. 
Eichelberjer,  16  Iowa,  422.  And  an  agreement  by  a  debtor  to  execute  to  hia 
creditor  a  mortgage  upon  the  debtor's  share  under  his  father's  will  when 
division  is  made  creates  an  equitable  mortgage:  Lynch  v.  Utica  Ins.  Co.,  18 
Wend.  236. 

Defective  Mortgage.  —  A  mortgage  or  trust  deed  which  cannot  be  enforced 
because  of  some  informality  requisite  to  a  perfect  mortgage  or  trust  deed 
will  be  regarded  in  equity  as  a  mortgage,  and  the  lien  enforced.  Wlien  the 
mtent  of  the  parties  to  form  a  lien  iipon  specific  property  is  evident,  effect 
will  be  given  to  such  intent  in  equity:  Blackburn  v.  Tweedie,  60  Mo.  505; 
Oak  v.  Morris,  29  N.  J.  Eq.  222;  JSJational  Bank  v.  Lanier,  7  Hun,  623; 
Payne  V.   Wtlson,   74  N.  Y.   348;    Daggett  v.   Rankin,   31   Cal.   321;  Lake  v. 


702  HuTZLER  Brothers  v.  Phillips.     [S.  Carolina, 

Dowel,  10  Ohio,  415.  Thus  a  deed  of  trust  which  is  inoperative  at  law  on 
account  of  a  failure  to  insert  the  name  of  the  trustee,  if  the  deed  in  other 
respects  is  perfect,  will  be  coasidered  in  equity  as  a  mortgage:  MrQuie  v. 
Peay,  58  Mo.  56.  So  will  a  trust  deed  which  is  imperfectly  acknowledged: 
Blach  V.  Gregg,  58  Id.  565.  And  so  will  a  mortgage  from  which  the  seal 
was  omitted  by  mistake:  McClurg  v.  Phillips,  49  Id.  315;  Dunn  v.  Raleij,  58 
Id.  134;  Harrington  V.  Fortner,  58  Id.  468;  Gillv.  Cto-jt,  54  Id.  415;  McClurg 
V.  Phillips,  57  Mo.  214. 

So  will  an  unsealed  mortgage,  made  in  pursuance  of  an  unsigned  power  of 
attorney:  Burnet  v.  Boyd,  60  Miss.  627.  And  an  instrument  in  the  form  of 
a  mortgage,  with  power  of  sale  and  under  seal,  but  not  expressed  to  be 
sealed,  is  good  as  an  equitable  mortgage:  Jones  v.  Brewington,  58  Mo.  210. 
So  is  an  instrument  in  writing,  intended  by  the  parties  as  a  mortgage,  but 
not  witnessed  as  required  by  law:  Abbott  v.  God/roy's  Heirs,  1  Mich.  178. 
But  it  has  been  held  that  such  effect  will  not  be  given  to  a  mortgage  wit- 
aessed,  acknowledged,  and  recorded,  but  not  signed  by  the  mortgagor:  Good- 
man V.  Randall,  44  Conn.  321.  Where  an  instrument  purporting  to  be  the 
mortgage  of  a  corporation  is  not  executed  in  the  name  of  the  corporation, 
and  is  therefore  not  a  legal  mortgage,  equity  will  regard  it  as  an  equitable 
mortgage,  and  enforce  it  as  such:  Miller  v.  Rutland  etc.  R.  R.  Co.,  36  Vt. 
452;  Lovev.  Sierra  Nevada  Min.  Co.,  32  Cal.  639;  91  Am.  Dec.  602. 

Assignment  of  Rents  and  Profits.  — An  assignment  of  the  rents  and  profits 
of  land  to  secure  a  debt  creates  an  equitable  lien,  and  the  assignee  is  entitled 
to  come  into  equity  and  have  it  enforced  as  a  mortgage.  Ex  parte  Wills,  1 
Ves.  Jun.  162;  2  Cox,  233;  Abbott  v.  Stratten,  3  Jones  &  L.  603.  This  rule 
is  denied,  however,  \x\.  AlcTXcnder  v.  Berry,  54  Miss.  422;  and  see  also  Allen  v. 
Montgomery,  48  Id.  101.  A  formal  mortgage  of  a  leasehold  constitutes  only 
an  assignment  of  the  rents  and  profits  for  the  term  in  those  states  where 
foreclosure  cannot  be  effected  by  sale,  the  mortgage  not  conferring  the  power 
of  sale,  and  where  the  mortgagee  can  only  receive  the  rents  and  profits:  Hidett 
V.  Soullard,  26  Vt.  295.  An  irrevocable  power  of  attorney  to  collect  rents, 
given  as  security  for  money  loaned,  is,  as  between  the  parties,  an  equitable 
mortgage  of  the  rents:  Smith  Co.  v.  McGuinness,  14  R.  I.  59.  So  a  covenant 
in  a  lease  that  a  building  to  be  erected  by  the  lessee  is  mortgaged  as  security 
for  the  rent  will  be  treated  in  equity  as  a  mortgage  thereof:  Barroilhet  v. 
Battelle,  7  Cal.  450.  And  an  assignment  of  a  lease  absolutely,  accompanied 
by  a  bond  stating  the  assignment  to  be  made  to  secure  a  debt  to  the  assignee, 
and  an  agreement  to  reassign  the  lease  and  land  on  payment  of  the  debt  and 
interest,  is  an  equitable  mortgage:  Jackson  v.  Green,  4  Johns.  186.  A  con- 
tract in  writing,  whereby  the  contractor  agrees  to  apply  the  rents  and  profits 
of  particular  land,  or  a  portion  thereof,  to  the  payment  of  a  debt,  creates 
an  equitable  mortgage  on  such  land  which  will  be  enforced  against  volunteers 
and  purchasers  with  notice:  Smith  v.  Patton,  12  W.  Va.  541. 

Statutory  Mortgage.  —  An  equitable  lien  or  mortgage  may  exist  by  virtue 
of  statute,  and  will  be  as  effectual  as  a  mortgage  execited  by  deed:  Kef  chum 
V.  Pacific  R.  R.,  4  Dill.  78;  Murdoch  v.  Woodson,  2  Id.  188;  22  Wall.  350. 
Thus  a  mortgage  may  be  created  by  legislative  act,  as  where  a  railroad  com- 
pany accepted  bonds  issued  under  an  act  declaring  them  to  constitute  a  first 
lien  and  mortgage  upon  the  road  and  property  of  the  corporation:  Wilson 
v.  Boyce,  92  U.  S.  320;  2  Dill.  539;  Whitehead  v.  Vineyard,  50  Mo.  30.  In 
order  to  create  an  equitable  statutory  mortgage,  it  is  necessary  that  the 
statute  in  express  terms  show  the  intention  to  give  a  lien:  CincinncUi  v. 
Morgan,  3  Wall.  275.     When  such  intention  is  shown,  the  mortgage  may 


Feb.  18S7.]      Hutzler  Brothers  v.  Phillips.  703 

embrace  after-acquired  lands:  Whitehead  v.  Vineyard,  50  Mo.  30.  The  bon^^s 
of  a  corporation,  pledgincj  its  real  and  personal  property  for  the  payment  of 
a  debt,  will  be  treated  in  equity  as  a  mortgage,  and  enforced  according  to 
the  intent  of  the  parties:  White  Water  etc.  Canal  Co.  v.  Valletta,  21  How.  414. 
So  a  deed  of  trust  executed  by  a  railroad  company  to  secure  the  payment  of 
bonds  and  coupons  will  be  treated  as  a  mortgage  in  equity,  and  so  enforced: 
Coe  V.  Johnson,  18  Ind.  218. 

Assignment  of  Contract  of  Purchase.  —  An  assignment  of  a  contract  for  the 
purchase  of  lands  as  security  for  a  debt  due  the  assignee,  upon  condition  that 
if  the  debt  is  paid  at  the  time  stipulated  the  assignee  will  reassign  the  con- 
tract, is  an  equitable  mortgage,  giving  the  assignor  the  right  of  redemption: 
Brochoay  v.  Wells,  1  Paige,  G17.  In  other  words,  a  contract  in  writing 
whereby  the  contractor  agrees  to  purchase  certain  land,  and  executes  a 
mortgage  thereon  to  secure  a  debt,  creates  an  equitable  lien  on  such  land 
when  purchased  as  will  be  enforcetl  in  equity  against  the  contractor,  volun- 
teers, and  purchasers  with  notice:  Smith  v.  Patton,  12  W.  Va.  541;  Fitzhugh 
V.  Smith,  62  111.  486;  Fenno  v.  Sayre,  3  Ala.  458;  Sinclair  v.  Armitage,  12 
N.  J.  Eq.  174;  No7-thrup  v.  Cross,  Seld.  Notes,  111.  A  party  who  holds  real 
estate  under  a  bond  for  a  deed  from  the  owner  of  the  legal  title  has  such  an 
interest  as  he  can  convey  by  equitable  mortgage:  Jones  v.  Lapham,  15  Kan. 
540;  Button  v.  Schroyer,  5  Wis.  598;  Anderson  v.  Ames,  6  Md.  52;  Gilkernon 
V.  Connor,  24  S.  C.  321-324.  This  is  especially  so  where  the  party  iu 
possession  has  made  valuable  improvements:  Bull  v.  Sykes,  7  Wis.  449;  Jones 
V.  Lapham,  supra.  And  his  assignee  will  succeed  to  all  his  rights  and  equi- 
ties: Levjis  V.  Boskins,  27  Ark.  61;  Baker  v.  Bishop  Hill  Colony,  45  111.  264; 
Steinkemeyerv.  Gillespie,  82  Id.  253;  A  Idea  v.  Garver,  32  Id.  32.  Where  land 
is  sold  upon  credit,  and  a  bond  given  to  make  title  upon  the  payment  of  the 
purchase-money,  the  effect  of  the  contract  is  to  create  a  mortgage  as  if  the 
vendor  had  conveyed  by  deed  and  taken  a  mortgage  back  for  the  payment 
of  the  purchase-money,  and  the  lien  so  created  is  a  charge  or  encumbrance 
upon  the  land  against  the  purchaser  and  his  privies  and  all  subsequent  pur- 
chasers: Lewis  V.  Boskins,  27  Ark.  63;  Smith  v.  Robinson,  13  Id.  533;  Moore 
V.  Anders,  14  Id.  628;  40  Am.  Dec.  551;  Graham  v.  McCampbell,  Meigs,  52; 
33  Am.  Dec.  126;  Tanner  v.  Hicks,  4  Smedes  &  M.  294;  Shall  v.  Blscoe,  18 
Ark.  142;  Pintard  v.  Goodloe,  Hemp.  502;  Thredgill  v.  Pintard,  12  How.  24; 
and  see  Curtis  v.  Buckley,  14  Kan.  449.  The  assignment  of  a  partial  interest 
in  a  contract  for  purchase  of  land  as  security  for  debt  is  an  equitable  mort- 
gage, which  may  be  enforced  against  the  assignor  and  those  claiming  under 
him  with  notice:  Northrup  v.  Cross,  Seld.  Notes,  111.  An  assignment  of  a 
certificate  of  purchase  of  land  issued  by  the  state  by  way  of  security  for  a 
debt  due  by  the  assignor  to  the  assij^jUee  is  an  equitable  mortgage  of  the  as- 
signor's interest  in  the  land  by  virtue  of  his  certificate:  Hill  v.  Eldred,  49 
Cal.  398;  Gunderman  v.  Gunnison,  39  Mich.  313;  Case  v.  McCabe,  35  Mich. 
100;  liossv.  Mitchell,  28  Tex.  150;  Crumhaughv.  Smock,  1  Blackf.  305. 

The  same  rule  applies  to  a  pre-emptor's  certificate  of  location:  Wright  y. 
Shimway,  1  Biss.  23;  ChrLity  v.  Dana,  34  Cal.  548.  And  a  subsequent  as- 
signee, or  purchaser  of  the  certificate,  takes  it  subject  to  the  terms  of  the 
first  assignment,  if  he  has  notice  thereof:  Dodge  v.  Silrerhorn,  12  Wis.  644; 
Stover  V.  Boxcnds,  1  Ohio  St.  107.  Though  an  equitable  mortgage  so  created 
is  subject  to  the  payment  of  the  amount  due  on  the  certificate,  still  when 
that  is  paid,  the  amount  is  a  prior  lien  upon  the  proceeds  of  a  foreclos- 
ure sale  of  the  land:  Dodge  v.  Silverhorn,  supra.  An  assignment  of  school- 
Umd  certificates,  which  are  by  their  terms  transferable  by  assignment  and 


704  HuTZLEB  Brothers  v.  Phillips.     [S.  Carolina, 

delivery,  creates  an  equitable  mortgage:  Mowry  v.  Wood,  12  Wis.  413;  Jarvia 
V.  Dutcher,  16  Id.  307.  Certificates  of  stock  in  a  joint-stock  company,  they 
representing  an  interest  in  land,  may  be  mortgaged  in  equity,  subject  to  the 
debts  of  the  company  and  other  stockholders'  equities:  Durkeex.  Strinf/Jiamj 

8  Id.  1.  A  settler  upon  public  lands,  claiming  under  the  United  States 
homestead  act,  after  making  his  proof  of  compliance  with  all  the  require- 
ments of  the  law  so  as  to  entitle  him  to  a  patent,  may  make  a  valid  mortgage 
of  the  laud:  Cheney  v.  White,  5  Neb.  261;  25  Am.  Rep.  487.  And  such  mort- 
gage is  valid,  notwithstanding  it  was  given  to  secure  a  debt  contracted  before 
6uch  proof  was  made:  Jo7^es  v.  Yoakam,  5  Neb.  265.  But  if  the  mortgagor 
sells  the  same  land  to  another,  who  afterwards  gets  a  pre-emption  title,  the 
mortgagee  cannot  enforce  his  mortgage  against  the  latter's  title,  and  his  right 
is  lost:  Bull  V.  Shaw,  48  Cal.  455.  The  transaction  amounts  to  an  equitable 
mortgage  where  the  holder  of  land  warrants  has  them  entered  in  the  name  of 
his  creditor  as  security  for  the  payment  of  a  debt:  Duenv.  Blake,  44  111.  135. 
In  conclusion,  it  may  be  added  that  when  one  who  holds  the  title  to  land  by 
agreement  and  part  payment  secures  from  a  third  party  the  money  to  pay 
the  balance  due  on  the  purchase,  and  the  latter  takes  the  title,  agreeing  to 
convey  it  in  a  certain  time  on  repayment  of  his  advance  money,  the  transac- 
tion is  an  equitable  mortgage  as  against  the  parties,  their  privies,  and  subse- 
quent purchasers  with  notice:  Fessler's  Appeal,  75  Pa,  St.  483;  Purdy  v. 
Bullard,  41  Cal.  444;  McClintock  v.  McCUntock,  3  Brewst.  76;  Chadwell  v. 
Wheless,  6  Lea,  312;  /un^  v.  McVickar,  3  Sand.  Ch.  192. 

Lien  for  Unpaid  Purchase-money.  —  The  doctrine  prevails  in  England, 
and  also  in  the  greater  portion  of  the  states  in  the  United  States,  that  a  ven- 
dor of  land,  though  he  has  made  a  deed  absolute  in  form,  and  expressing  the 
consideration  as  having  been  fully  paid,  has  an  equitable  lien  on  the  land  for 
his  unpaid  purchase-money  as  against  the  vendee  and  his  privies,  though  he 
has  taken  no  distinct  agrefement  or  separate  security :  See  Macreth  v.  Symmons, 
15  Ves.  329;  Moshier  v.  Meek,  80  111.  79;  Kent  v.  Gerhard,  12  R.  I.  92;  34  Am. 
Rep.  612;  Anketelv.  Converse,  17  Ohio  St.  11;  91  Am.  Dec.  115;  Smithv.  SmitJu, 

9  Abb.  Pr.,  N.  S.,  420;  Cardova  v.  Hood,  17  Wall.  1;  Sparks  v.  Hess,  15  Cal. 
18G;  Smith  V.  Price,  42  111.  399;  Hilly.  Grigshy,  32  Cal.  56;  Beal\.  Harring- 
ton, 116  111.  113;  Se7iter  v.  Lambeth,  59  Tex.  259;  Barrett  v.  Lewis,  106  Ind. 
120;  Be7inett  v.  Shipley,  82  Mo.  448;  Phillips  v.  Schall,  21  Mo.  App.  38; 
Joiner  v.  Perkins,  59  Tex.  300;  Wilkinson  v.  May,  69  Ala.  33.  Mr.  Jones,  in 
his  work  on  mortgages,  severely  criticises  the  principle  which  creates 
Buch  a  lien;  and  deplores  the  fact  that  it  so  generally  prevails.  He  says: 
"The  doctrine  of  a  vendor's  lien  for  the  purchase-money  prevails  in  up- 
wards of  half  in  number  of  the  states,  and  in  the  other  states  the  doctrine 
has  either  been  rejected  from  the  beginning,  or  having  prevailed  at  one  time 
has  since  been  expelled  by  statute,  although  it  may  be  that  in  a  few  states 
the  question  of  its  existence  has  not  been  definitely  decided.  In  the  courts 
of  the  United  States  the  doctrine  has  never  been  affirmed,  except  where  es- 
tablished by  the  local  law  of  the  states.  The  doctrine  even  in  those  states 
that  have  adopted  it  has  been  frequently  criticised  and  deplored,  as  incon- 
sistent with  the  general  policy  prevailing  in  this  country  to  make  all  matters 

of  title  depend  upon  record  evidence From  the  nature  of  the  equity, 

there  could  be  but  few  fixed  rules  regarding  it,  but  it  will  be  observed  in  fol- 
lowing the  American  decisions,  which  are  numerous,  that  there  is  hardly  a 
rule  upon  the  subject  which  has  not  been  somewhere  denied;  that  hardly  any 
two  states  can  be  found  in  which  the  courts  agree  upon  all  the  important 
points  of  the  doctrine;  and  that  the  cases  are  not  rare  in  which  the  decisiona 


i 


Feb.  1887.]      Hutzleb  Brothers  v.  Phillips.  705 

in  the  same  state  are  irreconcilable This  is  eminently  a  subject  of  case- 
law,  and  to  a  large  degree  each  case  is  a  law  unto  itself  and  unto  no  other 
case ":  1  Jones  on  Mortgages,  sec.  191,  where  the  states  and  cases  are 
enumerated  ia  which  the  doctrine  has  been  applied,  doubted,  or  not  adopted. 
The  lien  exists  in  California  by  virtue  of  section  3046,  Civil  Code;  and  see 
Burt  V.  Wilson,  28  Cal.  C32;  87  Am.  Dec.  142;  Gallagher  v.  Mars,  50  Cal.  23. 
In  those  states  in  which  the  doctrine  has  been  adopted  it  exists  unless  there 
has  been  an  express  or  implied  waiver  of  it:  Moshier  v.  Meeh,  80  111.  79; 
Short  v.  Battle,  52  Ala.  45G;  Wilson  v.  Lyon,  51  111.  1G6;  Dodge  v.  Evans,  43 
Miss.  570;  A  lien  v.  Bennett,  8  Smedes  &  M.  672-681 ;  Oilman  v.  Brown,  1 
Mason,  191;  Duntonv.  Outhouse,  31  N.  "W.  Rep.  411-413. 

The  lien  exists  to  the  extent  of  the  unpaid  purchase-money  against  the 
vendee,  his  heirs,  privies  in  estate,  and  subsequent  purchasers  with  notice;  also 
against  those  who  take  a  conveyance  of  the  land  without  advancing  any  new 
consideration,  so  as  to  make  them  in  equity  pvirchasers  for  value,  and  against 
voluntary  assignees  who  are  not  honajide  purchasers  for  value:  See  the  cases 
cited  immediately  SMp?-a,  and  Warner  \.  Van  Aldyne,  3  Paige,  513;  Croftv. 
Russell,  67  Ala.  9;  Bice  v.  Wilhurn,  31  Ark.  108;  25  Am.  Rep.  549;  Poe  v. 
Paxton,  26  W.  Va.  607;  Dickerson  v.  Carroll,  76  Ala.  377;  Senter  v.  Lambeth, 
59  Tex.  259;  Dunton  v.  Outhouse,  31  N.  W.  Rep.  411-413;  Wilkinson  v.  May, 
69  Ala.  33;  Carver  v.  Eads,  65  Id.  191.  The  presumption  exists  that  the  un- 
paid purchase-money  is  a  lien  upon  the  land,  and  it  is  upon  the  purchaser  to 
rebut  the  presumption  by  jjroof  of  waiver  or  otherwise,  for  the  lien  does  not 
exist  under  express  contract,  but  is  implied  from  the  presumed  intention  of 
the  parties  at  the  time  of  executing  the  deed:  Wilson  v.  Lyon,  41  111.  166; 
Truebody  V.  Jacobson,  2  Cal.  2G9;  Gilmanv.  Brown,  1  Mason,  191;  Magruder 
v.  Campbell,  40  Ala.  611;  Dodge  v.  Evans,  43  Miss.  570;  Fry  v.  Prewett,  56 
Id.  783;  Buries  v.  Watson,  48  Tex.  107;  Carver  v.  Eads,  65  Ala.  190;  Wilkinson 
V.  May,  69  Id.  33.  But  whenever  circumstances  exist  from  which  the  infer- 
ence can  be  drawn  that  the  parties  did  not  intend  to  create  the  lien,  it  will 
be  held  not  to  exist.  This  inference  arises  from  the  taking  of  a  distinct  and 
independent  security:  Parker  County  v.  Seivell,  24  Tex.  238;  or  a  mortgage 
upon  the  property  sold:  Stuart  v.  Harrison,  52  Iowa,  511;  Neal  v.  Speigle,  33 
Ark.  63;  or  from  an  assignment  of  the  debt  absolutely,  without  in  terms 
assigning  the  equitable  lien:  Smith  v.  Smith,  9  Abb.  Pr.,  N.  S.,  420.  As  be- 
tween such  lien  and  a  mortgage  lien  accruing  at  the  same  time,  the  legal  lien 
created  by  mortgage  will  prevail:  Fisk  v.  Potter,  2  Abb.  App.  138.  Where 
the  vendor  of  land  executes  his  bond,  agreeing  to  make  title  on  payment  of 
the  purchase-money  remaining  unpaid,  the  contract  is  considered  in  equity  aa 
a  mortgage,  with  all  of  its  equitable  rights  and  incidents,  and  the  vendor's 
assignee  of  a  note,  or  other  security  given  for  such  purchase-money,  becomes 
entitled  to  the  lien:  Connor  v.  Banks,  18  Ala.  42;  Moore  v.  Anders,  14  Ark. 
628;  40  Am.  Dec.  551;  Hutton  v,  Moore,  24  Id.  382;  Sparks  v.  Hess,  15  Cal. 
186;  McConnell  v.  Beattie,  34  Ark.  113;  Lewis  v.  Hawkins,  23  Wall.  119; 
Schearffv.  Dodge,  33  Ark.  346. 

All  subsequent  purchasers  and  encumbrancers  from  the  vendee  are  bound 
to  take  notice  of  such  lien  when  so  created,  for  it  has  none  of  the  odious  char- 
acteristics of  the  lien  of  a  vendor  who  has  parted  with  the  title  absolutely, 
acknowledging  the  receipt  of  the  purchase-money  in  full;  but  ia  wholly  dif- 
ferent in  this,  that  its  effect  is  of  a  conveyance  and  mortgage  back  for  the 
purchase  price:  Moore  v.  Anders,  14  Ark.  128;  40  Am.  Dec.  551;  Hineav. 
Perkins,  2  Ileisk,  395;  Dukes  v.  Turner,  44  Iowa,  575;  Merritt  v.  Judd,  14 
Cal.  59;  Masterson  v.  Pullen,  62  Ala.  145;  Scroggins  v.  Hoadley,  56  Ga.  165. 
Am.  8t.  Kep.,  Vol.  IV.  — 45 


706  HuTZLER  Brothers  v.  Phillips.     [S.  Carolina, 

Where  the  lien  is  expressly  reserved  in  the  deed,  which  is  recorded,  it  creates 
a  clear  equitable  mortgage,  of  which  every  one  is  bound  to  take  notice,  and 
such  lien  passes  to  the  vendor's  assignee  of  the  notes  for  the  purchase-money, 
and  may  be  enforced  by  him  as  against  subsequent  purchasers  or  encum- 
brancers: Blaisdellv.  Smith,  3111.  App.  150;  Davis  v.  Hamilton,  50  Miss.  213; 
Smith  V.  Rowland,  13  Kan.  245;  Dimjley  v.  Bank  of  Ventura,  57  Cal.  4G7; 
Stratton  v.  Gold,  40  Id.  778;  Webster  v.  Mann,  52  Tex.  41G;  HjU  v.  Mobile 
etc.  R.  R.  Co.,  58  Ala.  10;  Stanhope  v.  McLaujhlin,  52  Md.  483;  Mitchell  v. 
Wade,  39  Ark.  377;  Carpenter  v.  Mitchell,  54  111.  126;  Bradley  v.  Curtis,  79 
Ky.  327.  The  express  reservation  of  such  lien  in  the  deed  is  equivalent  to  a 
mortgage  taken  for  the  purchase-money  contemporaneously  with  the  deed, 
and  gives  the  jjurchaser  the  right  to  redeem  upon  foreclosure:  King  v.  Younj 
Men's  Ass'n,  1  Woods,  386;  Chitwood  v.  Trimble,  2  Baxt.  78;  Muterson  v. 
Cohen,  46  Tex.  520;  Pierce  v.  Gardner,  S3  Pa.  St.  211.  And  in  such  case  the 
rights  of  the  parties  depend  on  their  contract,  and  not  upon  the  mere  impli- 
cation of  law:  Harvey  v.  Kelley,  41  Miss.  490;  93  Am.  Dec.  2G7;  Stratton  v. 
Gold,  40  Id.  778.  Nor  is  it  deemed  to  be  waived  by  taking  other  security, 
as  it  would  be  if  it  were  merely  the  lien  not  reserved  and  arising  by  implica- 
tion: Carpenter  v.  Mitchell,  54  111.  126;  Lewis  v.  Pusey,  8  Bush,  615;  Dunlap 
V.  Shanklin,  10  W.  Va.  662;  Warren  v.  Branch,  15  Id.  21;  McCaslinv.  State, 
44  lud.  151;  Stricldandv.  Summerville,  55  Mo.  164;  Bozeman  v.  Ivey,  49  Ala. 
75;  Whitehirstv.  Yandall,  7  Baxt.  228;  Hurley  v.  Holhjday,  35  Md.  469. 
The  grantee  cannot  show  a  contemporaneous  contract  by  the  grantor  not  to 
look  to  the  land  for  payment  when  the  lien  is  expressly  reserved:  Hutchinson 
V.  Patrick.  22  Tex.  318;  otherwise  when  it  is  not:  Warren  v.  Branch,  15  W. 
Va.  21. 

Registry  Acts. — Equitable  mortgages  are  generally  held  within  the  pro- 
visions of  registi'y  acts  as  well  as  legal  mortgages:  United  States  Ins.  Co.  v. 
Shriver,  3  Md.  Ch.  381;  General  Ins.  Co.  v.  United  States  Ins.  Co.,  10  Md. 
517;  49  Am.  Dec.  174;  Parker  v.  Alexander,  1  Johns.  Ch.  394;  Jarvis  v. 
Dutcher,  16  Wis.  307;  Dodge  v.  Silverhorn,  12  Id.  644;  Boyce  v.  Shiver,  3  S.  C. 
515;  Hunt  v.  Johnson,  19  N.  Y.  279.  The  cases  above  cited  support  and 
establish  the  doctrine  that  all  rights,  encumbrances,  and  conveyances  touch- 
ing or  in  any  manner  concerning  lands  should  appear  of  record,  and  that 
therefore  the  mortgage  of  an  equitable  interest  therein,  if  first  recorded, 
always  takes  priority  over  a  mortgage  of  the  legal  estate.  The  very  early 
decisions  seem  to  have  been  averse  to  this  rule,  and  maintained  the  contrary 
doctrine  as  to  purchasers  of  the  legal  estate.  Thus  it  is  held  in  Hahtead  v. 
Bank  of  Kentucky,  4  J.  J.  Marsh.  554,  that,  the  law  not  requiring  it,  the  regis- 
tration of  an  equitable  mortgage  will  not  operate  as  constructive  notice  to  a 
subsequent  purchaser  from  the  person  wh&  holds  the  legal  title.  And  to  the 
same  effect,  Doswellv.  Buchannan,  3  Leigh,  377;  23  Am.  Dec.  280.  Generally, 
however,  the  registration  of  an  equitable  mortgage  is  notice  to  subsequent 
purchasers  of  the  legal  estate:  Jarvis  v.  Dutcher,  18  Wis.  307;  Dodge  v.  Sil- 
verhoi-n,  12  Id.  644;  Hunt  v.  Johnson,  19  N.  Y.  279;  Parkhurst  v.  Alexander, 
1  Johns.  Ch.  394.  Still  it  is  held,  in  a  late  case,  that  the  record  of  a  mort- 
gage given  by  one  who  has  only  an  unrecorded  equitable  mortgage  is  not  no- 
tice to  a  subsequent  purchaser  of  the  legal  title  from  the  one  in  possession  of 
the  laud;  for  as  the  purchaser  does  not  derive  title  through  the  mortgagor, 
he  does  not  take  subject  to  the  recorded  mortgage:  Lish  v.  Sharp,  89  111.  261. 
An  equitable  mortgage  under  a  contract  of  purchase  is  within  the  operation 
of  the  registry  acts,  although  no  legal  estate  passes  by  it;  and  if  first  re- 
corded, it  takes  priority  over  a  subsequent  mortgage  of  an  equitable  interest; 


Feb.  1887.]      IIutzler  Brothers  v.  Phillips.  707 

anil  an  assignment  of  the  contract  of  sale,  as  security  for  debt,  is  regarded  as 
a  mortgage:  Ba/i/c  of  Greens' lornujh  v.  Clapp,  7G  N.  C.  482.  So  one  in  posses- 
sion of  laud  under  a  parol  contract  of  sale  has  a  mortgageable  interest 
therein,  and  the  mortgage,  when  executed,  being  legally  recordable,  it  ia 
notice  to  a  subsequent  mortgagee,  who  is  bound  thereby:  Crane  v.  Turner, 
7  Hun.  357. 

Deed  Ah.solute  in  Form.  — The  subject  as  to  when  a  deed  absolute  in  form 
will  be  treated  in  equity  as  a  mortgage  has  already  been  discussed  in  the 
note  to  Chases  Cafe,  17  Am.  Dec.  300,  and  no  eflfort  will  be  here  made  to 
enlarge  upon  the  authorities  there  collected,  but  merely  to  cite  the  late  cases 
bearing  upon  this  branch  of  the  subject  of  equitable  mortgages.  It  is  a 
rule  well  settled  in  equity  that  an  absolute  deed  for  land,  executed  solely 
to  secure  a  debt  due  to  the  vendee,  will  be  treated  as  a  mortgage.  Among 
the  late  cases  holding  thii  doctrine  may  be  cited  Rohinsons  v.  Lincoln  Savings 
Bank,  85  Tenn.  3G3;  McBurney  v.  Wellman,  42  Barb.  390;  Union  Mut.  Ins. 
Co.  V.  Slee,  110  111.  35;  Lucas  v.  Hendrix,  92  Ind.  64;  Johnson  v.  Smith,  39 
Iowa,  548;  French  v.  Burns,  35  Conn.  358;  Stinchjield  v.  MilUken,  71  Me. 
5G7;  KliucJc  v.  Price,  6  Am.  Rep.  2CS;  Fredericks  v.  Corcoran,  100  Pa.  St. 
417:  McLauyhlin  v.  Shepherd,  52  Am.  Dec.  646;  Graham  v.  Graham,  55  Ind. 
23;  Frink  v.  Adams,  36  N.  J.  Eq.  485;  Union  Mut.  Life  Ins.  Co.  v.  White,  106 
111.  67;  Bettis  v.  Tcnvnsend,  61  Cal.  333.  Equity  always  looks  beyond  the 
form  of  the  instrument  to  the  real  transaction,  and  when  that  is  shown  to  be 
one  of  security  merely,  and  not  of  sale,  it  will  give  effect  to  the  actual  con- 
tract of  the  parties,  and  treat  it  as  a  mortgage:  Peugh  v.  Davis,  96  U.  S.  336; 
Nicliols  V.  Beijnolds,  1  R.  I.  30;  Tappan  v.  Aylsworth,  13  Id.  582;  Montrjomery 
V.  Spect,  55  Cal.  552;  Freeman  v.  Wilson,  51  Miss.  329;  McNamara  v.  Culver, 
22  Kan.  661.  But  its  character  must  be  determined  by  the  mind  of  the  par- 
ties at  the  time  of  its  execution,  and  not  at  a  subsequent  date:  Frink  v. 
Adams,  36  N.  J.  Eq.  485;  Reed  v.  Reed,  75  Me.  264.  Though  the  deed  is 
absolute  in  form,  the  actual  intent  and  contract  of  the  parties,  that  it  should 
be  considered  merely  as  security  for  debt,  and  therefore  a  mortgage,  may  be 
shown  in  equity,  not  only  by  a  written  defeasance,  but  also  by  parol  evidence: 
Smith  V.  Crenier,  71  111.  185;  Ilurford  v.  Harned,  6  Or.  365;  Freeman  v.  Wil- 
son, 51  Miss.  329;  McNamara  v.  Culver,  22  Kan.  661;  Pierce  v.  Robinson,  13 
Cal.  116;  Montjomery  v.  Sped,  55  Id.  352;  Campbell  v.  Dearborn,  109  Mass. 
130;  Barber  v.  Milner,  43  Mich.  248;  Horn  v.  Keteltas,  46  N.  Y.  605;  Mc- 
Clurkan  v.  Thompson,  69  Pa.  St.  305;  Umbenhowcr  v.  Miller,  101  Id.  71; 
Nicolls  V.  McDmiald,  101  Id.  514;  Perkins  v.  West,  55  Vt.  265.  Parol  evi- 
dence is  thus  admissible  to  show  the  deed  a  mortgage  as  between  the  parties, 
and  as  against  those  who  have  derived  title  through  the  grantee  who  are  not 
purchasers  in  good  faith  for  value  and  without  notice,  and  such  persons  have 
the  rights,  liabilities,  and  remedies  incident  to  the  relation  of  mortgagor  and 
mortgagee:  Bcatty  v.  Brummett,  9-1  Ind.  79;  King  v.  Warnngton,  2  N.  Mex. 
318.  Such  evidence  is  admissible  for  all  purposes.  It  is  not  confined  to  a 
mere  inspection  of  the  papers,  but  may  be  received  to  show  all  the  material 
facts  and  circumstances  attending  the  transaction,  and  whatever  form  such 
instruments  may  have  assumed  may  be  shown  by  parol  evidence:  Reeil  v. 
Reed,  75  Me.  264.  Thus  it  may  be  received  to  show  that,  as  between  the 
parties,  the  deed  was  intended  as  a  mortgage,  and  that  such  mortgage  was 
afterwards  extended  to  cover  new  debts:  Walker  \.  Walker,  17  S.  C.  328;  or 
that  an  instrument  subsequently  executed  in  relation  to  the  property  was 
void  for  want  of  consideration:  Ingalls  v.  Atwood,  53  Iowa,  283.  As  the 
equity  upon  which  the  court  acts  in  such  cases  arises  from  the  real  character 


708  HuTZLER  Brothers  v.  Phillips.     [S.  Carolina, 

of  the  transaction,  any  evidence,  written  or  oral,  tending  to  show  this  is  ad- 
missible: Peufjh  V.  Davis,  96  U.  S.  3315;  Montgomery  v.  Sprci,  55  Cal.  352; 
Bartlirxj  v.  Brasuhn,  102  111.  441.  But  wlienever  it  is  sought  to  show  that  a 
deed  absolute  on  its  face  is  a  mortgage  by  parol  evidence,  it  must  be  clear 
and  convicing,  and  of  the  strongest  possible  kind:  Loio  v.  Graff,  SO  111.  360; 
Hancock  v.  Harper,  86  Id.  445;  Bartiintj  v.  Brasuhn,  supra;  MaUheivs  v.  Por- 
ter, 16  Fla.  466;  TUdeti  v.  Streeter,  45  Mich.  533;  Hoidand  v.  Blake,  97  U.  S. 
624;  Stewart's  Appeal,  98  St.  377. 

In  determining  the  question  whether  a  deed  absolute  on  its  face  is  what  it 
purports  to  be  or  a  mortgage,  the  fact  that  tlie  parties,  after  its  execution, 
still  understood  the  relation  of  creditor  and  debtor  to  exist  between  them  in 
respect  to  the  debt  on  which  the  deed  is  founded,  must  generally  be  regarded 
as  decisive  in  showing  that  the  instrument  was  intended  as  a  mortgage:  Btidd 
V.  Van  Orden,  33  N.  J.  Eq.  143;  Euffier  v.  Womack,  30  Tex.  333;  Hoffman  v. 
Eyan,  21  W.  Va.  415;  Klein  v.  McNamara,  54  Miss.  90;  Westlake  v.  Horton, 
85  111.  228.  If  any  doubt  exists  respecting  the  nature  of  the  transaction,  it 
will  be  considered  a  mortgage:   Trucks  v.  Lindsey,  18  Iowa,  504. 

So  where  the  deed  is  given  as  security,  with  a  contract  unsealed,  showing 
the  transaction,  it  will  be  regarded  as  an  equitable  mortgage  and  so  enforced: 
Lewis  V.  Small,  71  Me.  552;  Eowell  v.  Jercett,  69  Id.  293.  If  the  deed  is  ac- 
companied by  a  lease  of  the  lands,  with  a  covenant  to  redeem  within  a  certain 
time,  the  deed  and  lease  constitute  an  equitable  mortgage,  and  the  grantor's 
rights  are  not  destroyed  by  his  failure  to  pay  within  the  time  specified, 
though  the  grantee  took  possession  at  the  expiration  of  the  lease.  In  such 
case  the  time  for  making  payment  may  be  extended  by  parol:  Vliet  v.  Young, 
34  N.  J.  Eq.  15;  Stryker  v.  Hersliey,  38  Ark.  264.  Thus  where  the  grantees 
in  the  deed  execute  an  instrument  providing  that  if  the  grantor  pays  them 
for  legal  services  rendered  and  to  be  rendered  they  will  reconvey  to  him,  the 
transaction  is  an  equitable  mortgage:  Scott  v.  Meioldrter,  49  Iowa,  487.  When 
the  deed  is  determined  to  be  an  equitable  mortgage,  it  always  remains  a  mort- 
gage: Euffier  V.  Womack,  30  Tex.  332;  Youle  v.  Eicliards,  23  Am.  Dec.  723; 
Bunacleufjh  v.  Poolman,  3  Daly,  236;  Eeed  v.  Eeed,  75  Me.  265;  no  matter 
what  changes  the  parties  may  afterwards  make  in  the  conveyance:  Wilson  v. 
Giddimjs,  28  Ohio  St.  554.  But  if  when  the  deed  is  executed  the  parties  con- 
tract for  a  resale,  the  contract  does  not  divest  the  title  acquired  by  the  deed 
or  convert  it  into  a  mortgage:  Eandall  v.  Sanders,  87  N.  Y.  578;  Estate  of 
Callahan,  13  Phila.  581.  So  after  an  absolute  deed  as  security  for  debt,  the 
grantee  may  abandon  the  payment  of  the  debt,  cancel  the  secret  agreement, 
and  treat  the  conveyance  as  absolute,  and  he  will  be  bonnet  by  his  election: 
Carpenter  v.  Carpenter,  70  111.  457. 

An  absolute  deed  intended  as  a  mortgage  is  not  fraudulent  and  void  as  to 
creditors.  Under  the  weight  of  authority,  such  conveyance  is  an  indication 
of  fraud  merely  as  against  existing  creditors,  but  not  conclusive,  and  the 
implication  of  fraud  may  be  repelled  by  proof  of  an  honest  intent:  Eosa 
V.  Duggan,  5  Col.  85;  Oibson  v.  Seymour,  4  Vt.  518.  A  deed  made  to  secure 
a  debt,  but  void  as  title  on  account  of  usury,  cannot  be  foreclosed  aa  an 
equitable  mortgage:  Broach  v.  Smith,  75  Ga.  159. 


AxMERICAN  STATE  REPORTS. 

Vol..    \MI,   Packs  <)8i-:'2f;. 
F^EOPLE  :'.  (3'BRIEN. 

I  til  Nkw  Y.ikk,   1.| 

Dissolution  of  Corporations. 


CASES 

XN   THE 

COURT    OF   APPEALS 

OF 

NEW  YORK. 


People  v,  O'Brien. 

nil  New  York,  1.1 
CJORPORATIONS.  —  ThE  PeOPLE   OF  THE   StATE    HAVE    No  AUTHORITT,    UPON 

THE  Dissolution  of  a  Corporation  and  the  appointment  of  a  receiver, 
to  maintain  a  supplementary  action  against  the  receiver,  the  corpora- 
tion, and  others,  for  the  purpose  of  obtaining  a  declaration  of  the  rights 
and  liabilities  of  the  several  parties,  determining  what  were  the  assets 
of  the  company,  and  the  extent  of  the  interests  of  the  several  parties 
therein,  and  restraining  the  mortgagees,  contractors,  and  others  from 
taking  legal  proceedings  to  enforce  their  rights  in  and  liens  upon  the 
property  of  the  corporation.     Per  Ruger,  C.  J. 

Constitutional  Law  —  Corporations.  —  The  Power  to  Repeal  Acts  of 
Incorporation,  though  reserved  in  such  acts,  must  be  exercised  in  sub- 
jection to  the  provisions  of  the  federal  constitution. 

Corporation  mat  Acquire  the  Fee  in  Property,  though  created  for  a 
limited  period  only. 

An  Interest  in  the  Streets  of  the  City  of  New  York  may  be  Granted 
IN  Perpetuity,  and  irrevocably,  by  the  city  authorities. 

Grant  of  Franchise  to  Construct  and  Maintain  a  Street-railway 
WILL  BE  Construed  as  an  Irrevocable  Grant  in  Perpetuity,  though 
the  corporation  to  which  it  is  granted  was  created  for  a  limited  period 
only. 

Franchise  to  Construct  and  Maintain  a  Street-railway  is  not  a  mere 
license  or  privilege  enjoyable  only  during  the  life  of  the  grantee,  and  rev- 
ocable at  the  will  of  the  state.  It  has  been  uniformly  regarded  as  in- 
destructible by  legislative  authority,  and  as  constituting  property  in  the 
highest  sense  of  the  term. 

Corporations.  —  Repeal  of  a  Law  Authorizing  Corporations  does  not 
destroy  organization  formed  under  it. 

Dissolution  of  a  Corporation  does  not  Take  Away  or  Destroy  its 
Property  or  Annul  its  Contracts.  Such  dissolution  has  no  other 
operation  upon  its  contracts  or  property  rights  than  the  death  of  a  natu< 

ral  person  has  on  his. 

684 


Nov.  1888.]  People  v.  O'Brien.  685 

Resebvation  of  Right  to  Repeal  the  Charter  of  a  Corporation  en- 
ables a  legislature  to  effect  a  destruction  of  the  corporate  life,  and  dis- 
able it  from  continuing  its  corporate  business;  but  personal  and  real 
property  acquired  by  the  corporation  during  its  lawful  existence,  rights 
of  contract  or  choses  in  action  so  acquired,  and  which  do  not  in  their  gen- 
eral nature  depend  upon  the  powers  conferred  by  the  charter,  are  not 
destroyed  by  such  repeal. 

Fka:*chise  to  Construct  and  Maintain  a  Street-railway  Survives 
the  Dissolution  of  the  corporation  grantee,  resulting  from  the  repeal  of 
its  charter  enacted  pursuant  to  a  right  of  repeal  reserved  by  the  legisla- 
ture. 

Upon  the  Repeal  of  an  Acr  of  Incorporation,  all  the  property  and 
rights  of  the  corporation  become  vested  in  the  directors  then  in  office,  or 
in  such  persons  as  by  law  have  the  management  of  the  business  of  the 
corporation,  in  trust  for  the  stockholders  and  creditors,  unless  the  re- 
pealing law  provides  for  the  appointment  of  other  persons  than  the  offi- 
cers of  the  corporation  as  trustees. 

Constitutional  Law.  —  Statute  Attempting  to  Take  from  the  Broad- 
way Surface  Company,  its  Stockholders  and  creditors,  its  franchise 
and  property,  and  bestow  them  upon  the  municipality  of  New  York,  or 
to  direct  a  sale  of  such  franchise,  and  the  payment  of  the  purchase  price 
to  such  city,  is  unconstitutional,  and  therefore  void. 

Statute  must  not  be  Given  Retroactive  Effect  unless  its  language  ex- 
pressly requires  it. 

Character  of  a  Statute  is  not  Determined  by  its  Title,  but  by  its 
provisions,  unless  its  language  is  ambiguous,  in  which  event  its  title  and 
the  occasion  of  its  enactment  may  be  considered  to  assist  a  correct  un- 
derstanding of  its  terms. 

Statute  Providing  Proceedings  to  be  Taken  on  the  Dissolution  of  a 
Corporation  by  Act  of  the  Legislature  must  be  Given  a  Prospec- 
tive Operation,  and  cannot  be  applied  to  a  corporation  so  dissolved 
prior  to  the  enactment  of  the  statute. 

Constitutional  Law.  —  When,  by  Reason  of  the  Dissolution  of  a  Cor- 
poration, its  Property  has  Vested  in  its  Directors,  in  trust  for  its 
stockholders  and  creditors,  the  legislature  has  no  power  to  subsequently 
provide  for  the  appointment  of  a  receiver  and  the  transfer  of  the  corpo- 
rate assets  to  him;  such  appointment  to  be  made  by  a  court  in  an  action 
to  which  such  directors  are  not  parties,  and  in  which  the  court  has  no 
other  judicial  discretion  or  authority  than  to  designate  such  receiver. 

Statute  Forbidding  a  Street-railway  Company  from  leasing  its  rights 
or  franchises  to  any  person  or  company  operating  a  road  parallel  thereto 
does  not  inhibit  traffic  contracts  with  parallel  roads  for  the  partial  use 
of  their  respective  routes  beyond  the  line  of  parallelism. 

Action  by  the  attorney-general  in  the  name  of  the  people 
against  John  O'Brien,  receiver  of  the  Broadway  Surface  Rail- 
road Company,  the  mayor  of  the  city  of  New  York,  the  Broad- 
way and  Seventh  Avenue  Railroad  Company,  the  Twenty-third 
Street  Railway  Company,  Francis  A.  Palmer  and  William  H. 
Hayes,  trustees  under  certain  mortgages.  The  president  and 
trustees  of  the  Broadway  Surface  Railroad  Company,  at  the 


686  People  v.  O'Brien.  [New  York, 

time  of  its  dissolution,  were  also  parties  defendant,  as  were ' 
several  other  persons. 

Charles  H.  Tabor^  attorney-general,  and  WiUiam  A.  PosU^  for 
the  people. 

Denis  O'Brien,  for  the  receiver. 

James  C.  Carter  and  Elihu  Root,  for  the  Broadway  and 
Seventh  Avenue  Railroad  Company. 

Albert  Stickney  and  Nelson  S.  Spencer,  for  Jacoh  Sharp  and 
the  Twenty-third  Street  Railway  Company. 

Edward  W.  Paige,  for  the  mortgage  trustees. 

Thomas  Allison,  for  the  mayor  of  New  York. 

William  C.  Gulliver,  for  James  A.  Richmond  and  others. 

RuoER,  C.  J.  It  will  not  be  unprofitable,  at  the  outset,  to 
recall  some  of  the  prominent  incidents  attending  the  origin 
and  operation  of  the  Broadway  Surface  Railroad  Company, 
for  the  purpose  of  obtaining  a  clearer  view  of  the  situation  of 
the  parties,  and  their  relation  to  the  subject  of  the  action. 

On  May  13,  1884,  that  company  filed  articles  of  association, 
and  became  incorporated  as  a  street-railroad  company  under 
the  provisions  of  chapter  252  of  the  Laws  of  1884,  a  general 
act  passed  to  authorize  the  formation  of  such  corporations, 
pursuant  to  the  mode  introduced  by  the  amendment  to  the 
constitution  of  1874,  By  such  incorporation  the  company 
became  an  artificial  being,  endowed  with  capacity  to  acquire 
and  hold  such  rights  and  property,  both  real  and  personal,  as 
were  necessary  to  enable  it  to  transact  the  business  for  which  it 
was  created,  and  allowed  to  mortgage  its  franchises  as  security 
for  loans  made  to  it,  but  having  no  present  authority  to  con- 
struct or  operate  a  railroad  upon  the  streets  of  any  munici- 
pality. This  right,  under  the  constitution,  could  be  acquired 
only  from  the  city  authorities,  and  they  could  grant  or  refuse 
it  at  their  pleasure.  The  constitution  not  only  made  the  con- 
sent of  the  municipal  authorities  indispensable  to  the  creation 
of  such  a  right,  but,  by  implication,  conferred  authority  upon 
them  to  grant  the  consent,  upon  such  terms  and  conditions  as 
they  chose  to  impose,  and  upon  the  corporation  the  right  to 
acquire  it  by  purchase. 

The  framers  of  the  constitution,  evidently  treating  the  privi- 
lege as  a  valuable  one,  which  should  be  disposed  of  for  the 
benefit  of  the  municipality,  to  those  who  would  pay  the  high- 


Nov.  1888.]  People  v.  O'Brien.  687 

est  price  for  it,  gave  the  municipal  authorities  the  exclusive 
right  to  grant  the  privilege,  which  had  theretofore  heen  exer- 
cised by  the  legislature  alone,  and  authorized  its  acquisition 
by  contract  from  such  municipality:  In  re  Cable  Co.,  109  N.  Y. 
32;  Mayor  etc.  v.  T.  &  L.  R.  R.  Co.,  49  Id.  657.  The  subsequent 
legislation  of  the  state  conlirms  this  view,  for  at  times  it  has 
provided  that  such  right  might  be  sold  at  auction,  and  by 
chapters  65  and  642  of  the  Laws  of  1886  makes  it  obligatory 
upon  the  municipalities  to  dispose  of  such  right  by  public 
auction  to  the  highest  bidder. 

Previous  to  December  5,  1884,  this  company  applied  to  the 
municipality  of  New  York  for  authority  to  lay  tracks  and  run 
cars  over  Broadway  from  the  Battery  to  Fifteenth  Street,  and 
on  that  day,  by  resolution  of  the  common  counsel,  the  consent 
of  the  city  was  given  upon  the  terms  and  conditions  prescribed 
in  the  resolution  granting  it,  among  which  was  the  annual 
payment  of  a  considerable  sum  of  money  to  the  municipality. 
It  is  conceded  that  the  Broadway  Surface  company  duly  ac- 
cepted the  grant,  and  fully  complied  with  and  performed  all 
of  the  terms  and  conditions  provided  therein,  to  entitle  it  to 
acquire,  construct,  and  operate  its  road.  We  know,  not  only 
from  contemporary  history,  but  from  cases  which  have  already 
reached  this  court,  that  serious  questions  have  arisen,  with 
reference  to  the  propriety  of  the  means  by  which  the  corpora- 
tors of  the  company  obtained  this  consent  from  the  municipal 
authorities,  but  they  are  not  involved  in  this  case,  and  have 
no  bearing  upon  the  questions  presented  for  discussion  by  the 
record.  They  were  neither  alleged  in  the  complaint,  supported 
by  proof,  or  presented  in  the  arguments  of  counsel.  The  com- 
pany subsequently  obtained  the  favorable  report  of  a  commis- 
sion duly  appointed  by  the  supreme  court  in  lieu  of  the  consent 
of  ijibutting  property  owners,  and  the  order  of  the  court  con- 
firming the  action  of  the  commissioners. 

After  its  incorporation  the  Broadway  Surface  company  mort- 
gaged its  property  and  franchises  as  security  for  contemplated 
loans,  and  authorized  its  bonds  to  be  put  upon  the  market  for 
sale  to  the  public  generally,  and  they  were  largely  purchased 
by  investers,  without  notice  of  any  defect  in  their  origin  or 
execution.  It  also  made  contracts  with  other  street-railroad 
companies  owning,  respectively,  lines  of  road  connecting  with 
the  contemplated  line  of  the  Broadway  Surface  company,  and 
diverging  therefrom  to  distant  parts  of  the  city,  for  the  use  of 
their  several  tracks  by  each  other,  for  which  it  received  a  large 


688  People  v.  O'Brien.  [New  York, 

present  pecuniary  consideration  from  each  of  said  companies, 
besides  the  exchange  of  mutual  benefits  and  accommodations. 

It  is  not  disputed  but  that  upon  the  entry  of  the  order  of 
confirmation  the  Broadway  Surface  Railroad  Company  be- 
came vested  with  tbe  right  of  constructing  a  railroad  on 
Broadway,  and  running  cars  thereon,  to  as  full  an  extent  as  it 
had  power  to  acquire,  or  the  state  and  city  authorities  had 
authority  to  grant. 

In  the  spring  of  1885  the  company  caused  its  track  to  be 
constructed  over  the  route  authorized,  and  from  that  time  to 
the  fourth  day  of  May,  1886,  when  it  was  dissolved  by  an  act 
of  the  legislature,  in  connection  with  other  railroad  companies, 
ran  its  cars  over  such  road  and  the  connecting  lines. 

On  May  14,  1886,  in  an  action  between  the  people,  as  plain- 
tiff, and  James  A.  Richmond,  the  former  president  of  the 
Broadway  Surface  Railroad  Company,  as  sole  defendant,  upon 
the  application  of  the  attorney-general,  one  John  O'Brien  was 
appointed  receiver  of  the  property  formerly  belonging  to  the 
Broadway  Surface  company,  by  a  justice  of  the  supreme  court 
of  the  third  judicial  district,  in  an  ex  parte  order  based  upon 
the  summons  and  complaint  in  that  action,  in  pursuance  of 
and  under  the  authority  alone  of  the  provisions  of  chapter  810 
of  the  Laws  of  1886. 

The  present  action  was  a  supplementary  action  brought  July 
8,  1886,  by  the  attorney-general  in  the  name  of  the  people  of 
the  state  against  the  city  of  New  York,  the  receiver  of  the 
Broadway  Surface  Railroad  Company,  and  numerous  other 
corporations  and  persons,  alleged  to  have  had  dealings  with 
such  company,  either  as  stockholders,  mortgagees,  creditors,  or 
contractors,  for  the  purpose  of  obtaining  a  judgment  declara- 
tory of  the  rights  and  liabilities  of  the  several  parties,  as  af- 
fected by  the  dissolution  of  the  corporation,  determining  the 
fact  as  to  what  were  assets  of  the  company,  and  the  extent  of 
the  interests  of  the  several  parties  therein,  and  restraining  the 
mortgagees,  contractors,  and  others  from  taking  legal  proceed- 
ings to  enforce  their  rights  in  and  liens  upon  the  property  of 
the  corporation. 

It  is  not  claimed  that  the  state  has  any  legal  interest  in  the 
determination  of  these  questions,  or  that  the  receiver  has  not 
ample  power  at  law  to  obtain  possession  of  such  assets  as  he 
may  be  entitled  to,  or  to  protect  the  property  of  the  corpora- 
tion from  unlawful  claims.  It  is  claimed  that  the  action  is 
maintainable  under  the  provisions  of  section  1  of  chapter  310 


Nov.  1888.]  People  v.  O'Brien.  689 

of  the  Laws  of  1886,  by  virtue  of  the  provision  making  it  the 
duty  of  the  attorney-general,  upon  the  dissolution  of  a  corpo- 
ration by  legislative  action,  "immediately  thereafter  to  bring 
a  suit  to  wind  up  and  finally  settle  and  adjust  the  afifairs  of 
Buch  annulled  and  dissolved  corporation." 

The  complaint  shows  that  previous  to  the  commencement 
of  this  action  the  attorney-general  had  brought  a  suit,  in 
accordance  with  the  statute,  to  wind  up  the  affairs  of  the  cor- 
poration; that  a  receiver  had  been  appointed  therein,  and  that 
such  action  was  still  pending  undetermined.  It  then  proceeds 
to  allege  that  in  consequence  of  various  enumerated  difficul- 
ties in  obtaining  possession  of  the  property  by  the  receiver, 
this  action  was  brought  "  in  aid  of  the  former  action  to  pre- 
vent a  multiplicity  of  suits,  and  to  carry  out  the  provisions  of 
chapter  310  of  the  Laws  of  1886." 

It  is  not  easy  to  see  on  what  theory  such  an  action  can  be 
maintained.  The  state  has  no  interest  entitling  it  to  intervene 
to  prevent  a  multiplicity  of  actions  between  other  parties. 
Neither  does  the  action  seem  necessary  or  proper  in  aid  of  the 
former  action. 

The  mode  by  which  the  provisions  of  chapter  310  are  to  be 
carried  out  are  specially  provided  by  that  act  to  be  through 
the  instrumentality  of  a  receiver,  and  it  is  not  claimed  that 
the  receiver  lacked  power  to  litigate  and  settle  any  of  the 
questions  presented  by  this  complaint.  The  receiver  might, 
perhaps,  have  brought  an  action  similar  in  character  to  this, 
and  would  have  had  a  legal  interest,  if  any,  in  the  property  to 
be  afifected  by  it;  but  the  state  has  no  such  interest,  and  has 
no  greater  authority  to  intervene  in  the  litigation  of  contro- 
versies between  individuals  and  corporations  than  any  other 
indifferent  party:  People  v.  Booth,  32  N.  Y.  397;  People  v. 
Inyersoll,  58  Id.  13;  17  Am.  Rep.  178;  Matter  of  N.  Y.  Ele- 
vated R.  R.,  70  N.  Y.  339;  People  v.  B.,  F.,  &  C.  I.  R.  R.  Co., 
89  Id.  93;  People  v.  A.  &  S.  R.  R.  Co.,  57  Id.  161. 

It  is  claimed  that  this  court  held  in  People  v.  O^Brien,  103 
N.  Y.  657,  that  the  action  was  maintainable.  We  think  that 
claim  is  unfounded.  The  question  was  not  involved  in  the 
motion  there  considered.  That  was  a  motion  to  change  the 
place  of  trial  of  the  action.  Whether  the  complaint  stated  a 
good  cause  of  action  or  not,  could  not  have  been  properly 
considered  or  decided  on  such  a  motion. 

This    action    is    certainly  unusual,   and   is   believed   to  be 

unprecedented  in  its  scope  and  design;  and  if  held  to  lie  at 
Am.  St.  Rep.,  Vol.  VII.  —44 


690  People  v.  O'Brien.  [Nevr  York, 

all,  presents  a  strong  and  unfavorable  contrast  to  the  mode  in 
which  legal  controversies  are  usually  brought  to  the  attention 
of  judicial  tribunals.  Some  members  of  the  court,  however, 
are  of  the  opinion  that  the  right  of  the  people  to  maintain  the 
action  depends  wholly  upon  the  question  of  the  constitution- 
ality of  chapter  310  referred  to,  and  requiring  the  consideration 
of  that  question. 

Considering,  therefore,  the  magnitude  of  the  interests 
affected,  and  the  importance  to  the  public  generally  of  a 
speedy  determination  of  the  questions,  involving  the  right  of 
operating  a  street-railroad  on  Broadway,  notwithstanding  the 
dissolution  of  the  corporation  to  which  that  right  was  originally 
granted,  we  refrain  from  disposing  of  the  case  upon  the  ground 
referred  to,  and  proceed  to  an  examination  of  the  questions 
upon  which  such  right  depends. 

Their  determination  involves  an  inquiry  into  the  rights 
secured  by  the  mortgagees  and  bond-holders  through  the 
mortgages  upon  the  property  and  franchises  of  the  railroad 
company;  the  validity  of  the  traflQc  contracts  made  by  it  with 
other  street-railroad  corporations,  and  the  effect  which  the 
legislation  of  1886,  comprised  in  chapters  268,  271,  and  310, 
had  upon  such  questions.  In  other  words,  we  think  the  mate- 
rial question  for  discussion  here  is,  whether  the  franchise  to 
maintain  tracks  and  run  cars  on  Broadway  survived  the  disso- 
lution of  the  corporation,  and  if  so,  upon  whom  the  right  of 
administering  its  aff'airs  devolved. 

Upon  the  trial  of  the  action,  a  judgment  was  rendered  in 
favor  of  the  defendants,  except  the  receiver,  to  the  effect  that 
the  mortgages  were  valid  liens  upon  the  property  and  fran- 
chises of  the  company,  and  survived  the  dissolution  of  the 
corporation;  that  the  traffic  contracts  were  made  by  authority 
of  law,  and  could  be  enforced  notwithstanding  the  dissolution 
of  the  corporation;  and  that  chapter  271,  and  parts  of  chapter 
310,  of  the  Laws  of  1886,  were  unconstitutional,  as  violative 
of  the  restrictions  of  the  fundamental  law  in  relation  to  legis- 
lation impairing  the  obligation  of  contracts,  and  constituting 
a  taking  of  "property  without  due  process  of  law." 

The  court  also  held  that  this  action  was  maintainable  in  the 
name  of  the  people;  that  a  receiver  of  the  property  of  the  dis- 
solved corporation  had  been  lawfully  appointed;  that  he  was 
entitled  to  take  possession  of  its  property,  and  wind  up  its 
affairs,  and  that  the  plaintiff's  were  entitled  to  a  perpetual  in- 
junction restraining  all  of  the  defendants,  except  the  receiver, 


Nov.  1888.]  People  v.  O'Brien.  691 

from  proceeding  with  actions  already  begun,  or  from  institut- 
ing other  proceedings  or  actions  to  enforce,  maintain,  or  assert 
any  of  the  claims,  demands,  or  rights  of  action  affecting  in 
any  manner  the  affairs,  property,  rights,  and  privileges  of  the 
Broadway  Surface  Railroad  Company  which  have  been  tried 
and  determined  in  this  action.  Not  only  the  plaintiff,  but 
each  of  the  defendants  except  the  Broadway  and  Seventh 
Avenue  Railroad  Company,  appealed  from  this  judgment  to 
the  general  term.  That  court  aflSrraed  the  judgment  of  the 
trial  court. 

The  plaintiff  and  all  of  the  defendants,  except  the  two 
railroad  corporations,  appeal  from  the  judgment  of  affirmance 
to  this  court,  and  thus  bring  before  us  every  determination 
involved  in  the  judgment. 

A  review  of  the  judgment  brings  up  for  consideration 
propositions  very  grave  in  character,  not  only  on  account  of 
the  extent  of  the  private  interests  affected,  but  because  their 
determination  will  affect  great  public  questions  arising  out  of 
the  limitations  imposed  by  the  constitution  upon  the  legisla- 
tive power,  over  the  property  of  corporations  lawfully  acquired. 

The  statutes  upon  which  the  action  is  predicated,  confess- 
edly assume  the  right  and  power  of  the  legislature  to  wrest 
from  the  company  its  franchises,  to  transfer  them  to  other 
persons,  and  bestow  their  value  upon  the  donees  of  the  state. 
The  statutes  contemplate  the  absolute  destruction  of  the  prop- 
erty of  the  corporation,  and  the  loss  of  its  value  to  the  credi- 
tors who  have  made  loans  in  good  faith  upon  the  security  of 
such  property,  and  this  action  is  avowedly  prosecuted  to 
accomplish  the  purposes  of  the  legislation.  It  is  therefore 
urgently  contended  by  the  attorney-general  that  none  of  the 
franchises  of  the  corporation  survived  its  dissolution,  and  that 
the  mortgages  previously  given  thereon,  as  well  as  all  con- 
tracts made  with  connecting  street-railroads  for  the  mutual 
use  of  their  respective  roads,  fell  with  the  repeal,  and  could 
not  be  enforced. 

If  it  could  be  supposed  for  a  moment  that  this  claim  was 
reasonably  supported  by  authority,  or  maintainable  in  logic 
or  reason,  it  would  give  grave  cause  for  alarm  to  all  holders 
of  corporate  securities. 

The  contention  that  securities  representing  a  large  part  of 
the  world's  wealth  are  beyond  the  reach  of  the  protection 
which  the  constitution  gives  to  property,  and  are  subject  to 
the  arbitrary  will  of  successive   legislatures,  to  sanction  or 


692  People  v.  O'Brien.  [New  York, 

destroy  at  their  pleasure  or  discretion,  is  a  proposition  so  re- 
pugnant to  reason  and  justice,  as  well,  as  the  traditions  of  the 
Anglo-Saxon  race  in  respect  to  the  security  of  rights  of  prop- 
erty, that  there  is  little  reason  to  suppose  that  it  will  ever 
receive  the  sanction  of  the  judiciary,  and  we  desire  in  unquali- 
fied terms  to  express  our  disapprobation  of  such  a  doctrine. 
Whatever  might  have  been  the  intention  of  the  legislature  or 
even  of  the  framers  of  our  constitution  in  respect  to  the  effect 
of  the  power  of  repeal  reserved  in  acts  of  incorporation,  upon 
the  property  rights  of  a  corporation,  such  power  must  still  be 
exercised  in  subjection  to  the  provisions  of  the  federal  consti- 
tution. 

Considering  the  power  which  the  state  has  to  terminate  the 
life  of  corporations  organized  under  its  laws,  and  the  authority 
which  its  attorney-general  has  by  suit  to  forfeit  its  franchises 
for  misuse  or  abuse,  and  to  regulate  and  restrain  corporations 
in  the  exercise  of  their  corporate  powers,  there  is  little  danger 
to  be  apprehended  in  the  future  from  the  overgrowth  of  power, 
or  the  monopolistic  tendencies  of  such  organizations,  but  what- 
ever that  danger  may  be,  it  is  trivial  in  comparison  with  the 
widespread  loss  and  destruction  which  would  follow  a  judi- 
cial determination  that  the  property  invested  in  corporate 
securities  was  beyond  the  pale  of  the  protection  afforded  by 
the  fundamental  law. 

It  is  not  perhaps  strange  in  the  great  variety  of  cases  bear- 
ing upon  the  subject,  and  the  manifold  aspects  in  which  ques- 
tions relating  to  corporate  rights  and  property  have  been 
presented  to  the  courts,  that  dicta,  couched  in  general  lan- 
guage, may  be  found  giving  color  to  the  plaintiff's  claim;  but 
we  think  that  there  are  no  reporfed  cases  in  which  the  judg- 
ment of  the  court  has  ever  taken  the  franchises  or  property  of 
a  corporation  from  its  stockholders  and  creditors  through  the 
exercise  of  the  reserved  power  of  amendment  and  repeal,  or 
transferred  it  to  other  persons  or  corporations,  without  provis- 
ion made  for  compensation. 

Among  other  claims  made  by  the  state,  it  is  contended  that 
the  stated  term  of  one  thousand  years  prescribed  in  its  char- 
ter for  the  duration  of  the  company  constitutes  a  limitation 
upon  the  estate  granted,  and  that  therefore  the  corporation 
took  a  qualified  estate  only  in  its  franchises,  and  that  the 
rights  reserved  by  the  Revised  Statutes  (Laws  of  1884  and  1850) 
and  the  constitution  to  alter,  amend,  and  repeal  the  charters 
or  laws  under  which  corporations  might  be  organized,  also 


Nov.  1888.]  People  v.  O'Brien.  G93 

constituted  a  limitation  upon  the  estate  granted,  and  that  the 
exercise  of  the  right  of  repeal  by  the  state  accomplished  the 
destruction  of  the  corporntion  and  the  annihilation  of  all 
franchises  acquired  under  its  charter. 

It  will  be  convenient,  in  the  first  instance,  to  consider  the 
nature  of  the  right  acquired  by  the  corporation  under  the 
grant  of  the  common  council  with  respect  to  its  terms  or  dura- 
tion. This  is  to  be  determined  by  a  consideration  of  the  lan- 
guage of  the  grant  and  the  extent  of  the  interest  which  the 
grantor  had  authority  to  convey.  We  think  this  question 
has  been  decided  Ijy  cases  in  this  court,  which  are  binding 
upon  us  as  authority  in  favor  of  the  perpetuity  of  such  estates. 
That  a  corporation,  although  created  for  a  limited  period,  may 
acquire  title  in  fee  to  lands  or  property  necessary  for  its  use, 
was  decided  in  Nicoll  v.  New  York  and  Erie  R.  R.  Co.,  12 
N.  Y.  121,  where  it  was  held  that  a  railroad  corporation,  al- 
though created  for  a  limited  period  only,  might  acquire  such 
title,  and  that  where  no  limitation  or  restriction  upon  the  right 
conveyed  was  oontained  in  the  grant,  the  grantee  took  all  of 
the  estate  possessed  by  the  grantor. 

The  title  to  streets  in  New  York  is  vested  in  the  city  in 
trust  for  the  people  of  the  state,  but  under  the  constitution 
and  statutes  it  had  authority  to  convey  such  title  as  was  neces- 
sary for  the  purpose  to  corporations  desiring  to  acquire  the 
same  for  use  as  a  street-railroad.  The  city  had  authority  to 
limit  the  estate  granted,  either  as  to  the  extent  of  its  use  or 
the  time  of  its  enjoyment,  and  also  had  power  to  grant  an 
interest  in  its  streets  for  a  public  use  in  perpetuity,  which 
should  be  irrevocable:  Yates  v.  Van  de  Bogert,  56  N.  Y.  526; 
In  re  Cable  Co.,  109  Id.  32. 

Grants  similar  in  all  material  respects  to  the  one  in  question 
have  heretofore  been  before  the  courts  of  this  state  for  con- 
struction, and  it  has  been  quite  uniformly  held  that  they  vest 
the  grantee  with  an  interest  in  the  street  in  perpetuity  for  the 
purposes  of  a  street-railroad:  People  v.  Sturtevant,  9  N.  Y.  263; 
59  Am.  Dec.  536;  Davis  v.  Mayor  etc.  of  New  York,  14  N.  Y. 
506;  67  Am.  Dec.  186;  Milhau  v.  Sharp,  27  N.  Y.  611;  84 
Am.  Dec.  314;  Mayor  etc.  v.  Second  Ave.  R.  R.  Co.,  32  N.  Y. 
261;  Sixth  Ave.  R.  R.  Co.  v.  Kerr,  72  Id.  330. 

Other  cases  are  also  reported  in  the  books,  but  it  is  deemed 
unnecessary  to  accumulate  authorities  on  this  point. 

In  Milhau  V.  Sharp,  27  N.  Y.  611,  84  Am.  Dec.  314,  Judge 
Selden  said,  with  reference  to  a  grant  from  the  common  coun- 


694  People  v.  O'Brien.  [New  York, 

cil  of  New  York  in  no  material  respect  dififering  from  this: 
"  It  amounted  to  an  immediate  grant  of  an  interest,  and,  it 
would  seem,  of  a  freehold  in  the  soil  of  the  street  to  the  de- 
fendants. The  rails,  when  laid,  would  become  a  part  of  the 
real  estate,  and  the  exclusive  right  to  maintain  them  perpetu- 
ally is  vested  in  the  defendants,  their  successors  and  assigns. 
I  say  perpetually,  because  there  is  no  limitation  in  point  of 
time  to  the  continuance  of  the  franchise,  and  no  direct  power 

is  reserved  to  the  corporation  to  terminate  it The  title 

to  the  rails,  when  permanently  attached  to  the  land,  and  such 
right  in  the  land  as  may  be  requisite  ,for  their  perpetual 
maintenance,  are  therefore  granted  to  the  defendants  by  the 
resolution." 

Judge  Comstock,  in  Davis  v.  Mayor  of  New  York,  14  N.  Y. 
506,  67  Am.  Dec.  186,  said:  "As  the  consideration  for  con- 
structing the  road,  the  ordinance  clearly  contemplates  that  it 
is  to  become  the  private  property  of  the  associates.  They 
alone  will  be  entitled  to  place  their  cars  upon  it,  and  within 
a  maximum  limit  they  can  charge  what  they  please  for  the 
carriage  of  passengers.  These  rights  are,  in  effect,  granted  in 
perpetuity." 

In  the  case  of  Mayor  etc.  v.  Second  Avenue  R.  R.  Co.,  32 
N.  Y.  272,  it  was  said:  "Assuming  that  the  common  council 
had  power  to  make  the  grant,  then  its  acceptance  by  Pearsall 
and  his  associates,  signified  by  the  execution  of  the  agreement 
with  the  conditions  annexed  thereto,  and  the  duties  and  obli- 
gations resulting  therefrom,  invested  the  latter  with  the  right 
of  property  in  the  franchise  which  the  common  council  could 
not  take  away  or  impair  by  any  subsequent  act  of  its  own." 

The  resolution  of  the  common  council  in  this  case  expressly 
provided  for  traffic  contracts  by  which  the  Broadway  and 
Seventh  Avenue  Railroad  Company  should  obtain  a  right  to 
run  cars  over  the  tracks  of  the  Broadway  Surface  railroad, 
and  no  conditions  upon  the  right  granted  to  the  Broadway 
Surface  Railroad  Company,  in  respect  to  the  duration  of  such 
contract  rights  or  otherwise,  were  imposed  by  the  terms  of  the 
grant.  It  was  clearly  contemplated  by  its  provisions  that  the 
rights  granted  should  be  exercised  in  perpetuity,  if  public 
convenience  required  it,  by  that  corporation,  or  those  who 
might  lawfully  succeed  to  its  rights. 

When  we  consider  the  mode  required  by  the  statutes  and 
the  constitution  to  be  pursued  in  disposing  of  this  franchise, 
the  inference  as  to  its  perpetuity  seems  to  be  irresistible,  for  it 


Nov.  1888.]  People  v.  O'Brien.  695 

cannot  be  supposed  that  either  the  legislature  or  the  framers 
of  the  constitution  intended  to  offer  for  public  sale  property 
the  title  to  which  was  defeasible,  at  the  option  of  the  vendor, 
or  that  such  property  could  be  made  the  subject  of  successive 
sales  to  different  vendees  as  often  as  popular  caprice  might 
require  it  to  be  done. 

Neither  can  it  be  supposed  that  they  contemplated  the  re- 
Bumption  of  property  which  they  had  expressly  authorized 
their  grantee  to  mortgage,  and  otherwise  dispose  of,  to  the  de- 
etruction  of  interests  created  therein  by  their  consent. 

We  are  therefore  of  the  opinion  that  the  Broadway  Surface 
Railroad  Company  took  an  estate  in  perpetuity  in  Broadway, 
through  its  grant  from  the  city,  under  the  authority  of  the  con- 
stitution and  the  act  of  the  legislature.  It  is  also  well  settled 
by  authority  in  this  state  that  such  a  right  constitutes  prop- 
erty within  the  usual  and  common  signification  of  that  word: 
Sixth  Avenue  R.  R.  Co.  v.  Kerr,  72  N.  Y.  330;  Peo'ple  v.  StuHe- 
vant,  9  Id.  263;  59  Am.  Dec.  536. 

When  we  consider  the  generality  with  which  investments 
have  been  made  in  securities  based  upon  corporate  franchises 
throughout  the  whole  country,  the  numerous  laws  adopted  in 
the  several  states  providing  for  their  security  and  enjoyment, 
and  the  extent  of  litigation  conducted  in  the  various  courts, 
state  and  federal,  in  which  they  have  been  upheld  and  en- 
forced, there  is  no  question  but  that,  in  the  view  of  legislatures, 
courts,  and  the  public  at  large,  certain  corporate  franchises 
have  been  uniformly  regarded  as  indescructible  by  legislative 
authority,  and  as  constituting  property  in  the  highest  sense  of 
the  term. 

It  is,  however,  earnestly  contended  for  the  state  that  such  a 
franchise  is  a  mere  license  or  privilege  enjoyable  during  the 
life  of  the  grantee  only,  and  revocable  at  the  will  of  the  state. 
We  believe  this  proposition  to  be  not  only  repugnant  to  jus- 
tice and  reason,  but  contrary  to  the  uniform  course  of  au- 
thority in  this  country.  The  laws  of  this  state  have  made 
such  interests  taxable,  inheritable,  alienable,  subject  to  levy 
and  sale  under  execution,  to  condemnation  under  the  exercise 
of  the  right  of  eminent  domain,  and  invested  them  with  the 
attributes  of  property  generally. 

We  will  refer  to  a  few  only  of  the  statutes  on  this  subject 
from  which  the  implication  arises,  not  only  that  the  state  in- 
tended to  invest  these  franchises  with  the  character  of  prop- 
erty, but  also  to  enable  their  mortgagees,  purchasers,  and 


696  People  v.  O'Brien.  [New  York, 

assigns  to  enjoy  their  use  under  an  indefeasible  title.  Thus 
railroad  corporations  have  been  authorized  to  contract  with 
other  corporations  for  a  qualified  transfer  of  such  franchises 
for  terms  unlimited  except  by  the  agreement  of  the  parties: 
Laws  of  1839,  c.  218;  Laws  of  1872,  sec.  2,  c.  1843;  Laws  of 
1884,  sec.  15,  c.  252;  to  pledge  them  by  way  of  mortgage  as 
security  for  loans:  Laws  of  1850,  subd.  10,  sec.  28;  to  con- 
solidate with  other  companies  owning  connecting  and  con- 
tinuous lines  of  railroad,  and  continue  the  use  of  such 
franchises  under  the  name  of  their  successors:  Laws  of  1875, 
c.  108;  Shields  v.  Ohio,  95  U.  S.  319.  Mortgagees  and  others 
have  been  authorized  to  purchase  such  franchises  upon  mort- 
gage sale  and  otherwise,  and  afforded  the  right  to  organize  so 
as  to  enjoy  their  use  thereafter:  Laws  cf  1857,  sec.  1,  c.  444; 
Laws  of  1873,  c.  469,  710;  Laws  of  1880,  c.  113;  Laws  of  1874, 
c.  430.  Purchasers  upon  a  mortgage  or  execution  sale  have 
been  authorized  to  form  associations  for  the  purpose  of  con- 
tinuing the  operation  of  such  railroad  with  all  its  powers, 
privileges,  and  franchises:  Laws  of  1873,  sec.  1,  c.  469,  710; 
Laws  of  1854,  sec.  1,  c.  282.  The  sale  of  such  franchises  has 
been  authorized  by  the  municipality  where  located  to  parties 
proposing  to  build  street- railroads:  Constitutional  Amendment 
of  1875;  Laws  of  1884,  sec.  7,  c.  252;  Laws  of  1886,  c.  62,  66. 
And  by  section  15  of  the  act  under  which  this  corporation  was 
organized,  such  companies  were  expressly  permitted  to  lease 
or  transfer  their  rights  and  franchises  to  other  street-railroad 
corporations.  Indeed,  it  is  matter  of  public  history  that  one 
half  of  the  railroads  of  the  state  are  now  operated  by  organiza- 
tions other  than  those  to  whom  the  franchises  were  originally 
granted,  notwithstanding  their  dissolution  through  transfers 
effected  by  the  foreclosure  of  mortgages  and  otherwise. 

The  statutes  cited,  as  well  as  others  not  specially  referred  to, 
indicate  the  general  policy  of  the  state  to  render  such  interests 
independent  of  the  life  of  the  original  corporation  and  trans- 
ferable as  property  by  means  of  judicial  proceedings  and 
otherwise,  under  certain  restrictions  not  pertinent  to  our 
present  purpose  particularly  to  consider:  People  v.  Brooklyn, 
F.,  &  C.  I.  R.  R.  Co.,  89  N.  Y.  84. 

In  Mayor  etc.  v.  Second  Avenue  R.  R.  Co.,  32  N.  Y.  261,  Judge 
Brown  said:  "The  rights  of  municipal  corporations  to  prop- 
erty in  lands  and  its  usual  incidents,  and  to  create  ferries  and 
railroad  franchises,  are  quite  distinct  and  separate  from  their 
duties  as  legislatures,  having  authority  to  pass  ordinances  for 


Nov.  18S8.]  People  v.  O'Brien.  697 

the  control  and  government  of  persons  and  interests  within  the 
city  limits.  The  latter  are  powers  held  in  trust,  as  all  legis- 
lative powers  are,  to  be  used  and  exercised  for  the  benefit  and 
welfare  of  the  whole  community,  while  the  former  are  property, 
in  the  ordinary  sense,  to  be  acquired  and  conveyed  in  the 
same  manner  as  natural  persons  acquire  and  transfer  prop- 
erty." 

The  same  learned  judge  said  in  Brooklyn  Central  R.  R.  Co.  v. 
Brooklyn  City  R.  R.  Co.,  82  Barb.  364:  "The  grant  to  the  city 
railroad  company  and  its  acceptance  on  the  conditions  an- 
nexed, with  the  duties  and  obligations  and  large  expenditures 
resulting  therefrom,  would  seem,  therefore,  upon  the  principles 
I  have  endeavored  to  state,  to  invest  the  company  with  the 
right  of  property  in  the  franchise  of  which  it  cannot  be  de- 
prived without  its  consent  or  against  its  will." 

It  was  held  by  this  court  in  Langdon  v.  Mayor  etc.,  93  N.Y. 
129,  that  a  grant  from  the  city,  of  land  to  be  used  as  a  wharf, 
carried  with  it,  as  a  necessary  incident  and  appurtenance,  a 
right  of  way  for  vessels  over  adjoining  waters  to  the  wharf, 
and  that  under  such  grants  the  property  granted  can  only  be 
resumed  by  the  grantor  when  needed  for  public  use  by  the 
exercise  of  the  right  of  eminent  domain. 

The  court  also  held  in  People  v.  Brooklyn  etc.  R.  R.  Co.,  89 
N.  Y,  75,  that  upon  a  foreclosure  of  the  property  and  fran- 
chises of  a  railroad  corporation,  an  individual  could  lawfully 
become  their  purchaser,  and  could  hold  and  transfer  them  to 
any  corporation  having  or  acquiring  the  right  to  exercise  such 
franchises. 

In  Sixth  Avenue  R.  R.  Co.  v.  Kerr,  72  N.  Y.  330,  it  was  held 
that  the  right  of  a  street-railroad  company  in  the  use  of  a 
street  for  the  purpose  of  its  business  was  a  property  right, 
subject  to  condemnation  for  public  use.  As  we  have  already 
seen,  the  cases  of  People  v.  Sturievant,  Mayor  etc.  v.  Sixth 
Avenue  R.  R.,  Davis  v.  Mayor  etc.,  and  Milhau  v.  Sharp, 
hereinbefore  referred  to,  sustain  the  same  views. 

The  case  of  N.  0.,  S.  F.,  &  Lake  R.  R.  Co.  v.  Delamore,  114 
U.  S.  501,  is  directly  in  point.  There  the  franchise,  as  here, 
was  acquired  by  the  corporation  from  the  municipal  authori- 
ties of  a  city  under  general  laws  authorizing  the  formation  of 
stVeet-railroad  corporations.  It  was  held,  "where  there  has 
been  a  judicial  sale  of  railroad  property  under  a  mortgage, 
authorized  by  law,  covering  its  franchises,  it  is  now  well  set- 
tled that  the  franchises  necessary  to  the  use  and  enjoyment  of 


698  People  v.  O'Brien.  [New  York, 

the  railroad  pass  to  the  purchaser It  follows  that  if 

the  franchises  of  a  railroad  corporation,  essential  to  the  use  of 
its  road,  and  other  tangible  property,  can  by  law  be  mortgaged 
to  secure  its  debts,  the  surrender  of  its  property  upon  the  bank- 
ruptcy of  the  company  carries  the  franchises,  and  they  may 
be  sold  and  pass  to  the  purchaser  at  the  bankruptcy  sale." 

In  Memphis  etc.  R.  R.  Co.  v.  Railroad  Commissioners,  112 
U.  S.  609,  619,  it  was  said:  "The  franchise  of  being  a  corpora- 
tion need  not  be  implied  as  necessary  to  secure  to  the  mort- 
gage bond-holders  or  the  purchasers  at  a  foreclosure  sale  the 
substantial  rights  intended  to  be  secured.  They  acquire  the 
ownership  of  the  railroad  and  the  property  incident  to  it,  and 
the  franchise  of  maintaining  and  operating  it  as  a  road." 

These  rights  of  property  having  been  acquired  and  created 
under  the  express  sanction  and  authority  of  the  state,  it 
remains  to  inquire  whether  they  were  defeasible  and  subject 
to  be  taken  away  through  the  exercise  of  any  power  reserved 
by  the  state  to  alter,  amend,  and  repeal  laws  or  charters. 

The  reservations  applying  to  this  case  are  claimed  to  be 
as  follows:  1.  Section  1,  article  8,  title '"  Corporations,  how 
Created,"  Constitution  of  1846,  providing  that  "all  general 
laws  and  special  acts  passed  pursuant  to  this  section  may  be 
altered  from  time  to  time  or  repealed"  ;  2.  Section  8,  title  3, 
chapter  18,  of  the  Revised  Statutes,  seventh  edition,  providing 
that  "  the  charter  of  every  corporation  that  shall  be  granted 
by  the  legislature  shall  be  subject  to  alteration,  suspension, 
and  repeal,  in  the  discretion  of  the  legislature";  3.  Section  48, 
chapter  140,  Laws  of  1850,  providing  that  "the  legislature 
may  at  any  time  annul  or  dissolve  any  incorporation  formed 
under  this  act,  but  such  dissolution  shall  not  take  away  or 
impair  any  remedy  given  against  any  such  corporation,  its 
stockholders,  or  officers,  for  any  liability  which  shall  have 
been  previously  incurred";  and  4.  Chapter  282,  Laws  of 
1884,  under  which  this  corporation  was  organized,  giving  it 
all  the  powers  and  privileges  granted,  and  subject  to  all  of  the 
liabilities  imposed  by  chapter  140,  Laws  of  1850,  and  the 
several  acts  amendatory  thereof,  and  further  providing  that 
"the  legislature  may  at  any  time  alter,  amend,  or  repeal  this 
act":  Sec.  19. 

The  constitution  of  1846  for  the  first  time  introduced 
restrictions  upon  the  power  of  legislatures  to  grant  special 
charters,  and  required  that  provisions  for  corporations,  save 
in  exceptional  cases,  should  thereafter  be  made  by  general 


Nov.  1888.]  People  v.  O'Brien.  699 

laws.  The  obvious  intent  of  the  constitutional  reservation 
was  to  remove  any  doubt  as  to  the  power  of  the  legislature  to 
amend  or  repeal  the  laws,  whether  general  or  special,  author- 
ized by  that  instrument  for  the  formation  of  corporations,  and 
seemed  to  leave  the  provisions  of  the  Revised  Statutes,  in 
relation  to  reserved  power  over  charters,  in  full  force  and 
effect 

It  will  be  observed  that  the  constitution  and  the  act  of  1884 
provide  specially  for  the  amendment  and  repeal  of  statutes 
alone,  but  the  Revised  Statutes  and  the  act  of  1850  are  ad- 
dressed specially  to  the  subject  of  the  annulment  and  repeal 
of  charters  created  under  such  statutes. 

It  seems  to  us  that  these  provisions  relate  to  different  sub- 
jects, viz.,  the  repeal  of  laws,  and  the  annulment  of  charters 
formed  under  such  laws,  and  that  the  power  to  do  one  does 
not  naturally  or  properly  include  the  power  to  do  the  other: 
Albany  Northern  R.  R.  Co.  v.  Brownell,  24  N.  Y.  345. 

Certainly  the  repeal  of  a  law  authorizing  corporations  would 
not  destroy  organizations  formed  under  it,  nor  would  the  an- 
nulment of  a  charter  affect  the  law  under  which  it  was  created. 
Neither  does  it  seem  reasonable  to  suppose,  while  taking  away 
the  power  of  the  legislature  to  create  corporate  bodies,  the  con- 
stitution intended  to  confer  power  to  destroy  them,  thus  en- 
abling them  to  accomplish  indirectly  that  which  they  were 
precluded  from  doing  directly.  It  must  be  assumed  that  the 
framers  of  the  constitution,  as  well  as  the  legislature,  used  the 
language  employed  by  them  intelligently,  and  according  to  its 
common  and  customary  signification,  and  when  they  spoke  of 
the  annulment  and  repeal  of  acts  and  laws  alone,  did  not  in- 
tend to  embrace  charters  as  well.  These  two  sul)jects  have 
frequently  been  the  occasion  of  legislative  action,  and  since 
the  restrictions  upon  the  powers  of  the  legislature  to  grant 
special  charters,  there  is  no  reason  to  suppose  that  they  did 
not  use  the  language  employed  in  its  literal  sense,  and  espe- 
cially so  when  both  subjects  were  immediately  within  the  con- 
templation of  the  law-makers. 

In  considering  this  question,  the  provisions  of  the  Revised 
Statutes  may  be  laid  out  of  view,  for  if  they  contain  any 
broader  power  than  the  act  of  1850,  they  must  be  deemed  to 
have  been  repealed  by  the  provisions  of  the  latter  act,  as  in- 
consistent therewith.  The  reservations,  therefore,  which  apply 
to  this  case  are  contained  in  the  acts  of  1850  and  1884,  which 
constitute  a  part  of  the  railroad  charter. 


700  People  v.  O'Brien.  [New  York, 

These  acts  should  be  read  and  construed  together,  and,  as 
thus  considered,  provide  that  the  legislature  may  at  any  time 
alter,  amend,  and  repeal  these  acts,  and  may  also  annul  and 
dissolve  charters  formed  thereunder,  but  such  dissolution  shall 
not  take  away  or  impair  any  remedy  against  such  corporation, 
its  officers  and  trustees,  for  any  liability  previously  incurred. 
The  contract  proved  between  the  corporation  and  the  state 
was  intended,  in  respect  to  a  repeal  of  the  charter,  to  survive 
the  dissolution  of  the  corporation,  and  to  determine  the  rights 
of  parties  interested  in  the  property,  in  the  event  of  dissolu- 
tion. By  virtue  of  this  contract,  the  corporation  secured  rights 
subject  to  be  taken  away  under  certain  restrictions,  and  pro- 
tected itself  from  any  consequences  following  a  repeal  of  its 
charter,  except  those  expressly  agreed  upon. 

But  even  if  it  be  conceded  that  the  constitutional  provisions 
place  the  right  to  repeal  charters,  as  well  as  laws,  beyond  the 
power  of  legislatures  to  waive  or  destroy,  the  question  still  re- 
mains as  to  the  efifect  of  such  a  repeal  upon  the  franchises  of 
the  corporation,  —  whether  it  contemplates  anything  more  than 
the  extinction  of  the  corporate  life,  and  consequent  disability  to 
continue  business,  and  exercise  corporate  functions  after  that 
time,  or  has  a  wider  scope  and  effect. 

It  may  be  assumed  in  this  discussion  that  the  authority  of 
the  legislature  to  repeal  a  charter,  if  it  has  expressed  its  inten- 
tion to  reserve  such  power  in  its  grant,  constitutes  a  valid  res- 
ervation. Parties  to  a  contract  may  lawfully  provide  for  its 
termination  at  the  election  of  either  party,  and  it  may,  there- 
fore, be  conceded  that  the  state  had  authority  to  repeal  this 
charter,  provided  no  rights  of  property  were  thereby  invaded 
or  destroyed.  In  speaking  of  the  franchises  of  a  corporation, 
we  shall  assume  that  none  are  assignable  except  by  the  spe- 
cial authority  of  the  legislature.  We  must  also  be  understood 
as  referring  only  to  such  franchises  as  are  usua'dy  authorized 
to  be  transferred  by  statute,  viz.,  those  requiring  for  their  en- 
joyment the  use  of  corporeal  property,  such  as  railroad,  canal, 
telegraph,  gas,  water,  bridge,  and  similar  companies,  and  not 
to  those  which  are  in  their  nature  purely  incorporeal  and  in- 
alienable, such  as  the  right  of  corporate  life,  the  exercise  of 
banking,  trading,  and  insurance  powers,  and  similar  privi- 
leges. The  franchises  last  referred  to  being  personal  in  char- 
acter, and  dependent  upon  the  continued  existence  of  the 
donee  for  their  lawful  exercise,  necessarily  expire  with  the  ex- 
tinction of  corporate  life,  unless  special  provision  is  otherwise 


Nov.  1888.]  People  v.  O'Brien.  701 

made:  People  v.  B.,  F.,  &  C.  I.  R.  R.  Co.,  89  N.  Y.  84;  People 
V.  Metz,  .50  Td.  61. 

In  the  former  class  it  has  been  held  that  at  common  law 
real  estate  acquired  for  the  use  of  a  canal  company  could  not 
be  Rold  on  execution  against  the  corporation  separate  from  its 
franchise,  so  as  to  destroy  or  impair  the  value  of  such  fran- 
chise: One  V.  Tide  Water  Canal  Co.,  24  How.  257;  and  by 
parity  of  reasoning  it  must  follow  that  the  tracks  of  a  rail- 
road company,  and  the  franchise  of  maintaining  and  operat- 
ing its  road  in  a  public  street,  are  equally  inseparable,  in  the 
absence  of  express  legislative  authority  providing  for  their 
severance. 

The  statute  of  our  state  authorizing  the  sale  of  the  franchise 
and  property  of  a  railroad  company  on  execution  seems  to 
recognize  the  indissolubility  of  the  connection  between  the  cor- 
poreal property,  and  its  incorporeal  right  of  enjoyment. 

It  is  also  to  be  observed  that  in  none  of  the  provisions  for 
repeal  in  this  state  is  there  anything  contained  which  purports 
to  confer  power  to  take  away  or  destroy  property  or  annul  con- 
tracts, and  the  contention  that  the  property  of  a  dissolved  cor- 
poration is  forfeited  rests  wholly  upon  what  is  claimed  to  be 
the  necessary  consequence  of  the  extinction  of  corporate  life. 
We  do  not  think  the  dissolution  of  a  corporation  works  any 
such  effect.  It  would  not  naturally  seem  to  have  any  other 
operation  upon  its  contracts  or  property  rights  than  the  death 
of  a  natural  person  upon  his:  Mumma  v.  Potomac  Co.,  8  Pet. 
281,  285. 

The  power  to  repeal  the  charter  of  a  corporation  cannot, 
upon  any  legal  principle,  include  the  power  to  repeal  what  is 
in  its  nature  irrepealable,  or  to  undo  what  has  been  lawfully 
done  under  power  lawfully  conferred:  Butler  v.  Palmer,  1 
Hill,  335. 

The  authorities  seem  to  be  uniform  to  the  effect  that  a  reser- 
vation of  the  right  to  repeal  enables  a  legislature  to  effect  a 
destruction  of  the  corporate  life,  and  disable  it  from  continuing 
its  corporate  business:  People  ex  rel.  Kimball  v.  B.  dc  A.  R.  R. 
Co.,  70  N.  Y.  569;  Philips  v.  Wickham,  1  Paige,  590;  and  a 
reservation  of  the  right  to  alter  and  amend  confers  power  to 
pass  all  needful  laws  for  the  regulation  and  control  of  the 
domestic  affairs  of  a  corporation,  freed  from  the  restrictions 
imposed  by  the  federal  constitution  upon  legislation  impairing 
the  obligation  of  contracts:  Munn  v.  Illiiwis,94  U.  S.  113,  123. 

We   tliink   no  well-considered   case  has  gone  further  than 


702  People  v.  O'Brien.  [New  York, 

this,  while  in  many  cases  such  power  has  been  expressly  held 
to  be  limited  to  the  effect  stated.  In  the  language  of  Chief 
Justice  Marshall  in  Fletcher  v.  Peck,  6  Cranch,  87,  135:  "  If  an 
act  be  done  under  a  law,  a  succeeding  legislature  cannot  undo 
it.  The  pa'st  cannot  be  recalled  by  the  most  absolute  power. 
Conveyances  have  been  made;  those  conveyances  have  vested 
legal  estates,  and  if  those  estates  may  be  seized  by  the  sove- 
reign authority,  still  that  they  originally  vested  is  a  fact,  and 
cannot  cease  to  be  a  fact.  When,  then,  a  law  is  in  the  nature 
of  a  contract,  when  absolute  rights  have  vested  under  that  con- 
tract, a  repeal  of  the  law  cannot  divest  those  rights." 

It  would  seem  to  be  quite  obvious  that  a  power  existing  in 
the  legislature  by  virtue  of  a  reservation  only  could  not  be 
made  the  foundation  of  an  authority  to  do  that  which  is  ex- 
pressly inhibited  by  the  constitution,  or  afford  the  basis  of  a 
claim  to  increase  jurisdiction  over  the  lives,  liberty,  or  prop- 
erty of  citizens  beyond  the  scope  of  express  constitutional 
power. 

Since  the  decision  of  the  celebrated  Trustees  Dartmouth 
College  v.  Woodward,  4  Wheat.  518,  the  doctrine  that  a  grant 
of  corporate  powers  by  the  sovereign  to  an  association  of  indi- 
viduals for  public  use  constitutes  a  contract,  within  the  mean- 
ing of  the  federal  constitution  prohibiting  state  legislatures 
from  passing  laws  impairing  its  obligations,  has,  although 
sometimes  criticised,  been  uniformly  acquiesced  in  by  the 
courts  of  the  several  states  as  the  law  of  the  land,  and  may  be 
regarded  as  too  firmly  established  to  admit  of  question  or  dis- 
pute: People  V.  Sturtevant,  9  N.  Y.  263;  59  Am.  Dec.  536; 
Milhau  V.  Sharp,  27  N.  Y.  611;  84  Am.  Dec.  314;  Brooklyn 
Cent.  R.  R.  Co.  v.  Brooklyn  City  R.  R.  Co.,  32  Barb.  364.  The 
intimation  by  Judge  Story  in  that  case  that  the  rule  might  be 
otherwise  if  the  legislature  should  reserve  the  power  of  amend- 
ing or  repealing  it,  led  to  the  adoption  by  the  legislatures  of  the 
various  states  of  the  practice  of  incorporating  such  reserva- 
tions in  acts  of  incorporation.  Whatever  may  be  the  effect  of 
such  reservations,  it  is  immaterial  whether  they  are  embraced 
in  the  act  of  incorporation  or  in  general  statutes  or  provisions 
of  the  constitution.  In  either  case  they  operate  upon  the  con- 
tract according  to  the  language  of  the  reservation:  Morawetz 
on  Corporations,  464.  It  is  manifest,  therefore,  that  in  the 
absence  of  such  reserved  power  legislatures  have  no  authority 
to  violate,  destroy,  or  impair  chartered  rights  and  privileges, 
or  power  over  corporations,  except  such  as  they  possess  by 


Nov.  1888.]  People  v.  O'Brien.  703 

virtue  of  their  legislative  authority  over  persons  and  property 
generally.  It  is  obvious  that  this  reserved  power  does  not,  in 
any  sense,  constitute  a  condition  of  the  grant,  and  cannot  have 
effect  as  such,  but  is  simply  a  power  to  put  an  end  to  the  con- 
tract with  such  effect  upon  the  rights  of  the  parties  thereto  as 
the  law  ascribes  to  it:  Sinking  Fund  Cases,  99  U,  S.  700,  748; 
Tomlinson  v.  Jessup,  15  Wall.  454.  457.  In  speaking  of  the 
exercise  of  this  power  by  Congress  in  the  Sinking  Fund  Cases, 
supra.  Chief  Justice  Waite  says:  "Congress  not  only  retaim, 
but  has  given  special  notice  of  its  intention  to  retain,  full  and 
complete  power  to  make  such  alterations  and  amendments  of 
the  charter  as  come  within  the  just  scope  of  the  legislative 
power.  That  this  power  has  a  limit,  no  one  can  doubt.  All 
agree  that  it  cannot  be  used  to  take  away  property  already 
acquired  under  the  operation  of  the  charter,  or  to  deprive  the 
corporation  of  the  fruits  actually  reduced  to  possession  of  con- 
tracts lawfully  made Whatever  rules  Congress  might 

have  prescribed  in  the  original  charter  for  the  government  of 
the  corporation  in  the  administration  of  its  affairs,  it  retaine  I 
the  power  to  establish  by  amendment.  In  doing  so,  it  cannot 
undo  what  has  already  been  done,  and  it  cannot  unmake  con- 
tracts that  have  already  been  made,  but  it  may  provide  for 
what  shall  be  done  in  the  future,  and  may  direct  what  prep- 
aration shall  be  made  for  the  due  performance  of  contracts  al- 
ready entered  into.  It  might  originally  have  prohibited  the 
borrowing  of  money  on  mortgage,  or  it  might  have  said  that 
no  bonded  debt  should  be  created  without  ample  provision  by 
sinking  fund  to  meet  it  at  maturity.  Not  having  done  so  at 
first,  it  cannot  now,  by  direct  legislation,  vacate  mortgages 
already  made  under  the  powers  originally  granted,  nor  release 
debts  already  contracted." 

The  judges  dissenting  in  that  case  contended  that  there- 
served  power  could  not  be  construed  as  authorizing  the  alter- 
ation, violation,  or  nullification  of  any  of  the  material  provis- 
ions of  the  grant,  but  should  be  held  to  mean  simply  a 
reservation  of  the  power  to  legislate,  freed  from  the  restric- 
tions imposed  by  the  constitutional  provisions  against  legis- 
lation impairing  the  obligations  of  contracts.  Mr.  Justice 
Bradley  said:  "The  reserved  power  in  question  is  simply  that 
of  legislation  to  alter,  amend,  or  repeal  a  charter.  This  is 
very  different  from  the  power  to  violate  or  to  alter  the  terms 
of  a  contract  at  will.  A  reservation  of  power  to  violate  a  con- 
tract, or  alter  it,  or  impair  its  obligation,  would  be  repugnant 


704  People  v.  O'Brien.  [New  York, 

to  the  contract  itself,  and  void.  A  proviso  repugnant  to  the 
granting  part  of  a  deed,  or  to  the  enacting  part  of  a  statute,  is 
void.  Interpreted  as  a  reservation  of  the  right  to  legislate, 
the  reserved  power  is  sustainable  on  sound  principles;  but 
interpreted  as  the  reservation  of  the  right  to  violate  an  exe- 
cuted contract,  it  is  not  sustainable." 

This  dipsent  proceeded  upon  the  ground  that  the  acts  of 
Congress  under  consideration  changed  some  of  the  essential 
features  of  the  contract,  and  were,  therefore,  void,  as  being 
obnoxious  to  the  provisions  of  the  constitution  for  the  protec- 
tion of  life,  liberty,  and  property.  The  majority  of  the  court 
held,  however,  that  such  acts  were  simply  an  exercise  of  the 
power  of  Congress  to  regulate  the  internal  administration  of 
the  affairs  of  a  corporation,  which,  to  a  certain  extent,  it  was 
unanimously  agreed  that  it  possessed.  There  was  no  dispute 
or  disagreement  as  to  the  correctness  of  the  rule  stated,  that 
the  power  of  amendment  and  repeal  was  a  restricted  power, 
limited  by  the  provisions  of  the  constitution.  An  interpreta- 
tion conferring  the  power  of  violating  a  contract  at  will  upon 
one  of  its  parties,  under  a  clause  authorizing  its  amendment 
or  repeal,  would  seem  to  be  inconsistent  with  any  reasonable 
notion  of  the  nature  of  such  an  instrument,  and  beyond  the 
power  of  parties  lawfully  to  create. 

If  it  is  possible  to  conceive  the  idea  of  a  repealable  grant, 
certainly  such  a  grant,  accompanied  with  power  to  convey  or 
pledge  the  interest  granted,  must,  on  the  execution  oT  the 
power,  necessarily  preclude  a  resumption  by  the  grantor  of 
the  subject  of  the  grant,  or  any  right  of  property  acquired 
under  it.  An  express  reservation  by  the  legislature  of  power 
to  take  away  or  destroy  property  lawfully  acquired  or  cre- 
ated would  necessarily  violate  the  fundamental  law,  and  it  is 
equally  clear  that  any  legislation  which  authorizes  such  a  re- 
sult to  be  accomplished  indirectly  would  be  equally  ineffectual 
and  void. 

In  People  v.  National  Trust  Co.,  82  N.  Y.  287,  the  question 
was  raised  that  a  dissolved  corporation  was  discharged  from 
the  obligation  to  pay  rent  accruing  upon  a  lease  subsequent 
to  its  dissolution.  Judge  Rapallo  said:  "This  claim  is  not 
founded  upon  the  allegation  of  any  payment,  release,  or  sur- 
render, or  anything  affecting  the  merits  of  the  claim,  but 
upon  the  sole  ground  that  by  the  dissolution  of  the  corpora- 
tion, the  lease  was  terminated,  and  the  covenant  to  pay  rent 
ceased  to  be  obligatory.     We  do  not  regard  the  dissolution  as 


Nov.  1888.]  People  v.  O'Brien.  705 

having  any  such  effect.  Under  the  statutes  of  this  state,  on 
the  dissolution  of  a  corporation,  its  assets  become  a  trust  fund 
for  the  payment  of  its  debts,  and  these  include  debts  to  ma- 
ture as  well  as  accrued  indebtedness,  and  all  engagements 
entered  into  by  the  corporation  which  have  not  been  fully  sat- 
istied  or  canceled." 

In  Commonwealth  v.  Essex  Co.^  13  Gray,  239,  Justice  Shaw 
eaid:  "When,  under  power  in  a  charter,  rights  have  been  ac- 
quired and  become  vested,  no  amendment  or  alteration  of  the 
charter  can  take  awa}''  the  property  or  rights  which  have  be- 
come vested  under  a  legitimate  exercise  of  the  powers  granted": 
Albany  R.  R.  Co.  v.  Brownell,  24  N.  Y.  345. 

The  case  of  City  of  Detroit  v.  Detroit  etc.  Plankroad  Co.,  43 
Mich  140,  is  not  only  in  point,  but  entitled  to  high  considera- 
tion on  account  of  the  distinction  as  a  constitutional  lawyer  of 
the  learned  judge  who  wrote  the  opinion  of  the  court.  The 
question  was,  whether  the  legislature  had  power  to  compel 
the  defendant  to  remove  its  toll-gates  from  within  the  city 
limits  after  they  had  been  lawfully  placed  there  under  the 
provisions  of  its  charter.  Judge  Cooley  says:  "It  cannot  be 
necessary  at  this  day  to  enter  upon  a  discussion  in  denial  of 
the  right  of  the  government  to  take  from  either  individuals  or 
corporations  any  property  which  they  may  rightfully  have 
acquired.  In  the  most  arbitrary  times,  such  an  act  was  rec- 
ognized as  pure  tyranny,  and  it  has  been  forbidden  in  Eng- 
land ever  since  Magna  Charta,  and  in  this  country  always. 
It  is  immaterial  in  what  way  the  property  was  lawfully  ac- 
quired, whether  by  labor  in  the  ordinary  avocations  of  life, 
by  gift,  or  descent,  or  by  making  a  profitable  use  of  a  fran- 
chise granted  by  the  state;  it  is  enough  that  it  has  become 
private  property,  and  it  is  thus  protected  by  the  'law  of  the 
land.'" 

And,  finally,  upon  this  branch  of  our  subject,  we  are  unable 
to  see  why  section  48  of  the  Law  of  1850  does  not  express  the 
rule  by  which  the  question  under  discussion  must  be  deter- 
mined. That  section  is  expressly  made  a  part  of  the  contract 
between  the  state  and  corporations  organized  thereunder,  and 
specially  provides  for  the  efifcct  which  an  exercise  of  the 
reserved  power  of  repeal  by  the  state  shall  have  upon  the 
franchises  of  the  company.  It  shall  not  impair  any  remedy 
existing  against  the  corporation,  its  directors  or  officers,  upon 
a  liability  previously  incurred.     This  was  the  contract  under 

which  the  dissolved  corporation  i.^sucd  its  stock,  mortgaged 
A.M.  St.  Rep.,  Vol.  VII.— 45 


706  People  v.  O'Brien.  [New  York, 

its  franchises,  entered  into  traflBc  engagements,  and  contracted 
debts.  Creditors,  contractors,  and  stockholders  had  a  right 
to  rely  upon  the  promise  of  the  state,  that  the  annulment  of 
the  corporate  charter  should  not  affect  the  remedies  existing 
in  their  favor  against  the  corporation;  and  this  promise  is  a 
contract,  protected  by  the  provisions  of  the  federal  constitu- 
tion. 

In  the  absence  of  any  constitutional  provision  prescribing 
the  effect  of  such  repeal,  it  was  competent  for  the  legislature 
to  declare  what  that  should  be,  and  for  the  state  to  contract 
with  reference  to  such  a  declaration.  The  right  of  repeal,  as 
provided  by  the  constitution,  is  fully  recognized  by  the  act  of 
1850,  and  the  effect  of  the  exercise  of  the  power  upon  the 
rights  of  parties  affected  thereby  is  clearly  defined. 

We  are  therefore  of  opinion  that  the  statute  not  only  pre- 
scribes the  rule,  creates  the  contract,  and  regulates  the  rights 
of  the  parties  upon  the  exercise  by  the  state  of  the  power  of 
repeal,  but  it  also  correctly  formulates  the  principle  of  law  ap- 
plicable to  the  situation.  We  think  it  necessary  to  refer  only 
to  some  of  the  leading  cases  cited  by  the  plaintiff's  attorney 
in  support  of  his  argument,  and  are  of  the  opinion  that  they 
are  not  controlling  authorities  upon  the  case  under  considera- 
tion. That  of  Greenwood  v.  Freight  Co.,  105  U.  S.  13,  was  an 
action  by  a  stockholder  in  the  Marginal  Company  against  the 
Freight  Company  and  others,  to  obtain  an  injunction  restrain- 
ing the  latter  company  from  taking  possession  of  th6  railroad 
tracks  of  the  former  after  its  dissolution  by  legislative  action, 
and  running  cars  thereon.  The  Marginal  Company  had  re- 
fused to  assert  its  rights,  and  the  stockholder  was  therefore 
allowed  to  bring  his  suit  to  protect  his  interest  in  its  property. 
Judge  Miller  says  in  that  case:  "Personal  and  real  property 
acquired  by  the  corporation  during  its  lawful  existence,  rights 
of  contract,  or  choses  in  action  so  acquired,  and  which  do  not 
in  their  nature  depend  upon  the  general  powers  conferred  by 
the  charter,  are  not  destroyed  by  such  a  repeal,  and  the  courts 
may,  if  the  legislature  does  not  provide  some  special  remedy, 
embrce  such  rights  by  the  means  in  their  power.  The  rights 
of  the  share-holders  of  such  a  corporation  to  their  interests  in 
its  property  are  not  annihilated  by  such  a  repeal,  and  there 
must  remain  in  the  courts  the  power  to  protect  those  rights.'^ 
It  was  further  held  that,  so  far  as  the  law  then  under  con- 
sideration authorized  one  corporation  to  take  and  use  the 
property  or  franchises  of  another,  it  was  sustainable  under  the 


Nov.  1888.]  People  v.  O'Brien.  707 

provisions  requiring  compensation  to  be  made  therefor  under 
the  power  of  eminent  domain. 

Neither  has  the  case  of  People  v.  Globe  M.  L.  Ins.  Co.,  91 
N.  Y.  174,  any  bearing  upon  the  questions  involved  in  this  dis- 
cussion. It  was  held  in  that  case  that  contracts  for  personal 
services  contemplated  the  continued  existence  of  the  parties, 
and  when  either  of  them  died  it  necessarily  effected  a  termina- 
tion of  such  contracts. 

So,  too,  cases  depending  upon  the  effect  of  conditions  in  a 
grant  to  the  creation  of  corporate  life,  or  the  acquisition  of 
property  rights  thereunder,  are,  for  obvious  reasons,  foreign  to 
the  questions  involved  here. 

Here  the  grantee  has  performed  every  condition  essential  to 
its  creation  as  a  corporate  being,  and  its  capacity  to  acquire 
and  hold  property,  and  the  only  question  is  as  to  the  effect  of 
a  power  to  extinguish  the  corporate  life,  reserved  in  its  char- 
ter, upon  its  property  rights. 

,  In  Erie  &  N.  E.  R.  R.  Co.  v.  Casey,  26  Pa.  St.  287,  301,  the 
question  arose  under  a  statute  which  specially  provided  that 
the  state  might  resume  all  rights  conferred  in  case  of  an 
abuse  or  misuse  of  the  powers  granted  to  the  corporation. 
Upon  an  alleged  abuse  of  power,  the  legislature  repealed  the 
charter  and  resumed  the  subject  of  the  grant.  The  corpora- 
tion forfeited  its  rights  by  its  voluntary  act.  The  reservation 
in  the  charter  was  expressly  made  a  condition  subsequent. 
The  case  was  between  the  representative  of  the  state  and  the 
railroad  corporation,  and  no  rights  of  creditors,  mortgagees,  or 
stockholders  were  involved  in  its  decision.  It  also  appears  by 
the  case  that  the  state  and  the  corporation  had  settled  their 
controversy  by  compromise  during  the  pendency  of  the  litiga- 
tion, and  it  can  hardly  be  said  to  have  involved  any  practical 
question. 

We  are  therefore  of  the  opinion  that  the  Broadway  Surface 
Company  took  an  indefeasible  title  to  the  land  necessary  to 
enable  it  to  construct  and  maintain  a  street-railroad  in  Broad- 
way, and  to  run  cars  thereon  for  the  transportation  of  freight 
and  passengers,  which  survived  its  dissolution. 

We  are  thus  brought  to  the  question  of  the  right  of  succes- 
sion to  the  property  of  a  dissolved  corporation  in  the  absence 
of  any  provision  in  the  act  of  dissolution  providing  for  such 
an  event. 

Sections  9  and  10,  title  3,  chapter  18,  part  1,  of  the  Revised 
Statutes,  seventh  edition,  132,  153,  seem  to  furnish  a  conclu- 


708  People  v.  O'Brieis.  [New  'i  di  k, 

Bive  solution  to  the  inquiry.  They  read  as  follows:  "  Sec, 
9.  Upon  the  dissolution  of  any  corporation  created  or  to  be 
created,  and  unless  other  persons  shall  be  appointed  by  the 
legislature,  or  by  some  court  of  competent  authority,  the  di- 
rectors or  managers  of  the  affairs  of  such  corporation  at  the 
time  of  its  dissolution,  by  whatever  name  they  may  be  known 
in  law,  shall  be  the  trustees  of  the  creditors  and  stockholders 
of  the  corporation  dissolved,  and  shall  have  full  power  to 
settle  the  affairs  of  the  corporation,  collect  and  pay  the  out- 
Btanding  debts,  and  divide  among  the  stockholders  the  njoneys 
and  other  property  that  shall  remain  after  the  payment  ot 
debts  and  other  necessary  expenses.  Sec.  10.  The  persons 
BO  constituted  trustees  shall  have  authority  to  sue  for  and 
recover  the  debts  and  property  of  the  dissolved  corporation, 
....  and  shall  be  jointly  and  severally  responsible  to  the 
creditors  and  stockholders  of  such  corporation,  to  the  extent 
of  its  property  and  effects  that  shall  come  into  their  hands." 

From  these  sections  it  would  seem  that  upon  the  dissolution 
of  this  corporation,  its  remaining  trustees  became  vested  with 
the  title  of  its  property,  and  responsible  to  its  creditors  and 
stockholders  for  the  value  thereof.  By  operation  of  law  a 
vested  right  of  action  accrued  to  all  creditors  and  stockhold- 
ers immediately  on  the  dissolution  against  such  trustees  for 
the  value  of  all  property  which  did  or  might,  by  the  exercise 
of  reasonable  diligence,  come  into  their  hands.  This  was  a 
liability  which  after  it  once  attached  was  beyond  the  consti- 
tutional power  of  the  legislature  to  release  or  discharge:  Dash 
V.  Vankleeck,  7  Johns.  577;  5  Am.  Dec.  291. 

The  evidence  is  undisputed  that  upon  the  dissolution,  de- 
clared by  the  legislature,  the  trustees  took  possession  of  the 
railroad  property,  and  surrendered  its  operation  to  the  mort- 
gagees of  such  railroad.  This,  in  the  absence  of  any  objection 
on  the  part  of  creditors  or  stockholders,  they  had  undoubted 
authority  to  do,  and  the  possession  of  such  mortgagees  there- 
after was  the  possession  of  such  trustees.  They  undoubtedly 
became  liable  for  the  value  of  such  property  to  creditors  and 
stockholders  by  virtue  of  such  possession,  and  their  authority 
to  administer  the  assets  of  the  corporation  for  the  purpose  of 
discharging  such  liability  became  fixed  by  the  law  existing  at 
the  time  the  liability  was  incurred.  The  cases  in  this  state 
fully  support  these  propositions.  As  was  said  by  the  chan- 
cellor in  Kane  v.  Bloodgood,  7  Johns.  Ch.  90,  128,  11  Am.  Dec. 
417:  "The  reasonable  construction  of  the  act  is,  that  the  trus- 


Nov.  1888.]  People  v.  O'Brien.  709 

tees  succeeded  to  all  the  rights  and  privileges  of  directors,  and 
to  the  same  means  of  defense." 

In  McLaren  v.  Pennington,  1  Paige,  102,  it  was  held,  as 
stated  in  the  head-note,  that  "  where  an  act  of  incorporation 
is  repealed,  all  the  property  and  rights  of  the  corporation  be- 
come vested  in  the  directors  then  in  oflice,  or  in  such  persons 
as  hy  hiw  have  the  management  of  the  business  of  the  corpo- 
ration, in  trust  f(ir  the  stockholders  and  creditors,  unless  the 
repealing  law  provides  for  the  appointment  of  other  persona 
than  th(^  olli(;ers  of  the  corporation  as  trustees." 

In  llenih  v.  Barvinre,  50  N.  Y.  305,  Judge  Rapallo  said: 
"  Under  the  provisions  of  1  Revised  Laws,  248,  and  1  Revised 
Statutes,  GOO,  sec;tions  9  and  10,  upon  the  dissolution  of  a  cor- 
poration, the  directors  or  njanagers  at  that  time  become  trus- 
tees of  its  property  (unless  some  other  custodian  is  appointed) 
for  the  ])urpose  of  paying  the  debts  of  the  corporation,  and 
dividing  its  property  among  its  stockholders,  and  these  provis- 
ions apply  as  well  to  the  real  estate  as  to  the  personal  prop- 
erty of  corporations.  Consequently,  where  lands  are  conveyed 
absolutely  to  a  corporatioi\  having  stockholders,  no  reversion 
or  possibility  of  a  reverter  remains  in  the  grantor." 

Allen,  J.,  in  Central  City  Savings  Bank  v.  Walker,  66  N.  Y. 
428,  speaking  of  tiie  ownership  of  property  and  the  property 
riglits  of  a  ctorporation,  said:  ''During  the  life  of  the  corpora- 
tion, the  body  corporate  was  the  legal  owner,  and  upon  the 
expiration  of  tlie  charter,  the  legal  title  vested  in  the  trustees 
in  odice,  at  the  time,  in  trust  for  the  creditors  and  stock- 
holders." 

There  can  be  no  valid  distinction  between  property  held  in 
trust  and  that  owned  by  individuals  in  respect  to  the  protec- 
tion allorded  to  it  by  the  constitution.  The  reason  for  its 
protection  is  equally  strong  in  either  case,  and  tiie  inviolability 
of  the  title  is  in  both  cases  beyond  the  reach  of  legislative 
action:    Trustees  Dartviouth  College  v.  Woodward,  4  Wheat.  518. 

It  then  renjains  for  us  to  consider  the  validity  of  the  i)ro- 
visioiis  of  chapters  271  and  810  of  the  Laws  of  1886.  W(!  are 
fully  impressed  with  the  importance  of  this  question,  and  the 
well-settled  principles  of  construction  which  require  every 
statute  to  be  so  construed  as  to  ui)hold  its  constitutionality, 
if  that  may  be  done  by  a  fair  and  reasonable  interpretation  of 
its  language. 

Another  rule,  equally  well  settled,  precludes  courts  from 
inquiring  into  the  njotives  of  legislatures  in  making  laws,  and 


710  People  v.  O'Brien.  [New  York, 

to  consider  them  simply  with  reference  to  their  legal  effect, 
upon  the  rights  of  persons  subjected  to  their  operation. 

If,  however,  upon  such  examination  it  is  found  that  con- 
Btitutional  rights  will  be  invaded  by  the  operation  of  the  stat- 
ute, it  is  the  duty  of  courts  to  protect  them  by  declaring  the 
invalidity  of  the  statute. 

Upon  such  examination,  we  are  of  the  opinion  that  chapter 
271  of  the  Laws  of  1886  is  unconstitutional  and  void.  Its 
provisions  phow  a  naked  and  undisguised  attempt  to  take 
away  from  the  Broadway  Surface  company  and  its  stock- 
holders and  creditors  its  property,  and  bestow  the  benefit 
thereof  upon  the  municipality  of  New  York.  The  act  attempts 
to  preserve  the  validity  of  the  consents  held  by  the  corpora- 
tion, notwithstanding  its  dissolution,  and  directs  their  sale  and 
transfer  to  the  purchaser,  and  the  payment  of  the  purchase 
price  to  the  city. 

These  consents  were  the  muniments  of  title  to  the  enjoy- 
ment of  the  rights  acquired  thereunder  by  the  railroad  cor- 
poration, and  could  not  be  lawfully  retained  in  existence  or 
transferred,  except  by  its  consent,  manifested  in  some  of  the 
ways  provided  by  law.  Their  possession  by  any  lawful  trans- 
feree would  entitle  him  to  the  exercise  and  use  of  the-  rights 
•thereby  conferred.  The  attempt  to  transfer  them  to  a  third 
party  by  the  mere  force  of  the  statute,  without  the  consent  or 
knowledge  of  their  lawful  owners,  was  an  effort  to  change  their 
ownership  without  due  process  of  law:  Parker  v.  Browning,  8 
Paige,  388;  35  Am.  Dec.  717. 

Such  legislation  has  been  frequently  and  emphatically  con- 
demned: Taylor  v.  Porter,  4  Hill,  147;  40  Am.  Dec.  274; 
Wynehamer  v.  People,  13  N.  Y.  434;  Westervelt  v.  Gregg,  12 
Id.  202;  62  Am.  Dec.  160;  Kilbourn  v.  Thompson,  103  U.  S. 
168. 

In  speaking  of  the  reserved  power  to  alter,  amend,  and 
repeal  laws  authorizing  incorporations,  in  People  v.  Boston  and 
Albany  R.  R.  Co.,  70  N.  Y.  570,  Judge  Earl  says:  "Under  this 
reserved  power,  the  legislature  may  impose  upon  railroad  cor- 
porations such  additional  restrictions  and  burdens  as  the 
public  good  requires.  It  may  not  confiscate  property,  but  it 
cannot  be  doubted  that  it  may  do  all  that  is  required  by  the 
act  of  1874." 

Judge  Thompson  said,  in  Dash  v.  Van  Vleeck,  7  Johns.  477, 
5  Am.  Dec.  291:  "It  is  repugnant  to  the  first  principles  of  jus- 
tice, and  the  equal  and  permanent  security  of  rights,  to  take  by 


Nov.  1888.]  People  v.  O'Brien.  711 

law  the  property  of  an  individual  without  his  consent,  and 
give  it  to  another." 

The  main  argument  presented  to  maintain  the  constitution- 
ality of  this  act  is  the  assertion  that  these  consents  do  not 
constitute  property  within  the  usual  signification  of  that  term. 
We  have  considered  that  question,  and  do  not  agree  with  the 
claim.  In  view  of  the  fact  that  the  statute  expressly  contem- 
plates their  sale,  transfer,  and  acquisition  by  a  purchaser,  it 
would  seem  unnecessary  to  go  further  to  prove  the  fallacy  of 
such  a  contention. 

These  remarks  apply  with  equal  force  to  chapter  310.  The 
plaintiff  has  argued  the  case  upon  the  assumption  that  the 
chapter  referred  to  applies  to  the  Broadway  Surface  Railroad 
Company,  and  should  control  the  proceedings  to  wind  up  its 
affairs.  That  company  was,  however,  dissolved  on  January 
4th,  and  the  act  now  under  consideration  was  not  passed 
until  January  11th  thereafter,  and  could  not  have  retroactive 
effect  unless  its  language  expressly  required  it.  We  can  see 
no  ground  for  such  a  contention,  unless  we  look  beyond  the 
language  of  the  act  and  speculate  as  to  the  motives  of  the 
legislature  in  passing  it.  The  act  does  not  purport,  in  terms, 
to  have  a  retroactive  operation,  and  it  is  contrary  to  settled 
principles  to  give  it  such,  unless  there  is  something  in  the 
language  of  the  act  requiring  this  to  be  done. 

Section  1  provides:  "Whenever  any  corporation  organized 
under  the  laws  of  this  state  shall  be  annulled  and  dissolved 
by  an  act  of  the  legislature,  it  shall  be  the  duty  of  the  attor- 
ney-general ....  to  bring  a  suit  ....  to  wind  up  the 
ajBfairs  of  the  corporation." 

This  language  looks  plainly  to  prospective  cases  arising 
under  the  act,  and  those  only,  and  there  is  nothing  in  the 
body  of  the  act  to  show  that  the  legislature  intended  it  to 
apply  to  a  dissolution  already  accomplished. 

The  character  of  a  statute  is  to  be  determined  by  its  pro- 
visions, and  not  by  its  title:  People  v.  McCann,  16  N.  Y.  58; 
69  Am.  Dec.  642;  but  when  its  language  is  ambiguous  and 
doubtful,  resort  may  be  had  to  its  title  and  the  occasion  of  its 
enactment  to  explain  an  ambiguity  in  its  terms.  There  is 
no  ambiguity  in  the  terms  of  this  act,  and  nothing  to  indicate 
an  intention  to  give  it  retroactive  operation.  The  application 
of  the  act  to  the  Broadway  Surface  Company  can  be  sustained 
only  upon  the  theory  that  such  act  applies  to  all  corporations 
whatsoever,  theretofore  dissolved  by  legislative  act,  however 


712  People  v.  O'Brien.  [New  York, 

remote  in  point  of  time  such  dissolution  may  have  been 
effected.  Whether  there  are  such  cases  or  not,  we  are  not 
informed,  but  we  are  invited  to  adopt  a  rule  which  would 
relate  back  and  cover  such  cases  if  they  exist. 

We  think  such  a  decision  would  conflict  with  settled  rules 
of  construction.  In  New  York  etc.  R.  R.  Co.  v.  Van  Horn,  57 
N.  Y.  473,  it  was  held  that  a  legislative  intent  to  violate  the 
constitution  will  not  be  assumed,  nor  will  a  law  be  so  con- 
strued as  to  give  it  a  retroactive  effect  when  it  is  capable  of 
any  other  construction;  and  that  if  all  of  its  language  can  be 
satisfied  by  giving  it  prospective  operation  only,  that  con- 
struction will  be  given  to  it. 

In  the  case  of  Dash  v.  Van  Kleecky  7  Johns.  477,  5  Am.  Dec. 
291,  it  was  decided  that  it  is  a  principle  of  universal  jurispru- 
dence that  laws,  civil  and  criminal,  must  be  prospective,  and 
cannot  have  a  retroactive  effect;  and  in  Benton  v.  Wirkwire, 
54  N.  Y.  229,  the  court  declared  that  neither  original  statutes 
nor  amendments  can  have  any  retroactive  effect,  unless,  in 
exceptional  cases,  the  legislature  so  declare:  People  v.  Snper- 
visors,  43  Id.  130;  People  v.  McCall,  94  Id.  587;  N.  Y.  &  0. 
M.  R.  R.  Co.  V.  Van  Horn,  57  Id.  473.  The  power  of  the 
legislature  to  give  retroactive  operation  to  a  statute  in  some 
cases  is  conceded,  but  we  believe  that,  to  have  such  effect,  it 
should  declare  its  purpose  in  plain  and  unmistakable  lan- 
guage, and  that  so  unusual  a  signification  should  not  be 
attributed  to  it  by  resorting  to  vague  and  equivocal  infer- 
ences which  have  no  support  in  the  language  employed. 
Such  an  interpretation  would  most  emphatically  be  forbidden 
when  it  would  interfere  with  vested  rights.  If  we  were  at 
liberty  to  inquire  into  the  circumstances  under  which  this  act 
was  passed,  and  its  connection  with  other  legislation  of  the 
same  period,  we  might  conjecture  that  the  legislature  designed 
it  to  apply  to  the  Broadway  Surface  Railroad  Company;  but 
it  has  not  so  expressed  itself  in  the  act,  and  the  rules  of  con- 
struction to  which  we  have  referred  forbid  us  from  supplying 
the  language  necessary  to  give  it  such  effect:  Benton  v.  Wirk- 
wire, 54  N.  Y.  226.  But,  assuming  that  the  act  was  intended 
to  apply  and  retroactive  effect  be  given  to  it,  we  are  of  opinion 
that  its  material  provisions  are  open  to  many  serious  ol)jec- 
tions  which  cannot  be  obviated  or  reconciled  with  the  pro- 
visions of  the  fundamental  law. 

A  receiver  is  the  representative  of  the  debtor.     It  is  his 
duty  to  scrutinize  the  claims  made  against  the  estate,  and 


Nov.  1888.]  People  v.  O'Brien.  713 

reject  and  defend  against  those  he  believes  to  be  unfounded  or 
illegal.  He  cannot  be  impartial  in  a  litigation  between  him- 
self and  creditors  as  to  such  claims.  A  law,  therefore,  which 
makes  such  a  party  the  referee  to  take  the  proof  of  claims, 
and  the  judge  to  determine  the  materiality  of  evidence  offered 
in  their  support,  violates  a  fundamental  rule  in  the  adminis- 
tration of  justice.  No  man  can  be  a  judge  in  his  own  case, 
and  it  is  immaterial  whether  he  is  a  party  in  his  own  right  or 
as  trustee  of  an  express  trust;  in  either  event  he  is  a  party  to 
the  action,  interested  therein  and  precluded  from  acting  in  a 
judicial  capacity  in  the  determination  of  such  a  case.  Nemo 
debet  esse  judex  in  propria  causa.  This  law  is  objectionable 
also  because  it  makes  proof  of  the  cost  of  the  obligation  the 
measure  of  the  creditor's  recovery,  instead  of  the  liability  of 
the  debtor  as  shown  by  the  terms  of  his  contract.  And,  again, 
it  requires  the  creditor  to  accept  payment  of  an  obligation 
before  maturity.  The  time  of  payment  of  a  pecuniary  obliga- 
tion is  a  material  provision  in  such  contract,  and  we  know  of 
no  authority  to  require  a  creditor  to  accept  payment  in  ad- 
vance, any  more  than  one  to  compel  such  payment  by  the 
debtor.  Each  party  has  the  right  to  stand  on  the  letter  of 
his  contract,  and  perform  it  according  to  its  terms.  But  an 
objection  to  this  act,  even  more  serious  than  those  considered, 
is  found  in  the  provision  for  the  appointment  of  a  receiver  of 
the  property  of  the  dissolved  corporation,  and  the  transfer  of 
its  assets  to  him  by  force  of  the  statute,  after  the  title  thereto 
had  become  vested  in  its  directors. 

It  will  not  be  claimed  that  the  appointment  of  such  a 
receiver  by  the  court  in  an  action  against  a  stranger,  without 
notice  to  the  trustees,  in  the  absence  of  the  authority  conferred 
by  chapter  810,  would  confer  upon  him  title  to  property  pre- 
viously vested  in  others:  Parker  v.  Browning,  8  Paige,  388;  35 
Am.  Dec.  717.  We  cannot  see  how  this  case  differs  from  the 
one  supposed.  The  only  authority  the  court  had  for  making 
the  appointment  was  derived  wholly  from  the  provisions  of 
this  act,  and  the  court  was  not  thereby  invested  with  any 
judicial  authority  or  discretion,  except  that  of  designating  the 
holder  of  the  title  assumed  to  be  transferred  by  the  act.  The 
court  has,  by  virtue  of  its  general  jurisdiction  over  trusts, 
authority  to  appoint  to  a  vacant  trusteeship,  and  perhaps,  for 
cause,  to  remove  fraudulent,  dishonest,  or  incompetent  trut^- 
tees,  and  appoint  others  to  perform  the  duties  of  the  trust  in 
order  to  avoid  a  failure  thereof;  but  we  know  of  no  authority 


714  People  v.  O'Brikn,  [Nev(r  York, 

for  a  court  to  appoint  a  receiver  of  property  vested  in  trustees, 
without  cause  and  without  notice  to  them,  or  opportunity 
afl'orded  to  defend  their  title  and  possession.  As  was  said  by 
Judge  Earl  in  Stuart  v.  Palmer,  74  N.  Y.  184,  30  Am.  Rep.  289: 
"  Due  process  of  law  requires  an  orderly  proceeding  adapted 
to  the  nature  of  the  case,  in  which  the  citizen  has  an  opportu- 
nity to  be  heard,  and  to  defend,  enforce,  and  protect  his  rights. 
A  hearing  and  an  opportunity  to  be  heard  is  absolutely  essen- 
tial. We  cannot  conceive  of  due  process  of  law  without  this." 
And  the  chancellor  had  previously  said  in  Verplanck  v.  M. 
Ins.  Co.,  2  Paige,  450:  "Another  fatal  objection  to  the  regu- 
larity of  these  proceedings  is,  that  the  appellants  were  deprived 
of  the  possession  of  their  property  without  having  an  oppor- 
tunity of  being  heard,  and  without  any  sufficient  cause  for 
Buch  a  summary  proceeding.  By  the  settled  practice  of  the 
court  in  ordinary  suits,  a  receiver  cannot  be  appointed,  ex 
parte,  before  the  defendant  has  had  an  opportunity  to  be  heard 
in  relation  to  his  rights  ":  Devoe  v.  Ithaca  etc.  R.  R.  Co.,  5  Paige, 
521;  Ferguson  v.  Crawford,  70  N.  Y.  256;  26  Am.  Rep.  589. 
As  we  have  seen,  the  property  of  this  corporation  vested  in  the 
persons  who-were  its  directors  at  the  time  of  its  dissolution. 
They  took  it  as  trustees  for  stockholders  and  creditors,  and 
were  not  made  parties  to  the  action  in  which  the  receiver  was 
appointed.  No  legislation  can  authorize  the  appointment  of  a 
receiver  of  the  property  of  A  in  an  action  against  C,  without 
violating  the  provisions  of  the  constitution  in  relation  to  the 
taking  of  property  without  due  process  of  law.  That  the  legis- 
lature might  amend  the  provisions  of  the  Revised  Statutes  in 
relation  to  the  devolution  of  property  of  dissolved  corporations, 
is  indisputable,  and  if  it  had  done  so  in  the  act  of  dissolution, 
or  previously,  it  would  undoubtedly  have  prevented  the  vest- 
ing of  the  property  in  trustees;  but  this  it  did  not  do,  and  it 
had  no  authority,  by  mere  force  of  legislative  enactment,  to 
take  vested  property  from  one  individual  or  trustee  and  give 
it  to  another:  McLaren  v.  Pennington,  1  Paige,  102;  Trustees 
Dartmouth  College  v.  Woodward,  4  Wheat.  518. 

These  conclusions  must  result  in  the  condemnation  of  the 
scheme  by  which  it  was  attempted  to  wind  up  the  affairs  of 
the  Broadway  Surface  Railroad  Company,  as  the  provision  for 
bringing  an  action  by  the  attorney-general  to  wind  up  its 
aff'airs  was  incidental  merely,  and  so  intimately  connected 
with  the  general  plan  of  the  scheme  that  it  cannot  be  supposed 
it  would  have  been  enacted  except  in  connection  with  the 


Nov.  1888.]  People  v.  O'Brien.  716 

other  provisions  of  the  act.  We  therefore  think  this  law  is 
obnoxious  to  the  objection  that  it  assumes  to  take  property 
without  due  process  of  law,  and  impairs  the  obligation  of  con- 
tracts. The  questions  as  to  the  rights  of  the  several  parties 
under  the  traffic  contracts  are  not  before  us  in  such  form  as  to 
authorize  us  to  pass  definitely  upon  them;  but  we  may  prop- 
erly, in  this  action,  determine  their  validity  so  far  as  any  ob- 
jections are  made  to  them  by  the  plaintiff  in  this  action. 
The  plaintiff  has  not  alleged  any  want  of  power  on  the  part  of 
the  defendant  corporations  to  run  cars  over  the  Broadway  Sur- 
face railroad  under  their  respective  charters,  and  that  ques- 
tion must  be  left  until  the  attorney-general  arraigns  them  in  a 
direct  action  for  usurpation:  People  v.  R,  F.,  &  C.  I.  R.  R. 
Co.,  89  N.  Y.  93;  Denike  v.  New  York  &  R.  L.  &  C.  Co.,  80  Id. 
699. 

It  is  claimed  that  the  contract  with  the  Broadway  and 
Seventh  Avenue  railroad  is  void  because  it  is  made  with  a 
company  owning  a  parallel  railroad.  The  trial  court  found 
that  it  was  parallel  to  the  Broadway  Surface  railroad.  Assum- 
ing, for  the  purposes  of  this  decision,  that  this  was  a  question 
of  fact  and  not  of  law,  and  that  we  are  bound  by  the  finding, 
we  do  not  conceive  that  fact  to  be  conclusive  on  the  question. 
The  material  ground  upon  which  the  contention  is  based  is 
the  proviso  to  section  15,  chapter  252,  Laws  of  1884,  authoriz- 
ing companies  organized  thereunder  to  lease  or  transfer  their 
rights  to  run  upon  or  over  any  portion  of  tlieir  railroad  tracks 
to  any  other  street  surface  railroad  company  authorized  to  run 
upon  such  route.  The  proviso  is,  that  the  section  should  not 
be  construed  to  authorize  any  of  such  companies  "  to  lease  its 
rights  or  franchises  "  to  any  other  company  owning  and  oper- 
ating a  road  parallel  thereto. 

By  these  contracts,  the  Broadway  Surface  railroad  acquired 
the  right  from  the  Broadway  and  Seventh  Avenue  railroad, 
and  from  the  Twenty-third  Street  Railroad  Company,  to  run 
cars,  and  make  a  continuous  trip  for  a  single  fare,  to  the 
termination  of  their  respective  roads,  over  the  tracks  of  such 
roads;  and  such  roads,  from  their  respective  points  of  connec- 
tion, were  thereby  respectively  authorized  to  run  cars  over  the 
Broadway  Surface  railroad.  That  these  rights  were  valuable 
and  inured  largely  to  the  convenience  and  benefit  of  the 
traveling  public,  is  not  now  denied. 

The  uniform  course  of  legislation  in  reference  to  street-rail- 
roads shows  a  policy  on  the  part  of  the  state  to  facilitate 


716  People  v.  O'Brien.  [New  York, 

arrangements  for  the  connection  of  continuous  lines,  and 
the  transfer  of  passengers  from  one  road  to  another,  with  the 
view  of  giving  the  longest  service  possible  to  the  public  with- 
out increase  of  fare.  It  can  hardly  be  supposed  that  the 
legislature,  while  expressly  making  provisions  for  such  fa- 
cilities, intended  to  proscribe  companies  connecting  with 
another  road,  which  happened  to  own  a  line  parallel  for 
a  certain  portion  of  its  length,  but  which  also  owned  other 
lines  extending  beyond  the  parallel  portion,  from  the  benefits 
to  be  derived  from  a  traffic  contract.  It  seems  to  us  that  the 
obvious  intent  of  this  provision  was  to  avoid  the  monopoly  of 
parallel  lines,  and  prevent  the  acquisition  by  one  railroad 
company  of  the  exclusive  possession  and  control  of  such  lines. 
It  therefore  prohibits  leases  to  parallel  roads.  This  does  not, 
and  in  our  judgment  was  not  intended  to,  preclude  such  com- 
panies from  making  traffic  contracts  for  the  partial  use  of 
their  respective  routes  beyond  the  line  of  parallelism.  These 
contracts  were  not  in  terms  or  in  effect  leases  of  such  rights, 
and  did  not  surrender  possession  or  control  of  the  road  by  its 
original  owner.  Such  contracts  were  also  authorized  by  chap- 
ter 218  of  the  Laws  of  1839,  and  we  do  not  consider  that  statute 
to  have  been  repealed  by  the  proviso  of  the  act  of  1884,  or 
other  legislation  on  the  subject. 

There  are  many  other  interesting  and  important  questions 
presented  by  the  briefs  of  the  able  counsel  for  the  respective 
parties  which  it  might  be  proper  to  discuss,  were  it  not  that 
the  demands  made  by  the  claims  of  practical  litigation  upon 
our  time  are  so  imperative  as  to  forbid  the  consideration  of 
abstract  and  speculative  investigations.  Such  questions  must 
be  left  to  occasions  when  parties  actually  aggrieved  present 
them  in  a  litigation  where  their  consideration  is  essential  to 
the  determination  of  rights.  The  views  expressed  lead  to  a 
denial  of  the  relief  sought  in  the  action  by  the  plaintiff. 

The  judgments  of  the  special  and  general  terms  should  be 
reversed,  and  the  complaint  dismissed,  with  costs  to  the  de- 
fendant other  than  the  receiver. 

Andrews  and  Earl,  JJ.,  concurred  in  the  result,  upon  these 
grounds:  1.  The  annulling  act  is  constitutional  and  valid, 
and  its  effect  was  only  to  take  the  life  of  the  corporation; 
2.  All  the  property  of  the  corporation,  including  its  street 
franchises  and  its  mortgages  and  valid  contracts,  including 
what  are  called  the  traffic  contracts  with  other  railway  com- 
panies, survived;  3.  The  act,  chapter  271,  is  unconstitutional; 


Nov.  1888.]  People  v.  O'Brien.  717 

4.  That  act,  and  the  act,  chapter  310,  are  parts  of  the  same 
scheiue  adopted  by  the  legislature  for  the  purpose  of  winding 
up  the  affairs  of  the  corporation,  and  disposing  of  and  dis- 
tributing its  property.  The  main  features  of  the  latter  act 
are  unconstitutional  and  void,  and  thus  so  much  of  the  legis- 
lative scheme  has  failed  that  there  is  not  enough  left  to  save 
the  whole  act  from  condemnation;  5.  As  the  latter  act  is  thus 
wholly  void,  and  this  action  is  founded  and  depends  solely* 
upon  it,  there  is  no  warrant  for  its  maintenance,  and  there- 
fore the  judgment  should  be  reversed,  and  compaiint  dismissed. 
Judgment  accordingly. 


Effect  of  Dissolution  of  Corporation,  whether  by  Repeal  of  its 
Charter  or  Otherwise.  —  In  the  notes  to  State  Bank  v.  State,  12  Am.  Dec 
239,  Mai/  V.  State  Bank  of  North  Carolina,  40  Id.  737,  and  Miners'  Ditch  Co. 
V.  Zellerbach,  99  Id.  33G  at  seq.,  the  subject  of  the  dissolution  of  corporations 
has  been  treated  at  some  length.  In  those  notes  it  is  shown  that  at  common 
law,  upon  the  dissolution  or  civil  death  of  a  corporation,  its  real  estate  re- 
verted to  the  original  owners  or  their  heirs,  its  personal  property  vested  in 
the  state  or  sovereign,  and  all  debts  due  to  or  from  it  were  by  operation  of  law 
extinguished.  And,  what  is  more  remarkable,  that  there  have  been  courts  in 
this  country,  even  since  the  adoption  of  the  constitution  of  the  United  States, 
which  have  upheld  this  doctrine.  It  is  difficult  to  comprehend  how  any 
American  court  could  conceive  that  such  a  doctrine  was  in  harmony  with  the 
provisions  of  the  federal  constitution  and  the  principles  of  American  juris- 
prudence. In  two  of  the  states  whose  courts  at  an  early  day  recognized  this 
rule  of  the  English  common  law  as  in  force,  subsequent  decisions  have  ex- 
pressly overruled  the  earlier  decisions  on  this  point.  In  State  Bank  v.  State, 
1  Blackf.  267,  12  Am.  Dec.  234,  the  supreme  court  of  Indiana  decided  that  the 
efifects  of  a  dissolution  of  a  corporation  at  common  law  were:  1.  That  its  lands 
and  tenements  reverted  to  the  lierson  by  whom  they  were  granted  to  the  corpo- 
ration; 2.  Its  goo<ls  and  chattels  vested  in  the  crown;  3.  The  debts  due  to  and 
from  it  were  extinguished.  But  in  tlie  case  of  State  v.  Bailey,  16  Ind.  46,  52, 
79  Am.  Dec.  405,  411,  Perkins,  J.,  in  delivering  the  opinion  of  the  court  said: 
"  It  may  be  observed,  further,  that  the  supreme  court  of  the  United  States  in 
Bacon  v.  RoherUion,  18  How.  480,  has  held  that  on  the  dissolution  of  a  once 
legal  corporation,  its  peisonal  and  real  property  become  assets  for  the  pay- 
ment of  its  debts  and  distribution  among  the  stockholders,  contrary  to  the 
doctrine  asserted  in  most  elementary  works;  and  in  State  Bank  v.  State, 
euyra.  This  doctrine  seems  to  us  to  be  right."  In  the  cases  of  Commercial 
Bank  of  Natcliez  v.  Cluiinbers,  8  Smedes  &  M.  9,  and  Coulter  v.  Robertson,  24 
Miss.  278,  57  Am.  Dec.  168,  the  higli  court  of  errors  and  appeals  held  that 
this  rule  of  the  English  common  law,  except  as  modified  by  statute,  was  in 
force  in  the  state  of  Mississippi.  But  Campbell,  J.,  delivering  the  opinion  of 
the  supreme  court  of  in;.!;  state  in  the  case  of  Bank  of  Mi^sissiipyi  v.  Duncan, 
56  Miss.  173,  said:  "The  injustice  of  the  common-law  rule,  and  its  '  hostility 
to  the  more  enlightened  spirit  of  the  age,'  were  urged  upon  the  high  court  of 
errors  and  appeals  by  counsel,  who  insisted  that  it  was  condenmed  by  reason 
and  the  principles  of  modern  and  enlightened  jurisprudence;  but  the  firm 
answer  of  the  court  was,  that,  except  as  modilied  by  statute,  the  common- 


718  People  v.  O'Brien.  [New  York, 

law  mle  on  this  subject  was  in  full  force  and  operation  in  this  state.  We 
have  no  hesitation  to  declare  our  full  concurrence  with  the  views  of  counsel 
on  this  point,  and  our  dissent  from  the  view  of  the  high  court  of  errors  and 
appeals  announced  in  the  case  of  Coulter  v.  Robertson,  24  Miss.  278."  And 
the  legislature  of  that  state  has  enacted  that,  "  on  the  final  dissolution  of  any 
corporation,  either  by  judgment  or  otherwise,  all  its  real  and  personal  estate 
shall  be  vested  in  the  individuals  who  may  have  been  members  of  the  corpo- 
ration, or  stockholders,  in  their  respective  proportions,  who  shall  hold  the 
same  as  tenants  in  common;  ....  and  debts  due  to  and  from  the  corpora- 
tion shall  not  be  extinguished  by  its  dissolution":  Rev.  Code  Miss.  1880, 
sec.  1040.  In  the  case  of  Fox  v.  Horah,  1  Ired.  Eq.  358,  36  Am.  Dec.  48, 
the  supreme  court  of  North  Carolina  held  that  the  English  common-law  doc- 
trine heretofore  stated  was  in  force  in  that  state.  And  this  decision  has 
been  approved  in  Malloy  v.  Mallett,  6  Jones  Eq.  345.  It  would  appear,  how- 
ever, that  the  injustice  likely  to  result  from  the  application  of  such  a  doc- 
trine has  been  avoided  by  the  interposition  of  the  courts  of  equity  in  that 
state,  for  Smith,  C.  J.,  in  delivering  the  opinion  of  the  court  in  Von  Glahn  v. 
De  Bosset,  81  N.  C.  467,  473,  referring  to  these  cases,  said:  "These  decisions 
were  made  and  these  conclusions  readied  after  full  discussion  and  careful  con- 
sideration by  as  able  jurists  as  ever  presided  in  this  court,  and  our  reluctance 
to  disturb  them  after  so  long  an  acquiescence  by  the  profession  could  be 
overcome  only  by  the  clearest  convictions  of  their  error.  They  rest,  however, 
upon  strictly  legal  principles,  well  settled  by  authority,  and  carried  to  their 
logical  results,  the  sounduess  of  which,  in  their  applications  to  the  facts  be- 
fore the  court,  we  are  not  disposed  nor  is  it  necessary  to  question  or  contro- 
vert. But  a  remedy  has  been  suggested,  and  in  numerous  cases  applied, 
which  may  seem  to  coniKct  with  the  decisions  of  this  court,  by  calling  into 
exercise  on  behalf  of  the  creditors  or  others  interested  the  equitable  jurisdic- 
tion of  the  court,  interposing  and  affording  relief  when  none  is  admissible  at 
law,  and  for  the  very  reason  that  there  is  no  legal  remedy.  While  it  is 
manifest  that  by  its  dissolution  the  corporation  ceases  to  exist,  and  can  sus- 
tain the  relations  of  neither  creditor  nor  debtor  towards  others,  and  hence 
debts  to  or  from  it  become  extinct  at  law,  it  is  inequitable  that  creditors 
should  go  unijaid,  when  there  are  funds  or  debts  of  the  defunct  corporation 
which  ought  to  be  applied  in  payment,  simply  for  want  of  some  legal  being 
intervening  between  the  creditors  and  debtors  of  the  corporation,  with 
capacity  to  make  the  collection  and  adjustment.  Accordingly,  acting  upon 
the  maxim  that  trusts  shall  not  fail  for  want  of  a  trustee,  and  regarding  the 
debts  and  other  property  of  the  dissolved  corporation  as  the  property  of  its 
creditors  to  the  extent  of  their  respective  claims,  the  court  of  equity  will 
stretch  out  its  arms  and  gather  up  and  collect  the  assets,  though  there  be  no 
strict  legal  owner  to  assert  his  right,  and  will  appropriate  and  distribute 
them  among  the  creditors,  and  subordinate  thereto,  among  its  secondary  credi- 
tors, the  stockholders  themselves.  The  exercise  of  this  equitable  power, 
though  not  adverted  to  in  the  cases  cited,  is  not  denied,  nor  is  it  inconsistent 
with  the  principle  therein  declared.  The  remedy  suggested  grows  out  of 
those  rigorous  rules  of  the  common  law,  and  is  the  offspring  of  necessity  to 
prevent  a  failure  of  justice." 

These  are  the  principal  states  in  which  the  common-law  doctrine  on  this 
subject  has  been  recognized.  There  are  to  be  found  in  the  reports  of  other 
states  statements  of  this  doctrine  of  the  English  common  law,  but  many  of 
them  are  rather  a  display  of  the  writer's  common-law  learning  than  a  state- 
ment of  the  legal  principles  to  be  applied  in  the  practical  determination  of 


Nov.  18S8.]  People  v.  O'Brien.  719 

the  questions  involved  in  the  cases.  We  doubt  very  much  if  any  modern 
American  case  can  be  found  in  which,  by  the  judgment  of  the  court,  the 
property,  either  real  or  personal,  of  a  corporation  has  been  taken  from  its 
creditors  and  stockholders  and  transferred  to  other  persons  or  corporations, 
or  appropriated  to  the  use  of  the  state,  without  provision  made  for  compen- 
sation. The  supreme  court  of  the  United  States  has  never  recognized  the 
existence  in  this  country  of  any  such  rule  of  law  as  that  claimed  to  have  been 
the  rule  of  the  English  common  law  in  reference  to  the  property  of  a  dis- 
solved corporation.  On  the  contrary,  that  tribunal  has  uniformly  held  that 
the  property  of  such  a  corporation  constitutes  a  trust  fund  for  the  payment 
of  its  creditors,  and  for  distribution  among  its  stockholders.  Mr.  Justice 
Miller,  in  delivering  the  opinion  of  the  court  in  Greenwood  v.  Frehjlit  Co.,  105 
U.  S.  13,  19,  said:  "Personal  and  real  property,  acquired  by  the  corporation 
during  its  lawful  existence,  rights  of  contract  or  choses  in  action  so  acquired, 
and  which  do  not  in  their  nature  depend  upon  the  general  powers  conferred 
by  the  charter,  are  not  destroyed  by  such  a  repeal;  and  the  courts  may,  if 
the  legislature  does  not  provide  some  special  remedy,  enforce  such  rights  by 
the  means  within  their  power.  The  rights  of  the  share-holders  of  such  a  cor- 
poration to  their  interest  in  its  property  are  not  anniliilated  by  such  a  repeal, 
and  there  must  remain  in  the  courts  the  power  to  protect  those  rights."  In 
the  case  of  Curran  v.  A7-Ica7isas,  15  How.  304,  312,  Mr.  Justice  Curtis,  deliver- 
ing the  opinion  of  the  court,  said:  "The  capital  and  debts  of  banking  and 
other  moneyed  corporations  constitute  a  trust  fund  and  pledge  for  the  pay- 
ment of  creditors  and  stockholders,  and  a  court  of  equity  will  lay  hold  of  the 

fund,  and  see  that  it  bo  duly  collected  and  applied And,   in  our 

judgment,  a  law  distributing  the  property  of  an  insolvent  trading  or  banking 
corporation  among  its  stockholders,  or  giving  it  to  strangers,  or  seizing  it  to 
the  use  of  the  state,  would  as  clearly  impair  the  obligation  of  its  contracts  as 
a  law  giving  to  the  heirs  the  efTects  of  a  deceased  natural  person,  to  the  ex- 
clusion of  his  creditors,  would  impair  the  obligation  of  his  contracts."  Mr. 
Justice  Story,  in  delivering  the  opinion  of  the  court  in  Terrett  v.  Taylor,  9 
Cranch,  43,  52,  said:  "But  that  the  legislature  can  repeal  statutes  creating 
private  corporations,  or  confirming  to  them  property  already  accjuired  under 
the  faith  of  previous  laws,  and  by  such  repeal  can  vest  the  property  of  such 
corporations  exclusively  in  the  state,  or  dispose  of  the  same  to  such  purposes 
as  they  may  please,  without  the  consent  or  default  of  the  corporators,  we  are 
not  prepared  to  admit;  and  we  think  ourselves  standing  upon  the  principles 
of  natural  justice,  upon  the  fundamental  laws  of  every  free  government,  upon 
the  spirit  and  letter  of  the  constitution  of  the  United  States,  and  upon  the 
decisions  of  most  respectable  judicial  tribunals,  in  resisting  such  a  doctrine." 
And  the  same  distinguished  jurist,  in  delivering  the  opinion  in  Alununa  v.. 
Potomac  Company,  8  Pet.  281,  285,  said:  "The  obligation  of  those  contracts 
survives;  and  the  creditors  may  enforce  their  claims  against  any  property 
belonging  to  tho  corporation  wliich  has  not  passed  into  tlie  hands  of  houajidt 
purchasers;  but  is  still  held  in  trust  for  tho  company,  or  for  the  stockholders 
thereof,  at  the  time  of  its  dissolution,  in  any  mode  permitted  by  the  local 
laws. " 

The  just  and  reasonable  doctrines  enunciated  in  the  foregoing  extracts  are 
firmly  established  by  the  great  weight  of  authority  in  this  country:  Lum  v. 
Robertson,  6  Wall.  277;  Shields  v.  Ohio,  95  U.  S.  324;  Wood  v.  Dummer,  3 
Mason,  308;  Lothrop  v.  Stedman,  13  Blatchf.  134;  Curry  v.  Woodward,  53  Ala. 
371;  Jlowe  v.  liohinson,  20  Fla.  352;  Hohinson  v.  Lane.,  19  Ga.  3.37;  Mining 
Co.  V.  Mining  Co.,  IIG  111.  170;  Powell  v.  Railroad  Co.,  42  Mo.  C3;  McCoy  v. 


720  People  v.  O'Brien.  [New  York, 

Farmer,  65  Mo.  244;  National  Trust  Co.  v.  Miller,  33  N.  J.  Eq.  155;  New- 
foundland etc.  Co.  V.  Sckack,  40  Id.  222;  Tawar  v.  Hale,  46  Barb.  361;  Leav. 
American  etc.  Canal  Co.,  3  Abb.  Pr.,  N.  S.,  1;  Healh  v.  Barmore,  50  N.  Y. 
302;  Hastings  v.  Dreio,  76  Id.  9;  Moore  v.  Schoppert,  22  W.  Va.  282;  Lumber 
Co.  V.  Ward,  30  Id.  43.  And  it  ia  now  provided  by  statute  in  most  if  not  all 
of  the  states,  that,  upon  the  dissolution  of  a  corporation,  its  property  of 
every  kind  shall  be  a  fund  for  the  payment  of  its  debts,  and  that  tho  balance 
remaining  after  meeting  all  its  legal  obligations  shall  be  divided  among  its 
stockholders  in  proportion  to  their  respective  interests.  And  this  would 
seem  to  be  the  only  disposition  of  the  property  of  a  dissolved  corporation 
that  can  be  made  in  harmony  with  the  principles  of  justice  and  in  accord- 
ance with  the  provisions  of  the  constitution  of  the  United  States.  The 
property  of  a  corporation  belongs  to  its  stockholders.  In  delivering  the 
opinion  of  the  court  in  Moore  v.  Schoppert,  22  W.  Va.  291,  Snyder,  J.,  said: 
"In  contemplation  of  law,  the  property  and  rights  of  an  incorporated  com- 
pany belong  to  the  united  association  acting  in  the  corporate  name,  and  not 
to  the  stockholders.  The  latter,  however,  are  the  real  owners;  and  a  tech- 
nical trust  thus  arises  in  their  favor,  which  will  be  protected  and  enforced 
by  the  courts  of  equity. "  The  effect  of  the  dissolution  of  the  corporation  is 
to  change  the  form,  but  not  to  destroy  this  ownership.  As  was  said  by  Low- 
rie,  C.  J.,  delivering  the  opinion  of  the  court  in  Lauman  v.  Lebanon  Valley 
R.  R.  Co.,  30  Pa.  St.  42,  72  Am.  Dec.  685:  "The  act  of  dissolution  works  a 
change  in  the  form  of  the  interests  of  its  members,  by  destroying  the  stock, 
and  substituting  the  thing  which  the  stock  represented,  that  is,  a  legal  in- 
terest in  the  property,  and  leaves  the  members  to  such  a  division  of  this. " 
This  property  no  law  can  take  from  its  owners  and  transfer  to  another  with- 
out compensation,  nor  appropriate  to  the  use  of  the  state  without  due  process 
of  law.  Said  Shipman,  J.,  in  delivering  the  opinion  of  the  court  in  Lolhrop 
V.  Stedman,  13  Blatchf.  143:  "A  repeal  of  a  charter  does  not  of  itself  violate 
or  impair  tho  obligations  of  any  contract  which  the  corporation  has  entered 
into.  But  the  legislature  cannot  establish  such  rules  in  regard  to  the  man- 
a!?ement  a  id  disposition  of  the  assets  of  the  corporation,  that  the  avails  shall 
be  diverted  from  or  divided  unfairly  and  unequally  among  the  creditors,  and 
thus  impair  the  obligation  of  contracts,  or  that  the  portion  of  the  avails 
which  belong  to  the  stockholders  shall  be  sequestered  and  diverted  from  the 
owners,  and  thus  injure  vested  rights."  And  Mr.  Justice  Story,  in  deliver- 
ing the  opinion  of  the  court  in  Wilkinson  v.  Leland,  2  Pet.  658,  said:  "  We 
know  of  no  case  in  which  a  legislative  act  to  transfer  the  property  of  A  to  B 
without  his  consent  has  ever  been  held  a  constitutional  exercise  of  legislative 
power  in  any  state  in  the  Union.  On  the  contrary,  it^  has  been  constantly 
resisted  as  inconsistent  with  just  principles  by  every  judicial  tribunal  in 
which  it  has  been  attempted  to  be  enforced."  Where  lands  are  conveyed  to 
a  corporation  by  an  absolute  grant,  it  would  seem  that,  in  this  country,  there 
can  remain  in  the  grantor  no  reversion  or  possibility  of  a  reverter:  Fletcher 
v.  Peck,  6  Cranch,  87;  Nicoll  v.  New  York  and  Erie  R.  R.  Co.,  12  N.  Y.  121; 
IJeath  v.  Barmore,  50  Id.  302;  Yates  v.  Van  de  Bogert,  56  Id.  526;  Erie  etc. 
R.  R.  Co.  v.  Casey,  56  Pa.  St.  287.  Chief  Justice  Marshall,  in  delivering  the 
opinion  of  the  court  in  Fletcher  v.  Peck,  6  Cranch,  137,  said:  "A  grant,  in  its 
own  nature,  amounts  to  an  extinguishment  of  the  right  of  the  grantor,  and 
implies  a  contract  not  to  reassert  that  right."  And  Black,  J.,  delivering  the 
opinion  of  the  court  in  Erie  etc.  R.  R.  Co.  v.  Casey,  26  Pa.  St.  325,  said: 
"  The  suggestion  that  the  repealing  act  will  have  the  effect  of  putting  the 
road  into  the  possession  of  the  persons  whose  lands  were  taken  to  build  it 


Nov.  1888.]  People  v.  O'Brien.  721 

on  13  entitled  to  still  less  regard.  In  the  first  place  it  is  founded  in  manifest 
error."  And  in  Nicollv.  New  York  etc.  B.  R.  Co.,  12  N.  Y.  128,  Parker,  J., 
delivering  the  opinion  of  the  court,  said:  "  It  is  not  to  the  parties  to  u  grant, 
but  to  its  terms,  that  we  look  to  ascertain  the  character  and  extent  of  the 
estate  conveyed.  Such  was  the  rule  at  common  law,  and  is  still  by  statute." 
By  the  civil  law  also  the  property  of  a  dissolved  corporation  belongs  to  its 
members,  and  must  be  divided  among  them:  Stark  v.  Burke,  5  La.  Ann.  740; 
Citizeiis'  Bank  of  Louisiana  v.  Levee  S.  C.  P.  Co.,  7  Id.  286. 

What  Franchises,  Rights,  and  Contracts  of  Corporation  Survivb 
ITS  Dissolution.  —  A  grant  of  a  corporate  franchise  is  necessarily  subject  to 
the  condition  that  the  privileges  and  franchises  conferred  shall  not  be  abused, 
or  employed  to  defeat  the  ends  for  which  they  were  couferred,  and  that 
when  they  are  abused  or  misemployed,  they  may  be  withdrawn  by  proceed- 
ings consistent  with  law:  Mumma  v.  Potomac  Co.,  8  Pet.  281;  Chicago  L.  I. 
Co.  v.  Needles,  113  U.  S.  574.  Story,  J.,  delivering  the  opinion  of  the  court 
in  Mumma  v.  Potomac  Co.,  supra,  said:  "A  corporation,  by  the  very  terms 
and  nature  of  its  political  existence,  is  subject  to  dissolution  by  a  surrender 
of  its  corporate  franchises,  and  by  a  forfeiture  of  them  for  willful  misuser 
and  non-user.  Every  creditor  must  be  presumed  to  understand  the  nature 
and  incidents  of  such  a  body  politic,  and  to  contract  with  reference  to  them." 
And  as  the  various  states  of  the  Uniou  have,  since  the  decision  in  the  cele- 
brated case  of  Dartmouth  College  v.  Woodward,  4  Wheat.  518.  either  by  stat- 
utes or  in  their  constitutions,  reserved  the  right  to  alter,  amend,  or  repeal 
charters  of  corporations  at  the  pleasure  of  the  legislature,  it  becomes  an  im- 
portant practical  question  to  determine  what  franchises,  rights,  privileges, 
and  contracts  of  the  corporation  survive  its  dissolution  by  the  repeal  of  its 
charter  or  otherwise.  The  eflfect  of  the  reservation  of  the  right  to  alter, 
amend,  or  repeal  a  charter  of  incorporation  is  to  prevent  the  charter  from 
bucoming  what  it  otherwise  would  be,  a  contract  with  the  state,  to  qualify 
the  grant,  and  to  prevent  the  exercise  of  tlae  reserved  power  from  falling 
within  the  prohibition  of  the  federal  constitution,  as  an  act  impairing  the 
obligation  of  a  contract:  West  Wisconsin  R'y  Co.  v.  Supervisors  of  Trempealeau 
Co.,  35  Wis.  257;  affirmed  93  U.  S.  595;  Mayor  etc.  of  Worcester  v.  Norwich 
etc.  R.  R.  Co.,  109  Mass.  103;  State  v.  Commissioners  of  R.  R.  Taxation,  37 
N.  J.  L.  228;  Read  v.  Frankfort  Bank,  23  Me.  318;  McLaren  v.  Pennington,  1 
Paige,  102;  New  York  Cable  R'y  Co.  v.  Cliambers  Street  etc.  R.  R.  Co.,  40  Hun, 
29;  Suydam  v.  Moore,  8  Barb.  358;  White  v.  Syracuse  etc.  R.  R.  Co.,  14  Id. 
559;  Tomlinson  v.  Jessup,  15  Wall.  454;  Beer  Co.  v.  Massachusetts,  97  U.  S. 
25.  Mr.  Justice  Field,  in  delivering  the  opinion  of  the  court  in  Tomlinson  v. 
Jessup,  supra,  said:  "The  reservation  affects  the  entire  relation  between  the 
state  and  the  corporation,  and  places  under  legislative  control  all  rights, 
privileges,  and  immunities  derived  by  its  charter  directly  from  the  state." 
Property  or  rights  which  have  become  vested  in  a  corporation  under  a  legiti- 
mate exercise  of  tlie  powers  granted  to  it  cannot  be  taken  away  from  it  by 
any  legislative  act:  Railroad  Co.  v.  Maine,  96  U.  S.  499;  Sinking  Fund  Cases, 
99  Id.  700;  Commonwealth  v.  Essex  Co.,  13  Gray,  239;  Detroit  v.  Detroit  etc. 
Co.,  43  Mich.  140;  Attorney-Genei-al  v.  Railroad  Companies,  35  Wis.  425.  And 
wlien  a  law  is  in  its  nature  a  contract,  when  absolute  rights  have  vested 
under  that  contract,  a  repeal  of  tlie  law  cannot  divest  those  rights:  Fletcluer 
v.  Peck,  0  Cranch,  87;  Brooklyn  Central  R.  R.  Co.  v.  Brooklyn  City  R.  R.  Co., 
32  Barb.  3oS. 

But  there  are  franchises  and  privileges  of  a  corporation  which  do  not  sur- 
vive its  dissolution.     The  franchise  of  becoming  and  being  a  corporation  ii 
Am.  Bt.  Rep.,  Vol.  VU.  -  46 


722  People  v.  O'Brien.  [New  York, 

one  of  these.  This  is  a  franchise  in  its  nature  incapable  of  transfer  or  assign- 
ment: Memphis  etc.  R.  R.  Co.  v.  Railroad  Commissioners,  112  U.  S.  609;  WiU 
lamette  Mfg.  Co.  v.  Bank  of  British  Columbia,  119  Id.  191;  Hall  v.  Sullivan 
R.  R.  Co.,  1  Brunner's  C.  C.  613;  Commonwealth  v.  Smith,  10  Allen,  448;  87 
Am.  Dec.  672.  Curtis,  J.,  in  delivering  the  opinion  of  the  court  in  Hall  v. 
Sullivan  R.  R.  Co.,  1  Brunner's  C.  C.  615,  said:  "The  franchise  to  be  a  cor- 
poration is,  therefore,  not  a  subject  of  sale  and  transfer,  unless  the  law,  by 
some  positive  provision,  has  made  it  so,  and  pointed  out  the  modes  in  which 
such  sale  and  transfer  may  be  effected."  Mr.  Justice  Miller,  in  delivering 
the  opinion  of  the  court  in  Willamjette  Mfg.  Co.  v.  Bank  of  British  Columbia, 
119  U.  S.  197,  said:  "But  there  were  franchises  created  by  the  act  of  incor- 
poration which  would  be  of  no  value  to  the  purchaser,  which,  in  the  nature 
of  things,  could  not  be  transferred  to  it,  and  which  were  not  intended  to  be 
transferred  to  it.  Obviously,  among  these  was  the  right  to  exist  as  a  corpo- 
ration." And  Mr.  Justice  Matthews,  delivering  the  opinion  of  the  court  in 
Memphis  etc.  R.  R.  Co.  v.  Railroad  Commissioners,  112  U.  S.  620,  said:  "If, 
as  required  by  the  argument  of  the  plaintiff  in  error,  we  regard  and  treat 
the  franchise  of  being  a  corporation  as  an  incorporeal  hereditament,  and  an 
estate  capable  of  passing  between  parties  by  deed,  or  of  being  charged  by 
way  of  mortgage,  and  of  being  sold  under  a  power  by  virtue  of  judicial 
process,  the  logical  consequences  will  be  found  to  involve  insuperable  diffi 
cultiea  and  contradictions A  conception  which  leads  to  such  incon- 
gruities must  be  essentially  erroneous." 

This  franchise  to  exist  as  a  corporation  is  distinguishable  from  the  fran- 
chises to  be  enjoyed  and  used  by  the  corporation  after  its  creation:  Comn,on- 
wealth  V.  Smith,  10  Allen,  448;  87  Am.  Dec.  672;  Adams  v.  Bostonetc.  R.  R.  Co., 
4  Nat.  Bank.  Reg.  99;  Sweait  v.  Boston  etc.  R.  R.  Co.,  6  Id.  234;  Memphis  etc. 
R.  R.  Co.  v.  Railroad  Commissioners,  112  U.  S.  609.  A  corporation  may  exist 
before  it  has  acquired  any  other  franchises,  property,  or  privileges.  And  it 
may  continue  to  exist  as  a  corporation  after  it  has  lost  or  disposed  of  all  its 
property:  See  note  to  Miners'  Ditch  Co.  v.  Zellerhach,  99  Am.  Dec.  336,  and 
cases  cited.  In  the  case  of  Grand  Rapids  Bridge  Co.  v.  Prange,  35  Mich.  400, 
the  corporation  acquired  a  franchise  of  taking  tolls  by  grant  from  a  local 
board,  and  not  directly  from  the  state,  and  it  was  held  that  its  estate  in  that 
franchise  ceased  upon  the  expiration  of .  the  period  for  which  it  was  granted, 
and  to  which  it  was  expressly  limited,  and  that  the  failure  of  the  state  to 
institute  proceedings  to  dissolve  the  corporation  could  not  keep  this  franchise 
alive,  or  i-estore  it  to  life.  Cooley,  C.  J.,  who  delivered  the  opinion  in  that 
case  said:  "The  grant  may  cease  and  the  corporate  existence  remain  un- 
touched." So  a  mortgage  executed  by  a  corporation  does  not  cover  its  cor- 
porate life  or  right  to  be  a  corporation.  And  when  a  corporation  mortgages 
its  property  and  franchises,  and  the  same  are  sold  under  proceedings  to  fore- 
close the  mortgage,  or  when  the  property  and  franchises  of  a  corporation  are 
sold  at  a  bankrupt  sale,  the  purchasers  at  such  sales  do  not  become  the  cor- 
poration, but  are  simply  joint  owners  of  the  property.  They  do,  however, 
acquire  all  the  property,  rights,  and  franchises  of  the  corporation,  except  the 
franchise  to  be  a  corporation:  Memphis  etc.  R.  R.  Co.  v.  Railroad  Commis' 
sioners,  112  U.  S.  609;  New  Orleans  etc.  R.  R.  Co.  v.  Delamore,  114  Id.  501; 
Chaffe  V.  Ludeling,  27  La.  Aim.  607;  Metzx.  Buffalo  etc.  R.  R.  Co.,  58  N.  Y. 
61;  17  Am.  Rep.  201;  People  v.  Brooklyn  etc.  R'y  Co.,  89  N.  Y.  75;  Atkinson 
V.  Marietta  etc.  R.  R.  Co.,  15  Ohio  St.  21;  Wellsborough  etc  Co.  v.  Orijjin,  57 
Pa.  St.  417.  Mr.  Justice  Woods,  in  delivering  the  opinion  of  the  court  in 
Hev)  Orleans  etc.  R.  R.  Co.  v.  Delamore,  114  U.  S.  510,  said:  "When  there 


Nov.  1888.]  People  v.  O'Brien.  723 

has  been  a  judicial  sale  of  railroad  property  under  a  mortgage  authorized  by 
law,  covering  its  franchises,  it  is  now  well  settled  that  the  franchises  necea- 
sary  to  the  use  and  enjoyment  of  the  railroad  passed  to  the  purchasers." 

In  the  case  of  Welhhorowjh  etc.  Co.  v.  Griffin,  bl  Pa.  St.  417,  an  act  of  the 
legislature  had  provided  that  a  sale  under  a  mortgage  which  a  plank  road 
company  was  authorized  to  make  should  pass  to  the  purchasers  a.t  the  fore- 
closure sale  all  the  corporate  rights,  franchises,  etc.,  as  fully  as  if  they  had 
been  the  original  corporators.  It  was  held  that  the  purchaser  at  the  fore- 
closure sale  did  not  become  the  corporation  or  acquire  its  name,  and  his 
duties  could  not  be  enforced  by  a  suit  against  the  company;  even  it  he  had 
done  business  as  the  company,  he  should  have  been  sued  in  his  own  name. 
In  some  of  the  states  it  has  been  provided  by  statute  that  when  the  property 
and  franchises  of  a  corporation  have  been  sold  under  foreclosure  proceedings, 
the  purchaser  may  form  a  corporation  for  the  purpose  of  carrying  on  the 
business.  A  right  to  charge  such  rates  of  freight  and  tolls  as  the  directors 
of  the  corporation  should  deem  reasonable  is  not  a  right  that  survives  the 
dissolution  of  the  corporation:  Shields  v.  Ohio,  95  U.  S.  319. 

The  privilege  of  immunity  from  taxation  granted  to  a  corporation  is  not, 
it  seems,  one  that  will  survive  the  dissolution  of  the  corporation.  Such  im- 
munity is  not,  properly  speaking,  a  franchise  of  the  corporation.  It  is  in  its 
nature  personal  and  incapable  of  being  transferred:  Monjan  v.  Loimiaiui,  93 
U.  S.  217;  Railroad  Co.  v.  County  of  Ilamhlen,  102  Id.  273;  State  v.  3Iaine 
Central  R.  R.  Co.,  66  Me.  488.  Mr.  Justice  Field,  in  delivering  the  opinion 
of  the  court  in  Morgan  v.  Louisiana,  93  U.  S.  223,  said:  "  Much  coafusiou  of 
thought  has  arisen  in  this  case  and  in  similar  cases  from  attaching  a  vague 
and  undefined  meaning  to  the  term  '  franchises.'  It  is  often  used  as  synony- 
mous with  rights,  privileges,  and  immunities,  though  of  a  personal  and  tem- 
porary character;  so  that,  if  any  one  of  these  exists,  it  is  loosely  termed  a 
•franchise,*  and  is  supposed  to  pass  upon  a  transfer  of  the  fratichises  of  the 
company.  But  the  term  must  always  be  considered  in  connection  witli  the 
corporation  or  property  to  which  it  is  alleged  to  appertain.  The  fi-anehisea 
of  a  railroad  corporation  are  rights  or  privileges  which  are  essential  to  the 
operations  of  the  corporation,  and  without  which  its  road  and  works  would 
be  of  little  value;  such  as  the  franchise  to  run  cars,  to  take  tolls,  to  appro- 
priate earth  and  gravel  for  the  bed  of  its  road,  or  water  for  its  engines,  and 
the  like.  They  are  positive  rights  or  privileges,  without  the  possession  of 
which  the  road  of  the  company  could  not  be  successfully  worked.  Immunity 
from  taxation  is  not  one  of  them.  The  former  may  be  conveyed  to  a  pur- 
chaser of  the  road  as  part  of  the  property  of  the  company;  the  latter  is  per- 
Bonal,  and  incapable  of  transfer  without  express  statutory  direction."  Wiiere, 
therefore,  a  new  railroad  company  is  formed  out  of  two  other  companies 
which  had  by  their  charters  a  right  of  exemption  from  taxation,  the  new  com- 
pany will  not  be  entitled  to  such  exemption:  Railroad  Co.  v.  Maine,  96  IJ.  S. 
499;  Railroad  Co.  v.  Georgia,  98  Id.  359.  But  where  tiie  new  corporation  is 
by  statute  expressly  invested  with  all  the  property,  rights,  and  privileges  of 
the  old  one,  the  exemption  will  accoinpauy  the  property:  Tomlitison  v. 
Branch,  15  Wall.  4G0;  Humphrey  v.  Pcgues,  10  Id.  244. 

It  may  perhaps  be  stated  as  a  general  rule,  that  in  cases  where  there  is  a 
reservation  of  the  right  to  alter,  amend,  or  repeal  the  charter  of  a  corpora- 
tion, whatever  rights,  franchises,  or  powers  in  the  corporation  depend  for 
their  existence  upon  the  granting  clauses  of  the  charter  are  lust  I;y  its  re- 
peal: Oreenwood  v.  Freight  Co.,  105  U.  S.  13;  To/nlinnon  v.  Jes.^up,  15  \^'all. 
454;  Railroad  Co.  v.  Maine,  90  U.  S.  499;  Railroad  Co.  v.  Georgia,  98  Id.  359; 


724  P  'OPLE  V.  O'Brien.  [New  York, 

Sinking  Fmid  Cases,  99  U.  S.  700;  Erie  etc.  R.  R.  Co.  v.  Casey,  26  Pa.  St.  287. 
In  the  case  of  Greenwood  v.  Freight  Co.,  supra,  the  legislature  of  Massachu- 
setts, by  an  act  passed  in  the  year  1867,  made  certain  persons,  their  associates 
and  assigns,  a  corporation  under  the  name  of  the  Marginal  Freight  Railway 
Company,  subject  to  the  duties,  restrictions,  and  liabilities  imposed  by  the 
general  laws  relating  to  street-railway  corporations,  so  far  as  they  might  be 
applicable,  and  granted  to  this  corporation  by  its  charter  the  right,  in  such 
manner  as  might  be  prescribed  and  directed  by  the  board  of  aldermen  of  the 
city  of  Boston,  to  construct,  maintain,  and  use  a  street-railway  in  certain 
enumerated  streets  of  the  city  of  Boston.  In  the  year  1872,  the  legislature 
repealed  this  act  by  another  act  which  incorporated  the  Union  Freight 
Railroad  Company,  to  which  company  it  gave  authority  to  run  its  track 
through  the  same  streets  and  over  the  same  ground  covered  by  the  track  of 
the  former  company,  and  to  take  possession  of  that  track  upon  payment  of 
compensation.  The  complainant  sought  to  enjoin  the  carrying  out  of  the 
provisions  of  this  latter  act,  and  Mr.  Justice  Miller,  in  delivering  the  opinion 
of  the  court  in  the  case,  said:  "It  results  from  this  view  of  the  subject  that 
whatever  right  remained  in  the  Marginal  company  to  its  rolling  stock,  its 
horses,  its  harness,  its  stables,  the  debts  due  to  it,  and  the  funds  on  hand, 
if  any,  it  no  longer  had  the  right  to  run  its  cars  through  the  streets,  or  any 
of  the  streets,  of  Boston.  It  no  longer  had  the  right  to  cumber  these  streets 
•with  a  railroad  track  which  it  could  not  use,  for  these  belonged  by  law  to  no 
person  of  right,  and  were  vested  in  defendants  only  by  virtue  of  the  repealed 
charter. " 

It  is  not  easy  in  the  present  state  of  the  law  to  determine  ■with  exactness 
what  are  the  rights  and  powers  that  remain  to  the  creditors  and  stockholders 
of  a  dissolved  corporation  after  the  repeal  of  its  charter,  made  pursuant  to  a 
reserved  right  of  repeal.  Mr.  Justice  Miller,  in  the  case  last  referred  to, 
said  on  this  subject:  "We  are  conscious  that  no  definition,  at  once  compre- 
hensive and  satisfactory,  can  be  here  laid  down  of  what  those  rights  and 
powers  are  that  remain  to  the  stockliolders  and  creditors  of  such  a  corpora- 
tion after  the  act  of  repeal."  In  the  case  of  Shields  v.  Ohio,  95  U.  S.  325, 
Mr.  Justice  Swayne  said:  "The  power  of  alteration  and  amendment  is  not 
without  limit.  The  alterations  must  be  reasonable;  they  must  be  made  in 
good  faith;  and  be  consistent  vrith  the  scope  and  object  of  the  act  of  incor- 
poration. Sheer  oppression  and  wrong  cannot  be  inflicted  under  guise  of 
amendment  or  alteration.  Beyond  the  sphere  of  the  reserved  powers,  the 
vested  rights  of  property  of  corporations  in  such  cases  are  surrounded  by 
the  same  sanctions  and  are  as  inviolable  as  in  other  cases."  Chief  Justice 
Waite,  in  the  Sinking  Fund  Cases,  99  U.  S.  718,  said:  "That  this  power  haa 
a  limit,  no  one  can  doubt.  All  agree  that  it  cannot  be  used  to  take  away 
property  already  acquired  under  the  operation  of  the  charter,  or  to  deprive 
the  corporation  of  the  fruits  actually  reduced  to  possession  of  contracts  law- 
fully made."  And  Shaw,  C.  J.,  in  delivering  the  opinion  of  the  court  in 
Commonwealth  v.  Essex  Co.,  13  Gray,  253,  said:  "Does  this  come  within  the 
power  of  the  legislature  to  amend  or  alter !  It  seems  to  us  that  this  power 
must  have  some  limit,  though  it  is  difficult  to  define  it.  Suppose  an  author- 
ity has  been  given  by  law  to  a  railroad  corporation  to  purchase  a  lot  of  land 
for  purposes  connected  with  its  business,  and  they  purchased  such  lot  from 
a  third  party,  could  the  legislature  prohibit  the  company  from  holding  it? 
If  so,  in  whom  should  it  vest?  or  could  the  legislature  direct  it  to  revest  in 
the  grantor,  or  escheat  to  the  public?  or  how  otherwise?  Suppose  a  mana- 
facturing  company  incorporated  is  authorized  to  erect  a  dam  and  flow  a  tract 


Nov.  1888.]  People  v.  O'Brien.  725 

of  meadow,  and  the  owners  claim  gross  damages,  which  are  assessed  and 
paid,  can  the  legislature  afterwards  alter  the  act  of  incorporation  so  as  to 
give  to  such  meadow-owners  future  annual  damages?  Perhaps  from  these 
extreme  cases,  —  for  extreme  cases  are  allowable  to  test  a  legal  principle,  — 
the  rule  to  be  extracted  is  this:  that  where,  under  power  in  a  charter,  rights 
have  been  acquired  and  become  vested,  no  amendment  or  alteration  of  the 
charter  can  take  away  the  property  or  rights  which  have  become  vested. un- 
der a  legitimate  exercise  of  the  powers  granted."  In  that  case  it  was  de- 
cided that  a  company  which  had  accepted  the  provisions  of  a  statute  making 
it  liable  for  all  damages  occasioned  by  its  dam  to  fish  rights  above  the  dam, 
and  paid  largo  sums  for  such  damages,  could  not  afterwards  be  required  by 
the  legislature  to  make  different  fish-ways,  notwithstanding  the  general  law 
reserving  tO  the  legislature  the  right  to  alter,  amend,  or  repeal  charters  of 
corporations. 

From  the  foregoing  extracts  may  be  deduced  the  general  principles  by  which 
to  determine  the  rights  and  powers  of  a  corporation  which  remain  to  its  credi- 
tors and  stockholders  upon  its  dissolution.  It  is  clear  that  all  the  real  and 
personal  property  belonging  to  the  corporation  at  the  time  of  its  dissolution 
remain  to  the  creditors  and  stockholders,  and  that  they  cannot  be  taken 
away  from  them,  or  diverted  to  any  other  use  or  purpose:  Terrett  v.  Taylor, 
9  Cranch,  43;  Curranv.  Arkansas,  15  How.  304;  Greenwood  v.  Freirjld  Co., 
105  U.  S.  13;  New  Orleans  etc.  B.  R.  Co.  v.  Delamore,  114  Id.  501;  Detroit  v. 
Detroit  etc.  Co.,  43  Mich.  140.  So  do  its  rights  of  contract  and  choses  in 
action  properly  acquired  by  it  during  its  lawful  existence:  Munima  v.  Poto- 
mac Co.,  8  Pet.  281;  New  Jersey  v.  Yard,  95  U.  S.  104;  Greenwood  v.  FreigU 
Co.,  105  Id.  13.  A  franchise  to  build,  own,  and  operate  a  railroad  is  prop- 
erty of  a  corporation,  and  will  remain  to  its  creditors  and  stockholders  after 
dissolution:  Hall  v.  Sidlivan  li.  R.  Co.,  1  Brunner's  C.  C.  613.  The  right  of 
a  street-railway  company  to  the  use  of  the  streets  of  a  city  for  the  purpose 
of  its  business,  whether  acquired  by  gift  or  purchase  from  the  city  authori- 
ties, is  a  property  right  which  survives  to  the  creditors  and  stockholders  after 
the  dissolution  of  the  corporation:  New  Orleans  etc.  R.  R.  Co.  v.  Delamore, 
114  U.  S.  501;  ililhau  v.  Sharp,  27  N.  Y.  611;  Sixth  Avenue  R.  R.  Co.  v.  Kerr, 
72  Id.  330;  State  v.  Mayor  etc.  of  Neio  York,  3  Duer,  119.  Unpaid  subscrip- 
tions to  the  capital  stock  of  a  corporation  are  corporate  property,  and  may 
be  reached  by  its  creditors:  Ilijlitower  v.  Thornton,  8  Ga.  486.  The  right 
given  by  statute  to  a  county  to  subscribe  to  the  capital  stock  of  a  corporation 
is  a  right  or  privilege  of  the  corporation  which  may  be  transferred  to  another 
corporation  or  to  a  consolidated  corporation  into  which  the  former  corpora- 
■  tion  has  passed:  County  of  Scotland  v.  Thomas,  94  U.  S.  682;  Jlannihal  c6  St. 
Jo.  R.  R.  Co.  v.  Marion  Co.,  36  Mo.  294;  Smith  v.  Clark  Co.,  54  Id.  58.  In 
Hastings  v.  Drew,  50  How.  Pr.  254,  it  was  held  that  if  the  property  of  a  dis- 
Bolved  corporation  be  divided  among  its  stockholders,  leaving  debts  unpaid, 
every  stockholder  receiving  his  share  of  the  property  is  liable  "pro  rata  to 
contribute  to  the  discharge  of  such  debts  out  of  tlie  property  in  his  hands, 
or  its  proceeds.  And  in  People  v.  National  Trust  Co.,  82  N.  Y.  283,  it  was 
decided  that  a  lease  to  a  corporation  is  not  terminated  by  its  dissolution,  and 
that  its  covenant  to  pay  rent  does  not  thereupon  cease  to  be  obligatory;  that 
its  debts  included  those  to  mature  as  well  as  accrued  indebtedness,  and  all 
engagements  entered  into  by  it  which  have  not  been  fully  satisfied  or  canceled. 
Effectt  of  Dissolution  upon  Suits  Pending  by  or  against  Corpora- 
tion. —  This  subject  is  considered  at  length  in  the  note  to  May  v.  StcUe 
Bank,  40  Am.  Dec.  737. 


726  Byam  v.  Collins.  [New  York, 

Corporation  —  Modes  of  Dissolving:  Folger  v.  Columbian  Ins.  Co.,  99 
Mass.  267;  90  Am.  Dec.  747,  and  note  756;  Germantown  Railway  v.  Filler,  60 
Pa.  St.  124;  100  Am.  Dec.  540;  effect  of  dissolution  on  property  and  rights 
of  corporation:  State  v.  Bailey,  10  Ind.  46;  79  Am.  Dec.  405;  Folger  v.  Co- 
lumhian  Ins.  Co.,  99  Mass.  207;  96  Am.  Dec.  746. 

Corporation  —  Capacity  to  Take  Title  in  Fee  to  Real  Property: 
Page  v.  Heineherg,  40  Vt.  81;  94  Am.  Dec.  378;  Blunt  v.  Walker,  11  Wia. 
334;  78  Am.  Dec.  709;  may  acquire  the  title  in  fee,  though  the  period  of  ita 
existence  is  limited,  when  such  power  is  given  by  ita  charter:  Rives  v.  Dud- 
ley, 3  Jones  Eq.  126;  67  Am.  Dec.  231. 

Grant  of  Franchise  by  Municipal  Corporation,  as  Agent  of  State, 
implies  contract  not  to  reassert  the  right  to  what  was  granted:  Port  of  Mobile 
V.  Railroad  Co.,  84  Ala.  115;  5  Am.  St.  Rep.  342;  Stein  v.  Mobile,  49  Ala.  362; 
20  Am.  Rep.  283;  Burlington  v.  Burlington  etc.  R'y  Co.,  49  Iowa,  144;  31  Am. 
Rep.  145.  But  it  was  held  that  an  irrevocable  grant  by  a  city  of  the  exclusive 
privilege  to  construct  and  operate  a  street-railwaj'  is  unconstitutional:  Bir- 
mingham etc.  R'y  Co.  v.  BirminglMm  St.  R'y  Co., 19  Ala.  405;  68  Am.  Rep.  615. 

Right  to  Construct  and  Maintain  Horse-railway  in  Public  Streets 
of  City  by  authority  of  the  legislature  and  the  city  council:  See  Murphy  v. 
Chicago,  29  111.  279;  81  Am.  Dec.  307;  Milhau  v.  Sharp,  27  N.  Y.  611;  84  Am. 
Dec.  314;  Illnchman  v.  Paterson  etc.  R.  R.  Co.,  17  N.  J.  Eq.  75;  86  Am. 
Dec.  252,  and  note  258. 

Construction  of  Statutes.  — Retrospectivb  Construction  of  a  statute 
is  never  allowable,  unless  the  intent  that  it  shall  so  operate  plainly  appears 
upon  its  face,  and  this  rule  applies  even  to  remedial  statntes:  Richmond  v. 
Henrico  Co.,  83  Va.  204. 


Byam  v.  Collins. 

[lU  New  York,  143.  J 
From  Libelotts  Publication  the  Law  Implies  Malick  and  Infers  dam- 

ages. 

A  Libelous  Communication  la  Regarded  as  Privileged,  if  made  hona 
Jide,  upon  any  subject-matter  in  which  the  party  communicating  has  an 
interest,  or  in  reference  to  which  he  has  a  duty,  if  made  to  a  person  hav- 
ing a  corresponding  interest  or  duty,  although  it  contains  criminating 
matter  which,  without  this  privilege,  would  be  slanderous  and  action- 
able; and  this,  though  the  duty  be  not  a  legal  one,  but  only  a  moral  or 
social  duty  of  imperfect  obligation. 

Whether  a  Libelous  Communication  is  Privileged  is  a  Matteb  aw 
Law. 

Ip  Libelous  Communication  is  Privileged,  the  Plaintifp  must  Assumk 
the  Burden  of  establishing,  as  a  matter  of  fact,  and  to  the  satisfaction 
of  the  jury,  that  it  was  maliciously  made. 

Libel.  —  Communication  is  not  Privileged  because  Made  by  the  Ma- 
ligner  in  the  conviction  that  he  owed  a  social  duty  to  give  currency  to 
libelous  rumors,  that  the  victim  of  them  may  be  avoided. 

A  Libelous  Communication  is  not  Privileged  when  made  to  an  unmar- 
ried woman  concerning  her  suitor,  by  the  fact  that  she,  some  years  be- 
fore, bad  requested  to  be  informed  of  anything  the  defendant  knew 


AMERICAN  STATE  REPORTS. 

Vor..    X,    Pa(;i:s  l]4-13tx 

CEN.   UN.  TEL.  CCX  ?.  FALLEY. 

[118  Indtana,   19-1.] 

Law  of  Telephone. 


114       Central  Union  Telephone  Co.  v.  Falley.     [Indiana, 

child  was  not  able  to  help  itself:  State  v.  Behm,  72  Iowa,  533.  There  is  no 
element  of  manslaughter  where  the  evidence  shows  that  the  defendant  was 
asked  by  the  deceased  if  the  defendant  did  not  have  a  man,  who  was  with 
him,  under  arrest,  and  thereupon  defendant  shot  him  and  killed  him,  for 
such  evidence  proves  murder;  nor  is  there  any  element  of  manslaughter 
where  the  evidence  shows   that  deceased  met  defendant  and  called  him  a 

d n  horse-thief,  and  at  the  same  time  dropped  the  muzzle  of  a  loaded 

rifle  upon  defendant's  bowels;  that  defendant  endeavored  to  take  the  rifle 
away  from  deceased,  and  not  succeeding,  shot  him  in  the  scuffle,  while  de- 
ceased was  trying  to  shoot  defendant;  for  such  evidence,  if  true,  proves  in- 
nocence and  self-defense:  State  v.  Byers,  100  N.  C.  512.  But  even  though 
there  exists  no  element  of  manslaughter  in  a  criminal  case,  yet  if  the  jury 
find  a  defendant  guilty  of  manslaughter,  it  is  proper  to  sentence  him  there- 
for: Fogg  V.  Stxite,  50  Ark.  506. 


Central  Union  Telephone  Co.  v.  Falley. 

fllS  Indiana,  194.J 

Telephone,  as  the  Word  is  Used  in  the  Statdtes  of  Indiana,  meana 
an  organized  apparatus  or  combination  of  instruments  usually  in  use  in 
transmitting  as  well  as  in  receiving  telephonic  messages. 

Telephone  Companies  are  Common  Carriers  of  News,  and  as  Sitch 
Subject  to  Proper  Regulations  requiring  them  to  conduct  their 
business  in  a  manner  conducive  to  the  public  benefit. 

Telephone  Company  mat  be  Compelled  by  Mandamus  to  furnish  any 
person  or  company  the  like  service  which  it  furnishes  to  others,  and  on 
like  terms. 

The  F*rice  to  be  Charged  for  the  Use  of  Telephones  and  Telephonic 
Connections  may  be  regulated  by  the  legislature  relative  to  business 
conducted  within  the  state. 

Telephone  Companies  must  Furnish  Each  Person,  under  the  statutes 
of  Indiana,  with  a  telephone  and  with  telephonic  communications  and 
connections;  and  cannot  relieve  themselves  from  their  liability  so  to  da 
by  abandoning  what  is  known  as  the  exchange  and  rental  system,  and 
substituting  therefor  another  system,  under  which  all  persons  must  re- 
sort to  stations  fixed  by  the  companies  where  telephones  are  kept  to  be 
used  upon  the  payment  of  a  certain  toll. 

Fact  that  a  Telephone  Company  has  Extended  its  Lines  through 
Different  States,  and  is  engaged  in  interstate  commerce,  will  not 
relieve  it  from  the  operation  of  state  8t.atutes,  upon  business  conducted 
wholly  within  the  state,  nor  justisfy  its  refusal  of  a  telephone  and  the 
best  telephonic  connections  and  facilities  to  a  person  doing  business  in 
such  state,  on  the  terms  prescribed  by  such  statute. 

The  Right  to  a  Writ  of  Mandate  to  Compel  the  Furnishing  of 
Telephonic  Facilities  is  not  Taken  Away  by  a  statute  imposing  a 
penalty  for  refusing  such  facilities.  The  statutory  remedy  is  cumulative 
merely. 

/.  R.  Coffroth,  T.  A.  Stuart,  and  A.  A.  Thomas,  for  the  appel- 
lant. 


Nov.  1888.]    Central  Union  Telephone  Co.  v.  Falley.     115 

W.  D.  Wallace,  S.  P.  Baird,  and  F.  S.   Chase,  for  the  ap- 
pellee. 

Olds,  J.  This  is  an  action  brought  by  the  relatrix  to  com- 
pel the  appellant,  by  mandate,  to  furnish  her,  at  her  place  of 
business  in  the  city  of  Lafayette,  a  telephone  and  telephonic 
connections  and  facilities.  The  petition  is  in  one  paragraph, 
averring  the  following  facts:  That  the  defendant,  the  Central 
Union  Telephone  Company,  is  a  corporation  duly  organized 
under  the  laws  of  the  state  of  Illinois;  that  it  is  now,  and  was 
at  the  time  of  the  doing  of  the  acts  and  things  hereinafter  com- 
plained of,  and  for  three  years  last  past  has  been,  owning  and 
operating  a  system  of  telephone  lines  and  wires,  and  engaged 
in  doing  a  general  telephone  business  in  the  city  of  Lafayette, 
county  of  Tippecanoe,  state  of  Indiana;  that  the  relatrix, 
Susana  B.  Falley,  is  now,  and  for  more  than  three  months 
last  past  has  been,  carrying  on  business  under  the  name  and 
style  of  the  "Falley  Hardware  Company,"  and  the  occupant 
of  a  business-room  in  said  city,  at  Nos.  37  and  39  on  South 
Third  Street  therein,  and  her  business-room  is  within  the 
limits  of  the  defendant's  telephone  business  in  said  city;  that 
the  relatrix  did,  on  the  twenty-fifth  day  of  October,  1887,  de- 
mand of  the  defendant  that  said  relatrix  be  furnished  by  said 
defendant  with  a  telephone  and  telephonic  connections  and 
facilities  necessary  to  place  the  relatrix,  at  her  said  business- 
room,  in  telephonic  connection  with  the  patrons  of  defendant  in 
said  city;  that  the  relatrix  did  then,  and  at  the  time  of  making 
said  demand,  tender  to  the  defendant  the  sum  of  nine  dollars, 
lawful  currency  of  the  United  States,  as  a  rental  in  advance 
for  such  telephone,  telephonic  connections,  and  facilities  for 
the  first  three  months'  use  thereof,  and  at  the  same  time  rela- 
trix offered  to  comply  with  the  reasonable  rules  and  regula- 
tions of  said  defendant  not  inconsistent  with  the  laws  of  this 
state;  that  the  defendant  at  the  time  said  demand  was  made 
refused,  and  ever  since  has  willfully,  wrongfully,  and  without 
cause,  failed  and  refused,  and  still  fails  and  refuses,  to  fur- 
nish to  said  relatrix,  at  her  said  business-room,  the  use  of 
such  teleplionc  and  telephonic  connections  and  facilities;  that 
the  defendant  is  a  common  carrier  of  telephonic  messages  be- 
tween its  patrons  within  the  limits  of  said  city  of  Lafayette; 
and  that  said  relatrix,  under  the  laws  of  the  state  of  Indiana, 
is  entitled  to  demand  and  receive  from  the  defendant  the  use 
of  the  telephone  and  telephonic  connections,  facilities,  and 
service  necessary  to  place  the  relatrix,  at  her  said  business- 


116        Central  Union  Telephone  Co.  v.  Falley.     [Indiana, 

room,  in  telephonic  communication  with  the  patrons  of  de- 
fendant in  said  city  for  the  compensation  of  three  dollars  per 
month,  as  fixed  and  prescribed  by  the  statute  of  said  state, 
and  for  such  compensation  she  is  entitled  to  receive  from  the 
defendant  the  use  of  a  telephone,  and  the  highest  and  best 
grade  of  telephonic  connections,  facilities,  and  service,  used 
and  furnished  by  said  defendant  in  carrying  on  its  business 
in  said  city.  Pra5'er  for  an  alternative  writ  of  mandate,  and, 
on  final  hearing,  a  peremptory  writ  compelling  defendant  to 
furnish  relatrix  with  such  telephone  and  telephonic  connec- 
tions, facilities,  and  service,  which  petition  was  duly  verified. 
Alternative  writ  of  mandate  issued  upon  the  complaint  in  due 
form,  setting  forth  the  filing  of  the  complaint  and  the  allega- 
tions of  the  complaint,  and  concluding  by  commanding  the 
appellant  to  furnish  the  relatrix  with  a  telephone  and  tele- 
phonic connections  and  facilities  as  asked,  or  in  default 
thereof,  to  appear  before  the  court  and  show  cause. 

In  answer  to  the  writ,  appellant  appeared  by  attorneys  and 
demurred  to  the  writ  for  the  cause  that  the  writ  did  not  state 
facts  sufficient  to  constitute  a  cause  of  action,  which  demurrer 
was  overruled,  to  which  ruling  of  the  court  on  the  demurrer 
appellant  excepted.  Appellant  then  filed  an  answer  in  five 
paragraphs.  The  first  is  a  general  denial,  and  the  other  par- 
agraphs allege  the  following  facts:  — 

2.  The  defendant  avers  that  it  is  a  corporation  under  the 
laws  of  Illinois;  that  for  several  years  prior  to  the  demand  by 
plaintifi",  as  alleged  in  the  complaint,  defendant  had  been 
engaged  in  carrying  on  its  business  as  a  telephone  company 
in  the  states  of  Indiana,  Ohio,  Illinois,  and  Iowa;  that  long 
before  and  at  the  time  of  the  happening  of  the  things  com- 
plained of  in  plaintiff's  complaint,  defendant  had,  ever  since 
had,  and  now  has  its  lines  and  wires  on  its  poles  in  the  city 
of  Lafayette,  and  in  various  cities  and  towns  in  the  states 
aforesaid,  and  during  all  of  said  time  and  still  has  ofiices  in 
said  various  cities  and  towns  in  each  of  said  states  connected 
with  each  other,  and  many  of  its  offices  and  telephones  in 
this  state  are  connected  by  means  of  its  wires  with  defend- 
ant's offices  and  instruments  in  the  states  of  Ohio,  Illinois, 
and  Iowa;  that  defendant  during  all  of  said  time  was,  has 
been,  and  is  engaged  in  transmitting  messages  for  the  public 
for  hire  over  its  said  wires,  not  only  between  towns  and  cities 
in  each  of  said  states,  but  also  between  the  several  states 
aforesaid;  and  during   all  of  said   time  defendant  has  been 


Nov.  1888.]    Central  Union  Telephone  Co.  v.  Falley.     117 

and  is  engaged  in  and  carrying  on  interstate  commerce; 
that  it  admits  that  plaintiff,  claiming  that,  under  the  act  of 
the  general  assembly  of  the  state  of  Indiana,  she  was  enti- 
tled to  have  a  telephone  in  her  store,  and  to  be  furnished  with 
telephonic  service  under  said  law,  tendered  defendant  nine 
dollars,  and  demanded  to  have  a  telephone  in  her  store;  and 
defendant  admits  that  it  refused  to  furnish  relatrix  with  a 
telephone,  and  with  telephonic  connections  and  service,  be- 
cause if  defendant  had  complied  with  said  request  and  demand 
she  would  thereby  be  furnished  facilities  for  transmitting  mes- 
sages from  Lafayette  to  various  places  in  the  states  of  Ohio 
and  Illinois,  where  defendant  had  and  has  its  wires  and  oflSices, 
as  aforesaid,  for  said  sum  of  money,  which  was  unreasonable 
and  greatly  less  than  defendant  charges  its  other  customers, 
and  which,  as  defendant  was  engaged  in  carrying  on  interstate 
commerce,  could  not  be  required  of  it. 

3.  The  third  paragraph  states  that  it,  defendant,  is  a  cor- 
poration under  the  laws  of  Illinois,  and  is  engaged  in  carry- 
ing on  a  general  telephone  business  in  the  city  of  Lafay- 
ette; that,  on  the  second  day  of  March,  1886,  it  in  good 
faith  announced  to  the  public  and  it  was  then  its  intention 
from  and  after  the  second  day  of  March,  1886,  not  to  furnish 
telephones  under  a  rental  system,  except  as  it  did  so  until  its 
contracts  then  in  existence  expired;  that  at  said  time  it  had  a 
large  number  of  contracts  with  its  various  subscribers  in  the 
city  of  Lafayette  for  the  use  of  its  telephones,  by  the  terms  of 
which  defendant  was  compelled  to  maintain  its  exchange  in 
said  city,  and  furnish  telephone  facilities  to  said  persons  until 
the  thirtieth  day  of  September,  1886;  that  defendant  treated 
all  applications  for  telephones  and  telephonic  service  alike; 
that,  in  good  faith,  and  without  discrimination,  having  de- 
termined to  cease  doing  a  general  rental  telephone  exchange 
business  in  this  state,  it  refused  to  furnish  telephones  and 
telephonic  connections  under  a  general  rental  telephone  ex- 
change system,  except  to  those  with  whom  it  had  contracts,  as 
aforesaid;  that  it  admits  the  demand  and  tender  by  relatrix 
and  the  refusal  by  defendant  to  furnish  her  with  a  telephone, 
because  it  had  determined  to  cease,  and  had  in  fact  ceased, 
doing  a  general  rental  telephone  exchange  business  in  said 
city,  and  so  informed  relatrix,  and  since  that  time  has  not  been 
and  is  not  engaged  in  a  general  telephone  business  under  a 
rental  system  in  said  city;  that  after  it  had  announced  its 
determination  to  cease  doing  a  general  rental  telephone  ex- 


118       Central  Union  Telephone  Co.  v.  Falley.     [Indiana, 

change  business,  it,  in  June,  1886,  determined  to  offer  to  the 
public,  and  did  in  fact  offer  to  the  public,  to  furnish  telephonic 
service  and  connections  by  means  of  public  toll-stations  at 
various  points  in  said  city,  which  system  of  public  toll-sta- 
tions defendant  had  in  operation  at  and  long  before  the  time 
of  the  demand  by  relatrix  for  telephone  and  telephonic  con- 
nections. 

Defendant  denies  that  it  owns  or  operates  a  telephone  ex- 
change under  the  rental  system  in  said  city  of  Lafayette, 
Indiana,  or  that  it  did  at  the  time  of  the  commencement  of 
this  action;  that  although  it  had  formerly  conducted  a  tele- 
phone exchange  under  the  rental  system,  it  abandoned  and 
terminated  the  same  as  soon  as  its  contracts  in  existence  were 
terminated.  The  defendant  avers  that  what  is  known  as  a 
telephone  exchange  under  a  rental  system  is,  where  lines  and 
telephone  instruments  are  furnished  to  subscribers  for  private 
use,  under  contracts  limiting  the  use  of  the  facilities  furnished 
to  such  subscribers  and  their  employees,  for  a  stipulated  ren- 
tal per  month,  quarter,  or  year,  and  in  which  the  instruments 
furnished  pass  into  the  possession  of  such  subscribers;  the 
lines  so  furnished  to  subscribers  center  at  a  switching-station, 
where  the  line  of  any  subscriber  is  connected  with  that  of  any 
other  subscriber,  on  request,  for  purposes  of  communication 
authorized  by  the  contract.  In  the  exchange  system,  a  set  of 
telephone  instruments,  connected  by  a. wire  with  the  central 
station,  is  furnished  to  any  reputable  person  who  desires  to 
become  a  subscriber  to  the  exchange,  and  signs  the  usual 
form  of  contract,  and  complies  with  its  conditions.  A  public 
toll  system  of  telephone  service  is  one  where  the  telephone 
company  furnishes  no  instruments  or  lines  for  private  use  for 
a  rental  charge,  but  establishes  stations  of  its  own,  for  the  ac- 
commodation of  the  public,  in  such  places  as  may  appear  to 
it  necessary  to  furnish  telephonic  facilities  and  connections  to 
the  public,  charging  a  toll  for  each  use  of  its  instruments  and 
lines,  such  toll-stations  being  in  charge  of  agents  selected,  ap- 
pointed, and  paid  by  the  telephone  company,  the  instrument 
at  such  station  remaining  in  the  possession  and  control  of  the 
company,  through  its  agents;  the  lines  from  such  stations 
extend  to  a  switching-station,  where  one  is  connected  with 
another  upon  the  order  of  any  agent,  which  agent  collects 
from  the  user  the  toll  charged  for  each  and  every  connection, 
and  accounts  for  the  same  to  the  company;  that  such  toll 
system  is  simply  an  extension  of  the  toll  system  which  the 


Nov.  1888.]    Central  Union  Teleppione  Co.  v.  Falley.     119 

defendant,  sinca  its  organization  for  some  years  past,  and 
prior  to  the  enactment  of  the  telephone  statutes  in  this  state, 
was  maintaining,  and  has  maintained,  in  various  towns  of 
this  state,  providing  telephonic  facilities  between  individuals 
residing  in  different  towns  where  toll-stations  are  established; 
that  at  the  time  of  the  commencement  of  this  suit  it  did  not, 
does  not  now,  nor  does  it  intend  to,  discriminate  against  the 
relatrix,  and  is  still  and  now  is  ready  and  willing  to  supply 
the  relatrix  and  all  applicants  with  such  facilities  as  it  has 
in  said  city. 

The  paragraph  further  sets  out  in  detail  the  manner  of  oper- 
ating and  conducting  the  toll-station  system,  and  alleges  that 
all  its  business  in  the  city  of  Lafayette,  at  the  time  of  the  com- 
mencement of  this  suit,  and  ever  since,  has  been  conducted 
on  that  system,  and  that  it  was  not  at  that  time  nor  since 
doing,  and  does  not  intend  to  do,  a  telephone  business  under 
the  rental  system;  that  notices  of  the  rates  and  fees  charged 
for  the  use  of  the  telephones  are  posted  in  each  station.  A  copy 
of  the  contract  that  it  enters  into  with  its  agent  is  set  out. 
The  answer  denies  any  discrimination  against  the  relatrix,  or 
any  intention  to  discriminate,  and  alleges  that  the  toll-stations 
are  so  distributed  as  to  accommodate  the  general  public,  and 
that  there  are  a  number  in  the  vicinity  of  the  place  of  busi- 
ness of  the  relatrix,  and  denies  being  a  common  carrier,  and 
denies  being  bound  to  rent  telephones  at  all,  or  as  demanded 
by  relatrix;  that  defendant  offered  to  establish  a  toll-station 
on  relatrix's  said  premises,  and  she  refused  to  allow  it  to  be 
done,  or  to  sign  a  contract  of  agency. 

The  following  is  a  copy  of  the  contract  set  out  with  this 
paragraph  of  answer:  — 

"Central  Union  Telephone  Company  —  Station  Contbact 
— Central  Station. 

"This  agreement,  made  this day  of ,  188-  by  and 

between  the  Central  Union  Teleplione  Company,  its  succes- 
sors or  assigns,  party  of  the  first  part,  and ,  party  of  the 

second  party,  witnesseth:  The  second  party  agrees:  1.  To 
permit  the  party  of  the  first  part  to  place  its  wires,  fixtures, 
telephone  instruments,  and  apparatus  in  and  upon  the  prem- 
ises of  the  second  party,  located  on street,  in  the 

of ,  county  of ,  in  the  state  of  Indiana,  for  the  pur- 
pose of  doing  a  general  telephone  and  telegraph  business; 
that  he, ,  said  second  party,  is  to  furnish  proper  office- 


120       Central  Union  Telephone  Co.  v.  Falley.     [Indiana, 

room,  rent,  light,  and  fuel,  and  necessary  employees  to  trans- 
act all  business  of  the  party  of  the  first  part,  at  said  station, 
in  a  prompt  and  business-like  manner;  to  collect  for  all  such 
business  such  regular  rates  as  may  be  fixed  from  time  to  time 
by  the  party  of  the  first  part,  and  the  same  to  account  for  to 
the  said  first  party;  and  further,  to  observe  and  conform  to 
such  rules  and  regulations  touching  said  business  as  may  from 
time  to  time  be  prescribed  by  said  first  party.  In  considera- 
tion thereof,  and  in  full  payment  therefor,  the  first  party 
agrees  to  pay  to  the  second  party  five  per  cent  commission 
upon  the  receipts  at  said  station   for  business  with  regular 

stations  within miles  of  the  county  court-house  in  said 

,  and upon  receipts  for  business  going  over  to  extra- 
territorial lines  of  the  first  party.  It  is  further  mutually 
agreed  that  should  the  telephone  or  telegraph  station  herein 
referred  to  fail  to  be  sufficiently  remunerative,  or  its  manage- 
ment by  the  party  of  the  second  part  prove  to  be  unsatisfac- 
tory to  the  party  of  the  first  part,  the  right  to  terminate  this 
agreement  at  any  time  is  reserved  by  the  party  of  the  first 
part;  but  otherwise,  this  agreement  is  to  be  in  force  and  effect 

until   the  last  of  ,  188-,  and  thereafter  until  the  party 

of  either  part  shall  have  given  the  party  of  the  other  part  ten 
days'  written  notice  of  his  or  its  desire  to  discontinue  the 
same.     Witness  the  hands  of  the  parties,"  etc. 

4.  The  fourth  paragraph  alleges  the  ceasing  to  do  business 
by  the  defendant  under  the  rental  system  and  conducting 
the  same  under  a  toll-station  system,  as  alleged  in  the  third 
paragraph,  and  avers  that  one  Edward  E.  Falley  is  a  partner 
of  relatrix,  and  that  they  are  trading  under  the  name  of  Fal- 
ley Hardware  Company,  and  that  prior  to  the  demand  by 
relatrix  for  a  telephone,  as  set  out  in  the  complaint,  defendant 
had  a  telephone  in  their  place  of  business  under  the  toll-sta- 
tion system,  and  said  firm  acted  as  the  agent  of  defendant  in 
the  operation  of  the  telephone;  that  said  firm  terminated  said 
contract  of  agency,  and  the  relatrix  then  made  the  demand  as 
alleged,  and  defendant  refused  for  the  reasons  as  stated  in  the 
third  paragraph  of  answer. 

The  fifth  paragraph  is  not  in  the  record. 

Appellee  filed  separate  demurrers  to  the  second,  third, 
fourth,  and  fifth  paragraphs  of  answer  for  the  cause  that 
neither  of  said  paragraphs  stated  facts  sufficient  to  constitute 
a  defense  or  return  to  said  alternative  writ  of  mandate. 

The  first  paragraph  of  answer  was  withdrawn  by  appellant, 


Nov.  1888.]    Central  Union  Telephone  Co.  v.  Falley.     121 

and  the  court  sustained  the  demurrers  to  the  second,  third, 
fourth,  and  fifth  paragraphs;  to  which  ruling  of  the  court  in 
sustaining  the  demurrers  to  the  several  paragraphs  of  answer 
appellant  duly  excepted,  and  appellant  failure  to  amend  or 
plead  further,  the  court  rendered  judgment  on  said  demur- 
rers, ordering  and  adjudging  that  a  peremptory  writ  of 
mandate  issue,  commanding  appellant  to  forthwith  furnish 
and  supply  relatrix,  at  her  business-rooms,  Nos.  37  and  39 
South  Third  Street,  in  the  city  of  Lafayette,  Indiana,  with  a 
telephone,  and  with  the  highest  and  best  grade  of  telephonic 
connections  and  facilities  and  service  used,  furnished,  and 
employed  by  said  appellant  in  carrying  on  its  said  business  in 
said  city,  and  that  might  be  necessary  to  place  her,  at  her 
said  place  of  business,  in  telephonic  communication  with  all 
persons  in  said  city  having  at  their  places  of  business  or  resi- 
dences telephones  placed  and  maintained  there  by  said  appel- 
lant; and  that  said  appellant  continue  to  supply  and  furnish 
the  same,  etc.,  so  long  as  appellant  continued  to  carry  on  a 
general  telephone  business  in  said  city,  and  so  long  as  rela- 
trix shall  continue  to  observe  the  reasonable  rules,  etc.,  and 
pay  the  compensation  of  three  dollars  per  month.  To  the 
rendering  of  which  judgment  the  appellant  excepted.  Ap- 
peal prayed  and  granted  to  this  court.  Errors  are  properly 
assigned  on  the  rulings  of  the  court. 

This  action  is  brought  under  the  acts  of  1885  prescribing 
the  duties  of  telephone  companies,  and  to  regulate  the  rental 
to  be  paid  for  the  use  of  telephones,  and  requires  a  construc- 
tion of  these  acts.  On  April  8,  1885,  the  following  law  was 
enacted:  — 

"  An  act  prescribing  certain  duties  of  telegraph  and  tele- 
phone companies,  prohibiting  discrimination  between  patrons, 
providing  penalties  therefor,  and  declaring  an  emergency." 

Section  1  relates  exclusively  to  telegraph  companies. 

"  Sec.  2.  Every  telephone  company  with  wires  wholly  or 
partly  within  this  state,  and  engaged  in  a  general  telephone 
business,  shall,  within  the  local  limits  of  such  telephone  com- 
pany's business,  supply  all  applicants  for  telephone  connec- 
tions and  facilities  with  such  connections  and  facilities, 
without  discrimination  or  partiality,  provided  such  appli- 
cants comply,  or  offer  to  comply,  with  the  reasonable  regula- 
tions of  the  company;  and  no  such  company  shall  impose 
any  conditions  or  restrictions  upon  any  such  applicant  that 
are  not  imposed  impartially  upon  all  persons  or  companies  ia 


122       Central  Union  TELEPnoNjt:  Co.  v.  Falley.     [Indiana, 

like  situation,  nor  shall  such  companies  discriminate  against 
any  individual  or  company  engaged  in  any  lawful  business,  or 
between  individuals  or  companies  engaged  in  the  same  busi- 
ness, by  requiring  as  a  condition  for  furnishing  such  facilities 
that  they  shall  not  be  used  in  the  business  of  the  applicant, 
or  otherwise  for  any  lawful  purpose. 

"  Sec.  3.  Any  person  or  company  violating  any  of  the  pro- 
visions of  this  act  shall  be  liable  to  any  party  aggrieved  in  a 
penalty  of  one  hundred  dollars  for  each  offense,  to  be  recovered 
in  a  civil  action  in  any  court  of  competent  jurisdiction;  pro- 
vided nothing  in  this  act  shall  be  construed  to  take  away  or 
abridge  the  right  of  such  aggrieved  party  to  appeal  to  a  court 
of  equity  to  prevent  such  violations  or  discriminations,  by  in- 
junction or  otherwise":  Acts  of  1885,  p.  151. 

On  the  13th  of  April,  1885,  another  law  was  enacted,  which 
is  as  follows:  — 

"  An  act  to  regulate  the  rental  allowed  for  the  use  of  tele- 
phones, and  fixing  a  penalty  for  its  violation. 

"Section  1.  That  no  individual,  company,  or  corporation 
now  or  hereafter  owning,  controlling,  or  operating  any  tele- 
phone line  in  operation  in  this  state  shall  be  allowed  to  charge, 
collect,  or  receive  as  rental  for  the  use  of  such  telephones  a 
sum  exceeding  three  dollars  per  month  where  one  telephone 
only  is  rented  by  one  individual,  company,  or  corporation. 
Where  two  or  more  telephones  are  rented  by  the  same  indi- 
vidual, company,  or  corporation,  the  rental  per  month  for  each 
telephone  so  rented  shall  not  exceed  two  dollars  and  fifty  cents 
per  month. 

"  Sec.  2.  Where  any  two  cities  or  villages  are  connected 
by  wire  operated  or  owned  by  any  individual,  company,  or 
corporation,  the  price  for  the  use  of  any  telephone  for  the  pur- 
pose of  conversation  between  such  cities  or  villages  shall  not 
exceed  fifteen  cents  for  the  first  five  minutes,  and  for  each  ad- 
ditional five  minutes  no  sum  exceeding  five  cents  shall  be 
charged,  collected,  or  received. 

"Sec.  3.  Any  owner,  operator,  agent,  or  other  person,  who 
shall  charge,  collect,  or  receive  for  the  use  of  any  telephone 
any  sum  in  excess  of  the  rates  fixed  by  this  act  shall  be 
deemed  guilty  of  a  public  offense,  and  on  conviction  shall  be 
fined  in  any  sum  not  exceeding  twenty -five  dollars":  Acts  of 
1885,  p.  227.     This  act  took  efi"ect  July  22, 1885. 

It  is  insisted  by  appellant  that  the  act  of  April  8th  is  simply 
an  act  prohibiting  discriminations  by  telephone  companies, 


Nov.  1888.]    Central  Union  Telephone  Co.  v.  Falley.     123 

and  providing  a  penalty  for  any  discrimination  by  such  com- 
panies, and  that  the  act  of  April  13th  prescribes  the  price 
which  may  be  charged  for  the  rental  of  telephones  when  the 
same  are  rented,  and  prescribes  penalties  for  asking  or  taking 
a  greater  rental,  and  that  unless  they  inhibit  all  other  systems 
or  methods  of  telephony  other  than  the  rental,  this  case  was 
decided  wrongly  by  the  court  below;  and  that  the  title  to  the 
act  of  April  8th  declares  it  to  be  an  act  prohibiting  discrimi- 
nation between  patrons,  and  prescribing  penalties  therefor. 

It  is  further  claimed  by  appellant  that  the  answers  show 
that  appellant  was  not  engaged  in  a  general  telephone  busi- 
ness at  Lafayette  at  the  time  of  appellee's  demand,  but  was 
engaged  only  in  a  limited  business,  and  that  it  offered  to  fur- 
nish appellee  such  limited  service,  and  has  in  all  respects 
offered  to  treat  her  in  the  same  manner  as  it  was  treating  its 
other  patrons,  but  that  she  wanted  a  different  service  than 
that  in  which  appellant  was  engaged;  in  other  words,  she 
wanted  appellant  to  discriminate  in  her  favor,  and  to  grant 
her  demand  would  make  appellant  amenable  to  the  law 
against  discrimination. 

In  determining  this  case,  it  is  important  to  consider  the 
nature  of  the  telephone,  how  operated,  the  utility  of  it,  and 
the  rights  of  the  parties  in  the  absence  of  the  statutes  enacted 
by  the  legislature.  The  telephone  differs  from  the  telegraph 
very  materially,  in  this,  that  the  transmission  of  news,  the 
Bending  and  receiving  of  messages  by  telegraph,  can  only  be 
done  by  those  having  a  knowledge  of  the  business,  and  having 
a  knowledge  of  the  art  and  science  of  telegraphy.  To  others 
who  are  not  telegraphists,  the  telegraph  would  be  useless.  It 
is,  therefore,  only  beneficial  to  the  general  public  when  op- 
erated by  persons  or  companies  keeping  in  their  employ 
telegraphists  to  send,  receive,  and  transmit  messages,  and 
messengers  to  deliver  them  to  persons  to  whom  addressed.  A 
telegraphic  instrument  in  the  house  or  place  of  business  of  a 
patron  of  the  company,  connected  with  the  wires  of  the  com- 
pany, with  facilities  for  transmitting  and  receiving  messages 
by  telegraph,  would  be  of  no  use  to  a  patron  unless  he  was 
learned  in  the  art  of  telegraphy.  But  the  telephone  is  en- 
tirely different;  a  telephone,  with  proper  connections  and 
facilities  for  use,  can  be  used  by  any  person;  it  requires  no 
experience  to  operate  it.  Webster  defines  it  as  "an  instru- 
ment for  conveying  sound  to  a  great  distance." 

In  the  case  of  Central  Union  Telephone  Co.  v.  Bradbury,  106 


124       Central  Union  Telephone  Co.  v.  Falley.     [Indiana, 

Ind.  1,  the  word  "  telephone,"  as  used  in  the  act  of  April  13, 
1885,  was  held  to  mean  "  an  organized  apparatus  or  combina- 
tion of  instruments  usually  in  use  in  transmitting  as  well  as 
in  receiving  telephonic  messages."  By  the  use  of  the  tele- 
phone, persons  are  enabled  to  converse  with  each  other  while 
in  their  respective  business  houses  or  residences  a  great  dis- 
tance apart.  Although  of  recent  date,  it  has  become  of  im- 
portant use  in  the  transaction  of  business,  and  there  is  no 
other  invention  or  device  to  supply  its  place.  While  it  may 
not  supply  and  take  the  place  of  the  telegraph  in  many  in- 
stances and  for  many  purposes,  yet  in  others  it  far  surpasses 
it,  and  is  and  can  be  put  to  many  uses  for  which  the  telegraph 
is  unfitted,  and  by  persons  wholly  unable  to  operate  and  use 
the  telegraph.  It  has  been  held  universally  by  the  courts, 
considering  its  use  and  purpose,  to  be  an  instrument  of  com- 
merce and  a  common  carrier  of  news,  the  same  as  the  tele- 
graph, and  by  reason  of  being  a  common  carrier,  it  is  subject 
to  proper  obligations,  and  to  conduct  its  business  in  a  manner 
conducive  to  the  public  benefit,  and  to  be  controlled  by  law. 
To  conduct  the  business  of  the  telephone  by  public  telephone 
stations  and  by  sending  messengers  to  notify  persons  with 
whom  a  patron  of  the  company  desires  to  converse  in  other 
parts  of  the  city,  to  compel  the  person  desiring  to  converse 
with  others  to  remain  at  the  public  telephone  station  until  the 
persons  with  whom  they  desire  to  converse  can  be  notified  and 
so  arrange  their  business  as  to  leave  and  go  to  another  tele- 
phone station  and  hold  the  conversation,  renders  the  use  of 
the  telephone  almost  worthless.  It  is  by  reason  of  the  fact 
that  business  men  can  have  them  in  their  offices  and  resi- 
dences, and,  without  leaving  their  homes  or  their  places  of 
business,  call  up  another  at  a  great  distance  with  whom  they 
have  important  business,  and  converse  without  the  loss  of 
valuable  time  on  the  part  of  either,  that  the  telephone  is  par- 
ticularly valuable  as  an  instrument  of  commerce.  It  being 
an  instrument  of  commerce,  and  persons  or  corporations  en- 
gaged in  the  general  telephone  business  being  common  car- 
riers of  news,  what  are  the  rights  of  the  public,  independent  of 
the  statute,  as  regards  discrimination? 

Any  person  or  corporation  engaged  in  telephone  business, 
operating  telephone  lines,  furnishing  telephonic  connections, 
facilities,  and  service  to  business  houses,  persons,  and  compa- 
nies, and  discriminating  against  any  person  or  company,  can 
be  compelled   by  mandate,  on  the  petition  of  such  person  or 


Nov.  1888.]    Central  Union  Telephone  Co.  v.  Falley.     125 

company  discriminated  against,  to  furnish  to  the  petitioner  a 
like  service  as  furnished  to  others.  This  has  been  held  in  the 
cases  of  State  v.  Nebraska  Telephone  Co.,  17  Neb.  126;  52  Am. 
Rep.  404;  Vincent  v.  Chicago  etc.  R.  R.  Co.,  49  111.  33;  People 
V.  Manhattan  Gas  Light  Co.,  45  Barb.  136.  And  the  principle 
held  in  these  cases  is  in  accordance  with  the  well-settled  rules 
governing  common  carriers. 

It  is  not  controverted  in  the  argument  by  counsel  for  the 
appellant  that  the  legislature  had  the  right  to  regulate  the 
price  to  be  charged  and  collected  for  the  use  of  telephones 
and  telephonic  connections,  facilities,  and  service;  and  even 
if  it  were  controverted,  it  is  well  settled  by  authorities  that 
the  legislature  has  the  right  to  do  so,  relative  to  the  business 
conducted  within  the  state:  Hockett  v.  State,  105  Ind.  250; 
55  Am.  Rep.  201;  Central  U.  Tel.  Co.  v.  Bradbury,  supra,  and 
authorities  cited  in  those  cases;  Johnson  v.  State,  113  Ind.  143; 
Munn  V.  Illinois,  94  U.  S.  113;  Ouachita  Packet  Co.  v.  Aiken, 
121  Id.  144;  Patterson  v.  Kentucky,  97  Id.  501. 

The  telephone  company  being  liable  for  discriminating  be- 
tween persons  and  companies,  and  the  person  or  company  dis- 
criminated against  having  a  remedy  without  the  enactment 
of  section  2  of  the  act  of  April  8,  1885,  there  was  no  occasion 
for  the  statute  on  that  account  alone.  Then  what  was  the 
purpose  and  object  of  the  two  statutes  set  out? 

It  should  be  presumed  the  legislature  had  some  purpose 
and  object.  If  section  2  of  the  act  of  April  8th  was  only  to 
prevent  discrimination,  and  section  1  of  the  act  of  April  13th 
only  to  fix  the  price  for  the  rental  of  telephones  when  the  tele- 
phone company  was  operating  under  a  rental  system,  then  all 
that  the  companies  operating  telephone  lines  would  have  to 
do  would  be  to  cease  to  operate  their  business  under  a  rental 
system,  and  charge  so  much  for  each  conversation,  or,  as  they 
have  done  in  this  case,  establish  public  telephone  stations, 
and  then  charge  for  each  separate  use  of  the  telephone,  and 
they  might  thereby  derive  a  greater  income  for  the  use  of  the 
telephone,  and  render  to  the  public  much  inferior  service,  and 
yet  avoid  liability  under  the  statute.  We  do  not  think  such 
was  the  object  or  purpose  of  the  statute,  or  that  such  construc- 
tion can  be  placed  upon  it. 

It  was  the  evident  intention  of  the  legislature  that  where  a 
telephone  company  was  doing  a  general  telephone  business  in 
this  state,  any  person  within  the  local  limits  of  its  business  in 
a  town  or  city  should  have  the  right  to  demand  and  receive 


126       Central  Union  Telephone  Co.  v.  Falley.     [Indiana, 

a  telephone  and  telephonic  connections,  facilities,  and  service, 
the  best  in  use  by  such  company,  and  should  only  be  liable 
to  be  charged  and  to  pay  three  dollars  per  month  therefor. 
With  this  construction  only  are  the  statutes  of  any  benefit  to 
the  citizens  of  the  state.  The  legislature  fixed  what,  in  the 
judgment  of  that  body,  was  the  maximum  price  that  should 
be  charged  for  the  service,  and  placed  it  in  the  power  of  each 
individual  and  gave  him  the  right  to  demand  and  receive 
Buch  service  within  the  limits  of  the  company's  business,  in 
any  town  or  city  where  such  company  is  doing  a  general  tele- 
phone business. 

It  is  insisted,  as  it  appears  by  the  answer  that  the  lines  of 
the  appellant  extended  through  the  states  of  Ohio,  Indiana, 
and  Illinois,  that  appellant  was  engaged  in  interstate  com- 
merce; that  it  was  a  common  carrier  of  news  between  the 
states,  and  that  therefore  such  statutes  are  an  interference 
with  interstate  commerce.  We  cannot  agree  with  that  theory. 
These  statutes  simply  provide  that  telephone  companies  shall 
provide  persons  within  this  state  with  certain  service,  and  for 
such  service  shall  receive  a  certain  compensation.  They  only 
seek  to  control  the  service  within  this  state.  If  section  2  of 
the  act  of  April  13th,  providing  for  the  price  to  be  paid  for 
connections  between  two  cities  or  villages,  should  be  construed 
to  apply  to  two  cities  or  villages  one  of  which  was  without 
this  state,  then  there  would  be  some  question  as  to  the  valid- 
ity of  that  section,  or  the  power  of  the  legislature  to  control 
the  price  to  be  paid  for  a  message  or  the  use  of  the  telephone 
for  communicating  with  a  person  beyond  the  limits  of  the 
state;  but  that  question  is  not  involved  in  this  case,  as  one 
section  of  a  statute  may  be  valid  and  another  not.  Tele- 
graph companies  stand  upon  a  different  footing,  in  some 
respects,  from  that  of  telephone  companies;  they  have  been 
granted  some  rights  and  privileges  by  acts  of  Congress  which 
cannot  be  abridged  or  interfered  with.  In  the  case  of  Western 
Union  Tel.  Co.  v.  Pendleton,  122  U.  S.  347,  referred  to  by  coun- 
sel for  appellant,  it  was  held  that  the  act  was  void  in  so  far  as 
it  sought  to  govern  the  delivery  of  messages  outside  of  the 
state:  State  v.  Neivton,  59  Ind.  173. 

It  is  also  contended  by  counsel  for  appellant  that  as  the 
statute  provides  a  remedy  other  than  that  by  mandate  for  a 
violation  of  the  statute,  the  writ  of  mandate  is  not  a  proper 
remedy. 

The  right  to  have  the  telephone  and  telephonic  connections 


Nov.  1888.]    Central  Union  Telephone  Co.  v.  Falley.     127 

and  facilities  is  a  right  given  by  the  statutes.  It  is  a  legal 
right,  which  may  be  enforced  by  mandate.  No  remedy  is 
adequate  which  does  not  give  the  person  that  to  which  he  is 
entitled  by  law;  the  penalty  of  one  hundred  dollars  is  cumu- 
lative, and  does  not  abridge  or  take  away  the  right  to  a  writ 
of  mandate.  The  statute  itself  provides  that  the  act  shall 
not  be  BO  construed  as  to  "  abridge  the  right  of  such  aggrieved 
party  to  appeal  to  a  court  of  equity  to  prevent  such  violations 
or  discriminations,  by  injunction  or  otherwise."  The  statute 
should  be  so  construed  as  that  the  penalty  shall  not  take  away 
any  of  the  other  remedies  the  aggrieved  person  may  have,  one 
of  which  remedies  is  by  writ  of  mandate.  This  court  held, 
in  the  case  of  Central  Union  Tel.  Co.  v.  Bradbury,  supra,  that 
Bradbury  was  entitled  to  his  remedy  by  writ  of  mandate 
compelling  the  company  to  furnish  him  with  a  telephone  and 
telephonic  service.  The  right  to  a  writ  of  mandate  requiring 
telephone  companies  to  furnish  telephonic  service  to  persons 
entitled  thereto  has  been  held  in  State  v.  Telephone  Co.,  36 
Ohio  St.  296;  38  Am.  Rep.  583;  also  by  the  supreme  court  of 
Pennsylvania,  in  Bell  Telephone  Co.  v.  Commonwealth,  59  Am. 
Rep.  '172.  In  this  case  the  complaint  states  a  good  cause  of 
action  under  the  statutes. 

The  second  paragraph  of  the  answer  alleges  the  conducting 
of  the  defendant's  business  in  the  several  states,  and  that  it 
is  engaged  in  interstate  commerce,  and  that  to  furnish  rela- 
trix  with  an  instrument  and  connection  with  its  lines  would 
put  her  in  connection  with  its  ofSces  outside  of  the  state,  and 
furnish  her  facilities  for  transmitting  messages  from  Lafayette 
to  various  places  in  Ohio  and  Illinois,  where  the  appellant  has 
its  wires  and  offices.  This  paragraph  does  not  controvert  the 
facts  alleged  in  the  complaint,  that  appellant,  at  the  time  of 
the  acts  and  things  complained  of,  etc.,  was  owning  and  oper- 
ating a  system  of  telephone  lines  and  wires,  and  engaged  in 
doing  a  general  telephone  business  in  the  city  of  Lafayette, 
and  that  the  place  of  business  of  the  relatrix  is  within  the 
limits  of  the  appellant's  telephone  business  in  said  city;  and 
it  must  also  be  remembered  that  the  demand,  as  alleged  in 
the  complaint,  was  only  that  she  be  furnished  with  a  tele- 
phone and  telephonic  connections  and  facilities  necessary  to 
place  her,  at  her  said  store,  in  telephonic  communication  with 
patrons  of  appellant  in  said  city.  The  statutes  contemplate 
two  kinds  of  service,  and  different  compensations  for  each; 
one,  cormections  and  facilities  for  conversing  with  patrons  of 


128       Central  Union  Telephone  Co.  v.  Falley.     [Indiana, 

the  company  within  any  city  or  town  where  an  exchange  is 
maintained;  the  other,  for  conversing  between  two  towns  or 
cities. 

The  other  paragraphs  show  the  appellant  to  have  been  en- 
gaged in  a  general  telephone  business  in  said  city,  operating 
the  same  under  a  toll  system  at  the  time  of  the  demand  and 
tender  by  relatrix,  and  do  not  controvert  the  allegations  in 
complaint  that  the  plaintiff's  place  of  business  is  within  the 
local  limits  of  appellant's  business  in  said  city.  Neither  of 
the  paragraphs  of  answer  is  sufficient. 

Under  the  construction  we  have  given  the  statutes,  there 
was  no  error  committed  by  the  court  below  in  overruling  the 
demurrer  to  the  complaint,  sustaining  the  demurrers  to  the 
answers,  or  in  granting  the  writ  of  mandate. 

The  judgment  is  affirmed,  with  costs. 


Law  of  the  Telephone.  —  Probably  no  invention  or  implement  which 
has  come  into  so  general  use  as  the  telephone  has,  in  the  same  period  of 
time,  ever  occasioned  so  small  an  amount  of  litigation.  Even  such  litigation 
as  has  arisen  has  been  mainly  devoted  to  the  determination  of  questions  of  a 
public  character,  and  has  rarely  been  carried  on  by  private  individuals  as- 
serting or  defending  what  they  believed  to  be  their  private  rights.  In  con- 
sidering such  questions  as  have  been  presented  to  them,  the  courts  have 
almost  uniformly  regarded  the  telephone  and  the  public  and  private  rights 
and  duties  growing  out  of  it  as  similar  in  character  and  extent  to  the  tele- 
graph, and  the  public  and  private  rights  growing  out  of  its  invention  and 
general  use.  Thus  in  England,  the  term  ' '  telegram  "  has  been  adjudged  to 
include  a  conversation  by  means  of  a  telephone,  and  the  telephone  business 
to  be  within  the  statute  giving  to  the  postmaster-general  the  exclusive  con- 
trol of  the  transmission  of  messages  by  telegraph:  Attorney-General  v.  Edison 
Telephone  Co.,  L.  R.  6  Q.  B.  D.  244.  In  Iowa,  telephone  companies  are  classed 
with  telegraph  companies,  for  the  purpose  of  determining  the  jurisdiction  of 
justices  of  the  peace  over  them:  FranJdin  v.  N.  W.  Telephone  Co.,  69  Iowa, 
97;  and  of  deciding  where  and  how  they  and  their  property  shall  be  assessed: 
Iowa  Union  Telephone  Co.  v.  Board  of  Equalization,  67  Id.  250.  So  in  dis- 
cusssing  whether  telephone  corporations  were  entitled  to  use  the  public 
streets,  or  to  exercise  the  right  of  eminent  domain,  and  whether  they  wero 
subject  to  legislative  control  for  the  purpose  of  preventing  unreasonable  dis- 
criminations and  the  imposition  of  exorbitant  charges,  the  courts  have  gen- 
erally proceeded  upon  the  assumption  that  the  rights,  duties,  and  obligations 
of  such  corporations  are  analogous  to  those  formed  for  the  purpose  of  carry- 
ing on  the  business  of  transmitting  messages  and  news  by  the  use  of  the 
telegraph. 

In  Wisconsin,  the  statute  regarding  corporations  provided,  among  other 
things,  that  corporations  might  be  formed  "to  build  and  operate  telegraph 
lines,  or  conduct  the  business  of  telegraphing,  and  to  conduct  and  maintain 
such. lines  with  all  necessary  appurtenances."  It  was  held  that  this  statute 
authorized  the  incorporation  of  a  telephone  company.  The  court,  in  consid- 
ering the  question,  said:   "It  is  urged  that  the  powers  thus  expressly  giveo 


Nov.  1888.]    Central  Union  Telephone  Co,  v.  Falley.     129 

to  form  and  organize  corporations  for  the  purpose  of  building  and  operating 
telegraph  lines,  or  conducting  the  business  of  telegraphing  in  any  way,  in- 
cludes the  power  of  forming  and  organizing  corporations  for  the  purpose  of 
building  and  operating  telephone  lines,  or  conducting  the  business  of  tele- 
phoning in  any  way.  Of  course  there  is  a  distinction  between  the  two 
classes  of  business;  but  in  almost  every  respect  they  are  very  similar,  if  not 
identical.  Each  of  them  must  erect  its  poles  or  posts,  and  upon  the  tops  of 
them  attach  its  lines  of  wire  from  point  to  point.  Each  must  almost  necessarily 
enter  upon,  along,  or  across  public  roads,  highways,  streams,  bodies  of  water, 
and  upon  the  lands  of  individuals,  for  the  purposes  mentioned.  In  these  re- 
spects, they  seem  to  be  identical.  One  may  require  more  lines  of  wire  than 
the  other;  but  we  are  not  aware  of  any  other  distinction  outside  of  their 
offices  or  places  of  operation  distingu  ishable  to  the  naked  eye.  It  is  these 
indistinguishable  features  alone  that  the  city  of  Oshkosh  had  to  deal  with. 
Possibly  there  may  be  a  marked  distinction  in  the  varying  intensity  of  the 
electric  currents  in  the  one  case,  and  in  the  other  at  the  point  of  transmis- 
sion or  receiving,  or  even  at  the  points  along  the  line;  but  such  difference,  if 
it  exists,  hardly  concerns  the  question  here  presented.  As  for  the  difference 
in  the  mode  of  communication  by  means  of  telegi-aphic  and  telephonic  appa- 
ratus, see  Attorney-General V.  Edison  Telephone  Co.,L.  R.  6  Q.  B.  D.  244.  In 
that  case,  Mr.  Stephen,  one  of  the  judges  of  the  exchequer  division  of  the  high 
court  of  justice,  who,  unlike  most  American  judges,  seems  to  have  sufficient 
time  not  only  to  satisfy  his  own  curiosity,  but  the  curiosity  of  all  the  curious, 
has  given  a  very  lengthy  and  definite  discussion  of  that  subject.  In  that 
case,  the  court  conclude  that  Edison's  telephone  was  a  telegraph  within  the 
meaning  of  the  telegraph  acts,  although  the  telephone  was  not  invented  nor 
contemplated  when  those  acts  were  passed.  It  is  there  said,  in  effect,  that 
the  mere  'fact — if  it  is  a  fact  —  that  sound  itself  is  transmitted  by  the  tele- 
phone establishes '  no  material  distinction  between  telephonic  and  telegraphic 
communication,  as  the  transmission,  if  it  takes  place,  is  performed  by  a 
wire  acted  on  by  electricity.  It  is  there  further  said  that,  '  of  course,  no  one 
supposes  that  the  legislature  intended  to  refer  specifically  to  telephones  many 
years  before  they  were  invented;  but  it  is  highly  probable  that  they  would, 
and  it  seems  to  us  clear  that  they  actually  did,  use  language  embracing  fur- 
ther discoveries  as  to  the  use  of  electricity  for  the  purpose  of  conveying  intel- 
ligence.' It  is  upon  this  theory  of  j)rogressive  construction  that  the  powers 
conferred  upon  Congress  to  regulate  commerce,  and  to  establish  post-offices 
and  post-roads,  have  been  held  not  confined  to  the  instrumentalities  of  com- 
merce, or  of  the  postal  service,  known  when  the  constitution  was  adoptecL 
but  keep  pace  with  the  progress  and  developments  of  the  country,  and  adapt 
themselves  to  the  new  discoveries  and  inventions  which  have  been  brought 
into  requisition  since  the  constitution  was  adopted,  and  hence  include  car- 
riage by  steamboats  and  railways,  and  the  transmission  of  communications 
by  telegraph:  Pensacola  Tel.  Co.  v.  Western  Union  Tel.  Co.,  9G  U.  S.  1.  If 
there  remains  any  doubts  as  to  the  power  given  to  charter  a  telegraph  com- 
pany being  sufficiently  broad  to  include  a  telephone  company,  then  it  must 
bo  dispelled  by  the  general  clause  above  quoted  from  section  1771,  to  wit, 
'for  any  lawful  business  or  purpose  whatever,  except,' etc. ;  for  by  a  well- 
settled  rule  of  construction,  these  general  words  extend  to  things  of  a  kindred 
nature  to  those  specifically  authorized  by  the  section,  and  hence  to  whatev^er 
is  of  a  kindred  nature  to  telegraphing,  which  most  certainly  includes  tele- 
phoning. J^^osciiur  a  sociis.  We  must  conclude  that,  under  the  statute,  it 
was  competent  to  form,  organize,  and  incorporate  a  telephone  company  poa- 
Am.  St.  Kep.,  Vol.  X.  —  9 


130       Central  Union  Telephone  Co.  v.  Falley.     [Indiana, 

sessing  like  powers  with  those  given  to  telegraph  companses ":    Wisconsin 
Telephone  Co.  v.  City  of  Oshkosh,  G2  Wis.  36. 

The  statute  of  Pennsylvania  controlling  telegraphic  corporations  enacted 
that  "  the  said  telegraphic  corporations  shall  receive  dispatches  from  and  for 
other  telegraph  lines  and  corporations,  and  from  and  for  any  individual;  and 
on  payment  of  their  usual  charges  to  individuals  for  transmitting  dispatches 
as  established  by  the  rates  and  regulations  of  such  telegraph  line,  transmit 
the  same  with  impartiality  and  good  faith,  under  penalty  of  one  hundred 
dollars  for  every  neglect  or  refusal  so  to  do."  On  an  application  being  made 
to  the  court  of  common  pleas  of  the  city  of  Philadelphia  by  the  common- 
wealth on  the  relation  of  the  Baltimore  and  Ohio  Telegraph  Company  for  a 
writ  of  mandate  to  compel  the  Bell  Telephone  Company  to  give  the  relator  a 
telephone  and  the  necessary  wires,  the  court,  by  Arnold,  J.,  in  Bell  Tele- 
phone Co.  v.  CommonweaWi  exrel.  Baltimore  <&  0.  T.  Co.,  35  Alb.  L.  J.  4,  re- 
ported also  in  note  to  Chesapeake  <&  P.  Tel.  Co.  v.  B.  &  0.  Tel.  Co.,  59  Am. 
Rep.  172,  "which  was  adopted  by  the  supreme  court  of  the  state,  April  19, 
18S6,  in  disposing  of  the  appeal  in  the  same  cause,  determinecl  that  tele- 
phone companies  were  controlled  by  the  provisions  of  this  statute,  and  there- 
fore could  not  withhold  from  one  person  or  corporation  the  privileges  which 
it  conceded  to  another. 

Among  the  obvious  powers  of  telephone  corporations  is  that  of  imposing 
reasonable  rules  for  the  transaction  of  their  business,  and  for  the  observance 
of  those  using  their  telephones.  As  these  implements  are  intended  for  gen- 
eral use  by  persons  of  all  classes  and  of  both  sexes,  those  who  use  them  may  be 
required  to  conduct  their  conversations  in  a  becoming  manner,  free  from  ob- 
scenity or  profanity;  and  for  a  violation  of  this  requirement  may  be  denied 
the  further  use  of  the  telephone:  Pugh  v.  City  &  8.  Telephone  Co.,  9  Cincin- 
nati Law  Bulletin,  104;  27  Alb.  L.  J.  162.  But  no  regulation  will  be  tol- 
erated which  prevents  the  public  from  having  a  fair  and  reasonable  use  of  tJie 
telephone  and  telephonic  exchanges,  or  denies  to  any  one  the  rights  secured 
to  him  by  any  statute,  or  requires  him  to  conduct  his  business  with  particular 
persons  or  agencies.  Hence  a  regulation  is  unreasonable  and  invalid  if  it 
prohibits  subscribers  from  calling  a  messenger  otherwise  than  through  the 
central  office:  People  v.  Hudson  River  Telephone  Co.,  19  Abb.  N.  C.  466;  10 
N.  Y.  Sup.  Ct.  282. 

A  telephone  corporation  is,  for  many  purposes,  regarded  as  a  common  car- 
rier; and  it  may,  doubtless,  like  other  common  carriers,  be  authorized  to  exer- 
cise the  power  of  eminent  domain  for  the  purpose  of  acquiring  the  right  to 
maintain  its  poles,  wires,  and  other  necessary  appliances  upon  and  over  pri 
vate  property:  State  v.  Am.  d-  E.  C.  N.  Co.,  43  N.  J.  L.  381;  N.  0.  Tel.  Co. 
v.  Southern  Tel.  Co.,  53  Ala.  211;  Pierce  v.  Drew,  136  Mass.  75;  49  Am.  Rep. 
7.  A  more  serious  question  has  regard  to  what  it  may  be  authorized  to  do 
in  and  upon  the  public  highways,  without  exercising  the  right  of  eminent 
domain,  and  without  obtaining  the  assent  of  the  adjacent  proprietors.  If  the 
fee  of  a  street  or  other  highway  is  in  the  proprietor  of  the  adjacent  lands,  sub- 
ject to  the  easement  which  has  been  previously  acquired  in  such  street  f')r 
public  use,  and  the  legislature  undertakes  to  sanction  the  use  of  such  street 
by  a  telephone  corporation,  the  statute  is  clearly  invalid  unless  the  new  use 
may  fairly  be  regarded  as  one  of  the  uses  for  which  the  street  has  been 
already  appropriated,  and  not  as  a  new  appropriation  or  an  additional  bur- 
den. The  public  cannot  be  expected  to  continue  using  its  streets  in  precisely 
the  same  manner  or  for  the  same  purposes  as  when  they  were  first  dedi- 
cated to  public  use.     Nor  is  the  use  which  may  be  made  of  a  street  confined 


Nov.  1888.]    Central  Union  Telephone  Co.  v.  Falley.     131 

to  the  passage  of  persons,  animals,  and  vehicles  over  it.  Sewers  and  gas  and 
water  pipes  may  be  laid  beneath  its  surface;  and  it  may  generally,  under  au- 
thority of  the  state  or  of  the  municipality,  he  devoted  "to  all  such  uses  aa 
are  conducive  to  the  public  good,  and  do  not  interfere  with  its  complete  and 
unrestricted  use  as  a  highway  ":  Ferrenhach  v.  Turner,  86  Mo.  426;  56  Am. 
Rep.  437.  The  passing  and  repassing  along  public  highways  must  neces- 
sarily be  diminished  by  the  use  of  the  telephone,  and  hence  the  burden  of 
the  public  use  is  diminished  rather  than  increased  by  the  existence  of  tele- 
phonic facilities.  It  is  true  that  one  of  the  objects  of  the  erection  of  poles, 
and  the  like,  for  the  carrying  on  of  the  business  of  telephoning  or  telegraph- 
ing, is  to  make  profit  for  private  persons  or  corporations.  This,  however, 
cannot  be  made  the  test  of  a  public  use  without  excluding  from  the  streets 
all  private  business.  Wliile  the  question  is  not  yet  free  from  dispute  and 
doubt,  a  slight  preponderance  of  the  decisions  sustains  the  validity  of  those 
statutes  and  municipal  ordinances  which  authorize  telephone  and  telegraph 
corporations  to  erect  their  poles  in  and  to  stretch  their  wires  across  the  pub- 
lic highways  without  making  compensation  to  adjacent  proprietors:  Irwin  v. 
Cheat  Southern  Telephone  Co.,  37  La.  Ann.  63;  Pierce  v.  Drew,  136  Mass.  75; 
49  Am.  Rep.  7;  Julia  Building  Asa'n  v.  Bell  Telephone  Co.,  88  Mo.  258;  57 
Am.  Rep.  398;  St.  Louis  v.  Bell  Telephone  Co.,  96  Mo.  628;  9  Am.  St.  Rep. 
370;  contra.  Board  of  Trade  Telegraph  Co.  v.  Barnett,  107  111.  507;  47  Am. 
Rep.  453;  Willis  v.  Erie  T.  <&  T  Co.,  37  Minn.  347,  in  which  the  court  was 
evenly  divided  on  the  question. 

The  right  to  use  the  street  for  the  purpose  of  erecting  and  maintaining 
poles  and  wires  for  use  in  connection  with  telephones  does  not  exist  unless 
conferred  by  statute  or  ordinance;  and  even  when  granted  by  statute,  will 
be  prohibited  by  injunction  unless  the  right  is  obtained  in  the  manner  pointed 
out  by  such  statute:  Broome  v.  New  Jersey  Telephone  Co.,  42  N.  J.  Eq.  141; 
New  York  and  New  Jersey  Telephone  Co.  v.  Township  of  East  Orange,  42  Id. 
490.  The  location  and  maintenance  of  telephone  poles,  when  authorized  by 
law,  should  be  in  such  a  mode  as  not  to  needlessly  incommode  the  public, 
and  for  any  negligence  from  which  a  person  in  the  use  of  the  highway  is  in- 
jured, the  telephone  company  is  answerable  in  damages:  Sheffield  v.  Central 
Union  Telephone  Co.,  36  Fed.  Rep.  164;  Pennsylvania  Telephone  Co.  v.  Var- 
man,  Sup.  Ct.  of  Penn.  A  grant  of  the  right  to  locate  telephone  poles  in  the 
streets,  and  to  stretch  wires  thereon,  does  not  include  an  authorization  to 
enter  upon  private  property,  even  for  the  purpose  of  cutting  off  the  limbs  of 
trees  which  overhang  the  street,  if  the  line  might  have  been  located  so  as  not 
to  interfere  at  all  with  the  trees,  with  but  little  additional  expense:  Memphis 
Bell  Telephone  Co.  v.  Hunt,  16  Lea,  456;  57  Am.  Rep.  237. 

The  duties  of  telephone  corporations  to  the  public  are  very  similar  to  those 
of  common  carriers  and  telegraph  corporations.  They  are  obliged  to  extend 
their  facilities  to  all  persons  who  are  willing  to  comply  with  reasonable  reg- 
ulations, and  to  make  such  compensation  as  is  exacted  of  others  in  like  cir- 
cumstances. The  right  to  discriminate  between  persons  and  corporations, 
and  to  grant  their  facilities  to  some  while  they  were  denied  to  others,  was 
attempted  to  be  exercised  in  many  instances,  and  was  not  relinquished  until 
after  the  most  persistent  litigation.  But  from  the  very  first,  the  courts  in- 
terposed by  writs  of  mandate  in  favor  of  persons  to  whom  the  use  of  the 
telephone  had  been  denied:  State  v.  Bell  Telephone  Co.,  10  Cent.  L.  J.  43S; 
11  Cent.  L.  J.  359;  22  Alb.  L.  J.  364;  State  v.  Bell  TelepJione  Co.,  23  Fed. 
Rep.  539;  Bell  Telephone  Co.  v.  Commonwealth,  35  Alb.  L.  J.  4;  also  reported 


132       Central  Union  Telephone  Co.  v.  Falley.     [Indiana, 

in  note  to  59  Am.  Rep.  172;  Louisville  Transfer  Co.  v.  American  District  Tele- 
phone Co.,  14  Chic.  L.  N.  15;  24  Alb.  L.  J.  283. 

About  the  time  that  telephones  came  into  general  use,  the  Western  Union 
Telegraph  Company  secured  a  contract  with  the  American  Bell  Telephone  Com- 
pany, the  result  of  which  was  that  the  latter,  in  granting  to  other  corporations 
and  companies  the  right  to  use  the  telephone,  and  to  establish  telephonic  ex- 
changes, stipulated  that  they  should  not  be  used  in  receiving  or  delivering 
messages  which  had  been  sent  over  the  wires  of  telegraph  corporations  other 
than  the  Western  Union  Telegraph  Company.  This  stipulation  was  urged 
in  many  cases  by  local  telephone  companies  as  a  reason  why  a  writ  of  man- 
date should  not  issue  to  compel  them  to  grant  to  telegraph  companies  other 
than  the  Western  Union  the  telephonic  facilities  accorded  to  other  corpora- 
tions and  individuals.  In  one  state  only  was  the  defense  sustained.  The 
reasoning  of  the  court  in  that  state  was  as  follows:  "A  statute  of  this  state 
provides,  in  effect,  that  every  telephonic  company  shall,  with  impartiality, 
permit  persons  and  corporations  to  transmit  speech  through  its  wires  by  in- 
struments. Tlie  utmost  reach  of  this  is  to  require  of  them  to  make  an  im- 
partial use  of  such  rights  or  privileges  as  they  possess.  If  their  system  is 
carried  into  effect  by  instruments  which  are  not  the  subjects  of  a  patent,  and 
they  so  conduct  their  business  as  to  become  common  carriers  of  speech,  they 
are  to  serve  applicants  with  impartiality;  or  if  it  is  carried  into  effect  by 
patented  instruments,  of  which  patents  they  are  the  owners,  the  same  result 
is  to  follow;  but  if  it  is  carried  into  effect  by  instruments  which  are  the  sub- 
jects of  a  patent  which  is  the  property  of  a  resident  of  another  state,  and 
from  which  they  are  able  to  purchase,  not  the  instruments  themselves,  but 
only  a  right  to  a  temporary  use  thereof,  subject  to  conditions  and  limitations, 
they  are  only  required  to  give  impartially  to  applicants  the  use  of  the  full 
measure  of  right  they  have  been  able  to  procure.  The  statute  cannot  confer 
power  ixpon  courts,  either  to  order  them  to  buy  that  which  cannot  be  bought, 
or  to  use  the  j)roperty  of  another  without  his  consent.  The  legislature  may 
deny  the  use  of  highways  for  the  erection  of  poles  for  the  support  of  wires  to 
any  corporation  which  is  not  the  full  owner  of  telephonic  patents  by  which 
its  system  is  operated,  and  which  is  not  able  to  give  a  perfectly  unrestrained 
and  impartial  use  of  all  their  capabilities  to  applicants,  or  to  any  corporation 
which  proposes  to  use  telephonic  patents  under  any  restrictions  whatever 
imposed  by  the  owner,  and  so  embarrass  and  hinder  as  to  induce  them  to 
become  full  owners  of  such  patents  or  retire  from  the  service  of  the  public. 
Legislatures,  for  reasons  of  public  policy,  in  many  ways  put  limitations  upon 
absolute  owners  in  the  use  of  their  property,  but  they  cannot  transfer  the 
property  of  one  to  another  without  compensation,  even  for  the  public  good": 
American  Rapid  Tel.  Co.  v.  Connecticut  Telephone  Co.,  49  Conn.  352;  44  Am. 
Rep.  237. 

Before  this  decis'cn  had  been  pronounced,  the  same  question  had  been  de- 
termined in  other  j  urisdictions  adversely  to  the  right  to  discriminate,  even 
when  founded  upon  reservations  in  the  contract  by  which  the  defendant  had 
secured  the  right  to  use  the  telephone:  State  of  Missouri  v.  Belt  Telephone  Co., 
23  Fed.  Rep.  539;  10  Cent.  L.  J.  438.  In  Ohio,  it  was  declared  by  the 
highest  court  that  the  defendant  corporation,  after  being  incorporated  under 
a  statute  requiring  it  to  serve  all  persons  impartially  and  in  good  faith, 
could  not  shield  itself  "by  any  self-imposed  restrictions  contained  in  the 
stipulations  of  a  contract  with  the  American  Bell  Telephone  Company"; 
that  letters  patent  did  not  authorize  the  patentee  to  vend  or  use  his  inven- 
tion "in  a  manner  which  but  for  the  letters  patent  would  be  unlawful"; 


Nov.  1888.J    Central  Union  Telephone  Co.  v.  Falley.     133 

and  that  "  the  use  of  tangible  property  which  comes  into  existence  by  the 
application  of  the  discovery  is  not  beyond  the  control  of  state  legislation 
simply  because  the  patentee  acquires  a  monopoly  in  his  discovery ";  that 
"the  property  of  an  inventor  in  a  patented  machine,  like  all  other  property, 
remains  subject  to  the  paramount  claims  of  society,  and  the  manner  of  its 
use  may  be  controlled  and  regulated  by  state  laws,  when  the  public  wel- 
fare requires  it":  State  v.  TelepJiotte  Co.,  36  Ohio  St.  29C;  38  Am.  Rep.  583. 
Like  views  were  reaffirmed  and  enforced  in  Chesapeake  etc.  Telephone  Co.  v. 
Baltimore  etc.  Tel.  Co.,  66  Md.  399;  59  Am,  Rep.  167;  35  Alb.  L.  J.  271; 
Louisville  v.  American  District  Tel.  Co.,  24  Id.  283;  Hockett  v.  State,  105 
Ind.  250;  55  Am.  Rep.  201;  25  Am.  Law  Heg.  325;  Bell  Telephone  Co.  v. 
Commonwealth,  59  Am.  Rep.  172;  State  v.  Nebraska  Telephone  Co.,  17  Neb. 
126;  52  Am.  Rep.  404.  In  the  case  last  named,  the  right  of  the  applicant  to 
have  a  telephone  was  not  grounded  upon  any  special  statute  of  the  state 
against  discrimination;  nor  was  any  special  contract  between  the  defendant 
and  the  American  Bell  telephone  urged  in  defense.  The  applicant  was  an 
attorney  between  whom  and  the  local  company  a  difficulty  had  arisen  on 
account  of  its  not  furnishing  him  with  a  list  of  subscribers,  and  his  conse- 
quent refusal  to  pay  for  his  telephone  dui-ing  the  period  when  such  list  was 
not  to  be  had.  The  telephone  was  then  taken  away  from  his  office,  and  he 
was  refused  another,  on  the  claim  that  his  conduct  had  forfeited  his  right  to 
it.  The  court  was  of  the  opinion  that  if  anything  was  due  for  the  former  use 
of  a  telephone,  the  company's  remedy  for  its  collection  by  an  ordinary  action 
was  adequate,  and  therefore  declined  to  consider  that  question.  In  affirm- 
ing the  applicant's  absolute  right  to  be  furnished  telephonic  connections  and 
facilities  on  the  same  terms  as  others,  the  court  said:  "It  is  said  by  re- 
spondent that  it  has  public  telephone  stations  in  Lincoln,  some  of  which  are 
near  relator's  office,  and' that  he  is  entitled  to  and  may  use  such  telephone 
to  its  full  extent  by  coming  there;  that,  like  the  telegraph,  it  is  bound  to 
send  the  messages  of  relator,  but  it  can  as  well  do  it  from  these  public  sta- 
tions; tliat  it  is  willing  to  do  so,  and  that  is  all  that  can  be  required  of  it. 
Were  it  true  that  respondent  had  not  undertaken  to  supply  a  public  demand 
beyond  that  undertaken  by  the  telegraph,  then  its  obligations  would  extend 
no  further.  But  as  the  telegraph  has  undertaken  to  the  public  to  send 
dispatches  from  its  offices,  so  the  telephone  has  undertaken  with  the  public 
to  send  messages  from  its  instruments,  one  of  which  it  proposes  to  supi^ly  to 
each  person  or  interest  requiring  it,  if  conditions  are  reasonably  favorable. 
This  is  the  basis  upon  which  it  proposes  to  operate  the  demand  which  it  pro- 
poses to  supply.  It  has  so  assumed  and  undertaken  to  the  public.  That 
the  telephone,  by  the  necessities  of  commerce  and  public  use,  has  become  a 
public  servant,  a  factor  in  the  commerce  of  the  nation  and  of  a  great  portion 
of  the  civilized  world,  cannot  be  questioned.  It  is,  to  all  intents  and  pur- 
poses, a  part  of  the  telegraphic  system  of  the  countr}',  and  in  so  far  as  it  has 
been  introduced  for  public  use,  and  has  been  undertaken  by  the  respondent, 
BO  far  should  the  respondent  be  held  to  the  same  obligation  as  the  telegraph 
and  other  public  servants.  It  has  assumed  the  responsibilities  of  a  common 
carrier  of  news.  Its  wires  and  poles  line  our  public  streets  and  thorough- 
fares. It  has,  and  must  be  held  to  have,  taken  its  place  by  the  side  of  the 
telegraph  as  common  carrier.  The  views  herein  expressed  are  not  new. 
Similar  questions  have  arisen  in  and  have  been  frequently  discussed  and 
decided  by  the  courts;  aud  no  statute  has  been  deemed  necessary  to  aid 
the  courts  in  holding  that  when  a  person  or  company  undertakes  to  supply  a 
demand  which  is  'affected  with  a  public  interest,'  it  must  supply  all  alike 


134       Central  Union  Telephone  Co.  v.  Falley.     [Indiana, 

who  are  like  situated,  and  not  discriminate  in  favor  of  or  against  any.  This 
reasoning  is  not  met  by  saying  that  the  rules  laid  laid  down  by  the  courts  as 
applicable  to  railroads,  express  companies,  telegraphs,  and  other  older  ser- 
vants of  the  piiblic  do  not  apply  to  telephones,  for  the  reason  that  they  are 
of  recent  invention,  and  were  not  thought  of  at  the  time  the  decisions  were 
made,  and  hence  are  not  affected  by  them,  and  can  only  be  reached  by  legis- 
lation. The  principles  established  and  declared  by  the  courts,  and  which 
were  and  are  demanded  by  the  highest  material  interests  of  the  country,  are 
not  confined  to  the  instrumentalities  of  commerce,  nor  to  the  particular  kind 
of  service  known  or  in  use  at  the  time  when  these  principles  were  enunci- 
ated, but  they  keep  pace  with  the  progress  of  the  country,  and  adapt  them- 
selves to  the  new  developments  of  time  and  circumstances.  They  extend 
from  the  horse  with  its  rider  to  the  stage-coach,  and  from  the  sailing  vessel 
to  the  steamboat,  from  the  coach  and  the  steamboat  to  the  railroad,  and 
from  the  railroad  to  the  telegraph,  and  from  the  telegraph  to  the  telephone, 
as  these  new  agencies  are  successively  brought  into  use  to  meet  the  demands 
of  increasing  population  and  wealth.  They  were  intended  for  the  govern- 
ment of  the  business  to  which  they  relate,  at  all  times  and  under  all  circum- 
stances. " 

A  question  which  has  not  yet  been  necessarily  determined,  except  in  one 
state,  is,  whether  the  general  legislative  control  to  which  telephone  corpora- 
tions must  submit  includes  the  supervision  by  the  legislature  of  the  charges 
which  may  be  exacted  for  the  use  of  their  telephonic  facilities.  If  the  state 
possesses  an  arbitrary  power  in  this  respect,  it  is  clear  that  the  grant  of  let- 
ters patent  may  be  substantially  annulled  by  statutes  which  withhold  from 
inventors  the  profits  for  the  better  realization  of  which  their  patents  were 
obtained.  In  Indiana,  a  statute  enacted  in  1885  fixed  the  maximum  rental 
of  telephones  in  that  state  at  three  dollars  per  month.  All  attempts  at  re- 
sisting or  evading  this  enactment  have  so  far  proved  futile.  The  general 
constitutionality  of  the  statute  was  affirmed  in  Hockett  v.  State,  105  Ind.  250; 
55  Am.  Rep.  201.  It  appeared  in  that  case  that  the  company  had  sought  to 
evade  the  statute  by  making  separate  charges  for  the  several  instruments, 
all  of  which  were  necessary  to  be  used  with  the  telephone.  But  the  court  de- 
cided that  in  the  term  "  telephone  "  was  included  the  entire  apparatus  "  ordi- 
narily used  in  the  transmission  as  well  as  the  reception  of  telephonic  mes- 
sages." These  views  were  reasserted  by  the  same  court  in  Central  Union 
Telephone  Co.  v.  Bradbury,  106  Ind.  1.  The  next  attempted  evasion  of  the 
statute  was  the  imposition  of  a  charge  for  the  use  of  the  telephone  by  non- 
subscribers,  which,  with  the  amount  charged  the  subscriber  for  his  use  of  it 
by  and  for  himself,  exceeded  the  amount  allowed  by  law.  As  the  charge  for 
non -subscribers  was  collected  irrespective  of  the  amount  of  use  by  such  non- 
subscribers,  and  whether  any  non-subscriber  used  the  telephone  or  not,  it 
was  treated  as  a  violation  of  the  statute,  and  as  justifying  the  conviction 
and  punishment  of  the  offender:  Johnson  v.  State,  113  Ind.  143.  The  latest 
method  of  escape  from  the  statute  is  shown  in  the  principal  case,  and  con- 
sisted of  the  refusal  to  place  telephones  in  the  offices  of  subscribers,  and  re- 
quiring them  to  resort  to  the  offices  established  by  the  telephone  company 
for  the  purpose  of  sending  or  receiving  messages.  The  right  to  do  this  was 
also  denied,  and  the  duty  of  the  company  to  furnish  telephonic  facilities  in 
the  usual  manner  enforced.  The  result  of  the  decisions  up  to  the  present 
time  is,  that  to  avoid  legislative  control  the  companies  must  withdraw  their 
instruments  from  the  state,  in  which  event  it  has  been  held  they  might  en- 


Nov.  1888.]    Central  Union  Telephone  Co.  v.  Falley.     135 

join,  as  an  infringement  of  the  patent,  any  attempted  use  of  them:  American 
Co.  V.  Cnshman,  .S6  Fed.  Rep.  4S8. 

The  right  of  a  city  to  regulate  the  charge  for  the  use  of  telephones  has 
been  denied.  The  right  was  claimed  to  have  been  conferred  by  that  part  of 
the  city  charter  which  authorized  the  city  to  regulate  the  use  of  its  streets, 
and  "to  license,  tax,  and  regulate  telegraph  companies  or  corporations,  and 
all  other  business,  trades,  avocations,  or  professions  whatever  ";  and  "finally, 
to  pass  all  such  ordinances,  not  inconsistent  with  the  provisions  of  the  char- 
ter or  the  law  of  the  state,  as  may  be  expedient  in  maintaining  the  peace, 
good  government,  health,  and  welfare  of  the  city,  its  trade,  commerce,  and 
manufactures,  and  to  enforce  the  same  ":  City  of  St.  Louis  v.  Bell  Telephone 
Co.,  96  Mo.  628;  9  Am.  St.  Rep.  370. 

As  telephones  are  used  by  all  classes  of  persons  for  business  purposes, 
some  legal  efifect  must  be  given  to  conversations  held  over  them;  and  to  the 
existence  of  this  legal  eflfect  it  is  essential  that  such  conversations  should,  at 
least  under  some  circumstances,  be  receivable  in  evidence.  It  is  true  that 
many  objections  to  their  reception  exist.  The  person  talking  cannot  be 
seen,  nor  i.s  there  any  method  of  authenticating  and  preserving  for  future 
reference  what  he  says.  Yet  where  both  parties  resort  to  this  method  of 
communication,  they  must  intend  that  some  legal  result  shall  follow.  If 
they  are  not  willing  to  assume  the  risks  incident  to  the  mode,  they  should 
decline  to  resort  to  it,  or  to  permit  others  to  communicate  with  them  in  that 
way.  If  the  person  receiving  the  message  can  recognize  the  voice  of  the 
sender,  or  testifies  that  he  recognized  it,  there  is  but  little  objection  to  hia 
being  permitted  to  state  the  contents  of  the  communication  thus  received: 
People  V.  Ward,  3N.  Y.  Crim.  R.  483,  511.  If  the  voice  is  not  recognized,  but 
the  conversation  is  held  through  a  telephone  kept  in  a  business  house  or 
ofi&ce,  it  is  also  admissible.  "The  courts  of  justice  do  not  ignore  the  great 
improvement  in  the  means  of  intercommunication  which  the  telephone  has 
made.  Its  nature,  operation,  and  ordinary  uses  are  facts  of  general  scientific 
knowledge,  of  which  the  courts  will  take  judicial  notice  as  parts  of  public 
contemporary  history.  When  a  person  places  himself  in  connection  with  the 
telephone  system  through  an  instrument  in  his  office,  he  thereby  invites 
coniniunication,  in  relation  to  his  business,  through  that  channel.  Conver- 
sations so  held  are  as  admissible  in  evidence  as  personal  interviews  by  a  cus- 
tomer with  an  unknown  clerk  in  charge  of  an  ordinary  shop  would  be  in 
relation  to  the  business  there  carried  on.  The  fact  that  the  voice  at  the 
telephone  was  not  identified  does  not  render  the  conversation  inadmissible  ": 
Wol/e  V.  Missouri  Pacific  R'y  Co.,  97  Mo.  473;  post,  p.  331.  The  one  to  whom 
the  message  is  sent  may  not  be  in  direct  comnmnication  with  the  telephone. 
The  conversation  may  be  conducted  by  an  operator  in  charge  of  a  public 
telephone  station;  in  which  event,  as  the  message  does  not  personally  concern 
the  operator,  he  will  rarely  remember  its  contents.  In  such  a  case  it  has 
been  held,  by  a  divided  court,  that  the  conversation  was  admissible  in  evi- 
dence, and  that  the  person  receiving  the  message  may  state  its  contents  as 
detailed  to  him  by  the  operator  at  the  time,  when  it  appears  from  other 
evidence  that  tlie  person  against  whom  the  evidence  was  ofi'ered  did  in  fact 
talk  over  the  wire  at  that  time.  "  When  one  is  using  the  telephone,  if  he 
knows  that  he  is  talking  to  the  operator,  he  also  knows  that  he  is  making 
him  an  agent  to  repeat  what  he  is  saying  to  another  party;  and  in  such  a 
case,  certainly  the  statements  of  the  operator  are  competent,  being  the 
declarations  of  the  agent,  and  made  during  the  progress  of  the  transaction. 
If  he  is  ignorant  whether  he  is  talking  to  the  person  with  whom  he  wisbea 


I 

136  Pennsylvania  Co.  v.  Stegemeier.        [Indiana, 

to  communicate  or  with  the  operator,  or  even  any  thirel  party,  yet  he  does 
it  with  the  expectation  and  intention  on  his  part  that  in  case  he  is  not  talk- 
ing with  the  one  for  whom  the  information  is  intended,  that  it  will  be  com- 
municated to  that  person;  and  he  thereby  makes  the  person  receiving  it  hia 
agent  to  communicate  what  he  may  have  said.  This  should  certainly  be  the 
rule  as  to  an  operator,  because  a  person  using  a  telephone  knows  that  there 
is  one  at  each  station  whose  business  it  is  to  so  act;  and  we  think  that  the 
necessities  of  a  growing  business  require  this  rule,  and  that  it  ia  sanctioned 
by  the  known  rules  of  evidence ":  Sullivan  v.  Kuykendall,  82  Ky.  483;  56 
Am.  Rep.  901 . 

In  Bannhiij  v.  Banning,  Sup.  Ct.  Cal.,  September,  1889,  an  acknowledg- 
ment of  a  deed  by  a  married  woman  was  sought  to  be  avoided  on  the  ground 
that  she  was  at  the  time  the  notary  took  such  acknowledgment  three  milea 
distant  from  him,  and  communicated  with  him  and  he  with  her  by  telephone 
only.  But  the  court  disposed  of  the  question  as  follows:  "It  is  admitted 
that  the  certificate  of  the  notary  is  in  due  form;  and  it  is  not  alleged  or 
pretended  by  the  defendant  that  she  did  not  voluntarily  sign  and  deliver  the 
deeds;  nor  that  she  did  not  voluntarily  and  without  the  hearing  of  her  hus- 
band acknowledge  the  execution  of  them  through  the  telephone,  after  having 
been  informed  by  the  notary  of  their  contents;  nor  that  any  deception  waa 
practiced  to  induce  her  to  execute  the  deeds;  nor  even  that  the  plaintiffs  had 
notice  of  the  manner  in  which  it  ia  alleged  that  she  acknowledged  the  execu- 
tion through  the  telephone.  These  particulars  are  not  stated  for  the  purpose 
of  maintaining  that,  under  any  circumstances,  an  acknowledgment  of  a  deed 
may  be  taken  through  a  telephone,  but  for  the  sole  purpose  of  showing  that 
there  is  no  pretense  of  fraud,  duress,  or  mistake. "  The  court  then  proceeded 
to  consider  the  authorities  bearing  upon  the  question  whether  a  certiticate  of 
the  acknowledgment  of  a  deed  by  a  married  woman  can  be  contradicted  col- 
laterally; and  having  reached  the  conclusion  that  such  certificate  could  not 
be  successfully  assailed  otherwise  than  by  proving  fraud,  sustained  the  deed 
and  acknowledgment  in  question.  Hence  while  the  court  expressly  with- 
held its  opinion  upon  the  question  whether  an  acknowledgment  by  telephone 
is  good  "under  any  circumstances,"  the  inevitable  logical  result  of  its  de- 
cision is,  that  such  acknowledgment,  followed  by  a  certificate  in  due  form,  ia 
good  under  all  circumstances,  unless  vitiated  by  fraud. 


Pennsylvania  Company  v.  Stegemeier. 

[118  Indiana,  305.J 

Demurrer  to  Plaintiff's  Evidence  Admits  the  truth  of  all  the  evidence 
adduced  by  him,  and  all  inferences  that  may  be  reasonably  drawn  there- 
from, and  withdraws  from  consideration  all  favorable  evidence  except 
upon  points  where  there  was  no  conflict. 

Ordinance  of  a  Municipal  Corporation  Requiring  a  Railway  Cor- 
poration TO  Keep  a  Flag-man  to  give  warning  to  travelers  at  the 
crossing  of  its  railroad  track  on  a  designated  street,  and  to  have  gates 
erected  at  such  crossing,  is  a  valid  local  law. 

Contributory  Negligence  in  Crossing  Railway  —  What  Exonerates 
Person  Injured  from  Charge  of.  —  One  who  reaches  a  railway  cross- 
ing in  a  city  at  which  the  railway  company  is  required  by  municipal 


AMERICAN  STATE  REPORTS 

\'oi..   XI,    Packs  :i(iT-3->(;. 

BEDELI.  r.   HERRING. 

1 77  Cai.ikornia,   'y'i'2.  \  . 

Negotiable  Instruments. 


Dec.  18S8.]  Bedell  i'.  Herring.  307 

Adverse  Possession  Sufftciext  to  Defeat  a  Right  of  Action  of  the 
Holder  of  the  Legal  Title  must  be  hostile  in  its  inception,  and  be  con- 
tinued as  such,  without  interruption,  for  the  statutory  period.  It  must  be 
actual,  visible,  exclusive,  acquired  and  retained  under  claim  of  title  incon- 
sistent with  that  of  the  true  owner;  but  it  need  not  be  under  a  rightful 
claim,  nor  even  under  a  muniment  of  title:  lUhio'is  Ce.nfral  R.  R.  Co.  v. 
Howjhton,  126  111.  23.3;  9  Am.  St.  Rep.  581,  and  note  586.  Title  to  realty- 
acquired  by  open,  uninterrupted,  exclusive,  and  adverse  possession,  under 
claim  of  ownership,  for  more  than  twenty  years,  will  defe;it  an  action  iu 
ejectment  by  the  holder  of  the  paper  title:  Riijgs  v.  Riley,  113  Ind.  208. 
Where  plaintiff,  to  maintain  his  action  to  recover  a  tract  of  land,  relies  upon 
seven  years'  adverse  possession  under  color  of  title,  he  must  show  that  such 
possession  was  continuous  and  unbroken  for  the  full  period  prescribed  by 
the  statute  of  limitations:  Scott  v.  Mills,  49  Ark.  266.  Prior  to  the  amend- 
ment of  1878  to  section  325  of  the  Code  of  Civil  Procedure,  one  who,  in  good 
faith,  entered  into  possession  of  real  estate,  claiming  title  thereto  under  a 
void  tax  deed,  and  under  such  claim  of  title,  openly,  notoriously,  and  visi- 
bly maintained  the  possession  thereof  for  a  sufficient  length  of  time  adversely 
as  against  the  whole  world,  including  the  owner  of  the  paper  title,  acquired 
title  to  the  land  by  adverse  possession:  Reynolds  v.  Lincoln,  73  Cal.  191. 
And  whether  one  claiming  title  by  adverse  occupancy  had  that  kind  of  con- 
tinuous, notorious,  and  hostile  possession  of  the  land  in  dispute  as  would  give 
title  under  the  statute  of  limitations,  is  a  question  of  fact  for  the  jury:  Mason 
V.  Ammon,  117  Pa.  St.  127. 


[In  Bank.] 

Bedell  v.  Herring. 

[77  California,  572.] 

Promissory  Note  —  Maker  Signing  Note  without  Knowing  its  Co."*- 
TENTs  —  Bona  Fide  Indorsee  for  Value  and  before  Maturity.  — 
Maker  of  a  promissory  note  who  signs  the  same  without  knowing  its 
contents,  because  he  cannot  read  or  write,  and  relying  on  false  repre- 
sentations by  the  payee  that  it  was  a  mere  memorandum  of  agency,  is 
guilty  of  such  carelessness  and  undue  confidence  that,  as  between  him- 
self and  an  indorsee  in  good  faith  for  value  and  before  maturity,  he 
must  bear  the  loss  and  pay  the  note. 

PR0MIS.S0RY  Note  —  Fraud  is  No  Defense  against  Bona  Fide  Indorsee 
FOR  Value  and  before  Maiurity.  — Maker  of  a  promissory  note  can- 
not defend,  it  seems,  on  the  ground  that  the  note  was  procured  from  him 
by  fraud,  as  against  an  indorsee  in  good  faith  for  value  and  before  ma- 
turity. 

Action  on  a  promissory  note.     The  facts  are  stated  in  the 
opinion. 

M.  E.  Sanborn,  for  the  appellant. 
John  T.  Harrington,  for  the  respondent. 


308  Bedell  v.  Herring,  [Cal. 

McFarland,  J.  This  is  an  action  upon  a  promissory  note  for 
five  hundred  dollars,  made  by  defendant,  payable  to  the  order 
of  E.  Jones,  due  in  six  months,  and  by  the  latter  indorsed  and 
delivered  to  plaintiff  before  maturity.  Judgment  went  for 
plaintiff,  and  defendant  appeals.  The  appeal  is  from  the 
judgment,  and  upon  the  judgment  roll  alone.  The  defense 
relied  on  was,  that  said  payee  Jones  procured  defendant  to 
sign  the  note  by  falsely  and  fraudulently  representing  that  it 
was  not  a  note,  but  a  mere  memorandum  about  a  certain 
agency. 

It  appears  from  the  findings  that  at  the  time  defendant  signed 
the  note  the  said  Jones  and  one  Moss  falsely  represented  to 
him  that  it  was  not  a  promissory  note,  or  any  contract  for  the 
payment  of  money,  but  was  merely  a  writing  by  which  he 
signified  his  willingness  to  act  as  agent  for  the  sale  of  a  certain 
patent  hay-fork.  Defendant  could  not  I'ead  or  write  the  English 
language,  except  that  he  could  sign  his  name.  He  signed 
the  note  without  knowing  its  contents,  and  believed  the  said 
representations  of  said  Jones  and  Moss.  Plaintiff  purchased 
the  note  for  four  hundred  dollars  before  its  maturity,  and  had 
no  notice  or  knowledge  that  it  was  procured  as  aforesaid,  or  of 
anything  that  affected  its  validity  as  between  the  original 
parties.  It  is  also  found  that  "plaintiff  is  the  indorsee  of  said 
note  in  due  course,"  and  that  "  defendant  signed  said  note 
voluntarily,  and  without  exercising  the  ordinary  care  in  regard 
to  the  character  of  the  paper  signed  which  a  prudent  business 
man  would  and  should  exercise." 

The  defense  set  up  cannot  be  maintained;  and  the  judg- 
ment of  the  superior  court  was  right.  It  is  found  by  the  court 
(fully  enough,  we  think)  that  the  defendant,  in  signing  the 
note,  did  not  exercise  ordinary  care.  Indeed,  the  act  of  sign- 
ing the  paper,  as  shown  in  the  findings  (and  there  is  no  evi- 
dence here),  was  itself  intrinsically  careless.  Therefore,  leav- 
ing other  aspects  of  the  case  out  of  view,  it  is  clear  that  the 
judgment  was  right  upon  the  principle  that  when  one  by  his 
carelessness  and  undue  confidence  has  enabled  another  to  ob- 
tain the  money  of  an  innocent  third  person,  he  must  answer 
for  the  loss  which  he  has  thus  caused. 

2.  It  is  not  necessary  here  to  pass  definitely  upon  the  broader 
question  discussed  in  the  briefs,  whether  or  not  payment  of  a 
negotiable  note  in  the  hands  of  an  innocent  indorsee,  who  re- 
ceived it  before  maturity,  can  be  avoided,  under  any  circum- 
Btances,  on  the  ground  that  it  was  procured  by  fraud.     It  is 


Dec.  1888.]  Bedell  v.  Herring.  309 

apparent  that  to  apply  to  such  an  instrument  the  principles 
which  establish  the  essentials  of  an  ordinary  contract  as 
between  the  original  parties,  —  as,  for  instance,  that  there 
must  be  consent  of  the  parties  and  a  sufficient  consideration; 
that  where  there  was  no  intention  to  sign  there  was,  in  law, 
no  signature;  that  fraud  vitiates  a  contract  ab  initio,  etc., — 
would  be  to  undernjine  the  whole  structure  of  commercial  law, 
and  "  shake  paper  credit  to  its  foundation."  The  former  de- 
cisions of  this  court  seem  to  be  in  the  direction  of  holding  that 
in  such  a  case  payment  cannot  be  avoided  for  fraud  in  the 
original  procurement  of  the  note:  Mitchell  v,  Hackett,  14  Cal. 
666;  Hellmann  v.  Potter,  6  Id.  14;  Rich  v.  Davis,  4  Id.  22; 
Haight  v.  Joyce,  2  Id.  65;  56  Am.  Dec.  311;  Rich  v.  Davis,  6 
Cal.  141;  Meyer  v.  Porter,  65  Id.  67;  Fuller  v.  Hutchings,  10 
Id.  523;  70  Am.  Dec.  746;  Poorman  v.  Mills  &  Co.,  39  Cal.  345; 
2  Am.  Rep.  451;  Smith  v.  Silsby,  55  Cal.  470.  In  Shepherd  v. 
Jones,  71  Id.  225,  it  does  not  appear  that  the  note  there  in- 
volved was  negotiable  or  transferred  before  maturity;  and 
there  is  no  discussion  in  the  opinion  of  the  general  question 
here  under  consideration.  In  Indiana  a  great  many  cases 
arose  similar  in  their  facts  to  those  of  the  case  at  bar;  and  it 
was  uniformly  held  there  that  the  defense  set  up  could  not  be 
maintained.  The  current  of  American  authorities  seems  to 
be  in  the  same  direction. 
Judgment  affirmed. 

Thornton,  J.  I  concur  in  the  judgment  on  the  ground  that 
the  defense  here  urged  cannot  be  made  against  plaintiff,  who 
is  an  innocent  purchaser  before  maturity  of  the  negotiable 
note  in  suit. 

Negotiable  Instruments.  —  Promissory  notes  given  for  gambling  debts 
are  valid  in  the  hands  of  innocent  indorsees:  IJatgJU  v.  Joyce,  2  Cal.  64;  56 
Am.  Dec.  311,  and  note  313;  as  to  the  protection  of  a  bona  fide  holder  of  ne- 
gotiable paper  before  maturity,  compare  Poorman  v.  Mills,  39  Cal.  345;  2  Am. 
Rep.  451;  Fuller  v.  Hutchings,  10  Cold.  523;  70  Am.  Dec.  746,  and  note. 
Compare  Corbin  v.   Wachhorst,  73  Cal.  411;  Hoyt  v.  Cross,  108  N.  Y.  76. 

Fraud  in  Inception  of  Negotiable  Instruments  as  Affecting  Bona 
Fide  Holders.  —  Who  are  bomi  fide  holders  of  negotiable  paper,  and  their 
rights  ia  general,  will  be  found  considered  in  the  notes  to  Ayer  v.  Hutchins,  3 
Am.  Dec.  235;  Bay  v.  Coddington,  9  Id.  272;  Sims  v.  Lyles,  26  Id.  156;  Bailey 
v.  Smith,  84  Id.  401.  It  is  now  proposed  to  discuss  particularly  the  efifect  of 
fraud  in  the  inception  of  negotiable  paper  upon  bona  fide  holders  thereof. 

Bona  Fide  Holder  Takes  Instrument  Unaffected  by  Fraud  in  its 
Origin.  —  The  general  rule  is  well  settled  that  a  holder  of  a  negotiable  in- 
strument who  acquires  it  bona  fide,  without  notice,  in  the  usual  course  of 


310  Bedell  v.  Herring.  [Cal. 

business,  for  a  valuable  consideration,  and  before  maturity,  takes  the  paper 
unafiFected  by  fraud  in  its  origin:  Sivift  v.  Tyson,  16  Pet.  1,  15;  Goodman  v. 
Si  nonds,  20  How.  343;  Brown  v.  Spofford,  95  U.  S.  474;  Cromwell  v.  County 
of  Sac,  96  Id.  51;  Slacom  v.  Wishart,  3  McLean,  517;  Barney  v.  Earlc,  13  Ala. 
106;  State  ex  rel.  Plock  v.  Cohh,  64  Id.  127;  Humphrey  v.  Clark,  27  Conn.  381 ; 
Von  Windisch  v.  Klaus,  46  Id.  433;  Rohinson  v.  Bank  of  Dari.en,  18  Ga.  65; 
Gridley  v.  J5awc,  57  111.  529;  Stoner  v.  MilUken,  85  Id.  218;  //e?-e<A  v.  Mer- 
chants' Nat.  Bank,  34  Ind.  380;  Woollen  v.  Vankirk,  61  Id.  497;  First  Nat. 
Bankv.  Lofton,  67  Id.  256;  Helms  v.  Wayne  Agricultural  Co.,  73  Id.  325;  38 
Am.  Rep.  147;  Wayne  Agricultural  Co.  v.  Cardwell,  73  Ind.  535;  Blairv.  Buser, 
1  Wils.  (Ind.)  333;  Temples.  Hays,  Morris,  9,  12;  Stein  v.  Keeler,  4G.  Greene, 
86;  Clappv.  County  of  Cedar,  5  Iowa,  15;  68  Am.  Dec.  678;  Sully  v.  Goldsmith, 
32  Iowa,  397;  Wait  v.  Chandler,  63  Me.  257;  Farrell  v.  Lovctt,  68  Id.  326;  28 
Am.  Rep.  59;  Hobart  v.  Penny,  70  Me.  248;  Burrillv.  Parsons,  71  Id.  282; 
Crampton  v.  Perkins,  65  Md.  22;  Thurston  v.  McKown,  6  Mass.  428;  Smith  v. 
Livingston,  111  Id.  342;  W instead  v.  Z)am,  40  Miss.  785,  787;  Corby  v.  Butkr, 
55  Mo.  398;  Perkins  v.  Challis,  1  N.  H.  254;  Paige  v.  Chapman,  58  Id.  333; 
Dougherty  v.  Scudder,  17  N.  J.  Eq.  248;  Holcomb  v.  Wyckoff,  35  N.  J.  L.  35; 
10  Am.  Rep.  219;  (?oi<W  v.  5er/ep,  5  Duer,  230;  Clothier  v.  ^(^/-iance,  51  N.  Y. 
322;  Selser  v.  i?roci,  3  Ohio  St.  302;  Farmers'  etc.  Bank  v.  Lucas,  26  Id.  385; 
Kingsland  v.  Pryor,  33  Id.  19;  Ridgway  v.  Farmers'  Bank,  12  Serg.  &  R.  256; 
14  Am.  Rep.  681;  Craig  v.  Sibbett,  15  Pa.  St.  238;  Third  Nat.  Bankv.  Mc- 
Cann,  15  Phila.  326;  Powers  v.  Ball,  27  Vt.  662;  Robinson  v.  Reynolds,  2 
Q.  B.  196.  Fraud,  therefore,  cannot  be  urged  either  defensively  or  affirma- 
tively against  a  bona  fide  holder.  This  rule  is  but  an  application  of  the 
broader  doctrine  that  such  a  holder  is  not,  in  general,  subject  to  infirmities 
wliich  may  exist  in  the  inception  of  the  instrument,  and  wliich  may  be  taken 
advantage  of  between  the  original  parties.  "If  any  rule  of  law  in  regard  ta 
negotiable  paper  is  well  established,"  says  Redfield,  C.  J.,  in  Powers  v.  Ball, 
supra,  "it  is  that  a  bona  fide  holder  for  value  will  he  able  to  shut  out  all  de- 
fenses, except  certain  statutory  ones,  where  the  paper  in  its  inception  is  de- 
clared absolutely  void,  as  notes  or  bills  given  upon  gambling  and  usurious 
considerations."  Duress,  even,  in  executing  the  paper,  will  not  be  a  defense 
in  his  hands:  Farmers'  etc.  Bank  v.  Butler,  48  Mich.  192. 

It  is  not  necessary,  in  order  to  entitle  a  holder  to  the  protection  of  the 
rule,  that  he  be  a  subsequent  transferee  from  or  through  an  original  party  to 
the  instrument.  The  payee  himself  may  be  protected.  Thus  if  a  person  is 
induced  to  sign  a  note  as  surety  by  the  fraudulent  representations  of  the 
principal  maker,  he  will,  notwithstanding,  be  liable  to  the  payee,  if  it  does 
not  appear  that  the  payee  knew  of  the  fraud:  Quinn  v.  Hard,  43  Vt.  375; 
Farmers'  etc.  Bank  v.  Lucas,  26  Ohio  St.  385.  Even  if  the  surety  was  in- 
duced to  sign  under  the  belief  that  forged  names  appearing  on  the  paper 
were  genuine,  he  will  be  bound  to  an  innocent  payee:  Selser  v.  Brock,  3  Id. 
302;  Helms  v.  Wayne  Agricultural  Co.,  73  Ind.  325;  38  Am.  Rep.  147;  Wayne, 
Agncultural  Co.  v.  Cardwell,  73  Ind.  555;  Stoner  v.  Milliken,So  111.  218;  Grid- 
ley  V.  Bane,  57  Id.  529. 

If  the  holder  have  notice  of  the  fraud  in  the  origin  of  the  paper,  or  if  he 
takes  in  bad  faith,  he,  of  course,  can  claim  no  recovery  from  the  defrauded 
party:  Fisher  v.  Leland,  4  Gush.  456;  50  Am.  Dec.  805;  City  Bank  of  Colum- 
bus V.  Phillips,  22  Mo.  85;  64  Am.  Dec.  254;  Crampton  v.  Perkins,  65  Md.  22; 
Ormsbee  v.  Howe,  54  Vt.  182;  41  Am.  Rep.  841;  and  the  same  would  be  true 
if  he  paid  no  value,  or  if  he  took  after  maturity,  unless,  in  any  of  these 
cases,  he  acquired  the  instrument  from  one  in  whose  hands  it  is  not  subject 


Dec.  1888.]  Bedell  v.  Herring.  311 

to  the  defense,  obtaining  thereby  the  title  of  such  transferrer:  Commissioners 
of  Marion  County  v.  Clark,  94  U.  S.  278;  Crormoell  v.  County  of  Sac,  96  Id. 
51;  Simon  v.  Merritt,  33  Iowa,  537;  Mornyer  v.  Cooper,  35  Id.  257;  HeretliY. 
Merchants'  National  Bank,  34  Ind.  380;  Riley  v.  Schawacker,  50  Id.  592;  Boyd 
V.  McCann,  10  Md.  118;  Merchaiits'  Bank  v.  Pi-esident  etc.  of  Farmers'  Bank, 
cited  10  Id.  123;  Bassett  v.  Avenj,  15  Ohio  St.  299;  Bodley  v.  Emporia  Nat. 
Bank,  38  Kan.  59;  Gould  v.  Segee,  5  Duer,  260,  268;  Woodman  v.  Churchill, 
52  Me.  58;  Masters  v.  Ibherson,  8  Com.  B.  100.  If,  also,  the  action  is  be- 
tween the  original  parties,  there  can  be  no  question  as  to  the  right  of  the 
defrauded  party  to  set  up  the  defense  against  the  one  who  perpetrated  the 
fraud,  as  in  case  of  any  other  contract.  And  it  is  held  a  promissory  note 
may  be  avoided  in  toto  for  fraud,  in  the  hands  of  the  payee,  where  the  maker, 
who  was  an  illiterate  man,  signed  it  after  it  was  read  over  to  him  as  bearing 
a  different  and  less  rate  of  interest  than  that  expressed  upon  its  face:  Stacy 
V.  Ross,  27  Tex.  3;  84  Am.  Dec.  604.  But  if  a  note  be  given  for  the  purpose 
of  defrauding  the  maker's  creditors,  it  has  been  held  that  it  cannot  be 
avoided  by  the  maker  for  that  fact,  but  may  be  enforced  against  him  by  the 
payee:  Carpenter  v.  McClure,  39  Vt.  9;  91  Am.  Dec.  370;  and,  at  all  events, 
such  fraud  would  be  no  defense  to  an  action  brought  by  an  indorsee  who 
took  the  note  for  value,  before  maturity,  and  without  notice  of  the  fraud: 
Pottery.  Belden,  105  Mass.  11. 

Fraud  perpetrated  upon  some  other  holder  of  a  negotiable  instrument  with 
reference  thereto  will  also  be  no  defense  to  one  sued  thereon.  Thus  it  is  no 
defense  to  an  action  on  a  promissory  note  by  an  indorsee  against  the  maker 
that  the  note  was  obtained  from  the  payee  by  means  of  fraudulent  represen- 
tations of  which  the  indorsee  had  knowledge  when  he  received  the  note: 
Prouty  V.  Roberts,  6  Cush.  19;  52  Am.  Dec.  761. 

In  some  states,  the  question  of  fraud  in  tlie  procurement  or  execution  of 
negotiable  instruments  has  been  the  subject  of  statutory  regulation.  Thus 
in  Georgia  a  section  of  the  code  provides  that  "the  bonafde  holder  tor  value 
of  a  bill,  draft,  or  promissory  note,  or  other  negotiable  instrument,  who  re- 
ceives the  same  before  it  is  due,  and  without  notice  of  any  defect  or  defense, 
shall  be  protected  from  any  defenses  set  up  by  the  maker,  acceptor,  or  in- 
dorser,  except  ....  fraud  in  its  procurement."  The  words  "fraud  in  its 
procurement "  have  been  liberally  construed  to  mean  "  fraud  in  the  procure- 
ment by  the  holder  of  the  paper  ";  and  therefore  a  bona  fide  transferee  of  a 
promissory  note,  without  notice,  and  before  maturity,  will  be  protected,  al- 
though the  note  was  procured  by  the  payee  from  the  maker  by  fraud:  Rohen- 
son  V.  Vason,  37  Ga.  66;  Hoijan  v.  Moore,  48  Id.  156,  162;  Merritt  v.  Bagwell, 
70  Id.  578,  583;  and  such  holder,  having  a  good  title,  a  transferee  from  him 
has  the  same,  no  matter  at  what  time  the  transfer  to  the  latter  was  made: 
Hogan  v.  Moore,  supra.  This  construction,  it  is  said,  makes  a  party  respon- 
sible for  his  own  fraudulent  conduct,  but  does  not  make  an  innocent  person 
responsible  for  the  fraudulent  conduct  of  others  of  which  he  had  no  knowl- 
edge. 

In  Illinois,  "if  any  fraud  or  circumvention  be  used  in  obtaining  the  mak- 
ing or  executing  "  of  any  note,  it  is  provided  that  the  note  shall  be  void,  not 
only  between  the  maker  and  payee,  but  also  in  the  hands  of  every  subsequent 
holder.  Fraud  or  circumvention  in  procuring  the  execution  of  a  promissory 
note  is,  therefore,  uader  this  statute,  a  good  defense,  whether  the  transferee 
took  the  paper  with  or  without  notice  thereof:  Hewitt  v.  Jones,  72  111.  218; 
Hubbard  v.  Rankin,  71  Id.  129.  But  the  statute  does  not  require  both  fraud 
and  circumvention,  if  there  be  any  distinction  between  the  \/ords,  in  obtain- 


312  Bedell  v.  Herring.  [Cal. 

ing  the  making  or  executing  of  a  note  before  the  defense  can  be  interposed; 
it  is  suiScient  if  either  be  practiced:  Hewett  v.  Jolinsov,  72  111.  513.  "A  fraud 
in  obtaining  a  note  may  consist  of  any  artifice  practiced  upon  a  person  to 
induce  him  to  execute  it  when  he  did  not  intend  to  do  such  an  act.  Circum- 
vention seems  to  be  nearly,  if  not  quite,  synonymous  M'ith  fraud ":  Per 
Walker,  C.  J.,  in  Latham  v.  Smith,  45  Id.  25,  27.  It  is  a  well-settled  inter- 
pretation of  this  provision  that  the  fraud  or  circumvention  which  will  avoid 
a  promissory  note  in  the  hands  of  an  innocent  holder  for  value,  and  before 
maturity,  must  be  in  the  "making  or  executing"  the  same,  and  not  in  the 
contract  or  consideration  upon  which  the  note  was  given:  Woods  v.  Hynes, 
1  Scam.  103;  Mulford  v.  Shepard,  1  Id.  583;  33  Am.  Dec.  432;  Latham  v. 
Smith,  45  111.  25,  27;  Shipley  v.  Carroll,  45  Id.  285;  Depiii/  v.  Schuyler,  45  Id. 
306;  Murray  v.  Beckwith,  48  Id.  391;  Culver  v.  Hide  and  Leather  Bank,  78 
Id.  625;  Taylor  v.  Thompson,  3  111.  App.  109;  Hayden  v.  Olinr/er,  5  Id.  632. 
To  illustrate:  It  is  no  defense  against  such  a  holder  that  the  note  was  given 
for  the  price  of  goods  sold  by  the  payee,  who  made  false  representations  as 
to  their  quantity  and  quality:  Woods  v.  Hynes,  supra;  or  that  the  note  was 
given  for  the  purchase  price  of  land  about  which  the  payee  made  false  repre- 
sentations: Mulfoid  V.  Shepard,  supra;  nor  is  a  misrepresentation  by  the 
payee  in  regard  to  the  legal  efifect  of  the  instrument — as  that  it  would  not 
become  operative  until  the  maker  should  put  a  revenue-stamp  upon  it,  and 
the  property  for  which  it  was  given  should  be  delivered  —  such  fraud  or  cir- 
cumvention in  obtaining  the  note  as  will  amount  to  a  defense  against  an 
innocent  transferee  for  value,  before  maturity:  Latham  v.  Smith,  supra;  and 
the  same  is  true  of  the  violation  of  a  promise  by  vendors  to  vendees,  made  as 
an  inducement  to  the  execution  of  the  note  for  the  balance  of  the  price  of  ' 
goods  sold,  not  to  assign  the  same,  and  to  allow  the  vendees  on  the  note  all 
damages  to  which  they  might  be  entitled  "by  reason  of  a  failure  of  warranty 
as  to  the  quality  of  the  goods:  Murray  v.  Beckwith,  supra;  so  the  failure  of 
consideration,  in  whole  or  in  part,  can  plainly  not  be  set  up  as  a  defense  in 
the  hands  of  such  a  holder:  Culver  v.  Hide  and  Leather  Bank,  supra;  Taylor 
v.  Thompson,  supra;  and  where  certain  persons  were  induced  to  sign  a  note 
as  sureties,  on  the  representations  of  the  principal  maker  that  certain  others 
would  also  sign,  but  the  note  was  delivered  by  the  latter  without  such 
signatures,  the  payee,  who  did  not  participate  in  the  representations,  or  have 
any  notice  of  them,  is  not  affected  thereby:  Young  v.  Ward,  21  111.  223;  and 
it  is  also  held-  that  where  a  person,  as  a  matter  of  amusement,  and  without 
any  design  of  delivering  the  paper  to  the  payee,  signed  her  name  to  a  prom- 
issory note,  which  was  afterwards  stolen  by  the  payee,  and  transferred  to 
one  who  paid  value  and  without  notice,  that  there  was  no  ' '  fraud  or  circum- 
vention "  in  obtaining  or  executing  the  note,  within  the  meaning  of  the  stat- 
ute, which  would  defeat  an  action  by  the  holder  against  the  maker:  Shipley 
V.  Carroll,  45  111.  285;  but  while  this  ruling  may  be  correct,  it  would  seem 
that  the  case  should  have  been  decided  differently,  because  of  the  want  of 
delivery.  ''It  must  be  borne  in  mind,"  says  Walker,  C.  J.,  in  Latham  v. 
Smith,  supra,  "that  the  fraud  or  covin  must  relate  to  the  obtension  of  the 
instrument  itself,  and  not  to  the  consideration  upon  which  it  is  based.  It  is 
not  fraud  whicli  relates  to  the  quality,  quantity,  value,  or  character  of  the 
consideration  that  moves  the  contract,  but  it  is  such  a  trick  or  device  as  in- 
duces the  giving  of  one  character  of  instrument  under  the  belief  that  it  is 
another  of  a  different  character;  such  as  giving  a  note  or  other  agreement 
for  one  sum  or  thing,  when  it  is  for  another  sum  or  thing;  or  as  giving  a 
note  under  the  belief  that  it  is  a  receipt." 


Dec.  1888.]  Bedell  r.  Herring.  313 

If,  therefore,  a  person,  through  artifice,  and  •without  negl'gence  on  his 
part,  is  induced  to  execute  a  note  as  one  payable  absolutely,  iinder  the  belief 
that  it  was  payable  only  on  a  contingency,  there  is  such  fraud  or  circumven- 
tion as  will  bar  an  action  under  the  statute,  by  any  transferee  whatsoever: 
MuriKon  v.  Nichols,  62  III.  Ill;  or  where  through  some  false  representations, 
device,  or  trick,  and  without  negligence,  a  person  signs  a  note  for  a  larger 
sum  than  he  intended:  liicliardson  v.  Schirtz,  59  Id.  313;  Aufeu  v.  Gruner,  90 
Id.  300;  or  where  through  some  fraudulent  representations,  device,  or  trick, 
ami  in  the  exercise  of  reasonable  prudence  and  care,  he  signs  a  note,  suppos- 
ing that  he  is  signing  an  instrument  of  an  entirely  different  character:  Taylor 
v.  Atclmon,  54  Id.  I9G;  5  Am.  Rep.  IIS;  Puffer  v.  Smith,  57  111.  527;  Simsy. 
Bice,  67  Id.  88;  lluhhard  v.  nankin,  71  Id.  129;  Vanhrunt  v.  Simjley,  85  Id. 
281;  compare  Anderson  v.  Warne,  71  Id.  20;  22  Am.  Rep.  83.  But  it  is 
necessary  in  all  such  cases,  notwithstanding  the  fraud  or  circumvention,  that 
the  maker  should  have  exercised  ordinary  care  and  diligence  to  acquaint  him- 
self with  the  contents  of  the  i)aper  before  executing  it,  or  he  will  be  bound  to 
an  innocent  holder  for  value  and  before  maturity:  Leach  v.  Nichols,  55  111. 
273;  Mead  v.  Munson,  60  Id.  49;  Swannell  v.  Watson,  71  Id.  456;  Homes  v. 
Bale,  71  Id.  552;  Auten  v.  Gruner,  90  Id.  300;  Smith  v.  Culton,  5  111.  App. 
422;  and  whether  he  was  guilty  of  negligence  or  not  in  the  execution  of  the 
note  is  held  to  be  a  question  for  the  jury:  Id.;  Munson  v.  Nichols,  supra. 

In.ST RUMENTS    NEVER    DELIVERED,   BUT    OBTAINED   BY   FrAUD  OR   CrIME.  — 

There  is  no  doubt  that  delivery  of  a  negotiable  instrument  is  necessary  to 
create  any  liability  as  between  the  immediate  parties.  And,  therefore,  if  the 
payee  of  a  promissory  note  obtains  possession  thereof  by  fraud,  he  cannot 
maintain  any  action  thereon:  Carter  v.  McClintock,  29  Mo.  464.  A  fortiori 
would  this  be  true  if  he  obtained  possession  by  stealth.  But  the  authorities 
are  conflicting  as  to  whether  a  honajide  holder  can  recover  on  an  instrument 
which  has  never  been  delivered  by  the  maker  or  drawer  to  any  one  for  any 
purpose.  It  has  been  broadly  asserted  that  the  fact  there  was  no  delivery 
of  a  promissory  note  to  any  person  by  or  on  behalf  of  the  maker  was  no  de- 
fense to  an  action  on  the  note  by  a  honajide  holder  for  value,  who  received  it 
before  maturity:  Kinyon  v.  Wohlford,  17  Minn.  239;  10  Am.  Rep.  105.  In 
two  Illinois  cases  the  same  result  was  reached,  under  some  novel  conditions 
of  fact.  In  one  of  them,  a  person,  after  signing  a  note,  was  about  to  insert  a 
condition  in  it,  when  the  payee  snatched  it  from  him  and  rau  away,  and 
transferred  it  to  an  innocent  purchaser  before  maturity:  Clarke  v.  Johnson,  54 
111.  296.  In  the  other,  a  jierson,  as  a  mere  matter  of  amusement,  and  with- 
out any  intention  of  delivering  the  paper  to  the  jjayee,  signed  her  name  to  a 
promissory  note,  which  was  afterwards  stolen  by  the  payee,  and  transferred 
to  an  innocent  purchaser:  Shipley  v.  Carroll,  45  Id.  285.  These  are  extreme 
cases,  and  of  doubtful  correctness.  It  is  difficult  to  see  upon  what  reason 
they  can  be  sustained,  unless  upon  the  ground  of  the  maker's  negligence;  but 
then  the  negligence  was  not  a  proximate  cause  of  the  notes  getting  into  cir- 
culation. 

On  the  other  hand,  it  is  maintained  that  delivery  of  a  negotiable  instru- 
ment, at  least  for  some  purpose,  is  essential  to  its  validity,  even  in  the  hands 
ot  a  dona  Jide  holder  for  value,  and  before  maturity.  At  all  events,  it  would 
seem  to  be  a  sound  conclusion  that  where  paper  requiring  no  indorsement  ia 
stolen  from  the  maker  or  drawer  by  a  stranger,  it  never  having  been  volun- 
tarily delivered  to  any  one,  there  can  be  no  recovery  on  it,  even  by  an 
innocent  purchaser,  before  maturity:  Hall  v.  Wilson,  16  Barb.  548,  555; 
Baxendale  v.  Bennett,  L.  R.  3  Q.  B.  D.  525;  certainly  this  should  be  so  if  the 


314  Bedell  v.  Herring.  [Cal. 

instrument  is  incomplete:  Ledwkh  v.  McKim,  53  N.  Y.  307  But  cases  have 
gone  further.  Thus  in  Burson  v.  Huntington,  21  Mich.  415,  4  Am.  Rep.  497, 
the  maker  signed  a  promissory  note,  payable  to  the  order  of  another,  but  did 
not  deliver  it,  and  while  he  was  temporarily  absent  from  the  room,  the  payee, 
contrary  to  the  maker's  prohibition,  took  the  note  from  the  table  where  it 
had  been  left  by  the  maker,  and  went  away  with  it.  It  was  held  that  the 
maker  was  not  liable  thereon,  even  to  a  bona  fide  indorsee  for  value,  and  be- 
fore maturity.  Again,  in  Cline  v.  Guthrie,  42  Ind.  227,  13  Am.  Rep.  357,  a 
person  wf},3  induced  by  fraud  to  sign  his  name  to  a  promissory  note,  when  he 
supposed  that  he  was  writing  his  name  on  a  blank  piece  of  paper,  to  enable 
the  payees  to  see  how  his  name  was  spelled  or  written.  The  maker  did  not, 
after  he  discovered  that  he  had  so  signed  his  name  to  a  note,  voluntarily  de- 
liver it  to  the  payees;  but  it  M'as  wrongfully  and  forcibly  taken  possession  of 
by  them,  and  by  them  carried  away  against  the  maker's  consent.  It  was 
held  that  these  facts  constituted  a  good  defense  to  the  note  in  the  hands  of 
an  indorsee  in  good  faith  for  value,  and  before  maturity.  In  these  cases, 
the  notes  were  decided  to  be  invalid  for  want  of  delivery;  and  furthermore, 
there  was  no  negligence  or  estoppel  on  which  the  makers  could  be  charged. 
But  it  is  held  that  one  who  attempts  to  cancel  negotiable  paper  which  he 
has  signed,  but  not  put  in  circulation,  may  do  it  so  ineffectually  and  negli- 
gently that  if  it  be  thereafter  obtained  and  fraudulently  transferred,  he  may 
be  liable  to  a  bona  fide  purchaser  for  value:  Ingram  v.  Primrose,  7  Com.  B., 
N.  S.,  82;  compare  Schloey  v.  Ramshottom,  2  Camp.  485. 

Instruments  Put  in  Circulation  in  Violation  of  Instructions  or 
Conditions.  — The  case  where  a  negotiable  instrument  is  put  in  circulation 
in  violation  of  instructions  or  conditions  on  which  it  is  intrusted  by  the  party 
signing  to  another,  evidently  differs  from  the  case  last  considered,  where  the 
paper  has  never  voluntarily  been  intrusted  to  any  one,  but  the  possession  is 
at  the  outset  wrongfully  obtained.  If  the  paper  comes  into  the  hands  of  a 
bona  fide  holder  for  value,  and  without  notice,  there  is,  in  the  former  case, 
room  for  the  operation  of  the  principle,  of  two  innocent  persons,  that  one 
should  suffer  who  placed  it  in  the  power  of  another  to  commit  the  wrong; 
and  the  right  of  such  a  holder  to  recover  has  been  rarely  denied.  A  reoovery 
by  the  bona  fide  holder  in  this  case  is,  we  take  it,  more  properly  due  to  this 
principle  than  to  any  special  doctrine  appertaining  to  negotiable  instruments. 
If,  then,  bonds  of  a  corporation  are  wrongfully  put  in  circulation  by  its 
agents  or  officers,  an  accommodation  indorser,  as  well  as  the  corporation  it- 
self, will  be  liable  to  an  innocent  holder  for  value:  Oilman  v.  New  Orleans  etc. 
i?.  Ji.,  72  Ala.  566;  Grand  Rapids  etc.  R.  R.  v.  Sanders,  17  Hun,  552.  So  a 
person  will  be  liable  to  a  bona  fide  holder  for  value  on  negotiable  paper  which 
he  intrusts  to  an  agent  for  negotiation,  and  which  the  agent  misappropriates: 
Goodman  v.  Simonds,  20  How.  343;  Brush  v.  Scribner,  11  Conn.  388;  29  Am. 
Dec.  303;  Fisher  v.  Fisher,  98  Mass.  303;  and  a  person  is  likewise  liable 
where  he  indorses  a  note  for  accommodation,  and  intrusts  it  to  his  clerk  to 
deliver  it  to  a  certain  person,  on  the  latter 's  signinp:  it  with  the  name  of  a 
firm  as  makers,  and  the  clerk  delivers  the  note  before  it  is  signed  by  any  one: 
Whitmore  v.  Nickerson,  125  Id.  496;  28  Am.  Rep.  257;  or  where  one  signs 
a  note  as  surety,  and  delivers  it  to  his  agent  with  instructions  to  make  in- 
quiries of  a  certain  person  as  to  the  solvency  of  the  principal  maker,  and  not 
to  deliver  it  to  the  payee  unless  such  person  should  be  of  the  opinion  that  the 
principal  maker  was  solvent,  but  the  agent  causes  the  note  to  be  delivered 
to  the  payee  without  making  the  inquiries:  Taylor  v.  Grain,  2  J.  J.  Marsh. 
449. 


Dec.  1888.]  Bedell  v.  Herring.  315 

The  same  result  follows  where  an  accommo<lation  party  intrusts  the  paper 
to  the  accommodated  party  for  a  specific  purpose,  and  the  latter  wrongfully 
uses  it  for  a  different  purpose:  President  etc.  o/Chicopee  Bank  v.  C/iapin,  8 
Met.  40;  Maitland  v.  Citizens'  Nat.  Bank,  40  Md.  540,  5G8;  Woodruffs'.  Hill, 
116  Mass.  310;  Hemphill  v.  Bank  of  Alabama,  6  Smedes  &  M.  44;  Fanning  v. 
Farmers'  Bank,  8  Id.  139.  An  innocent  holder  for  value  is  likewise  unaf- 
fected l)y  the  fact  that  the  instrument  was  transferred  by  the  payee  in  violation 
of  a  condition  on  which  it  was  held  by  him:  Bush  v.  Peckard,  3  Harr.  (Del.) 
385;  and  sec  Kohnv.  Watkins,  26  Kan.  G9] ;  40  Am.  Rep.  336;  or  that  the  paper 
payable  to  one's  own  order  was  not  to  be  used,  but  should  operate  as  a  re- 
ceipt merely:  Pedlichv.  Dull,  54  N.  Y.  234;  or  that  the  party  from  whom  he  re- 
ceived tlie  paper  had  possession  of  it  for  certain  purposes,  and  misappropriated 
it:  Collins  V.  Gilbert,  94  U.  S.  753;  or  that  the  paper  was  negotiated  in  viola- 
tion of  a  condition  on  which  it  was  signed  or  indorsed  by  an  accommodation 
party:  Gacje  v.  Sharp,  24  Iowa,  15;  Davis  v.  Lee,  26  Miss.  505;  S/nallv.  Sirdth, 
]  Denio,  583;  and  see  Watson  v.  Riissell,  3  Best  &  S.  34;  affirmed  in  5  Id. 
908;  Clark  v.  Thayer,  105  Mass.  216;  and,  coiisequently,  one  who  signs  or 
indorses  a  iiote  as  surety  cannot  defend  an  action  thereon,  cither  by  the  inno- 
cent payee  or  any  other  bona  fide  holder  for  value,  on  the  ground  that  the 
principal  maker,  to  whom  he  intrusted  the  note,  delivered  the  same  in  viola- 
tion of  a  condition  that  a  certain  other  person  or  persons  should  also  first 
sign  or  indorse  as  co-sureties:  Bonner  v.  Nelson,  57  Ga.  433;  Clark  v.  Bryce, 
64  Id.  486;  Young  v.  Ward,  21  Id.  223;  Deardorffv.  Foresman,  24  Ind.  481; 
Smith  V.  Moberly,  10  B.  Mon.  266;  52  Am.  Dec.  543;  Barik  of  Missouri  v.  Phil- 
lips, 17  Mo.  29;  Massman  v.  Holcher,  49  Id.  87;  Merriam  v.  liockwood,  47 
N.  H.  81;  Passumpsic  Bank  V.  Goss,  SI  Yt.  315;  Dixon  v.  Dixon,  31  Id.  450; 
Farmers'  etc.  Bank  v.  Humphrey,  36  Id.  554;  but  this  rule  was  denied  in  A  wde 
V.  Dixon,  6  Ex.  869,  and  in  Perry  v.  Patterson,  5  Humj)h.  133,  136;  and  a 
majority  of  the  supreme  court  of  Missouri  refused  to  apply  it  to  a  non-nego- 
tiable note  in  Ayres  v.  Milroy,  53  Mo.  516;  but  the  first  two  of  these  latter 
cases  are  opposed  to  the  weight  of  authority;  and  the  last  case  does  not  give 
a  proper  effect  to  the  principle  above  noted,  on  which  this  question  rests. 

Finally,  if  a  promissory  note  be  deposited  with  a  third  person  as  an 
escrow,  and  it  is  delivered  to  the  payee  without  the  maker's  knowledge  and 
consent,  and  without  the  happening  of  the  condition  on  which  it  was  to  be 
delivered,  the  maker  is,  nevertheless,  liable  to  an  innocent  holder  for  value: 
Vallett  V.  Parker,  6  Wend.  615;  Fearing  v.  Clark,  16  Gray,  74;  77  Am.  Dec. 
394;  Graff"  v.  Logue,  61  Iowa,  704;  Bigelow,  Q.  J.,  saying,  in  Feai-ing  v. 
Clark,  supra:  "It  is  undoubtedly  true  that,  as  between  the  original  parties 
to  a  note,  or  those  who  take  it  with  notice,  it  is  essential  that  there  should 
have  been  a  delivery  of  the  note  by  the  maker  to  take  effect  as  a  contract. 
In  this  sense,  delivery  is  included  in  the  allegation  of  making.  But  the 
rule  is  qualified  and  limited  as  between  the  maker  and  a  bona  fide  holder. 
In  such  case,  a  valid  delivery  can  be  made  by  any  person  to  whom  the  maker 
has  given  the  note  in  such  form  as  to  enable  him  to  hold  himself  out  as  abso- 
lute owner  of  the  note."  But  it  has  been  otherwise  held  that  where  a  prom- 
issory note  and  mortgage  securing  it  were  placed  in  the  hands  of  a  mere 
custodian,  indifferent  between  the  parties,  to  be  delivered  to  the  payee  upon 
the  happening  of  a  certain  event,  and  the  custodian,  without  authority,  de- 
livered the  papers  to  the  jjayee  without  waiting  for  such  event,  the  maker 
was  not  liable  thereon,  for  want  of  a  proper  delivery,  even  to  a  bona  fide 
holder  for  value:  Chipmanv.  Tucker,  38  Wis.  43;  20  Am.  Rep.  1;  and  also 
where  negotiable  instruments,  running  to  a  railroad  company,  were  depos- 


316  Bedell  v.  IIeuring.  [Cal. 

ited  by  the  makers  with  a  third  person,  to  he  held  by  him  subject  to  their 
order  only,  and  an  agent  of  the  company  fraudulently  induced  a  clerk  of  the 
custodian  to  let  him  take  the  instruments  for  the  purpose  of  making  a 
schedule  of  them,  promising  to  return  them  as  soon  as  that  was  done,  but 
such  agent  delivered  them  to  the  company,  which  negotiated  them  for  value, 
before  maturity,  to  persons  who  had  no  notice  of  the  facts,  it  was  held  that 
there  could  be  no  recovery  thereon  against  the  makers,  because  there  had 
been  no  valid  delivery:  Roberts  v.  McGrath,  38  Wis.  52;  Roberts  v.  Wood,  38 
Id.  60;  and  see  Andrews  v.  Thayer,  30  Id.  228.  These  Wisconsin  cases  are, 
however,  opposed  both  to  principle  and  the  weight  of  authority. 

Instruments  Execitted  in  Blank  and  Wrongfctlly  Filled  up. — In- 
timately connected  with  the  last  head  is  the  case  where  one  executes  or  signs 
negotiable  paper  in  blank,  and  intrusts  the  same  to  another,  with  specific 
directions  or  on  an  express  understanding  as  to  the  filling  up  of  the  blanks. 
It  is  well  settled  that  such  person  is  liable  to  a  bona  fide  holder  for  value, 
whether  the  paper  be  for  accommodation,  or  be  intended  to  be  used  for  his 
own  benefit,  if  the  blanks  are  wrongfully  filled  up,  by  the  one  to  whom  the 
paper  is  intrusted,  for  larger  amounts,  or  on  different  terms,  or  they  are  filled 
up  by  the  bona  fide  holder  to  whom  the  paper  is  transferred  in  blank  by  such 
person  without  notice  of  the  limiting  instructions  or  agreement,  and  the 
signer  has  been  thereby  defi-auded.  Negotiable  instruments  so  executed 
carry  on  their  face  an  implied  authority  to  fill  up  the  blanks,  and  perfect  the 
paper  in  conformity  with  the  apparent  object  of  the  blanks.  And  the  signer 
cannot  complain,  as  against  the  bona  fide  holder,  that  the  person  to  whom  he 
intrusted  the  paper  violated  the  confidence  reposed  in  him.  Of  the  two  in- 
nocent parties,  the  maker  and  the  innocent  holder,  the  former  should  bear 
the  loss,  because  he  placed  it  in  the  power  of  the  third  person  to  perpetrate 
the  wrong:  Russel  v.  Langstaffe,  2  Doug.  514;  CoUis  v.  Emett,  1  H.  Black. 
312;  Scladtz  v.  Astley,  2  Bing.  N.  C.  544;  Montague  v.  Perhins,  22  Eug.  L. 
&  Eq.  516;  Lo)idon  etc.  Bank  v.  Wentworth,  L.  R.  5  Ex.  Div.  96,  101;  Bank 
of  PUtsburgli  v.  Neal,  22  How.  Pr.  96,  107;  Putnam  v.  Sullivan,  4  Mass.  45; 
3  Am.  Dec.  206;  President  etc.  of  Androscoggin  Bank  v.  Kimball,  10  Cush.  373; 
Roberts  v.  Adams,  8  Port.  297;  33  Am.  Dec.  291;  Herbert  v.  Huie,  1  Ala.  18; 
34  Am.  Dec.  755;  Huntington  v.  Branch  Bank  at  Mobile,  3  Ala.  186;  Marshall 
V.  Drescher,  68  Ind.  359;  Eichelberger  \.  Old  Nat.  Bank,  103  Id.  401;  McDon- 
ald V.  Muscatine  Nat.  Bank,  27  Iowa,  319;  Joseph  v.  First  Nat.  Bank,  17  Kan. 
256;  Bank  of  Commonwealth  V.  Curry,  2  Dana,  142;  Hemphill  v.  Bank  of  Ala- 
bama, 6  Smedes  &  M.  44;  Fanning  v.  Farmers'  etc.  Bank,  8  Id.  139;  Torrey  v. 
Fisk,  10  Id.  590;  Van  puzer  v.  Howe,  21  N.  Y.  531;  Redlich  v.  Dall,  54  Id. 
284;  Fullerton  v.  Sturgis,  4  Ohio  St.  529;  Schryver  v.  Hawkes,  22  Id.  308; 
Dierchs  v.  Roberts,  13  S.  C.  338;  Nichol  v.  Bate,  10  Yerg.  429;  Orrick  v.  Cols- 
ton, 7  Gratt.  189.  "  The  indorsement  on  a  blank  note,"  says  Lord  Mansfield, 
in  Russel  V.  Langstaffe,  supra,  "is  a  letter  of  credit  for  an  indefinite  sum." 

As  between  the  immediate  parties  to  the  transaction,  the  paper,  of  course, 
can  only  be  filled  up  in  conformity  with  the  authority  conferred,  although 
if  there  are  no  restrictions  the  authority  is  general:  Davidson  v.  Lanier,  4 
W^all.  447,  456.  And  in  no  case  is  any  implied  authority  conferred  to  fill  up 
a  blank  with  matter  foreign  to  the  apparent  purpose  for  which  it  had  been 
left:  McCoy  \.  Lockwood,  71  Ind.  319;  "the  authority  implied  from  the  ex- 
istence of  the  blanks  would  not  authorize  the  person  intrusted  with  the  in- 
strument to  vary  or  alter  the  material  terms  of  the  instrument  by  ernsing 
what  is  written  or  printed  as  part  of  the  same,  nor  to  pervert  the  scope  and 
meaning  of  the  same  by  filling  the  blanks  with  stipulations  repugnant  to 


Dec.  1888.]  Bedell  v.  Herring.  317 

what  was  plainly  and  clearly  expressed  in  the  instrument  before  delivery  ": 
An()le  V.  Northwestern  L.  Ins.  Co.,  92  U.  S.  330;  nor,  of  course,  has  the  per- 
son intrusted  with  the  instrument  authority  to  alter  a  material  stipulation 
not  left  blank:  Coburn  v.  Wehh,  56  Ind.  96.  If  the  paper  be  taken  with 
notice  that  the  blanks  have  been  filled  up  without  authority,  or  in  fraud, 
the  defense  can  be  maintained  on  that  ground:  Davidson  v.  Lanier,  supra; 
Goss  V.  Whitehead,  33  Miss.  213;  but  in  Mississippi  it  is  held  that  a  note  will 
not  be  avoided  in  toto,  but  only  as  to  the  excess,  where  a  person  takes  the 
paper  with  notice  that  an  agent  to  whom  it  was  intrusted  in  blank  has  ex- 
ceeded his  authority  as  to  the  amount  to  be  inserted:  Johnson  v.  Blasdale, 
1  Smedes  &  M.  17;  40  Am.  Dec.  85;  Goad  v.  Hart's  Adm'rs,  8  Sinedes  &  M. 
787. 

It  is  an  entirely  different  case,  however,  where  one  writes  his  name  on  a 
blank  piece  of  paper,  of  which  another  takes  possession  without  authority, 
and  writes  a  promissory  note  above  the  signature.  The  signer  cannot  be 
held  by  a  bona  fide  transferee:  Nance  v.  Lary,  5  Ala.  370.  No  confidence 
is  reposed  by  the  signer  in  any  one,  for  the  violation  of  which  he  might  be 
held,  but  the  making  of  the  note  is  a  forgery.  No  instrument  whatever 
was  intended  to  be  made  by  the  signer  which  should  be  binding  upon  him. 
So  where  a  person  wrote  his  name  on  a  blank  piece  of  paper,  for  the  purpose 
of  identifying  his  signature,  and  the  one  to  whom  it  was  given,  without  the 
knowledge  of  the  signer,  wrote  over  the  signature  a  promissory  note,  the  in- 
strument is  a  forgery,  and  an  innocent  holder  for  value  is  not  entitled  to  re- 
cover: Caulkins  v.  Whisler,  29  Iowa,  495;  4  Am.  Rep.  236. 

Instrument  so  Executed  that  a  Portion  thereof  may  be  Detached 
OR  Altered.  — If  a  person  signs  a  note  to  which  a  condition  is  so  attached 
that  it  is  perfectly  apparent  to  him  that  the  condition  may  be  separated 
from  the  note,  and  the  note  left  a  perfect  negotiable  instrument  without 
anything  on  its  face  to  indicate  that  the  condition  had  ever  constituted  a 
part  of  it,  the  maker  will  be  guilty  of  such  negligence  that  the  wrongful 
separation  of  the  condition  will  be  no  defense  to  an  action  against  him  on  the 
note  by  a  bona  fide  holder  for  value,  and  before  maturity:  Cornell  v.  NebeJcer, 
58  Ind.  425;  Zimmerman  v.  Rote,  75  Pa.  St.  188;  compare  Cocliran  v.  Neheker, 
48  lud.  459.  "It  is  the  duty  of  the  maker  of  the  note,"  says  the  court  in 
Zimmerman  v.  Rote,  supra,  "to  guard,  not  only  himself,  but  tlie  public, 
against  frauds  and  alterations,  by  refusing  to  sign  negotiable  paper  made  in 
such  a  form  as  to  admit  of  fraudulent  practices  upon  them  with  ease,  and 
without  ready  detection."  If,  however,  there  is  no  question  of  negligence  on 
the  part  of  the  maker,  the  unauthorized  separation  of  the  condition  would 
be  such  a  material  alteration  as  would  avoid  the  note,  even  in  the  hands  of 
the  innocent  purcliaser:  Benedict  v.  Cowden,  49  N.  Y.  396;  10  Am.  Rep.  382; 
Wait  V.  Pomeroy,  20  Mich.  425;  4  Am.  Rep.  395.  The  case  of  Stepliens  v. 
Davis,  85  Tenn.  271,  however,  holds  that  where  a  promissory  note,  taken 
from  a  book  of  printed  blank  notes,  was  signed  after  a  condition  was  written 
on  the  stub,  and  the  stub  was  detached  by  the  payee  or  his  agent,  the  de- 
taclimeut  of  the  stub  avoided  the  note,  even  in  the  hands  of  an  innocent 
holder,  before  maturity,  and  that  an  instruction  that  if  the  stub  could  be 
easily  removed  without  defacing  the  note,  the  maker  would  not  be  entitled 
to  relief  on  account  6f  his  own  negligence,  was  erroneous.  The  decision  is 
opposed  to  the  cases  first  cited,  and  seems  to  be  based  upon  a  misapprehen- 
sion of  Benedict  v.  Coioden  and  Wait  v.  Pomeroy,  supra,  where  the  element  of 
negligence  was  not  really  involved,  although  in  Wait  v.  Pomeroy  some 
of  the   observations   of  Chief    Justice  Campbell    tend  towards  maintaining 


318  Bedell  v.  Herring.  [Cal. 

the  view  that  the  maker  would  in  no  event  be  liable  if  the  condition  were 
detached.  In  Palmer  v.  Largent,  5  Neb.  223,  it  is  held  that  while  the 
fraudulent  removal  of  a  memorandum,  written  under  a  promissory  note,  and 
qualifying  it,  vitiates  the  instrument,  even  in  the  hands  of  a  honaf.de  holder, 
yet  where  the  words  alleged  to  have  been  removed  by  the  payee  were  "this 
note  is  given  upon  condition,"  and  there  is  nothing  to  show  what  the  condi- 
tion was,  the  removal  does  not  vitiate  the  instrument,  inasmuch  as  the  words 
were  entirely  immaterial. 

For  the  same  reason,  if  one  signs  an  instrument  which  is  apparent  to  him 
to  be  in  such  a  form  that  a  note  included  in  it  may  be  so  detached  from  the 
rest  of  the  instrument  as  to  appear  a  simple  promissory  note,  he  will  be 
liable  thereon,  if  it  is  so  detached,  to  a  bona  fide  holder  for  value,  and  before 
maturity:  Woollen  v.  Ulrich,  64  Ind.  120;  Woollen  v.  Whitacre,  73  Id.  198;  but 
here,  again,  the  maker  is  held  not  liable  in  the  absence  of  negligence,  and  that 
the  question  of  negligence  is  for  the  jury:  Broion  v.  Beed,  79  Pa.  St.  370;  21 
Am.  Rep.  75;  Sharswood,  J.,  remarking:  "If  the  maker  of  a  bill,  note,  or 
check  issues  it  in  such  a  condition  that  it  may  be  easily  altered  without  de- 
tection, he  is  liable  to  a  bona  fide  holder  who  takes  it  in  the  usual  course  of 
business  before  maturity."  Likewise,  where  a  person  signed  a  printed  note, 
in  the  blank  of  which  was  written  "one  hundred,"  leaving  a  space  between 
these  words  and  the  printed  word  "dollars,"  which  space  was  filled  by  the 
payee  after  delivery  with  the  word  "fifty,"  written  in  the  same  hand,  and 
there  being  nothing  suspicious  in  the  appearance  of  the  paper,  it  was  held 
that  the  maker  was  liable  for  the  face  of  the  note  to  a  bona  fide  holder  for 
value,  and  before  maturity:  Garrard  v.  Haddan,  67  Pa.  St,  82;  5  Am.  Rep. 
412. 

Instruments  Mistakenly  Executed  under  False  Repkesentations. 
—  There  is  no  doubt  that  if  one  signs  a  negotiable  instrument  without  read- 
ing it,  or  if  he  cannot  read,  without  asking  to  have  it  read  to  him,  he  cannot 
avoid  the  legal  effect  of  his  signature,  even  against  an  original  party,  by  set- 
ting up  his  ignorance  of  the  contents  of  the  paper,  in  the  absence  of  fraud, 
deceit,  or  misrepresentation:  Goetter  v.  Pickett,  61  Ala.  387;  Dawson  v.  Burrus, 
73  Id.  Ill;  BurrowjJis  v.  Pacific  Guano  Co.,  81  Id.  255;  Pacific  Guano  Co.  v. 
Anglin,  82  Id.  492;  Cannon  v.  Lindsey,  85  Id.  198;  7  Am.  St.  Rep.  38;  Ro(jers 
v.  Place,  29  Ind.  577.  In  the  frequently  quoted  language  of  Gibson,  C.  J., 
in  Greenfield's  Estate,  14  Pa.  St.  489:  "  If  a  party,  who  can  read,  will  not  read 
a  deed  put  before  him  for  execution,  or  if,  being  unable  to  read,  will  not  de- 
mand to  have  it  read  or  explained  to  him,  he  is  guilty  of  supine  negligence, 
which,  I  take  it,  is  not  the  subject  of  protection,  either  in  equity  or  at  law." 
Proof  that  the  grantor  of  a  deed  was  very  ignorant  and  illiterate,  and  could 
not  read  writing,  and  that  the  deed  was  not  read  to  him,  is  not  suificient  to 
avoid  the  deed,  unless  he  requested  it  to  be  read:  Hallenbeck  v.  Dewitt,  2 
Johns.  404. 

It  is  quite  a  different  matter,  however,  if  one  signs  negotiable  paper  relying 
upon  the  false  representations  of  another  as  to  its  contents.  There  are  two 
classes  of  cases.  He  may  intend  to  sign  a  negotiable  instrument,  but  mis- 
representations may  be  made  as  to  its  terms;  or  he  may,  through  some  fraud- 
ulent representation,  device,  or  trick,  have  signed  such  an  instrument  suppos- 
ing that  it  is  an  instrument  of  an  entirely  different  character.  As  a  general 
proposition,  applicable  to  the  first  class,  it  may  be  stated  that  one  who  exe- 
cutes a  promissory  note,  intending  to  sign  it  for  a  certain  sum,  or  according 
to  certain  terms,  cannot,  in  an  action  against  him  by  an  innocent  holder  for 
value  before  maturity,  set  up  as  a  defense  that,  through  the  fraudulent  repre- 


Dec.  1888.]  Bedell  v.  Herring.  819 

sentations  of  the  payee  or  his  agent,  or  through  the  false  reading  of  the 
paper  to  him  by  the  latter,  it  was  executed  for  a  larger  sum,  or  with  dif- 
ferent terms  thau  he  intended,  if  he  was  guilty  of  negligence  in  failing  to  use 
reasonable  care  to  inform  himself  of  the  contents  of  the  instrument:  Craig  v. 
Hohhs,  44  Ind.  363;  Dutton  v.  Clapper,  53  Id.  276;  Yeagley  v.  Webb,  86  Id. 
424;  Wright  v.  Flinn,  33  Iowa,  159;  Fayette  County  Savings  Bank  v.  Steffes,  54 
Id.  214;  Griffiths  v.  Kellogg,  39  Wis.  290;  20  Am.  Rep.  48;  Eoach  v.  Karr,  18 
Kan.  529;  26  Am.  Rep.  788;  and  as  heretofore  shown,  this  rule  is  also  true 
under  the  statutes  of  Georgia  and  Illinois:  Alerritt  v-  Bagwell,  70  Ga.  578, 
583;  Leach  v.  Nichols,  55  111.  273;  Richardson  v.  Schirtz,  59  Id.  313;  Mead  v. 
Munson,  60  Id.  49;  Miinmn  v.  Nichols,  62  Id.  Ill;  Homes  v.  Hale,  71  Id.  552; 
Auten  V.  Gruner,  90  Id.  300.  There  is,  however,  some  confusion  among  these 
cases  in  regard  to  the  question  how  the  negligence  is  to  be  determined. 
There  seems  to  have  been  a  tendency  to  submit  the  matter  to  the  jury,  and 
there  is  no  doubt  that,  ordinarily,  and  when  the  facts  are  disputed,  or  there  is 
room  for  a  fair  difference  of  opinion  on  the  facts  as  shown,  the  question  is  one 
for  the  jury;  but  it  would  seem,  at  all  events,  that  when  it  clearly  appears 
that  the  maker  signed  the  instrument  •without  reading  it,  or  if  he  could  not 
read,  without  having  it  read  over  to  him,  relying  instead  upon  the  false 
representations  of  the  payee  or  his  agent,  he  is  guilty  of  such  negligence,  as  a 
matter  of  law,  as  will  prevent  the  fraud  from  being  an  available  defense  as 
against  an  innocent  holder  for  value,  and  before  maturity.  Under  other 
special  circumstances,  the  question  might  also  be  one  of  law. 

More  difficulty  is  encountered  with  the  class  of  cases  where  the  negotiable 
instrument  was  executed  by  the  part}'  through  a  false  representation,  device, 
or  trick,  under  the  belief  that  he  was  signing  an  instrument  of  a  totally  dif- 
ferent character.  The  general  rule  has  been  well  stated  as  follows:  "The 
party  whose  signature  to  such  paper  is  obtained  by  fraud  as  to  the  character 
of  the  paper  itself,  who  is  ignorant  of  such  character,  and  who  has  no  inten- 
tion of  signing  it,  and  who  is  guilty  of  no  negligence  in  affixing  his  signature 
or  in  not  ascertaining  the  character  of  the  instrument,  is  no  more  bound  by 
it  than  if  it  were  a  total  forgery,  the  signature  included  ":  Walker  v.  Ehert, 
29  Wis.  194;  9  Am.  Rep.  548;  Kellogg  v.  Steiner,  29  Wis.  626;  Butler  y.  Cams, 
37  Id.  61;  Cline  v.  Guthrie,  42  Ind.  227;  13  Am.  Rep.  357;  Webb  v.  Corbin,  78 
Ind.  403.  It  is  thus  observed  that  the  negligence  of  the  signer  is  the  im- 
portant factor  in  determining  whether  or  not  he  may  be  held  liable  to  an  in- 
nocent holder  for  value  before  maturity.  But  it  has  been  held  by  some  cases 
that  the  one  who  executes  the  paper  under  such  circumstances  will  be  liable, 
irrespective  of  the  question  of  negligence:  Rowland  v.  Foioler,  47  Conn.  347; 
First  Nat.  Bank  v.  Johns,  22  W.  Va.  520;  46  Am.  Rep.  506;  and,  on  the  other 
hand,  there  are  dicta  and  decisions  to  the  effect  that  he  incurs  no  liability  at 
all,  notwithstanding  he  may  have  been  negligent:  Briggs  v.  Ewart,  51  Mo. 
245;  11  Am.  Rep.  445;  Martin  v.  Smylee,  55  Mo.  577;  Corby  v.  Weddle,  57 
Id.  452;  Gibbs  v.  Linabury,  22  Mich.  479;  7  Am.  Rep.  675;  Anderson  v.  Wal- 
ter, 34  Mich.  113,  119.  These  latter  views,  however,  do  not  accord  with 
either  principle  or  authority.  See  the  earlier  Missouri  cases,  moditied  by 
Shirts  V.  Overjohn,  60  Mo.  305.  The  amount  of  care  which  the  siguer  is  re- 
quired to  exercise  is  generally  expressed  as  "ordinary";  but  in  Dinsinore  v. 
Stiinbert,  12  Neb.  433,  in  an  action  on  a  promissory  note  by  bona  fide  trans- 
ferees for  value  before  maturity,  't  was  held  that  an  instruction  that  the  ver- 
dict should  be  for  t)lie  defendauc,  if  he,  "before  signing  said  note,  used  the 
diligence  and  care  that  a  man  of  ordinary  care  and  prudence  would  have 
used,  under  similar  circumstances,  to  ascertain  its  contents,  and  was  without 


320  Bedell  v.  Herring.  [Cal. 

fault,"  was  erroneous;  and  that  the  jury  should  have  been  told  that  to  make 
such  defense  available,  the  defendant  must  not  have  been  guilty  of  any  neg- 
ligence in  signing  the  paper. 

Generally  speakiag,  the  question  of  the  signer's  negligence  is  a  fact  to  be 
submitted  to  the  jury:  See  Foster  v.  Machinnon,  L.  R.  4  Com.  P.  704;  Webb 
V.  Corhin,  78  Ind.  403;  Abbott  v.  Rose,  62  Me.  194;  16  Am.  Rep.  427;  Chapman 
V.  Rose,  56  N.  Y.  137;  15  Am.  Rep.  401;  Fnitonv.  Robinson,  4  Hun,  252; 
Rossv.  Doland,  29  Ohio  St.  473;  De  Camp  v.  Hamma,  29  Id.  467;  Citizens' 
Nat.  Bank  v.  Smith,  55  N.  H.  593;  Sims  v.  Bice,  67  111.  88;  but  where  it  is 
shown  that  he,  being  able  to  read,  signed  tho  instrument  without  reading  it, 
or  not  being  able  to  read,  he  signed  it  without  having  it  reail  over  to  him, 
relying  upon  the  false  representations  of  the  payee  or  his  agent,  especially  if 
the  latter  be  a  stranger,  that  it  was  an  instrument  of  a  different  character, 
or  upon  the  false  reading  of  it  by  such  person,  if  he  can  himself  read,  he 
should  be  held  to  be  negligent  as  a  matter  of  law,  and  a  recovery  can  conse- 
quently be  had  again.st  him  by  a  bona  fide  holder  for  value  before  maturity: 
See  Nebeker  V.  Cutsinger,  48  Ind.  436;  Moon  v.  Vancuren,  49  Id.  201;  Glenn 
V.  Porter,  49  Id.  500;  Kimble  v.  Christie,  55  Id.  140;  Woollen  v.  Ulrich,  64  Id. 
120;  Maxwell  v.  Morehart,  66  Id.  301;  Thomas  v.  Ruddell,  66  Id.  326;  Indi- 
ana Nat.  Bank  v.  Weckerly,  67  Id.  345;  Fisher  v.  Von  Behren,  70  Id.  19;  36 
Am.  Rep.  162;  Ruddell  v.  Fhalor,  72  Ind.  533;  37  Am.  Rep.  177;  Rudddl  v. 
Dillman,  73  Ind.  518;  38  Am.  Rep.  152;  American  Ins.  Co.  v.  McWhorter,  78 
Ind.  136;  Williams  v.  Stoll,  79  Id.  SO;  41  Am.  Rep.  604;  Baldwin  v.  Bar- 
rows, 86  Ind.  351;  Douglass  v.  Matting,  29  Iowa,  498;  4  Am.  Rep.  238;  Looinis 
v.  Metcalf,  30  Iowa,  382;  McCormack  v.  Molburg,  43  Id.  561;  Ort  v.  Fowler, 
31  Kan.  478;  47  Am.  Rep.  501;  Kellogg  v.  Curtis,  65  Me.  59;  Shirts  v.  Over- 
John,  60  Mo.  305;  De  Camp  v.  Hamma,  29  Ohio  St.  467,  471;  Phelanv.  Moss, 
67  Pa.  St.  59;  5  Am.  Rep.  402.  On  the  other  hand,  where  a  party's  signa- 
ture to  a  promissory  note  was  obtained  by  fraud  as  to  the  character  of  the 
paper  itself,  he  being  sick,  and  enfeebled  in  mind  and  body,  and  unable  to 
read  the  paper,  and  there  being  no  one  to  whom  he  could  appeal  for  assist- 
ance, and  the  paper  having  been  misread  to  him,  it  was  held  on  demurrer  to 
the  answer  setting  forth  these  facts  that  he  was  guilty  of  no  negligence,  and 
was  not  liable  to  an  indorsee  before  due,  although  it  appeared  that  the  per- 
sons who  obtained  the  note  were  strangers  to  him:  Webb  v.  Corbin,  supra;  and 
in  an  action  by  an  indorsee  against  the  maker  of  a  note,  an  answer  showing 
by  proper  averments  that  the  note  was  without  consideration,  and  the  exe- 
cution was  obtained  by  fraud  while  the  maker  was  so  under  the  influence  of 
medicines  administered  by  the  person  who  received  the  note  that  he  wag 
incapable  of  comprehending  the  nature  of  the  transaction,  is  good  on  demur- 
rer: Mitchell  V.  Tomlinson,  dl  Ind.  167 ;  so  an  answer  to  a  complaint  on  a  prom- 
issory note,  brouglit  by  an  indorsee  before  maturity  against  the  maker,  to 
the  effect  that  the  defendant  had  entered  into  a  contract  of  agency  with  the 
payee,  but  that  no  note  was  shown  or  read  to  the  defendant,  or  intended  to 
be  executed  by  him,  but  that  if  it  was  contained  in  the  paper  which  he  had 
signed  it  was  so  disguised  and  concealed  that  he  could  not  with  reasonable 
diligence  have  discovered  the  same,  is  also  good  on  demui-rer:  Detwiler  v. 
Bish,  44  Id.  70. 

Whether  an  illiterate  person  is  guilty  of  negligence  in  signing  an  instru- 
ment, which,  through  fraud,  turns  out  to  be  negotiable  paper,  without  first 
having  had  it  read  over  to  him  by  some  one  other  than  the  payee  or  his  agent, 
as  by  a  member  of  his  family,  or  a  friend  or  neighbor,  is  also,  in  general,  a 
question  of  fact  for  the  jury:  Baldwin  v.  Bricker,  86  Ind.  221..  222;  Hopkina 


Dec.  1888.]  Bedell  v.  Herring.  321 

V.  Hawkeye  Ins.  Co.,  57  Iowa,  203;  Stvannellv.  Watson,  71  El.  456;  Frederick 
V.  Clemens,  60  Mo.  313.  la  Baldwin  v.  Barrows,  86  Ind.  351,  it  appeared,  in 
an  action  against  the  maker  of  a  promissory  note,  by  bona  fide  holders  for 
value,  and  before  maturity,  that  the  maker,  who  could  not  read,  signed  the 
note  upon  a  representation  that  it  was  a  mere  order  for  medicines,  and  with- 
out asking  his  wife,  who  was  present  and  could  read.  It  was  held,  on  a  re- 
view of  the  evidence,  that  he  was  liable.  In  a  number  of  cases  it  has  been 
held  that  where  a  person  who  could  not  read,  or  who  could  read  only  with 
difficulty,  signed  a  note,  relying  upon  the  false  reading  or  representations  of 
it  by  the  payee  as  an  instrument  of  a  diflferent  character,  a  verdict  in  his  fa- 
vor was  sustained  by  the  evidence:  Taylor  v.  Atchison,  54  111.  196;  5  Am.  Rep. 
118;  Piijfer  v.  Smith,  57  111.  527;  Hubbard  v.  Rankin,  71  Id.  129;  Vanhrunt 
".  Shvjley,  85  Id.  281;  Soper  v.  Peck,  51  Mich.  563;  First  National  Bank  v. 
Deal,  55  Id.  592.  See  also  Whitney  v.  Snyder,  2  Lans.  477;  Fii'st  National 
Bank  v.  Lierman,  5  Neb.  247.  But  in  Mackey  v.  Peterson,  29  Minn.  298,  the 
extreme  view  was  taken  that  where  a  person  signed  a  promissory  note,  suppos- 
ing it  to  be  a  mere  receipt,  and  relying  upon  the  false  representations  of  the 
payee's  agent,  wlio  was  a  stranger,  that  it  was  a  receipt,  and  upon  the  false 
reading  of  the  jjaper  by  the  latter  to  him,  he  being  unable  to  read  English 
himself,  and  there  being  no  one  who  could  read  English  within  half  a  mile, 
that  he  was  guilty  of  negligence,  and  the  facts  furnished  no  defense  as  against 
a  bona  fide  holder  for  value,  and  before  maturity;  while,  on  the  other  hand, 
the  case  of  Corby  v.  Weddle,  57  Mo.  452,  holds  that  where  a  person  signed  a 
promissory  note  without  reading  it,  he  reading  writing  with  difficulty,  be- 
lieving it  to  be  an  instrument  of  a  diflferent  character,  and  relying  upon  the 
representations  of  the  payee,  who  was  a  stranger,  that  it  was  an  instrument 
of  a  different  character,  a  declaration,  in  an  action  by  an  innocent  holder  for 
value,  and  before  maturity,  to  the  effect  that  if  the  defendant's  signature  was 
procured  under  false  pretenses  that  he  was  signing  an  instrument  of  a  diflfer- 
ent character,  he  having  no  intention  of  making  a  note,  there  could  be  no  re- 
covery, thus  excluding  the  question  of  his  negligence,  was  correct;  but  more 
recently  it  has  been  decided,  under  similar  circumstances,  that  the  question  of 
negligence  should  be  left  to  the  jury:  Frederick  v.  Clemens,  60  Mo.  313;  and 
Bee  also  Shirts  v.  Over  John,  60  Id.  305. 

A.MOUNT  OF  Recovery  by  Bona  Fide  Holder  against  Defrauded 
Maker  or  Indouser.  — There  is  no  doubt  that  if  a  negotiable  instrument 
is  valid  and  binding  between  the  original  parties,  the  payee  may  sell  it  at 
any  rate  of  discount  he  chooses,  and  the  purchaser  will  have  a  right  to  re- 
cover the  full  face  value  of  the  paper:  Sec  Durnnt  v.  Banta,  27  N.  J.  L.  624, 
and  cases  cited;  National  Bank  v.  Green,  33  Iowa,  140.  But  if  there  was 
fraud  in  the  inception  of  the  paper,  the  authorities  are  not  agreed  as  to  the 
amount  of  recovery  by  a  bona  fide  holder.  If  the  paper  was  transferred  as 
collateral  security  merely  by  one  in  whose  hands  the  defense  of  fraud  is 
available,  it  is  clear  that  the  bona  fide  transferee  should  recover  thereon  to 
the  extent  only  of  the  amount  secured,  for  the  reason  that  as  to  any  surplus 
over  and  above  that  sum  he  would  be  a  trustee  for  his  transferrer,  who  is  en- 
titled to  nothing  from  the  defrauded  party:  See  President  etc.  of  Chicopee 
Bank  v.  Chapin,  8  Met.  40;  Stoddard  v.  Kimball,  6Cush.  469;  Fisher  v.  Fisher, 
98  Mass.  303;  Allaire  v.  llartshorne,  21  N.  J.  L.  665;  47  Am.  Dec.  175;  Union 
National  Bank  v.  Roberts,  45  Wis.  373;  and  the  same  result  follows  where  ac- 
commodation paper  is  transferred  as  collateral  security  by  the  accommodated 
party,  altliough  no  question  of  fraud  is  involved:  Williams  v.  Smith,  2  Hill, 
301;  Duncan  v.  Gilbert,  29  N.  J.  L.  521;  Atlas  Bank  v.  Doyle,  9  R.  I.  76;  98 
Am.  St.  Rep.,  Vol.  XL— 21 


322  Bedell  v.  Herring.  [Cal. 

Am.  Dec.  368;  Valktte  v.  Mason,  1  Ind.  89.  If,  however,  a  negotiable  in- 
strument is  purchased  before  maturity  by  one  who  has  no  notice  of  fraud  in 
its  origin,  he  should  be  entitled  to  recover  the  full  amount  of  the  paper 
against  the  defrauded  party,  notwithstanding  he  may  have  paid  less  than  its 
face  value:  Cromioellv.  County  of  Sac,  96  U.  S.  51;  Railroad  Companies  v. 
Schutte,  103  Id.  118,  144;  Sully  v.  Goldsmith,  32  Iowa,  397;  Lay  v.  Wissman, 
36  Id.  305;  Wdliams  v.  Huntington,  68  Md.  590;  6  Am.  St.  Rep.  477;  Hohart 
V.  Penny,  70  Me.  248,  249;  Bawje  v.  Flint,  25  Wis.  544,  550;  Tod\.  Wick,  36 
Ohio  St.  370,  391;  Butterjieldv.  Toivn  of  Ontario,  32  Fed.  Rep.  891.  There 
is  evidently  a  distinction  between  the  case  where  the  transferee  takes  the 
paper  as  collateral  security,  and  where  he  makes  an  out  and  out  purchase  of 
it.  In  the  one  case  he  is  to  account  for  a  surplus,  after  satisfying  the  secured 
claim,  to  one  against  whom  the  defense  of  fraud  may  be  maintained;  in  the 
other,  he  holds  entirely  for  his  own  benefit.  Presumably,  the  paper  was  sold 
for  what  it  would  bring  in  the  market,  and  to  allow  a  reduction  in  recovery 
from  its  full  amount  would  be  depriving  the  purchaser  substantially  of  his 
rights  as  a  bona  Jide  holder,  and  permitting,  after  all,  the  defense  of  fraud  to 
be  successfully  pleaded  against  him.  These  considerations  apply  with  par- 
ticular force  to  the  securities  of  public  and  private  corporations,  which  are 
constantly  fluctuating  in  price;  but  there  is  no  reason  why  the  rule  should 
not  have  a  general  application.  A  line  of  cases,  notwithstanding,  limits  the 
amount  of  recovery  to  the  price  paid:  Stalker  v.  McDonald,  6  Hill,  93,  90;  40 
Am.  Dec.  389;  Moore  v.  JRyder,  05  N.  Y.  438;  Youngs  v.  Lee,  18  Barb.  187, 
192;  affirmed  in  12  N.  Y.  551;  Huff  v.  Wagner,  03  Barb.  215;  Hargerw. 
Wilson,  63  Id.  237;  Stevens  v.  Corn  Exchange  Bank,  3  Hun,  147;  Todd  v.  Shel- 
bourne,  8  Id.  510;  Holcomb  v.  Wyckof,  35  N.  J.  L.  35;  10  Am.  Rep.  219;  De 
Kay  V.  Hackensack  Water  Co.,  38  N.  J.  Eq.  158;  and  see  Maitland  v.  Citizens' 
Nat.  Bank,  40  Md.  540,  568;  compare  Park  Bank  v.  Wa'><on,  42  N.  Y.  490; 
1  Am.  Rep.  573;  Cardwell  v.  Hicks,  37  Barb.  458;  Grand  Bapids  etc.  R.  R.  v. 
Sanders,  17  Hun,  552.  Of  course,  if  the  transferee  should  reaeive  notice  of 
the  fraud  before  making  full  payment,  he  should  be  protected  only  to  the 
amount  advanced  previous  to  that  time:  Dresser  v.  Missouri  etc.  R'y,  93 U.  S. 
92;  and  see  Hubbard  v.  Chapin,  2  Allen,  328;  Crandall  v.  Vickery,  45  Barb. 
156. 

It  might  also  be  here  noticed  that  there  is  no  reason,  on  principle,  why  a 
purchaser  of  accommodation  paper  from  an  original  party,  at  a  discount, 
should  not,  independently  perhaps  of  the  usury  laws,  recover  the  full  face 
value  from  the  accommodating  party.  This  would  certainly  seem  to  be  true 
if  he  took  without  notice  of  the  nature  of  the  paper,  and  it  is  difficult  to  see 
why  it  should  not  be  true  even  if  he  took  with  notice,  provided  he  acts  in 
good  faith:  See  Gaul  v.  Willis,  26  Pa.  St.  259;  Moore  v.  Baird,  30  Id.  138; 
Daniels  v.  Wilson,  21  Minn.  530,  532;  but  some  cases  restrict  the  recovery  to 
the  amount  paid:  Brown  v.  Mott,  7  Johns.  361 ;  Holeman  v.  Hobson,  8  Humpli. 
127;  Wiffen  v.  Roberts,  1  Esp.  261;  Jones  v.  Hibbard,  2  Stark.  304;  Simpson 
v.  Clarke,  2  Cromp.  M.  &  R.  342;  as  also  where  the  consideration  for  the 
paper  has  failed:  Petty  v.  Hannum,  2  Humph.  102.  Finally,  it  might  be 
observed  that  the  fact  that  less  than  the  face  value  of  the  paper  was  paid  by 
the  purchaser  might  be  an  important  element  in  determining  the  bonajidea 
of  the  holder:  See  note  to  Bailey  v.  Smith,  84  Am.  Dec.  403. 

Rights  of  Tkan.sferee  from  Bona  Fide  Holder.  —  The  rule  is  '^^ell 
settled  that  one  who  acquires  negotiable  paper  from  a  bona  Jide  holder  for 
value,  and  before  maturity,  acquires  the  title  and  rights  of  such  holder. 
Tbereforo  he  will  not  be  affected  by  the  fact  that  he  had  notice  of  fraud  in 


Dec.  1888.]  Bedell  v.  Herring.  323 

the  origin  of  the  paper:  Cromwell  v.  County  of  Sac,  96  U,  S.  51;  Commis- 
sioners of  Marion  County  v.  Clark,  94  Id.  278;  Simon  v.  Merritt,  33  Iowa,  637; 
Mornyer  v.  Cooper,  35  Id,  257;  Hereth  v.  Merchants'  Nat.  Bank,  34  Ind.  380; 
Riley  v.  Schawacker,  50  Id.  592;  Boijd  v.  McCann,  10  Md.  118;  Merchants' 
Bank  v.  President  etc.  of  Farmers'  Bank,  cited  10  Id.  123;  Bassett  v,  Avery, 
15  Ohio  St.  299;  Bodley  v.  Emporia  Nat.  Bank,  38  Kan.  59;  Butterfield  v. 
yowrt  of  Ontario,  32  Fed.  Rep.  '891;  or  that  he  took  the  paper  after  maturity: 
Gould  V.  ScQee,  5  Duer,  2G0,  268;  Woodman  v.  Churchill,  52  Me.  58;  Hogan 
V.  Moore,  48  Ga.  156,  162;  or  that  he  paid  no  consideration:  Masters  v.  Ihher- 
8on,  8  Com.  B.  100.  The  same  rules  exist  where  the  paper  was  given  on  an 
illegal  consideration:  Chalmers  v.  Lanion,  )  Camp.  383;  Cotton  v.  Sterling,  20 
La.  Ann.  282;  or  where  it  was  given  without  consideration:  Smith  v.  His- 
cock,  14  Me.  449;  Hascall  v.  Whitmore,  19  Id.  102;  Peabody  v.  Rees,  18  Iowa, 
571;  Howell  v.  Crane,  12  La.  Ann.  12G;  Watson  v.  Flanagan,  14  Tex.  354; 
Bank  of  Sonoma  V.  Gove,  63  Cal.  355.  "The  rule  has  been  too  long  settled 
to  be  questioned  now, "  says  Field,  J. ,  in  Cromwell  v.  County  of  Sac,  supra, 
"  that  whenever  negotiable  paper  has  passed  into  the  hands  of  a  i)arty  un- 
affected by  previous  infirmities,  its  character  as  an  available  security  is  es- 
tablished, and  its  holder  can  transfer  it  to  others  with  the  like  immunity. 
His  own  title  and  right  would  be  impaired  if  any  restrictions  were  placed 
upon  his  power  of  disposition."  Again,  it  is  well  said  in  Bassett  v.  Avery, 
supra,  that  "if  a  jiarty  holds  a  negotiable  instrument  discharged  of  defenses 
which  may  have  existed  between  the  antecedent  parties,  no  reason  is  i)er- 
ceived  why  his  right  of  sale  should  be  any  more  restricted  than  his  right  to 
collect.  The  liability  of  the  maker  is  then  fixed.  It  is  not  increased  by  a 
subsequent  sale  or  gift  of  the  note  to  another;  and  it  would  be  inconsistent 
that  the  law  should  recognize  a  perfect  title  in  a  party  and  yet  limit  his 
power  of  disposition  in  the  manner  claimed." 

Burden  of  Proof  as  to  Bona  Fide  Ownership.  —  It  is  a  well-estab- 
lished proposition  that  the  mere  possession  of  a  negotiable  instrument  by  the 
indorsee,  or  by  the  transferee  where  no  indorsement  is  necessary,  imports 
prima  facie  that  he  is  the  lawful  owner,  3.nd  that  he  acquired  it  before  ma- 
turity, bona  fide,  for  value,  in  the  usual  course  of  business,  and  without 
notice  of  any  circumstance  impeaching  its  validity:  Note  to  Bailey  v.  Smith, 
84  Am.  Dec.  403;  Murray  v.  Lardner,  2  Wall.  110;  Carpenter  v.  Longan,  16 
Id.  271;  Commissioners  of  Marion  County  v.  Clark,  94  U.  S.  278,  285;  Collins 
V.  Gilbert,  94  Id.  753;  Brown  v.  Spoford,  95  Id.  474,  478;  In  re  Tallassee  Mfg. 
Co.,  64  Ala.  593;  McOanii  v.  Lewis,  9  Cal.  246;  Fuller  v.  llutchings,  10  Id. 
523;  70  Am.  Dec.  746;  Sperry  v.  Spaulding,  45  Cal.  544;  Matthews  v.  Poy- 
ihress,  4  Ga.  287,  305;  Merchants'  etc.  Nat.  Bank  v.  Trustees  of  Masotiic  Hall, 
62  Id.  271,  283;  Pettis  v.  Westlake,  3  Scam.  535;  Mabley  v.  Ryan,  14  111.  51; 
Woodworthv.  Huntoon,  40  Id.  131;  Depuy  v.  Schuyler,  45  Id.  306;  Palmer  v. 
Nassau  Bank,  78  Id.  380;  Hall  v.  Allen,  37  Ind.  541,  542;  Baldwin  v.  Fagan, 
83  Id.  447;  Wilkinson  v.  Sargent,  9  Iowa,  521;  Tnistees  of  Iowa  College  v. 
Hill,  12  Id.  462;  Lathrop  v.  Donaldson,  22  Id.  234;  Union  Nat.  Bank  v. 
Barber,  5G  Id.  559;  Rahm  v.  King  Wrought-iron  Bridge  Manufactory,  16  Kan. 
530;  Eaton  v.  Harlan,  20  Id.  452;  Taylor  v.  Bowles,  28  La.  Ann.  294,  295; 
Baxter  v.  Elli.^,  57  Me.  178;  Totten  v.  Buey,  57  Md.  446;  Conley  v.  Winsor, 
41  Mich.  253;  Cummings  v.  Thompson,  18  Minn.  246;  Craig  v.  City  of  Vicks- 
burg,  31  Miss.  216;  Emanuel  v.  White,  34  Id.  56;  69  Am.  Dec.  385;  Winstead 
V.  Davk,  40  Miss.  785;  Harrison  v.  Pike,  48  Id.  46;  Ilorton  v.  Bayne,  52  Mo. 
531;  Corby  v.  Butler,  55  Id.  398;  Johnson  v.  McMuri-y,  72  Id.  278;  Duncan 
r.  Gilbert,  29  N.  J.  L.  621;  Conroy  v.  Warren,  3  Johns.  Cas.  259;  2  Am.  Dec 


324  Bedell  v.  Herring.  [CaL 

156;  Case  v.  Mechanics'  Banking  Ass'n,  4  N.  Y.  166;  First  Nat.  Bank  v. 
Green,  43  Id.  298;  Boss  v.  Bedell,  5  Duer,  462,  467;  French  v.  Barney,  1  Ired. 
219;  Pugh  v.  Grant,  86  N.  C.  39;  Fredwell  v.  Blount,  86  Id.  33;  Daws  v. 
Bartlett,  12  Ohio  St.  534;  80  Am.  Dec.  375;  Knight  v.  Pugh,  4  Watts  &  S. 
445;  39  Am.  Dec.  99;  Brown  v.  ^ilree^,  6  Watts  &  S.  221;  Snyder  v.  i?j7€y,  6 
Pa.  St.  164;  47  Am.  Dec.  452;  Atlas  Bank  v.  Doyle,  9  R.  I.  76;  98  Am.  Dec. 
S68;  Jones  v.  Westcott,  2  Brev.  166;  3  Am.  Dec.  704;  Blum  v.  Loggins,  53 
Tex.  121;  Duersons  Adm'r  v.  Alscyp,  27  Gratt.  229,  248;  Middleton  v.  Barned, 
4  Ex.  241. 

Nor  is  this  presumption  overcome  by  evidence  that  the  paper  was  executed 
without  consideration  between  the  original  parties,  or  that  the  consideration 
has  failed:  Ellicott  v.  Martin,  6  Md.  509;  61  Am.  Dec.  327;  Hinkley  v.  Fourth 
National  Bank,  77  Ind.  475;  Boss  v.  Bedell,  5  Duer,  462,  467;  Alhrecht  v. 
Strimpler,  7  Pa.  St.  476;  Hutchinson  v.  Boggs,  28  Id.  294;  Gray's  Adm'r  v. 
Bank  of  Kentucky,  29  Id.  365,  367;  Sloan  v.  Union  Banking  Co.,  67  Id.  470; 
Dingman  v.  Amsink,  11  Id.  114;  Wilson  v.  Lazier,  11  Gratt.  477;  Whittaker  v. 
Edmunds,  1  Moody  &  R.  366;  Batley  v.  Catterall,  1  Id.  379;  Jacob  v.  Hungate, 
1  Id.  445;  Lacey  v.  Forrester,  2  Cromp.  M.  &  R.  59;  jli«7&  v.  Barber,  1  Mees, 
&  W.  425;  /'ite/i  V.  Jowe^,  5  El.  &  B.  238;  but  see  Heath  v.  Sansom,  2  Barn. 
&  Adol.  291;  Simpson  v.  C/ar^-e,  2  Cromp.  M.  &  R,  342;  nor  by  the  fact  that 
the  maker  of  a  note  paid  the  amount  thereof  to  the  original  payee,  without 
notice  that  it  had  been  transferred:  Emanuel  v.  White,  34  Miss.  56;  69  Am. 
Dec.  385.  The  possession  of  a  negotiable  instrument,  however,  only  author- 
izes a  presumption  of  such  rights  and  obligations  of  the  several  parties  as 
are  indicated  by  the  paper  itself:  Central  Bank  v.  Hammett,  50  N.  Y.  159.  It 
is  held  in  a  code  state,  where  actions  are  to  be  brought  in  the  name  of  the 
real  party  in  interest,  that  the  possession  of  an  unindorsed  promissory  note, 
not  payable  to  bearer,  also  raises  a  presumption  that  the  person  producing  it 
on  the  trial  was  the  real  and  rightful  owner,  and  entitled  to  the  money  due 
from  the  maker:  Jackson  v.  Love,  82  N.  C.  405;  contra,  Dorn  v.  Parsons,  5i5 
Mo.  GOl;  and  see  Gibson  v.  Miller,  29  Mich.  355. 

While  the  foregoing  rule  is  well  established,  it  is  equally  well  settled  that 
if  the  maker,  acceptor,  or  other  party  bound  by  the  original  consideration  of 
negotiable  paper  proves  that  there  was  fraud  in  the  inception  of  the  instru- 
ment, or  circumstances  raising  a  strong  suspicion  of  fraud,  the  general  pre- 
sumption in  favor  of  the  holder  is  then  overcome,  and  he  is  bound  to  show 
that  he  acquired  the  paper  bona  Jide,  for  value,  before  maturity,  in  the 
usual  course  of  business,  and  under  circumstances  creating  no  presumption 
that  he  knew  of  the  fraud:  Smith  v.  Sac  County,  11  Wall.  139;  Ccrni- 
viifsioners  of  Mai-ion  County  v.  Clark,  94  U.  S.  278,  285;  Collins  v.  Gil- 
bert, 94  Id.  753,  761;  McClintick  v.  Cummins,  2  McLean,  98;  Wallace  v. 
Branch  Bank  at  Mobile,  1  Ala.  565;  Thompson  v.  Armstrong,  7  Id.  256; 
Boss  V.  Drinkard's  Adnir,  35  Id.  434;  Oilman  v.  New  Orleans  etc.  R.  R., 
72  Id.  566;  Sperry  v.  Spauhling,  45  Cal.  544;  Matthews  v.  Poythress,  4 
Ga.  287,  305;  Merc/iants'  etc.  National  Bank  v.  Trustees  of  Masonic  Hall, 
62  Id.  271,  283;  Harbison  v.  Bank  of  Indiana,  28  Ind.  133;  92  Am.  Dec. 
308;  Zook  v.  Simonson,  72  Ind.  83;  Baldwin  v.  Fagan,  83  Id.  447;  Mitchell  v. 
Tomlinson,  91  Id.  167;  Blair  v.  Buser,  1  Wils.  (Ind.)  333;  Lane  v.  Krekle,  22 
Iowa,  399;  Woodioard  v.  Rodgers,  31  Id.  342;  Rock  Island  National  Bank  v. 
Nelson,  41  Id.  563;  Bank  of  Monroe  v.  Anderson  Bros.  Min.  etc.  Co.,  65  Id. 
692;  Morgan  v.  Yarborough,  13  La.  74;  33  Am.  Dec.  553;  Baxter  v.  Ellis,  57 
Me.  178;  Roberts  v.  Lane,  64  Id.  108;  18  Am.  Rep.  242;  Kellogg  v.  Curtii,  69 
Me.  212;  31  Am.  Rep.  273;  Ellicott  v.  Martin,  6  Md.  509;  61  Am.  Dec.  327; 


Dec.  1888.]  Bedell  v.  Herring.  325 

Totten  V.  Buey,  57  Md.  446;  Crompton  v.  Perkins,  65  Id.  22;  Bissell  v.  Mor- 
gan, 11  Cush.  198;  Tucker  v.  Morrill,  1  Allen,  528;  Smith  v.  Livinfjston,  111 
Mass.  342;  Carrier  v.  Cameron,  31  Mich.  373;  18  Am.  Rep.  192;  Wrhjht  v. 
Inoin,  33  Mich.  32;  Conley  v.  fFiMsor,  41  Id.  253;  Cummings  v.  Thompson,  18 
Miun.  246;  Horton  v.  Bayne,  52  Mo.  531;  Hamilton  v.  Marks,  63  Id.  167; 
Johnson  v.  McMurry,  72  Id.  278;  Perkins  v.  P;om<,  47  N.  H.  387;  93  Am. 
Dec.  449;  Duncan  v.  G«fte?-<,  29  N.  J.  L.  521;  Woodhull  v.  Holmes,  10 
Johns.  231;  Fa^eW  v.  Pariw,  6  Wend.  615;  irar(Ze«  v.  //oz/>e?Z,  9  Id.  170; 
Ca«e  V.  Mechanics'  Banking  Ass'n,  4  N.  Y.  166;  Farmers'  etc.  .N'at.  Bank  v. 
Noxon,  45  N.  Y.  762;  Ross  v.  Bedell,  5  Duer,  462,  467;  Holme  v.  Karsper,  5 
Binn.  469;  Bdtzhoover  v.  Blackstock,  3  Watts,  20,  26;  27  Am.  Dec.  330;  ^Z- 
fcrecA^  V.  Strimpler,  7  Pa.  St.  476,  477;  Hutchinson  v.  Boggs,  28  Id.  294;  Ch-ay'a 
Adm'rv.  Bank  of  Kentucky,  29  Id.  365,  367;  Albictzv.  Mellon,  37  Id.  367; 
Maples  V.  Broione,  48  Id.  458;  Dingmanv.  Amsink,  77  Id.  114;  Pnghv.  Orant, 
86  N.  C.  39;  Z>am  v.  Bartlett,  12  Ohio  St.  534;  80  Am.  Dec.  375;  KnigU  v. 
Pugh,  4  Watts  &  S.  445;  39  Am.  Dec.  99;  Brown  v.  Street,  6  Watts  &  S. 
221;  Snyder  v.  Biley,  6  Pa.  St.  164;  47  Am.  Dec.  452;  Blum  v.  Loggins,  53 
Tex.  121;  Vathir  v.  .^ane,  6  Gratt.  246;  Wilson  v.  Xaz^Vr,  11  Id.  477;  Whit- 
taker  V.  Edmunds,  1  Moody  &  R.  366;  ifi^/s  v.  Barber,  1  Mees.  &  W.  425;  iSmi^A 
V.  Baine,  16  Q.  B.  244;  Haney  v.  Towers,  6  Ex.  656;  Berry  v.  Alderman^ 
14  Com.  B.  95;  Mather  v.  XorfZ  Maidstone,  1  Com.  B.,  N.  S.,  273;  //aZi  v. 
Featherstone,  3  Hurl.  &  N.  284;  compare  Terry  v.  Taylor,  04  Iowa,  35. 

The  reason  of  this  rule  is  the  presumption  that  the  guilty  party  trans- 
ferred the  paper  merely  that  he  might  recover  on  it  in  the  name  of  a  third 
person.  And  this  being  the  reason  of  the  rule,  it  would  seem  to  be  plain 
that  the  fraud  to  cast  the  onus  on  the  holder  need  not  necessarily  have  been 
in  procuring  the  execution  of  the  paper,  or  in  putting  it  in  circulation,  but 
that  it  might  have  been  a  fraud  subsequently  committed  in  obtaining  posses- 
sion of  tlie  i)aper  from  the  defendant,  if  he  is  sought  to  be  held  liable  thereon, 
or  from  the  plaintiff,  if  he  is  seeking  to  assert  his  title  to  the  paper,  as  the 
case  might  be:  See  Fifth  Ward  Sav.  Bank  v.  First  Nat.  Bank,  48  N.  J.  L. 
613;  see,  however,  Sloan  v.  Union  Banking  Co.,  67  Pa.  St.  470;  but  it  would 
seem  to  be  equally  true,  in  the  language  of  Chief  Justice  Dixon  in  Kinney  v. 
Kruse,  28  Wis.  183,  that  "the  fraudulent  putting  in  circulation  of  a  nego- 
tiable instrument,  which  operates  to  change  the  burden  of  proof,  and  call 
upon  the  plaintiff  to  prove  his  title  as  a  bona  fide  holder,  is  where  this  is  done 
fraudulently  as  to  the  defendant  or  maker,  and  not  where  it  is  so  done  as 
to  the  payee  or  some  intermediate  holder  or  i^arty  to  the  paper  ";  but  com- 
pare President  etc.  of  Fulton  Bank  v.  President  etc.  of  Plioenix  Bank,  1  Hall, 
662;  Hart  v.  Potter,  4  Duer,  458. 

It  makes  no  difference,  in  the  application  of  the  rule  requiring  the  holder 
to  make  this  showing,  what  the  form  of  the  transfer  to  him  may  have  been; 
that  is,  whether  the  paper  was  specially  indorsed,  or  whether  it  was  indorsed 
in  blank:  Morgan  v.  Yarborougli,  13  La.  74;  33  Am.  Dec.  553.  The  rule, 
however,  is  a  rule  of  evidence,  and  not  of  pleading;  and  it  is,  notwithstand- 
ing, necessary  for  one  who  relies  upon  the  element  of  fraud  to  make  the  ap- 
propriate allegations  showing  that  the  holder  is  not  a  bona  fide  holder,  or  that 
he  gave  no  value,  or  took  after  maturity,  or  with  notice:  See  Clapp  v.  County 
of  Cedar,  5  Iowa,  15;  68  Am.  Dec.  678;  Lane  v.  Krekle,  22  Iowa,  399.  In  ac- 
cordance with  the  proposition  heretofore  considered,  it  is  sufficient  for  the 
holder  to  show  either  "  that  he  himself,  or  any  prior  holder  whose  rights  he 
has,  came  by  the  note  fairly,  for  value,  before  maturity,  witliout  knowledge 
of  the  fraud,  in  the  due  course  of  business,  unattended  with  any  circum- 


326  Bedell  v.  Herring.  [Cal. 

stances  justly  calculated  to  excite  suspicion";  for  "if  any  intermediate 
holder  between  the  plaintifi'  and  defendant  took  the  note  under  such  circum- 
stances as  would  entitle  him  to  recover  against  the  defendant,  the  plaintiflF 
will  have  the  same  right,  even  though  he  may  have  purchased  when  the  note 
was  overdue,  or  with  a  knowledge  of  its  infirmity  between  the  original  par- 
ties": Roberts  v.  Lane,  64  Me.  lOS;  18  Am.  Rep.  242. 

It  might  be  here  noticed  that  the  holder  of  a  negotiable  instrument  is  not 
only  required  to  show  that  he  took  the  paper  bona  Jide,  for  value,  before  ma- 
turity, in  the  usual  course  of  business,  and  under  circumstances  creating  no 
presumption  that  he  knew  of  the  infirmity,  where  fraud  in  executing,  obtain- 
ing, or  circulating  the  paper  is  set  up  against  him,  but  he  must  make  a  like 
showing  when  there  is  evidence  that  the  instrument  was  given  upon  an  ille- 
gal consideration:  Sistermans  v.  Field,  9  Gray,  331;  Holden  v.  Cosgrave,  12  Id. 
216;  Smith  v.  Edgeworth,  3  Allen,  233;  Emerson  v.  Burns,  114  Mass.  348,  349; 
Paton  V.  Coit,  5  Mich.  505;  72  Am.  Dec.  58;  Swell  v.  Hooper,  62  Me.  54;  Bax- 
ter V.  Ellis,  57  Id.  178;  ElUcottv.  Martin,  6  Md.  509;  61  Am.  Dec.  327;  Horton 
v.  Bayne,  52  Mo.  531;  Garland  v.  Lane,  46  N.  H.  245;  Whittaker  v.  Edmunds, 

1  Moody  &  R.  366;  Milk  v.  Barber,  1  Mees.  &  W.  425;   Edmonds  v.  O roves, 

2  Id.  642;  Bailey  v.- Bidwell,  13  Id.  73;  Bingham  v.  Stanley,  2  Q.  B.  117;  Fitch 
V.  Jones,  5  El.  &  B.  238;  also  in  case  of  duress:  Clark  v.  Pease,  41  N.  H.  414; 
First  Nat.  Bank  v.  Oreen,  43  N.  Y.  298;  and  see  Beltzhoover  v.  Blackstock,  3 
Watts,  20,  26;  27  Am.  Dec.  330;  Knight  v.  Pugh,  4  Watts  &  S.  445;  39  Am. 
Dec.  99;  Albrecht  v.  Strimpler,  7  Pa.  St.  476,  477;  Gray's  Adm'r  v.  Bank  of 
Kentucky,  29  Id.  365,  367;  Cummings  v.  Thompson,  18  Minn.  246;  and  where 
the  paper  is  shown  to  have  been  lost  by  or  stolen  from  the  true  owner: , 
Devlin  v.  Clark,  31  Mo.  22;  and  see  Beltzhoover  v.  Blackstock,  Knight  v.  Pugh, 
Albrecht  v.  Strimpler,  Gray  s  Adm'r  v.  Bank  of  Kentucky,  Cummings  v.  Thomp- 
son, supra. 

It  has  been  intimated  by  some  authorities  that  under  any  of  the  foregoing 
exceptional  circumstances  the  holder  is  also  bound  to  prove  affirmatively 
his  want  of  notice  of  the  infirmity:  Munroe  v.  Cooper,  5  Pick.  412;  Aldrich 
V.  Warren,  16  Me.  465;  Perrin  v.  Noyes,  39  Id.  384;  63  Am.  Dec.  633;  Cottle 
V.  Cleaves,  70  Me.  256;  Williams  v.  Huntington,  68  Md.  590;  6  Am.  St.  Rep. 
477;  Eichelberger  v.  Old  Nat.  Bank,  103  Ind.  401;  Nickerson  v.  Ruger,  76 
N,  Y.  279;  McKesson  v.  Stanberry,  3  Ohio  St.  156;  but  this  is  requiring  him 
to  prove  a  negative;  and  while  it  must  not  appear  from  the  showing  he 
makes  that  he  was  chargeable  with  notice,  yet  the  fact  that  he  had  actual 
notice  must,  according  to  the  better  opinion,  be  proved  by  the  opposite 
party:  Hapgood  v.  Needham.,  59  Me.  442;  Swett  v.  Hooper,  62  Id.  54;  Davis 
V.  Bartlett,  12  Ohio  St.  534;  80  Am.  Dec.  375;  Paton  v.  Coit,  5  Mich.  505; 
72  Am.  Dec.  58;  Catlin  v.  Hansen,  1  Duer,  309;  Hart  v.  Potter,  4  Id.  458; 
Ross  V.  Bedell,  5  Id.  462,  467;  Kelly  v.  Ford,  4  Iowa,  140;  Lake  v.  Reed,  29 
Id.  258;  4  Am.  Rep.  209;  compare  Union  Nat.  Bank  v.  Barber,  56  Iowa,  559, 
663. 

It  has  been  denied  that  any  presumption  at  all  is  raised  against  the  holder 
of  a  bank  bill  by  a  showing  that  it  was  stolen,  or  fraudulently  put  into  cir- 
culation, such  instruments  passing  from  hand  to  hand  as  money,  and  not 
ordinarily  subject  to  be  identified  by  one  who  receives  or  passes  them: 
Worcester  County  Bank  v.  Dorchester  etc.  Bank,  10  Cush.  488,  490;  57  Am. 
Dec.  120;   Wyer  v.  Dorchester  etc.  Bank,  11  Cush.  51;  59  Am.  Dec.  137. 


AMERICAN  STATE  REPORTS. 

Vol.   XIV,   Pages  732-754. 
HAGERMAN  z-.   BUCHANAN. 

145  New  Jkksex,  Eq.  im.  \ 

Fraudulent  Conveyances, 


732  Hagerman  v.  Buchanan.  [New  Jersey, 

Hagerman  V.  Buchanan. 

[45  New  Jbrsey  Equity,  292.J 

Voluntary  Conveyance,  when  Void  as  to  Subsequent  Creditors.  —  A 
voluntary  conveyance  or  settlement  can  be  attacked  by  a  subsequent 
creditor  only  upon  the  ground  of  the  existence  of  an  actual  intent  in  the 
minds  of  the  parties,  at  the  time  of  the  execution  of  the  conveyance,  to 
thereby  hinder,  delay,  or  defraud  the  creditors  of  the  grantor. 

Voluntary  Conveyance,  Burden  of  Proof.  —  A  subsequent  creditor  who 
seeks  to  attack  and  avoid  a  voluntary  conveyance  made  by  his  debtor 
must  assume  the  burden  of  proving  an  actual  fraudulent  intent  on  the 
part  of  the  grantor  to  defraud  some  creditor. 

Voluntary  Conveyance,  Fraudulent  Intent  from  What  Presumed.  — 
In  an  attack  upon  a  voluntary  conveyance  by  a  subsequent  creditor,  the 
fact  that  there  were  pre-existing  debts  has  always  been  considered 
more  or  less  important  in  determining  the  existence  of  a  fraudulent  in- 
tent. 

VOLUN  TARY    CONVEYANCE,     PRESUMPTION     FROM    GrANTOR's     EmBARKINO    IN 

Hazardous  Business.  —  The  fact  that  the  grantor  enters  into  a  hazard- 
ous business  or  engages  in  a  speculative  enterprise  at  or  soon  after  the 
execution  of  a  voluntary  conveyance  is  strong  evidence  of  a  fraudulent 
intent.  This  intent  will  not  be  inferred,  however,  if  it  appears  that  the 
grantor  earnestly  examined  and  sought  to  inform  himself  regarding  the 
business  into  which  he  entered,  and  was  led  to  believe  that  it  was  en- 
tirely safe. 

Samuel  A.  Patterson  and  Henry  G.  Clayton,  for  the  appel- 
lants. 

Hawkins  and  Durand,  for  the  respondents. 

Reed,  J.  The  complainants  below  furnished  lumber  to  J, 
H.  Hagerman  and  Son  between  the  dates  of  July  24,  1886, 
and  November  29,  1886.  On  March  4,  1887,  a  judgment  was 
recovered  in  the  supreme  court  for  the  sum  of  $958.53,  the 
price  of  said  lumber.  Under  a  fieri  facias  issued  thereon,  a 
certain  house  and  lot  in  Asbury  Park  was  levied  upon.  The 
title  to  this  property  stood  in  the  name  of  Sarah  Hagerman, 
the  wife  of  the  defendant  John  H.  Hagerman.  It  was  con- 
veyed to  her  by  her  husband,  through  an  intermediate  person, 
on  July  17,  1883.  The  bill  in  this  case  was  filed  by  Buchanan 
&  Co.,  the  judgment  creditors,  for  the  purpose  of  having  the 
conveyance  made  by  Hagerman  to  his  wife  declared  void, 
upon  the  ground  that  it  was  made  to  hinder  and  delay  credi- 
tors, and  to  have  the  property  sold,  and  the  proceeds  applied 
to  the  payment  of  their  judgment.  The  court  below  advised 
that  the  case  stood  in  the  same  posture  as  that  of  Demarest  v. 
Terhune,  18  N.  J.  Eq.  532,  and  that  the  rule  adopted  in  that 
case  was  properly  applicable  to   this.     A  decree  was  accord- 


March,  1889.]        Hagerman  v.  Buchanan.  733 

ingly  made  that  the  deed  made  by  Hagerman  to  his  wife 
should  be  regarded  only  as  a  security  for  the  consideration 
actually  paid  by  her. 

It  is  perceived  that  the  debt  of  the  complainant  was  con- 
tracted over  three  years  after  the  conveyance  was  made  which 
is  attacked.  If  the  conveyance  is  to  be  regarded  as  in  a  degree 
voluntary,  the  creditor  has  a  burden  imposed  upon  him  which 
would  not  exist  had  his  debt  antedated  the  deed.  The  char- 
acter of  a  voluntary  conveyance,  when  attacked  by  a  creditor 
having  a  pre-existing  claim,  is  definitely  settled  in  this  court. 
In  the  case  of  Haston  v.  Castner,  81  N.  J.  Eq.  697,  after  an 
elaborate  review  of  the  course  of  judicial  sentiment  in  this 
state,  it  was  decided  that,  in  respect  to  debts  existing  at  the 
date  of  a  voluntary  conveyance,  the  deed  was  void  by  force 
of  the  statute  relating  to  frauds  and  perjuries.  Against  the 
attack  of  a  creditor  belonging  to  this  class,  neither  the  motive 
which  induced  the  deed,  nor  the  solvency  of  the  grantor  at  the 
time  of  its  execution,  nor  any  other  circumstance  which  might 
bear  upon  the  bona  fides  of  the  parties  to  the  conveyance,  is 
important.  Fraud  is  the  legal  conclusion  arising  from  the 
contemporaneous  concurrence  of  the  two  facts,  namely,  a 
voluntary  deed  and  an  existing  debt  due  by  the  grantor. 

In  respect  to  the  attitude  which  subsequent  creditors  bear 
towards  a  voluntary  conveyance,  there  has  not  been,  so  far  as 
I  recall,  a  deliverance  by  this  court.  But  the  sentiment,  both 
judicial  and  professional,  is  hardly  less  doubtful  upon  this  than 
upon  the  former  question.  The  rule  which  has  been  recog- 
nized is,  that  a  voluntary  settlement  can  be  attacked  by  a  sub- 
sequent creditor  only  upon  the  ground  of  the  existence  of  an 
actual  intent  in  the  njind  of  the  parties  at  the  time  of  the  exe- 
cution of  the  conveyance  to  hinder,  delay,  or  defraud  creditors 
by  means  of  the  deed.  In  the  case  of  Ridgway  v.  Underwood, 
4  Wash.  C.  C.  129,  Judge  Washington,  after  stating  that  he 
had  examined  the  numerous  cases  which  related  to  the  opera- 
tion of  the  statute  (13  Elizabeth),  remarked  that,  with  entire 
satisfaction  to  himself,  he  had  reached  the  following  result: 
"A  voluntary  deed  by  a  person  indebted  at  the  time  to  any 
amount  is  fraudulent  and  void  as  to  such  prior  creditors, 
merely  upon  the  ground  that  he  was  so  indebted.  But  as  to 
6uii.>^t(iueni  creditors,  the  deed  is  not  void  for  that  reason,  be- 
cause it  does  not  necessaril}'  or  even  rationally  follow  that  the 
conveyance  was  fraudulently  made  with  intent  to  hinder  or 
delay  creditors  who  became  such  long  after  the  deed  was  made. 


734  Hagerman  v.  Buchanan.         [New  Jersey, 

But  if  the  case  presents  other  circumstances  from  which  fraud 
can  legally  be  inferred,  the  voluntary  conveyance  will  be 
avoided  in  favor  of  a  subsequent  creditor."  This  case  was 
cited  with  approval  by  Chancellor  Green  in  his  opinion  in  the 
case  of  Beerkman  v.  Montgomery^  14  N.  J.  Eq.  106. 

In  the  case  of  Reade  v.  Livingston,  8  Johns.  Ch.  481,  8  Am. 
Dec.  520,  Chancellor  Kent,  after  an  elaborate  view  of  the  au- 
thorities, came  to  the  conclusion,  also,  that,  in  respect  to  pre- 
existing creditors,  a  voluntary  conveyance  was  fraudulent  as 
a  legal  inference,  and  ought  to  be  so  far  as  it  concerned  exist- 
ing debts,  but  that  as  to  subsequent  debts  there  was  no  such 
necessary  legal  presumption,  and  there  must  be  proof  of  fraud 
in  fact.  Indebtedness  existing  at  the  time,  although  not 
amounting  to  insolvency,  must  be  such  as  to  warrant  that 
conclusion.  The  view  of  the  learned  chancellor  was,  that 
while  fraud  would  be  imputed  to  the  voluntary  grantor,  so  far 
as  the  grant  afifected  pre-existing  debts,  yet  that  the  fact  of 
the  existence  of  such  debts,  and  their  relative  amount  in  com- 
parison with  the  property  of  the  grantor  remaining,  were,  as  to 
debts  subsequently  arising,  only  facts  which  were  important 
in  determining  whether  there  was  an  actual  intent,  at  the  time 
of  the  conveyance,  to  hinder  and  delay  creditors.  The  doc- 
trine of  this  case,  so  far  as  it  dealt  with  the  attitude  of  a  vol- 
untary grantor  toward  prior  creditors,  was  adopted  by  this 
court  in  the  case  of  Hasten  v.  Castner,  31  N.  J.  Eq.  697. 

The  opinion  in  the  form.er  case  was  also  noticed  in  the  opin- 
ion in  Hasten  v.  Castner,  supra,  as  one  delivered  by  a  distin- 
guished judge  upon  a  review  of  all  the  decisions  then  extant, 
and  as  one  which  had  largely  shaped  the  jurisprudence  of  this 
country  upon  this  branch  of  equity  jurisprudence.  While  it 
is  true  that  the  court  was  not  dealing  with  the  feature  now 
under  consideration,  yet  the  distinction  between  the  status  of 
the  two  classes  of  creditors  was  a  conspicuous  feature  in  the 
opinion  of  Chancellor  Kent.  It  promulgated  a  doctrine  which 
embraced  within  its  scope  all  creditors.  The  approval  of  the 
opinion  of  Chancellor  Kent  went  far  in  the  direction  of  an  in- 
dorsement of  his  whole  declaration,  which  constitutes  a  single 
and  complete  system  touching  the  doctrine  of  voluntary  set- 
tlements in  respect  to  creditors  of  all  kinds. 

By  reason  of  these  recognitions  of  cases  in  which  the  dis- 
tinction above  mentioned  has  been  formulated,  and  by  reason 
of  the  rational  grounds  upon  which  such  a  distinction  rests,  I 
regard  the  complainant  in  this  case  as  having  the  burden  of 


March,  1889.]        Hagerman  v.  Buchanan.  735 

showing  that,  at  the  time  the  conveyance  was  made,  there 
existed  an  actual  intent  to  hinder  and  delay  creditors.  This 
conclusion  appears  the  more  reasonable  after  an  examination 
of  the  cases  in  the  English  courts  dealing  with  this  subject. 
From  such  an  examination  it  appears  that  while  there  has 
been  considerable  fluctuation  in  judicial  sentiment  in  respect 
to  the  attitude  of  prior  creditors  who  attack  a  voluntary  con- 
veyance, there  is  little  or  none  in  respect  to  the  posture  of 
subsequent  creditors.  As  to  the  latter  of  the  two  classes  of 
creditors,  the  rule  has  been  quite  uniform,  that  an  actual 
fraudulent  intent  to  defraud  some  creditor  must  be  proved. 

In  an  attack  upon  such  a  conveyance  by  a  subsequent  cred- 
itor, it  is  true  that  the  fact  that  there  were  pre-existing  debts 
has  always  been  considered  more  or  less  important  in  deter- 
mining the  existence  of  a  fraudulent  intent.  Different  equity 
judges  have  accorded  to  the  existence  of  such  debts  different 
degrees  of  probative  force,  and  have  raised  from  the  fact  of 
their  existence  cerlft,in  indisputable  presumptions,  but  the  line 
of  adjudications  is  opposed  to  the  notion  that  the  existence  of 
a  prior  debt  of  any  amount  raises  a  conclusive  presumption 
that  a  voluntary  conveyance  is  fraudulent  as  against  the  at- 
tack of  a  subsequent  creditor:  May  on  Fraudulent  Convey- 
ances, 64. 

The  rule  laid  down  by  Chancellor  Kent  and  Judge  Wash- 
ington is  not  only  simple,  but  equitable. 

A  conclusive  presumption  against  a  voluntary  conveyance 
should  be  raised  in  respect  to  those  debts  which  it  may  be  pre- 
sumed were  incurred  upon  the  faith  of  the  ownership  of  the 
property  conveyed. 

It  is  therefore  inequitable  that  the  debtor  should  be  per- 
mitted to  give  away  such  property  at  the  expense  of  a  pre- 
existing creditor,  whether  the  intention  be  good  or  otherwise. 
But  as  to  creditors  who  become  such  without  any  possible  in- 
ducement arising  from  such  ownership,  no  such  conclusive 
{resumption  should  arise.  No  equitable  consideration  re- 
quires it;  and  besides,  if  such  a  rule  be  adopted,  no  settle- 
ment could  be  made  which  would  not  be  at  the  mercy  of  the 
grantor  during  his  lifetime.  The  power  to  incur  debts  would 
be  a  power  to  subject  the  property  to  a  liability  for  tdieir  pay- 
ment at  any  time.  So,  as  already  remarked,  equitable  con- 
siderations, as  well  as  the  weight  of  authority,  are  in  favor  of 
the  rule  that  an  actual  intent  to  defraud,  arising  from  all  the 
circumstances  surrounding  the  transaction,  must  be  proved 


736  Hagerman  v.  Buchanan.  [New  Jersey, 

before  a  voluntary  conveyance  will  be  decreed  void  at  the  suit 
of  a  subsequent  creditor. 

An  observation  seems  appropriate  in  respect  to  the  legal 
terms  which  are  employed  in  dealing  with  these  two  classes  of 
cases.  Void  voluntary  conveyances,  when  spoken  of  in  re- 
spect to  either  class  of  creditors,  are  styled  fraudulent,  but  as 
to  the  former  class  there  is  said  to  be  legal  fraud,  and  as  to 
the  latter  class,  actual  fraud. 

There  is  force  in  the  remark  of  Mr.  Bigelow  that  the  term 
"legal  fraud"  is  a  misnomer.  The  word  "fraud"  implies 
moral  turpitude.  When  a  transaction  is  voided  by  the  statute 
without  respect  to  the  motive  which  induced  it,  but  upon  con- 
giderations  of  policy  only,  it  is  unlawful,  and  not  fraudulent. 
To  style  it  fraudulent,  whether  the  fraud  be  legal  or  otherwise, 
may  fix  an  unmerited  stigma  upon  the  party  to  the  trans- 
action. A  more  just  and  appropriate  appellation  to  apply  to 
conveyances  of  the  former  class  would  be  simply  unlawful, 
while  the  term  "  fraudulent  "  would  still  properly  be  applica- 
ble to  the  latter  class  of  conveyances. 

Tlie  question  of  fact  remains  to  be  considered,  whether 
there  was  an  intention  existing  in  the  mind  of  the  parties  to 
the  present  conveyance  to  hinder  and  delay  creditors,  which 
induced  the  execution  of  the  deed.  In  the  first  place,  the 
facts  proved  show  that  that  conveyance  was  voluntary  only 
in  respect  to  a  slight  proportion  of  the  value  of  the  property 
sold.  The  wife,  at  the  time  of  the  conveyance,  was  a  creditor 
of  her  husband.  According  to  the  testimony,  the  lot  sold  was 
worth  about  two  thousand  dollars.  Mr.  Hagerman  says  the 
house,  outhouses,  barns,  and  fences  cost  two  thousand  five  hun- 
dred dollars.  The  whole  property  was  worth  from  four  thou- 
sand five  hundred  to  five  thousand  dollars. 

The  claims  of  the  wife  against  her  husband  were  the  follow- 
ing: She  had  owned  property  in  Brooklyn  before  she  and  her 
husband  removed  thence  to  Asbury  Park.  In  1876  she  sold 
tins  property,  upon  which  there  was  a  mortgage  for  five  thou- 
sand dollars,  for  the  sum  of  seven  thousand  four  huiKlred  dol- 
lais.  The  balance,  amounting  to  two  thousand  four  hundred 
dolhirs,  she  loaned  to  her  husband.  He  gave  her  a  mortgage 
to  secure  this  loan,  with  the  interest  thereon,  amounting  to- 
gether to  the  sum  of  $2,814.  There  was  upon  this  property, 
upon  which  the  mortgage  was  given,  another  mortgage  of  six 
hundred  dollars,  which  mortgage  she  paid  from  the  proceeds 
of  some  building  and  loan  association  stock  which  she  owned. 


March,  1889. J        Hagerman  v.  Buchanan.  737 

If  interest  be  allowed  her  on  her  mortgage  from  December  6, 
1879,  to  July  17,  1883,  it  would  amount  to  $610  more.  There 
is  nothing  in  the  case  to  show  that  she  should  not  be  entitled 
to  interest,  as  would  any  other  mortgagee. 

It  is  true,  she  lived  in  the  house,  but  nevertheless  it  was  the 
home  of  her  husband,  and  it  was  her  home,  because  it  was  his 
home.  She  cannot  be  regarded  as  a  mortgagee  in  possession. 
The  husband  owned  the  legal  title,  and  was  himself  in  posses- 
sion of  the  property. 

Nor  does  the  fact  that  she  took  in  boarders,  and  received 
compensation  therefor,  change  this  condition  of  affairs.  She 
says  that  she  expended  the  money  so  received  in  the  care  and 
reparation  of  the  property.  But  if  this  be  not  so,  it  would  not 
affect  the  position  of  the  husband  as  the  head  of  the  family  in 
possession;  for  if  she  took  the  proceeds  of  the  boarders,  it  was 
the  proceeds  of  her  own  labor,  which  the  husband  had  the 
right  to  permit  her  to  appropriate:  Peterson  v.  Mulford,  36 
N.  J.  L.  481;  Luse  v.  Jones,  39  Id.  707. 

Indeed,  the  reception  of  boarders  seems  to  have  been  a  mere 
incident  of  the  housekeeping,  and  in  no  way  diminished  the 
value  of  the  use  of  the  property  to  Mr.  Hagerman,  but  prob- 
ably diminished  the  housekeeping  expenses,  which  would 
otherwise  have  fallen  legally  upon  him.  So  I  regard  the 
amount  of  the  indebtedness  of  the  husband  to  the  wife  as 
reaching  to  the  sum  of  four  thousand  dollars. 

I  place  the  value  of  the  house  from  four  thousand  five  hun- 
dred to  five  thousand  dollars,  and  I  doubt  if  it  would  have 
brought  more  than  the  latter  sum  in  the  market.  So  the  dif- 
ference between  the  wife's  claim  and  the  value  of  the  property 
which  she  received  is  not  great. 

But  there  is  another  fact  which  still  further  reduces  the 
amount  of  this  difference:  the  wife  had  her  inchoate  right  of 
dower  in  the  property,  the  value  of  which,  of  course,  could  not 
be  applied  to  the  payment  of  her  husband's  creditors.  The 
fact  of  this  encumbrance  upon  the  property  in  some  degree 
diminishes  its  salable  value.  So  I  think  it  appears  true,  as  I 
have  already  remarked,  that  the  voluntary  element  in  this 
transaction  is  small,  relative  to  the  entire  value  of  the  prop- 
erty, and  this  is  a  material  feature  in  solving  the  question 
whether  the  conveyance  was  fraudulent. 

The  point  strongly  insisted  upon  by  the  counsel  for  the 
complainants  was,  that  it  appeared  that  on  the  day  the  deed 
was  given   Mr.  Hagerman  entered   into  a  partnership.      He 

Am.  St.  Kbp..  Vol.  XIV.  — 47 


738  Hagerman  v.  Buchanan.         [New  Jersey, 

became  a  member  of  the  firm  of  J.  C.  Farr  &  Co.  He  gave  for 
his  interest  in  the  firm  two  promissory  notes  of  seven  thousand 
five  hundred  dollars  each,  both  amounting  to  fifteen  thousand 
dollars.  It  appears  that  this  firm  became  insolvent  in  three 
or  four  months  thereafter.  It  is  argued  that  this  shows  that 
Mr.  Hagerman  was  entering  upon  a  hazardous  enterprise,  and 
that  this  deed  was  made  to  place  his  property  beyond  the 
reach  of  future  creditors. 

Now,  it  is  true  that  the  fact  that  a  person  has  entered  into  a 
hazardous  business  or  engaged  in  a  speculative  enterprise  at 
or  soon  after  the  execution  of  a  voluntary  conveyance  is 
strong  evidence  of  a  fraudulent  intent.  It  evinces  a  desire  to 
reap  the  benefit  for  himself  if  successfulj  and  escape  responsi- 
bility if  unlucky.  Nevertheless,  each  case  must  stand  upon 
its  own  footing,  and  no  legal  rule  can  be  adopted  as  to  the 
quantity  of  proof  or  the  particular  complexity  of  facts  which 
will  annul  a  conveyance  upon  this  ground.  The  character  of 
the  business,  the  degree  of  pecuniary  hazard  incurred,  the 
amount  of  property  remaining  in  the  grantor,  the  value  of  the 
property  conveyed,  the  acts  and  words  occurring  coincidently 
with  the  transaction,  are  to  be  viewed  together  in  solving  the 
question  of  fraudulent  intent. 

Now,  viewing  these  transactions  together,  I  do  not  think 
such  an  intent  has  been  proved.  I  think  that  Mr.  Hagerman 
inquired,  as  he  says  he  did,  particularly  about  the  business  of 
Farr  &  Co.,  and  that  he  tried  to  be  careful  not  to  involve  him- 
self in  a  precarious  business. 

I  think  it  was  only  when  he  was  convinced  by  the  per- 
suasions of  Mr.  Farr  that  it  was  entirely  safe,  and  that  the 
amount  of  his  notes  would  be  paid  out  of  the  proceeds,  that  he 
entered  into  the  business.  He  says  it  was  understood  that  the 
old  firm  had  assets  to  the  amount  of  forty  thousand  dollars, 
and  that  the  liabilities  which  the  new  firm  assumed  were  only 
fifteen  thousand  or  twenty  thousand  dollars.  Although  in  fact 
the  business  was  risky,  as  the  result  disclosed,  as  Hagerman 
understood  it  at  the  time  he  become  connected  with  it,  it  did 
not  so  present  itself.  He  undoubtedly  wished  to  place  his 
wife  in  a  position  of  security,  as  she  had  frequently  requested. 
But  this  is  the  object  of  every  settlement.  She  had  no  security 
for  the  six  hundred  dollars.  Taking  into  consideration  the 
fact  that  he  says  that  he  had  eighteen  hundred  dollars  in 
bank,  and  a  lot  worth  six  hundred  dollars,  that  the  voluntary 
elements  in  the  conveyance  are  so  small,  and  that  he  seems 


March,  1889.]        Haqerman  v.  Buchanan.  739 

to  have  been  led  to  believe  that  the  business  he  afterwards 
engaged  in  was  entirely  safe,  I  do  not  think  it  proved  that  the 
conveyance  to  his  wife  was  induced  by  a  fraudulent  intent  to 
hinder  and  delay  creditors. 

The  decree  below  should  be  reversed* 


Voluntary  Conveyances.  —  1.  What  Transfers  are  Voluntary.  —  A  volun- 
tary conveyance  has  been  described  as  one  made  without  any  consideration 
whatever:  Jackson  v.  Peck,  4  Wend.  300;  Sho?Uz  v.  Brown,  27  Pa.  St.  123; 
Seward  v.  Jackson,  8  Cow.  40G.  The  fact  that  a  transfer  was  made  upon  an 
inadequate  consideration  is  doubtless  one  which  may  be,  and  ought  to  be,  con- 
sidered by  a  court  or  jury  in  determining  whether  or  not  the  transfer  was 
made  with  intent  to  defraud  the  creditors  of  the  grantor,  and  if,  in  connec- 
tion with  other  circumstances,  it  satisfies  them  of  such  fraudulent  intent,  the 
transfer  should  be  disregarded:    Washband  v.    Washband,  27  Conn.  424. 

The  expression  frequently  to  be  found  in  the  opinions  of  the  courts  and 
elsewhere,  that  a  voluntary  conveyance  is  one  entirely  without  consideration, 
is,  in  our  judgment,  inaccurate  and  misleading.  It  cannot  be  that  a  nominal 
consideration,  one  which  neither  the  grantee  nor  the  grantor  could  have  re- 
garded as  other  than  grossly  disproportionate  to  the  value  of  the  property, 
is  sufficient  to  give  the  transfer  the  same  immunity  from  the  attacks  of  cred- 
itors as  one  which  is  a  fair  equivalent  for  the  property  transferred.  The 
consideration  must  be  substantial,  and  thougli  it  is  more  than  nominal,  it 
may  well  be  so  inadequate  as  to  convince  any  reasonable,  unprejudiced  per- 
son that  the  transfer  was  voluntary,  either  in  whole  or  in  part.  Speaking  of 
such  a  transfer,  the  court  of  appeals  of  the  state  of  Maryland  very  justly 
said:  "But  it  has  been  strongly  urged  in  argument  that  this  fact  was  an  im- 
material circumstance,  and  that  the  deed,  if  it  rests  upon  a  moneyed  consid- 
eration, must  be  supported,  even  though  that  consideration  bears  no  adequate 
relation  to  the  real  value  of  the  property.  This  proposition,  as  a  universal 
rule,  is  not  correct,  so  far;  at  least,  as  third  persons  are  concerned.  It  is  true 
that  it  gives  to  the  deed,  in  contemplation  of  law,  the  character  of  a  bargain 
and  sale,  and  subjects  it  to  all  the  rules  of  interpretation  and  the  like  which 
govern  such  instruments.  Nevertheless  a  deed,  valid  in  all  respects  as  be- 
tween the  parties,  may  be  assailed  in  cliancery  by  creditors  solely  upon  the 
ground  of  inadequacy  of  consideration;  as,  for  example,  where  land  is  sold 
and  conveyed  at  private  sale,  as  this  was,  and  a  consideration  in  money  is  re- 
ceived therefor  palpably  leas  than  its  real  value  or  what  it  would  bring  at  a 
public  sale  in  the  market.  In  such  circumstances  a  court  of  equity  will  re- 
gard the  transaction  as  evidence  either  of  fraud  or  of  a  design  on  the  part  of 
the  grantor  to  make  a  gift  to  tlie  grantee  of  the  difference  between  the  price 
paid  and  the  actual  value  of  the  property;  and  if  the  latter,  the  deed,  to  the 
extent  of  ttie  difference,  will  be  regarded  as  voluntary,  or  resting  upon  the 
consideration  of  natural  love  and  affection.  If  this  were  not  so,  fraud  could 
be  perpetrated  upon  creditors  with  impunity,  by  converting  the  deeds  based 
in  fact  upon  the  consideration  of  love  and  affection  into  those  based  upon  a 
moneyed  consideration,  by  merely  agreeing  to  receive  a  trivial  price  in 
money  for  the  property  sold":    Wortluu<jton  v.  Bullitt,  G  Md.  198. 

There  are  some  circumstances  in  which  transfers  will  not  be  adjuH^ed  vol- 
untary, though  the  consideration  can  hardly  be  considered  of  any  value,  as 
where  a  transfer  is  in  payment  uf  an  obligation  which  could  not  have  beea 
eulorced,  and  which  the  grantor  might  have  omitted  to  discharge  bad  ha 


740  Hagerman  v.  Buchanan.  [New  Jersey, 

thought  proper.  We  think  it  a  mistaken  view  of  the  proper  relation  of  a 
debtor  to  hia  creditors  to  leave  him  at  liberty,  as  self-iuterest  or  caprice 
may  suggest,  to  withdraw  his  property  from  his  creditors  having  enforce- 
able claims,  and  devote  it  to  the  discharge  of  claims  which  are  supported 
merely  by  a  moral  obligation,  and  which  probably  would  never  have  been 
discharged  had  not  approaching  insolvency  warned  the  debtor  that  he 
could  not  hope  to  keep  the  property  as  his  own.  These  moral  obligations 
constitute  a  perpetual  menace  to  creditors  having  claims  enforceable  by  ac- 
tion, while  they  confer  no  rights  on  their  holders  except  such  as  the  caprice 
or  self-interest  of  the  debtor  may  from  time  to  time  conceHe.  He  can,  of 
course,  make  any  terms  or  come  to  any  understanding  he  choose*  with  the 
holders  of  them.  As  these  holders  have  no  means  of  coercing  payment,  they 
will  grant  him  any  concession  he  may  suggest.  He  may  go  on  and  do  busi- 
ness and  obtain  credit,  because  his  assets  are  far  in  excess  of  all  liabilities 
which  can  be  enforced  against  him,  and  having  made  purchases  on  credit,  he 
may  turn  the  proceeds  of  the  purchases  over  to  the  payment  of  claims,  from 
which  he  had  long  been  practically  released,  through  the  operation  of  the 
statute  of  limitation,  or  of  a  discharge  in  bankruptcy  or  insolvency  proceed- 
ings. The  theory  of  the  adjudications  upon  this  subject  is,  that,  notwith- 
standing the  operation  of  the  statute  or  of  the  discharge,  the  debt  yet  remains, 
and  that  the  debtor  has  merely  obtained  the  privilege  of  pleading  the  dis- 
charge or  statute,  as  he  may  deem  proper;  that  this  is  a  privilege  which  hi» 
creditors  have  no  right  and  no  power  to  compel  him  to  exercise;  and  that  he 
may,  therefore,  pay  the  debt  either  in  money  or  by  the  transfer  of  the  whole 
or  any  part  of  his  property;  and  unless  the  transaction  is  otherwise  objec- 
tionable, they  have  no  cause  of  complaint:  Wilson  v.  Bussell,  13  Md.  494;  71 
Am.  Dec.  645;  Keeii  v.  Klechier,  42  Pa.  St.  529;  Updike  v.  Titus,  13  N.  J.  Eq. 
151;  Shearon  v.  Henderson,  38  Tex.  245;  French  v.  Motley,  63  Me.  326;  Brook- 
ville  national  Bank  v.  Trumble,  76  Ind.  195. 

So  if  the  transfer  is  made  to  discharge  an  obligation  which  the  debtor 
might  have  escaped  by  pleading  the  statute  of  frauds,  it  must  be  deemed  sup- 
ported by  a  valuable  consideration.  "The  cases  seem  to  establish  the  rule 
that  a  conveyance  or  security  given  for  a  debt  or  in  fulfillment  of  a  contract 
which  could  have  been  recovered  or  enforced  in  an  action  were  it  not  for 
some  legal  maxim  or  statutory  provision  which  prevents  such  recovery  by 
reason  of  the  contract  not  being  in  the  form  prescribed  by  the  statute,  —  in 
other  words,  not  being  evidenced  in  the  manner  prescribed  by  law,  —  is  not 
a  voluntary  conveyance  or  security,  and  therefore  fraudulent  and  void  as  to 
creditors,  if  the  evidence  shows  that  there  was  a  sufficient  consideration  for 
the  debt  or  promise  to  support  the  same  were  it  not  for  the  statutory  require- 
ments": First  National  Bank  v.  Bertsch,  52  Wis.  438;  Ooffv.  Rogers,  71  Ind. 
459;  Lefferson  v.  Dallas,  20  Ohio  St.  68;  Cresswell  v.  McCai<j,  11  Neb.  222; 
Livermore  v.  Northrup,  44  N.  Y.  107;  Stowell  v.  Hazlett,  57  Id.  637. 

It  is,  perhaps,  not  correct  to  say  that  a  mere  moral  obligation  is  a  suffi- 
ciently valuable  consideration  to  support  a  transfer  and  to  relieve  it  from  tlie 
imputation  of  being  voluntary.  The  obligation  must  be  one  which  is  legal 
and  enforceable  but  for  some  statutory  defense  which  the  debtor  may  elect 
to  waive,  as  where,  to  avoid  liability,  he  must  plead  or  otherwise  urge  the 
statute  of  frauds  or  of  limitations,  or  a  discharge  under  a  statute  relating  to 
bankrupts  or  insolvents.  Therefore,  if  a  debtor  has  been  released  by  a  com- 
position agreement  entered  into  between  him  and  his  creditors,  though  the 
moral  obligation  to  pay  them  is  not  less  obvious  than  if  such  release  resulted 
from  proceeding  in  insolvency  or  bankruptcy,  a  conveyance  of  which  a  debt. 


March,  1889.]        Hagerman  v.  Buchanan.  741 

thus  released  by  his  creditors,  is  the  sole  consideration,  is  voluntary:  King  v. 
Moore,  18  Pick.  376;  Nightingale  v.  Harris,  6  R.  I.  321. 

A  consideration  valuable  in  the  eyes  of  the  law  does  not  necessarily  consist 
of  money  or  property,  and  there  is  at  least  one  consideration,  which,  though 
not  consisting  of  money  nor  property,  and  while  in  many  instances  of  great 
value,  doubtless  sometimes  enables  the  grantor  to  reserve  a  substantial  ben- 
efit for  himself  at  the  expense  of  his  creditors.  We  refer  to  the  con- 
sideration of  marriage.  Marriage  has  always  been  regarded  as  a  valuable 
consideration.  Therefore  a  conveyance  made  by  one  person  to  another 
in  consideration  that  the  latter  will  marry  him  is  supported  by  an  adequate 
consideration,  and  unless  otherwise  fraudulent,  cannot  be  avoided  by  the 
creditors  of  the  grantor.  Whatever  obligations  either  of  the  parties  have 
entered  into  by  an  antenuptial  marriage  settlement  has  the  same  rank  and 
dignity  as  if  their  consideration  consisted  of  money  or  other  property. 
Hence  nothing  that  either  does,  either  before  or  after  the  marriage,  in  ful- 
fillment or  satisfaction  of  this  obligation,  is  voluntary,  in  the  judgment  of  the 
law.  "  Marriage,  in  contemplation  of  the  law,  is  not  only  a  valuable  considera- 
tion to  support  such  a  settlement,  but  is  a  consideration  of  the  highest  value, 
and  from  motives  of  the  soundest  policy  is  upheld  with  a  steady  resolution. 
The  husband  and  wife,  parties  to  such  contract,  are  therefore  deemed,  in  the 
highest  sense,  purchasers  for  a  vali^  i.ble  consideration;  and  so  that  it  is  bona 
fide,  and  without  notice  of  fraud  brought  home  to  both  sides,  it  becomes  un- 
impeachable by  creditors  ":  Magniac  v.  Thompson,  7  Pet.  393;  Ep]jes  v.  Ran- 
dolph, 2  Call,  103;  Bunnell  v.  WUhrow,  29  Ind.  123;  Barrow  v.  Barrow,  2 
Dick.  504;  Pierce  v.  Harrington,  58  Vt.  649;  Frank's  Appeal,  59  Pa.  St.  190; 
Lock-wood  V.  Nelson,  16  Ala.  294;  Dygert  v.  Remerschneider,  32  N.  Y.  629; 
Spears  v.  Shropshire,  11  La.  Ann.  559;  66  Am.  Dec.  206;  Satterlhwaite  v.  Em- 
ley,  4  N.  J.  Eq.  489;  43  Am.  Dec.  618;  note  to  Merritt  v.  Scott,  50  Id.  372; 
Michael  V.  Morey,  29  Md.  239;  90  Am.  Dec.  106;  Jenkins  v.  Clement,  1  Harp. 
Eq.  72;  14  Am.  Dec.  698;  Prewit  v.  Wilson,  103  U.  S.  22;  Gibson  v.  Bennett, 
79  Me.  302. 

The  fact  that  an  intended  husband  who  makes  a  marriage  settlement  is  at 
the  time  financially  embarrassed,  and  that  it  embraces  the  greater  portion  of 
his  estate,  certainly  does  not  render  it  voluntary,  nor  does  it  necessarily  im- 
press upon  such  settlement  the  stigma  of  actual  fraud.  If,  however,  the 
wife  knew  of  her  intended  husband's  financial  difficulties,  the  court  or  jury 
would  doubtless  be  left  to  determine,  from  all  the  attendant  circumstances, 
whether  the  settlement  was  fraudulent  or  not:  Herring  v.  Wickham,  29  Gratt. 
628;  26  Am.  Rep.  40;  Jones's  Appeal,  62  Pa.  St.  324;  Campion  v.  Cotton,  17 
Ves.  264;  Eraser  v.  Thompson,  4  De  Gex  &  J.  659. 

It  is  not  essential  that  the  marriage  be  consummated  to  entitle  the  in- 
tended wife  to  the  benefit  of  a  marriage  settlement,  or  to  property  conveyed 
to  her  in  consideration  of  her  promise  of  marriage.  The  consideration  of  the 
conveyance  may  consist  of  the  promise  of  one  party  to  marry  the  other,  and 
when  this  is  the  case,  the  consideration  is  not  incapacitated  from  sustaining 
the  conveyance  by  the  fact  that  the  death  of  one  of  the  parties,  or  some  other 
supervening  cause,  prevents  the  fulfillment  of  the  promise:  Smith  V.  Allen, 
6  Allen,  454;  81  Am.  Dec.  758;  Connor  v.  Stanley,  65  Cal.  183. 

The  consideration  of  marriage  is  not  necessarily  confined  to  the  parties  to 
the  contract  of  marriage.  A  parent  may  settle  property  on  his  child  in  view 
of  her  marriage,  and  the  settlement  will  be  presumed  to  have  been  in  con- 
templation of  a  marriage  which  follows  soon  afterward:  Hopkirk  v.  Randolph, 
2  Brock.  132.     Even  if  the  gift  is  made  years  before  marriage,  and  during 


742  Hagerman  v.  Buchanan.         [New  Jersey, 

the  infancy  of  a  daughter,  and  when  no  particular  marriage  could  have  been 
in  contemplation,  and  she  subsequently  marries,  such  conveyance,  from  th'j 
date  of  such  marriage,  ceases  to  be  voluntary,  and  is  not  subject  to  success- 
ful attacks  by  creditors  or  purchasers  whose  rights  have  their  inception  after 
the  marriage:  Welles  v.  Cole,  5  Gratt.  645;  and  it  is  even  doubtful  whether 
the  conveyance  is  open  to  attack  by  those  who  were  creditors  of  the  grantor 
immediately  precedmg  the  marriage:  Huaton's  Adm'r  v.  Cantiit,  Jl  Leigh, 
136;  Fones  v.  Bica,  9  Gratt.  568. 

If  a  marriage  settlement  is  made  after,  in  pursuance  of  articles  entered 
into  or  letters  written  before,  a  marriage,  it  is  not  voluntary,  and  can  with- 
stand the  attack  of  creditors:  Khinard  v.  Daniel,  13  B.  Mon.  499;  but  a 
settlement  made  after  marriage,  not  supported  by  any  valid  agreement 
previously  entered  into,  is  voluntary,  and  subject  to  the  same  infirmity  as 
any  other  voluntary  transfer  or  agreement:  Gugen  v.  Sampson,  4  Fost.  &  F, 
974. 

A  consideration  which  will  relieve  a  deed  from  the  charge  of  being  volun- 
tary must  be  legal.  It  cannot  consist  of  a  contract  forbidden  by  law  or  pub- 
lic policy:  IVecti  v.  Hill,  38  N.  H.  199;  Jose  v.  Bewett,  50  Me.  248.  Hence 
a  transfer  to  a  mistress  in  consideration  either  of  past  or  future  intercourse 
is  voluntary:  Wait  v.  Day,  4  Denio,  439;  Potter  v.  Garcia,  58  Ala.  303;  29 
Am.  Rep.  748;  Sherman  v.  Barrett,  1  McMuU.  47;  Hargrovea  v.  Meray,  2 
Hill  Ch.  222. 

Tliough  no  moneyed  or  property  consideration  for  a  transfer  exists,  it  is  not 
voluntary  if  made  in  pursuance  of  a  duty  resting  on  the  grantor.  Thus  if  he  is  a 
mere  trustee,  having  no  beneficial  interest  in  the  property,  his  conveyance  to 
his  cestui  que  trtist  is  not  voluutar3':  Seeders  v.  Allen,  98  111.  468.  Whatever 
the  grantor  can  be  compelled  to  do,  he  may  do,  without  any  other  compulsion 
than  such  as  results  from  the  knowledge  on  his  part  of  the  existence  of  the 
duty,  and  of  the  power  of  the  one  to  whom  he  owes  it  to  resort  to  the  proper 
tribunals  to  enforce  its  performance.  Therefore,  if  one  who  holds  lauds  or 
other  property  is  a  mere  trustee  of  the  legal  title,  or  if  he  has  entered  into 
some  agreement  the  performance  of  which  can  be  specifically  enforced,  he 
need  not  wait  until  suit  has  been  brought  against  him  before  he  conveys  to 
the  cestu,  que  trvst,  or  to  the  person  otherwise  entitled  to  a  conveyance;  and 
if  he  conveys  without  compulsion,  his  creditors  are  not  injured,  and  have  no 
ground  upon  which  to  avoid  the  conveyance:  Forhusk  v.  Williams,  16  Pick. 
42;  McConnellv.  Martin,  52  Ind.  434;  Bancroft  v.  Curtis,  108  Mass.  47;  Jack- 
son V.  Ham,  15  Johns.  261;  Gudgel  v.  Kitterman,  108  111.  50;  Caffal  r.  Hale,  49 
Iowa,  53;  Norton  v.  Mallory,  63  N.  Y.  434;  Syracuse  Chilled  Plow  Co.  v.  Wing, 
85  Id.  44;  unless  the  grantee  has  by  some  act  or  omission  estopped  himself 
from  insisting  upon  his  rights  as  against  the  creditors  of  the  grantor:  City 
National  Bank  v.  Hamilton,  34  N.  J.  Eq.  158. 

There  are  cases  where  parties  are  entitled  to  specific  performance  of  gifts 
made  or  agreed  to  be  made  to  them,  or  at  least  to  have  executed  the  muni- 
ments of  title  constituting  the  final  evidence  of  such  gifts.  When  such  a 
case  has  arisen,  any  conveyance  or  other  evidence  of  the  transmission  of  title 
which  the  donor  executes  is  not  voluntary.  Thus  if  a  gift  is  made  of  lands, 
and  the  donee  enters  into  possession,  makes  valuable  improvements,  and  does 
such  acts  as  entitle  him  to  the  specific  performance  of  the  gift,  the  donor  may 
then  make  the  conveyance  requisite  to  vest  the  donor  with  the  title,  and 
those  who  were  not  creditors  of  the  donor  when  the  gift  was  originally  made, 
and  possession  taken,  cannot  complain:  Dozier  v.  Watson,  94  Mo.  328;  4  Am. 
St.  Rep.  388;  Van  Bibber  v.  Mather,  52  Tex.  406;  Kinealy  v.  Macklin,  89  Mo. 


March,  1889.]        Hagebman  v.  Buchanan.  743 

433;  Dougherty  V.  Harsel,  91  Id.  161.  If,  however,  the  gift  rests  in  mere 
promise  or  in  an  intent  to  give,  not  so  fully  executed  that  the  donee  can  com- 
pel its  consummation,  then  any  instrument  executed  or  act  done  to  complete 
the  gift  is  voluntary,  and  can  be  assailed  as  successfully  as  if  the  intent  to 
give  had  not  previously  existed:  Rucker  v.  Ahdl,  8  B.  Mon.  566;  48  Am.  Dec. 
406;  Davis  v.  McKinney,  5  Ala.  719;  Hubbard  v.  Allen,  59  Ala.  283;  Wmth- 
ington  v.  Bullitt,  6  Md.  172. 

A  transfer  may  be  made  by  one  person  to  another,  without  any  considera- 
tion, to  accomplish  some  temporary  and  perhaps  unlawful  purpose,  and  with 
the  expectation,  expressed  or  implied,  that  the  grantee  will,  at  some  future 
time,  when  the  purpose  has  been  eflfected,  reconvey  to  the  grantor;  and  then 
the  question  may  arise  whether,  if  the  grantor  does  so  reconvey,  his  convey- 
ance is  voluntary,  and  subject  to  attack  as  such.  In  an  early  case  in  New 
York,  wherein  it  appeared  that  a  transfer  had  been  made  for  the  purpose  of 
qualifying  the  donee  to  be  a  voter,  it  was  held  that  his  creditors  had  no  right 
to  object  to  a  retransfer,  where  he  had  never  taken  possession  of  the  prop- 
erty nor  acquired  any  credit  based  upon  his  supposed  ownership  of  it:  Jack- 
son V.  Ham,  15  Johns.  261.  The  better  rule,  however,  in  our  judgment,  is, 
that  if  the  transfer  is  good  between  the  parties,  as,  for  example,  where  the 
transfer  is  made  for  the  purpose  of  defrauding  creditors,  so  that  the  grantor 
has  no  power  to  compel  a  reconveyance,  then  if  the  grantee  does  reconvey, 
his  act  is  voluntary,  and  may  be  assailed  as  such  by  his  creditors:  Susong  v. 
Williams,  1  Heisk.  625;  Chapin  v.  Pease,  10  Conn.  69;  Allison  v.  Hagan,  12 
Nev.  38;  Maker  v.  Borard,  14  Nev.  324. 

What  Creditors  may  Attack  a  Voluntary  Transfer  as  Fraudulent.  — When  a 
conveyance  actually  or  constructively  fraudulent  is  sought  to  be  avoided,  one 
of  the  first  questions  to  be  considered  is,  whether  the  person  seeking  to  avoid 
it  is,  within  the  meaning  of  the  law  upon  this  subject,  a  creditor  entitled  to 
relief.  To  constitute  one  a  creditor,  it  is  not  necessary  that  money  be  due  to 
him  from  the  debtor  at  the  time  of  the  transfer.  It  is  sufficient  that  the 
debtor  has  entered  into  some  obligation  or  done  some  act  which  may  result 
in  his  liability  to  the  creditor.  Wlien  the  liability  is  ascertained,  it  relates 
back  to  the  inception  of  the  original  agreement  or  obligation,  and  entitles  the 
creditor  to  proceed  as  though  tliere  had  been  a  debt  due  and  payable  to  him 
at  that  time:  Note  to  Oreer  v.    Wright,  52  Am.  Dec.  116. 

"The  term  'creditors,'  as  employed  in  the  statutes  and  decisions  concern- 
ing fraudulent  and  voluntary  conveyances,  is  not  used  in  any  narrow  or 
technical  signification,  but  includes  all  persons  whose  interests  might  be 
defrauded  by  the  transfer.  Wherever  there  exists  a  right  or  obligation  for 
the  invasion  or  disregard  of  which  a  judgment  may  be  entered,  a  transfer 
made  with  the  view  of  rendering  such  judgment  inell'ectual  is  doubtless 
fraudulent,  and  therefore  void  as  against  the  interest  sought  to  be  defrauded. 
Thus  if  one  has  committed  any  tort  for  whicli  he  may  be  answerable  in  dam- 
ages, the  person  entitled  to  recover  such  damages  is  a  creditor,  and  as  such, 
in  proceeding  to  obtain  satisfaction  of  a  judgment  for  such  damages,  may 
treat  as  void  any  transfer  made  with  a  view  of  hindering  or  delaying  him  in 
his  attempt  to  realize  such  satisfaction:  Barling  v.  Bishopp,  2'J  Beav.  417; 
Fox  v.  Hills,  1  Conn.  295;  Westmoreland  v.  Powell,  59  Ga.  1^56;  Bongard  v. 
Block,  81  III.  186;  25  Am.  Rep.  276;  Weir  v.  Day,  57  Iowa,  87;  Cook  v.  Cook, 
43  Md.  522;  Hoffman  v.  Junk,  51  VVis.  613;  Han-is  v.  Harj-is,  23  Gratt.  737; 
Patrick  V.  Ford,  5  Sneed,  532,  note.  Hence  a  transfer  to  prevent  the  satis- 
faction of  a  judgment  which  might  be  recovered  against  the  grantor  for  a 
Blander  uttered  by  him:    Walradt  v.  Brown,  1  Gilm.  397;  41  Am.  Dec.  190; 


744  Hagerman  v.  Buchanan.         [New  Jersey, 

Lillard  v.  McOee,  4  Bibb,  165;  Farnsworth  v.  Bdl,  5  Sneed,  531;  or  for  se- 
duction or  breach  of  promise  of  marriage:  Lowry  v.  Pinson,  2  Bail.  324;  23 
Am.  Dec.  140;  Smith  v.  Cidbertson,  9  Rich.  106;  Hoffman  v.  Junk,  51  Wis. 
613;  Oreer  y.  Wright,  6  Gratt.  154;  52  Am.  Dec.  Ill;  McVeigh  v.  Retenow, 
40  Ohio  St.  107;  or  for  alimony,  or  other  moneys  to  which  a  wife  is  entitled 
from  her  husband:  Boog  v.  Boog,  78  Iowa,  524;  Feigley  v.  Feigley,  7  Md.  537; 
61  Am.  Dec.  375;  Sanborn  v.  Lang,  41  Md.  107;  Taylor  v.  Wild,  8  Beav.  159; 
Draper  v.  Draper,  68  111.  17;  Chase  v.  Chase,  105  Mass.  385;  Bonslough  v. 
Bonslough,  68  Pa.  iSt.  495;  Livermore  v.  Boutelle,  11  Gray,  217;  71  Am.  Dec. 
708;  Tyler  v.  Tykr,  126  111.  525;  9  Am.  St.  Rep.  642;  Weber  v.  Rothchild,  15 
Or.  385;  3  Am.  St.  Rep.  162;  Boils  v.  Boils,  1  Cold.  284;  Picket  v.  Garrison, 
76  Iowa,  347;  ante,  p.  220;  Plunkttt  v.  PlunkeU,  114  Ind.  484,  —may  be  re- 
garded as  fraudulent  and  void. 

"Sometimes  it  has  been  held  that  one  having  a  claim  for  a  tort  is  not  enti- 
tled to  protection  as  a  creditor,  unless  he  has  commenced  an  action  for  the 
damages  occasioned  to  him  thereby:  Hill  v.  Bowman,  35  Mich.  191,  in  which 
case  the  opinion  is,  upon  this  subject,  a  mere  dictum.  This  question  has  not 
been  very  carefully  considered;  but,  upon  principle,  there  seems  to  be  no 
reason  for  attaching  any  importance  to  the  pendency  of  the  action,  except 
that  the  known  pendency  of  an  action  renders  it  more  probable  that  the 
transfer  was  fraudulent,  and  intended  to  avoid  a  claim  which  the  parties 
had  reason  to  believe  would  be  prosecuted  to  judgment.  But  a  plaintifiF  is 
no  more  a  creditor  after  commencing  an  action  than  before.  His  cause  of 
complaint,  whatever  it  may  be,  must  exist  anterior  to  the  commencement  of 
his  action,  and  is  of  precisely  the  same  character  after  such  commencment  as 
before.  If  any  change  takes  place  in  the  cause  of  action,  it  cannot  be  prior 
to  its  merger  in  the  judgment.  Nor  does  the  mere  pendency  of  the  action 
create  any  lien  upon  any  property.  The  better  opinion,  therefore,  is,  that 
one  having  a  claim  for  a  tort  is  a  creditor  before  the  commencement  of  an 
action  thereon  as  well  as  after,  and,  as  such  creditor,  is,  upon  recovering 
judgment,  entitled  to  avoid  a  fraudulent  transfer  antedating  the  commencing 
of  his  action:  Corder  v.  Williams,  40  Iowa,  582;  Shean  v.  Shay,  42  Ind.  375; 
13  Am.  Rep.  366. 

"If  a  judgment  is  based  on  a  contract,  the  judgment  creditor's  right  to  be 
treated  as  a  creditor  relates  back  to  the  date  of  the  execution  of  the  original 
contract.  Hence  he  may  treat  as  void  any  fraudulent  transfer  executed 
subsequent  to  the  contract  on  which  the  judgment  was  based.  The  transfer 
cannot  be  supported  by  showing  that  when  it  was  made  the  judgment  credi- 
tor's debt  had  not  become  due:  Howe  v.  Ward,  4  Me.  195;  Cook  v.  Johnson, 
12  N.  J.  Eq.  51;  72  Am.  Dec.  381;  or  that  his  claim  was  contingent,  and  it 
could  not  then  have  been  known  that  any  cause  of  action  against  him  would 
ever  result  from  the  contract.  Therefore,  if  a  bond  be  given,  a  fraudulent 
transfer  made  subsequently,  but  before  breach  of  its  condition,  may  be 
avoided  as  well  as  if  executed  after  such  breach:  Thompson  v.  Thompson,  19 
Me.  244;  36  Am.  Dec.  751;  Stone  v.  Myers,  9  Minn.  303;  86  Am.  Dec.  104; 
Carlisle  v.  Rich,  8  N.  H.  44;  Anderson  v.  Anderson,  64  Ala.  403;  38  Am.  Rep. 
797;  Sodeny.  Soden,  34  N.  J.  Eq.  115.  The  same  rule  prevails  where  the 
liability  of  the  fraudulent  grantor,  at  the  date  of  the  grant,  was  contingent: 
Bibb  V.  Freeman,  59  Ala.  612;  Post  v.  Stiger,  29  N.  J.  Eq.  554;  as  where  he 
was  a  surety  or  indorser,  and  it  was  not  known  that  he  would  ever  be  called 
upon  to  pay  the  debt.  Jackson  v.  Seward,  5  Cow.  67;  Cramer  v.  Reford,  17 
N.  J.  Eq.  367;  90  Am.  Dec.  594;  McLaughlin  v.  Bank,  7  How.  220;  Bay  v. 
Cook,  31  111.   336;  Gibson  y.  Love,  4  Fla.  217;  Crane  v.  Sickles,  15  Vt.  252; 


< 


March,  1889.]        Hagerman  v.  Buchanan.  746 

€urd  V.  Millers  Ex'r,  7  Gratt.  185;  Kiel  v.  Larlcin,  72  Ala.  493.  The  lia- 
bility of  a  grantor  under  his  covenant  of  warranty  does  not  differ  in  princi- 
ple from  other  contingent  liabilities,  and  a  fraudulent  conveyance  made  at 
any  time  after  such  covenant  ought  to  be  regarded  aa  void  as  against  a  judg- 
ment thereon:  Rliodes  v.  Oreen,  36  Ind.  7;  Oannard  v.  Eslava,  20  Ala.  741; 
contra,  Bridgfard  v.  Riddell,  55  111.  261. 

"If  debts  exist  when  a  fraudulent  conveyance  is  made,  a  change  in  their 
form,  or  in  the  person  to  whom  they  are  due,  is  immaterial.  Subsequent 
creditors  from  whom  means  were  obtained  to  pay  ofif  the  antecedent  credi- 
tors are  entitled  to  treat  the  conveyance  as  void":  Freeman  on  Executions, 
fiec.  137  a;  Paulk  v.  Cook,  39  Conn.  566;  Barhydt  v.  Perry,  bl  Iowa,  416; 
Mills  V.  Morris,  HofiF.  Ch.  419;  Savage  v.  Murphy,  34  N.  Y.  508;  90  Am.  Dec. 
733;  McElwee  v.  Sutton,  2  Bail.  128.  So  if  the  grantor  of  a  voluntary  con- 
veyance is  then  indebted  to  one  with  whom  he  continues  to  do  business  and 
to  have  an  account,  and  the  payments  afterwards  made  by  the  debtor  are 
aufficient,  if  applied  to  the  debt  existing  at  the  transfer,  to  extinguish  it, 
but  by  reason  of  subsequent  purchases  by  or  other  proper  charges  against 
the  grantor  the  balance  due  from  him  exceeds  that  due  at  the  date  of  the 
transfer,  then  the  creditor  has  all  the  equity  of  one  whose  debt  wholly  ante- 
■dated  the  transfer:  Whittinijton  v.  Jennings,  6  Sim.  493;  3  L.  J.,  N.  S.,  157. 

If  the  creditor  who  is  seeking  to  avoid  a  voluntary  conveyance  as  fraudulent 
has  commenced  an  action  and  taken  out  a  wrii  of  attachment,  or  has  re- 
-covered judgment  and  had  an  execution  issued  thereon,  he  may  levy  his  writ 
as  though  such  conveyance  had  not  been  made.  "  As  against  a  fraudulent 
transferee,  the  creditor  may  seize  the  property,  whether  real  or  personal,  as 
that  of  the  fraudulent  vendor,  and  may  proceed  to  sell  it  under  execution. 
The  title  transferred  by  such  sale  is  not  a  mere  equity,  —  not  the  right  to  con- 
trol the  legal  title,  and  to  have  the  fraudulent  transfer  vacated  by  some  ap- 
propriate proceeding;  it  is  the  legal  title  itself,  against  which  the  fraudulent 
transfer  is  no  transfer  at  all":  Freeman  on  Executions,  sec.  1.36. 

The  creditor  may,  however,  prefer  to  proceed  to  have  the  character  and 
validity  of  the  transfer  judicially  and  conclusively  determined  before  pro- 
■ceeding  to  sell  the  property.  He  may  tile  a  bill  in  equity  and  have  the  trans- 
fer declared  void  as  against  him:  Stork  Growers'  Bank  v.  Newton,  13  Col.  245; 
JSockman  v.  Sockman,  18  Ohio,  362;  Henderson  v.  Dickey,  50  Mo.  161;  Swi/l 
V.  A  rents,  4  Cal.  390;  Oormley  v.  Potter,  29  Ohio  St.  597;  Oallman  v.  Perrie, 
47  Miss.  131.  He  is  not  entitled  to  do  this  under  the  mere  allegation  that 
he  is  a  creditor.  He  must,  if  possible,  reduce  it  to  a  judgment,  and  thereby 
establish  its  existence  beyond  controversy.  The  exceptions  to  this  rule  are 
rare,  and  mostly  result  from  statutory  innovations:  Freeman  on  Executions, 
Bees.  426,  427. 

Voluntary  transfers  may  in  some  instances  be  avoided  both  by  prior  and  by 
subsequent  creditors.  If  a  transfer  is  made  for  the  purpose  of  hindering,  de- 
laying, or  defrauding  the  creditors  of  the  grantor,  it  may  be  avoided  by  any 
of  his  creditors,  prior  or  subsequent:  Oruber  v.  Voyks,  1  Brev.  266;  Backer 
V.  Clark,  12  Blatchf.  256;  Fox  v.  Mayer,  54  N.  Y.  125.  If,  however,  it  ia 
«hown  that  there  was  no  actual  intention  on  the  part  of  the  grantor  to  hinder, 
delay,  or  defraud  his  creditors,  or  to  accomplish  any  other  fraudulent  pur- 
pose, it  becomes  material  to  inquire  whether  the  creditor  who  is  seeking  to 
avoid  a  voluntary  conveyance  was  such  at  the  time  it  was  made  or  became 
such  afterwards.  We  wish  first  to  consider  when  a  voluntary  conveyance  majl 
be  avoided  by  pre  existing  creditors.  If  a  creditor,  undertaking  the  cellec- 
tion  of  his  debt,  tinda  himself  wholly  or  partly  unable  to  collect  it  without 


746  Hagerman  v.  Buchanan.  [New  Jersey, 

resorting  to  property  which  his  debtor  has  voluntarily  conveyed  to  another, 
a  case  has  arisen  in  which  it  appears  more  than  probable  that  a  voluntary 
transfer  is  the  cause  of  the  delay  or  inability  to  collect  the  debt.  The  origi- 
nal tendency  of  the  authorities  was  to  regard  a  voluntary  conveyance  as  in- 
disputably fraudulent  and  void  as  against  a  creditor,  who,  on  its  account, 
finds  himself  hindered  or  delayed  in  the  collection  of  his  debt.  And  even 
at  the  present  time  it  is  doubtful  whether  in  some  of  the  states  a  voluntary 
transfer  can  be  upheld  under  any  circumstances,  when  to  uphold  it  is  to  pre- 
vent a  creditor  from  obtaining  payment  of  a  pre-existing  debt:  Chamley  v. 
Dunsany,  2  Schoales  &  L.  714;  Lockhard  v.  Beckley,  10  W.  Va.  87;  Spuett  v. 
Willows,  3  De  Gex,  J.  &  S.  29.3;  Marmon  v.  Harwood,  124  111.  104;  Core 
V.  Cunningham,  27  W.  Va.  206;  Cook  v.  Johnson,  12  N.  J.  Eq.  51;  72  Am. 
Dec.  481;  Bel/ordv.  Crane,  16  N.  J.  Eq.  265;  84  Am.  Dec.  155;  Langv.Broivn, 
21  Ala.  179;  56  Am.  Dec.  244;  Crawford  v,  Kirksey,  55  Ala.  182;  28  Am. 
Rep.  704;  Huggins  v.  Perrine,  30  Ala.  396;  68  Am.  Dec.  131;  Reade  v.  Liv- 
ingston, 3  Johns.  Ch.  481;  8  Am.  Dec.  520;  0' Daniel  v.  Crawford,  4  Dev.  197; 
Kissam  v.  Edmeiidson,  1  Ired.  Eq.  180;  Bogard  v.  Gardley,  4  Smedes"  &  M. 
302;  Muse  v.  Bromherg,  88  Ala.  620.  This  is  the  safer  and  better  rule,  though 
it  has  no  doubt  been  relinquished  in  the  majority  of  the  states  in  favor  of 
transfers  made  by  a  husband  or  father  to  his  wife  or  children,  or  other  per- 
sons dependent  upon  them,  and  who  are  the  natural  objects  of  his  bounty, 
where  it  is  shown  almost  beyond  a  reasonable  doubt  that  the  transfer  was 
made  in  good  faith,  without  any  intention  to  defraud  or  embarrass  creditors, 
prior  or  sul^sequent,  and  in  the  reasonable  belief  that  the  donor's  estate  was 
ample  to  discharge  all  liabilities  existing  against  it  without  rendering  neces- 
sary a  resort  to  the  property  voluntarily  transferred. 

While,  as  .shown  in  the  preceding  paragraph,  voluntary  transfers  have  in 
some  of  the  states  been  adjudged  to  be  indisputably  void  as  against  pre-exist- 
ing creditors,  irrespective  of  the  financial  condition  of  the  grantors  at  the 
time  when  they  were  made,  the  great  weight  of  authority  at  the  pre.seiit 
time  is,  that  such  transfers  are  •prima  facie  fraudulent,  and  those  seeking  to 
support  them  must  do  so  by  any  competent  evidence  sufficient  to  satisfy  the 
court  or  jury  with  whom  the  decision  of  the  question  rests  that  the  transfer  in 
question  is  not  fraudulent.  In  other  words,  the  mere  fact  of  the  existence  of 
a  prior  indebtedness  does  not  conclusively  establisli  the  fraudulent  character 
of  the  transfer,  and  inevitably  deprive  it  of  all  power  to  harm  pre-existing 
creditors:  Lyne  v.  Bank  of  Kentucky,  5  J.  J.  Marsh.  545;  Clayton  v.  Brown,  17 
Ga.  217;  Jones  v.  Clifton,  101  U.  S.  225;  Ilnntersv.  Waite,  3  Gratt.  26;  Weed  v. 
Davis,  25  Ga.  684;  Salmon  v.  Bennett,  1  Day,  525;  7  Am.  Dec.  237;  Van  Wyck 
v.  Seward,  6  Paige,  62;  Filleyv.  Register,  4  Minn.  391;  77  Am.  Dec.  522;  Hinde'a 
Lessee  v.  Longworth,  11  Wheat.  190;  Cole  v.  Tyler,  65  N.  Y.  73;  Wilder  v. 
Brooks,  10  Minn.  50;  88  Am.  Dec.  49;  Holmes  v.  Penney,  3  Kay  &  J.  90;  3 
Jur.,  N.  S.,  80;  26  L.  J.  Ch.  179;  but  it  does  burden  the  transfer  with  the 
presiimption  of  fraud,  and  prevent  its  assertion  against  such  creditors,  unless 
this  presumption  is  satisfactorily  removed:  Cole  v.  Tyler,  65  N.  Y.  73;  Good- 
man v.  Wineland,  61  Md.  449;  Ellingerv.  Crowl,  17  Id.  361;  Hunters  v.  Waite, 
3  Gratt.  26;  Mathews  y.  Torinus,  22  Minn.  132;  Oliver  v.  Moore,  23  Ohio  St. 
473;  Spence  v.  Dunlap,  6  Lea,  457;  Hutchinson  v.  Kelly,  1  Rob.  (Va.)  123;  39 
Am.  Dec.  250;  Nicholas  v.  Ward,  1  Head,  323;  73  Am.  Dec.  177;  Walsh  v. 
Byrnes,  39  Minn.  527.  The  general  rules  applicable  for  this  subject  are  very 
well  stated  in  the  following  extract  from  the  opinion  of  Baldwin,  J.,  in  Hunters 
V.  Waite,  3  Gratt.  32:  "The  law  gives  no  general  lien  to  creditors  upon  the 
property  of  their  debtors,  though  it  enables  them  to  obtain  satisfaction  there- 


4 


March,  1889.]        Hagerman  v.  Buchanan.  747 

from  by  the  proper  judicial  proceedings.  It  does  not  restrain  a  man's  domin- 
ion over  his  own  property  so  long  as  he  acts  with  fairness  and  good  faith;  but 
it  treats  as  null  and  void  all  fraudulent  contrivances  to  screen  it  from  the  pur- 
suit of  his  creditors.  It  is  fraudulent  to  defeat  them  by  reservations  of  bene- 
fits to  himself;  it  is  equally  fraudulent  to  defeat  them  by  benefactions  conferred 
upon  others.  It  is  not  the  consideration,  but  the  intent  with  which  a  convey- 
ance is  made,  that  maljes  it  good  or  bad  as  against  creditors.  However  valu- 
able the  consideration,  if  the  conveyance  be  designed  to  delay,  hinder,  or 
defeat  creditors,  it  is  void;  and  though  the  conveyance  be  voluntary,  yet  if  made 
with  fairness  and  good  faith,  it  is  unimpeachable.  The  intent  with  which  an 
act  is  done  may  be  a  conclusion  of  law  from  certain  facts,  against  which  con- 
clusion all  other  evidence  is  unavailing;  or  it  may  be  a  presumption  of  law 
from  other  facts,  which  is  prima  facie  only,  and  liable  to  be  repelled  by  suffi- 
cient evidence.  If  a  man  who  is  in  insolvent  circumstances  conveys  away 
his  property  to  strangers,  or  settles  it  upon  his  wife  or  children,  the  law  con- 
cludes the  design  to  be  fraudulent  against  his  creditors,  and  all  evidence  to 
the  contrary  is  idle  or  delusive;  and  so  if  he  render  himself  insolvent  by  a  vol- 
untary conveyance,  however  meritorious  in  itself  merely.  It  is  in  vain  to  specu- 
late upon  his  motive,  or  adduce  evidence  of  an  honest  purpose.  It  may  be 
that  he  had  acted  through  ignorance  or  mistake  or  misconception.  Apologies 
and  excuses  maybe  found  to  absolve  him  from  moral  turpitude;  but  to  these 
the  law  cannot  listen.  He  is  bound  to  known  his  own  circumstances  and  the 
just  demands  against  him;  and  the  injustice  and  wrong  to  his  creditors  are 
palpable  and  unquestionable.  On  the  other  hand,  if  a  man  is  in  flourishing 
or  unembarrassed  circumstances,  and  exercises  a  reasonable  and  prudent  dis- 
cretion in  gifts  and  advancements  to  his  children,  adapted  to  their  wants, 
and  justified  by  his  means,  leaving  an  ample  fund  for  the  payment  of  his 
debts,  there  can  be  no  propriety  in  the  conclusion  of  a  fraudulent  purpose 
from  the  mere  fact  of  indebtedness  at  the  time.  Still,  as  it  is  difficult  to 
ascertain  the  exact  state  of  a  man's  pecuniary  circumstances  at  the  time  of 
his  making  a  voluntary  conveyance,  as  the  claims  of  creditors  are  strong, 
and  the  devices  of  fraud  are  numerous  and  often  plausible,  there  ought  to  be 
a  leaning  against  the  protection  of  property  from  the  pursuit  of  creditors, 
and  a  preliminary  presumption  in  their  favor,  throwing  the  burden  of  estab- 
lishing the  fairness  and  good  faith  of  the  transaction  upon  the  adverse  party. 
This  he  may  do  by  satisfactory  proofs  of  the  donor's  ample  resources,  the 
moderation  of  his  gift,  and  his  freedom  from  embarrassment;  and  in  the 
attempt  to  do  this,  he  may  be  met  by  marks  or  badges  of  a  fraudulent  pur- 
pose. " 

When  a  voluntary  transfer  is  void  as  against  creditors,  whether  prior  or 
subsequent,  its  invalidity  does  not  depend  upon  the  insufficiency  of  consider- 
ation, but  upon  the  presumed  intent  of  the  grantor.  And  here  it  must  not 
be  forgotten  that  it  is  the  inference  or  intent  which  must  be  drawn  from  the 
circumstances  that  controls,  rather  than  the  actual  intention  of  the  grantor. 
The  language  of  some  of  the  authorities  on  this  subject  seems  at  first  irrec- 
oncilable, for  we  sometimes  find  them  asserting  that  the  intent  of  the  grantor 
is  immaterial,  and  at  other  times  declaring  that  it  is  controlling.  This  appar- 
ent contradiction  arises  from  the  employment  of  the  word  "intent  "in  the 
one  case  to  denote  the  absence  of  all  evil  motives  on  the  part  of  the  grantor, 
and  in  the  other  case  to  denote  the  motive  which  the  court  or  jury  must  im- 
pute to  him  from  his  financial  condition  at  the  time  of  the  transfer  in  ques- 
tion. If  the  transfer  must  necessarily  or  probably  hinder,  delay,  or  defraud 
the  grantor '•  creditors,  it  is  void  as  against  them,  however  innocent  his  in  ten- 


748  Hagerman  v.  Buchanan.  [New  Jersey, 

tion  or  worthy  his  motive  in  making  it:  Potter  v.  McDowell,  31  Mo.  62; 
Churchill  V.  WelU,  7  Cold.  370;  Belford  v.  Crane,  16  N.  J.  Eq.  265;  84  Am. 
Dec.  155;  Pattenx.  Casey,  57  Mo.  118;  Cole  v.  Tyler,  65  N.  Y.  573;  Freeman 
V.  Pope,  L.  R.  5  Ch.  App.  538;  L.  R.  9  Eq.  206.  He  has  no  right  to  hindor, 
delay,  or  defraud  thein,  and  his  voluntary  transfer  will  not  be  sustiiined  if 
that  result  might  reasonably  have  been  apprehended  when  it  was  made. 

With  respect  to  tlie  grantee  of  a  voluntary  conveyance,  as  he  has  paid  no 
consideration  therefor,  he  has  no  equities  paramount  nor  even  equal  to  those 
of  the  pre-existing  creditors  of  the  grantor.  His  intent  is  therefore  imma- 
terial, and  the  conveyance  to  him  must  stand  or  fall,  according  to  the  pre- 
sumed intent  of  his  grantor.  The  grantee  cannot  support  it  by  proving;  his 
entire  innocence  and  his  want  of  all  knowledge  of  the  intent  or  circumstances 
of  the  grantor:  Thomson  v.  Dougherty,  12  Serg.  &  R.  448;  Swartz  v.  Huzlctt, 
8  Cal.  118;  Wise  v.  Moore,  31  Ga.  148;  Clark  v.  Chnmherlain,  95  Mass.  257- 
Hicks  V.  IStone,  13  Minn.  434;  Peck  v.  Carmichael,  9  Yerg.  325;  Gamble  v. 
Johnson,  9  Mo.  597;  Laughton  v.  Harden,  68  Me.  208;  Woody  v.  Dean,  24 
S.  C.  499. 

As  a  voluntary  transfer  must  either  be  enforced  or  disregarded,  according 
to  the  intent  which  must  be  imputed  to  the  grantor  at  the  time  it  was  exe- 
cuted, it  is  of  the  utmost  importance  to  ascertain  from  what  circumstances 
the  fraudulent  intent  should  or  should  not  be  presumed.  If  the  grantor  is  at 
the  time  financially  embarrassed,  if  there  are  judgments  rendered  or  actions 
pending  against  him  or  suits  threatened,  his  voluntary  conveyance  is  unques- 
tional)ly  fraudulent  and  void  as  against  creditors:  Bohaniion  v.  Combs,  79 
Mo.  305.  To  render  a  voluntary  transfer  fraudulent,  it  is  not  essential  that 
the  grantor  be  insolvent  at  the  time  of  making  it.  "If  a  debtor  is  in  em- 
barrassed circumstances,  and  makes  a  voluntary  conveyance,  and  is  afterwards 
unable  to  meet  his  debts  owing  at  the  time  of  the  assignment,  in  the  ordi- 
nary course  prescribed  by  law  for  their  collection,  or  is  reduced  to  that  condi- 
tion that  an  execution  against  him  would  be  unavailing,  such  conveyance  ia 
void  as  to  those  debts,  and  the  property  conveyed  is  subject  to  their  pay- 
ment": Potter  V.  McDowell,  31  Id.  62.  "It  is  sufficient  to  show  that  the 
grantor  was  embarrassed  or  in  doubtful  circumstances,  and  was  not  possessed 
of  ample  means  outside  of  the  particular  property  for  the  satisfaction  of  hia 
then  existing  debts.  When  this  condition  of  afifairs  is  proven  to  exist,  the 
conveyance  in  question — although  none  but  the  purest  motives  may  have 
prompted  its  execution — becomes  fraudulent  in  law,  and  is  open  to  attack, 
and  can  be  successfully  assailed  by  all  who  were  creditors  at  the  time  of  the 
execution  of  the  conveyance,  and  whose  debts  remain  unliquidated  and  in- 
capable of  collection  in  the  ordinary  course  of  proceedings  ":  Patten  v,  Casey, 
57  Id.  118. 

As  the  object  of  evidence  concerning  the  debtor's  inability  at  the  date  ot 
the  transfer  is  to  enable  the  court  or  jury  to  judge  what  his  intent  was  in 
making  it,  and  as  no  conclusive  presumption  of  fraud  arises  from  the  fact 
that  lie  was  somewhat  indebted  at  the  time,  it  ia  evident  that  the  precise 
amount  of  indebtedness  necessary  to  avoid  such  transfer  cannot  be  stated, 
and  that  diflferent  courts  or  juries  may  reach  diverse  conclusions  from  the 
same  state  of  facts.  If,  after  a  transfer,  the  grantor  still  continued  to  be  the 
owner  of  property  sufficient  to  pay  his  debts,  and  was  not  about  to  embark 
in  some  business  in  which  he  expected  to  contract  additional  liabilities,  and 
this  transfer  is  assailed  by  a  pre-existing  creditor,  whose  debt  remains  un- 
paid, it  must  be  left  to  the  jury  or  the  court  to  determine  as  a  question  of 
fact,  from  all  the  attendant  circumstances,  whether  the  intent  of  the  grantor 


March,  1889.]        Hagerman  v.  Buchanan.  749 

was  fraudulent  or  not:  Sanders  v.  Wagon-ieller,  19  Pa.  St.  248;  Lermo  v.  Wil- 
mant,  9  Allen,  382;  Chambers  v.  Spenre,  5  Watta,  404;  Mateer  v.  Hissim,  3 
Penr.  &  W.  160;  Posten  v.  Posten,  4  Whart.  27;  Pomery  v.  Bailey,  43  N.  H. 
118.  The  general  principle  which  ought  to  govern  courts  and  juries  in  deter- 
mining this  question  has  been  thus  stated  by  the  court  of  appeals  of  Ken- 
tucky: Although  the  grantor  "may  not  at  the  time  have  been  insolvent,  or 
so  much  involved  at  the  date  of  the  deed  as  to  render  the  residue  of  his  es- 
tate then  necessarily  insufficient  to  pay  his  debts,  yet  if  he  was  involved 
'to  a  material  extent,'  by  which  we  are  to  understand  an  extent  which 
might,  in  view  of  ordinary  contingencies,  endanger  the  rights  of  his  credi- 
tors, then  the  deed  was  constructively  fraudulent  as  to  subsequent  as  well  as 
pre-existing  debts;  for  in  such  a  case  a  fraudulent  intent  is  implied;  and  the 
deed  was  void  for  express  fraud,  if  from  the  extent  of  the  grantor's  indebt- 
edness, compared  with  his  means  of  paying,  the  unreasonableness  of  the  con- 
veyance as  an  advancement  to  the  appellant,  considering  the  claims  of  other 
children,  and  other  attending  circumstances,  the  inference  is  justified  that 
the  grantor  made  the  conveyance  for  the  purpose  of  avoiding  the  payment 
of  his  liabilities  ":  Lowry  v.  Fisher,  2  Bush,  70;  92  Am.  Dec.  475. 

No  case  has  come  within  our  observation  in  which  a  voluntary  transfer 
has  been  sustained  against  a  pre-existing  creditor  when  the  grantee  was  not 
a  member  of  the  grantor's  family,  and  as  such  the  natural  object  of  his 
bounty;  nor,  on  the  other  hand,  have  we  met  with  any  case  declaring  that 
such  a  transfer  could  not  be  upheld  because  made  to  a  stranger.  Doubtless 
the  fact  that  the  donee  is  bound  to  the  donor  by  the  ties  of  consanguinity  or 
even  affinity  is  worthy  of  great  consideration,  because  it  is  natural  aad 
commendable  for  one  whose  financial  standing  enables  him  to  do  so  to  provide 
for  and  secure  against  want  in  the  future  the  members  of  his  family,  and  it 
is  more  probable  that  a  voluntary  transfer  to  them  may  have  been  made 
without  any  fraudulent  intention  than  a  like  transfer  to  a  stranger.  If, 
however,  a  voluntary  transfer  should  be  made  to  one  not  related  to  the  gran- 
tor, and  not  especially  entitled  to  his  benefaction,  and  from  the  grantor's 
financial  ability  at  the  time,  and  from  all  the  surrounding  circumstances,  the 
court  and  jury  should  be  convinced  of  the  absence  of  all  fraudulent  intent, 
we  see  no  reason  for  denying  the  validity  of  the  transfer,  though  the  grantor 
may  have  been  indebted  at  the  time,  provided  that  such  debts  bore  an  incon- 
siderable ratio  to  his  remaining  assets. 

The  right  of  a  husband  or  father  to  make  conveyances  to  his  wife  or  chil- 
dren, notwithstanding  the  existence  of  indebtedness  against  him  at  the  time,  is 
now  well  established  in  a  majority  of  the  states.  Still  these  gifts  cannot  be 
sustained  if  they  embrace  all  the  grantor's  property,  or  even  if  he  is  finan- 
cially embarrassed,  or  if  he  ought,  as  a  prudent,  practical  man,  to  foresee  that 
they  will  result  in  some  of  his  creditors  being  deprived  of  the  means  of  ob- 
taining payments  of  their  debts.  One  has  no  right  to  be  generous,  even  to 
the  members  of  his  family,  if  his  generosity  will  probably  be  at  the  expense 
or  detriment  of  his  creditors:  Marmon  v.  Harwood,  124  111.  104;  7  Am.  St. 
Rep.  345;  Howe  v.  Wassman,  10  Mo.  169;  49  Am.  Dec.  126;  Lewis  v.  Love,  2 
B.  Mon.  345;  38  Am.  Dec.  161. 

Though  it  is  doubtful  whether  the  property  which  the  grantor  retains  may 
not  be  sufficient  to  discharge  all  his  liabilities,  a  voluntary  conveyance  to  his 
wife  and  children  must  be  pronounced  fraudulent,  if  the  amount  of  his  in- 
debtedness is  large,  and  he  is  fearful  that  his  property  may  not  be  sufficient 
to  pay  it,  and  especially  if  his  conceded  insolvency  follows  within  a  short 
time  after  the  execution  of  the  voluntary  transfer:  UtewarC  v.  Rogers,  25  lowa^ 


750  Haqerman  v.  Buchanan.         [New  Jersey, 

395;  95  Am.  Dec.  794;  Driggs  v.  Norwood,  50  Ark.  42;  7  Am.  St.  Rep.  78. 
If,  on  the  other  hand,  the  property  to  which  the  grantor  retains  the  title 
after  making  a  voluntary  transfer  is  at  the  time  unquestionably  sufficient  to 
discharge  all  his  lial)ilities,  and  the  transfer  is  no  more  than  a  reasonable  gift 
in  view  of  his  remaining  assets,  his  ability  to  earn  money,  and  the  demands 
which  are  likely  to  be  made  upon  him,  then  the  transfer  should  be  sustained, 
unless  it  appears  from  other  circumstances  to  have  been  made  for  a  fraudu- 
lent purpose:  Gridley  v.  Wataon,  5.3  111.  193;  Cole  v.  Tyler,  65  N.  Y.  78;  Ar- 
ix'tt  V.  Wanett,  6  Ired.  41;  Winchester  v.  Charter,  97  Mass.  140;  Taylor  v. 
Eistman,  92  N.  C.  601;  Miller  v.  Pierce,  6  Watts  &  S.  101;  WaUhv.  Ketchum, 
84  Mo.  427;  French  v.  Holmes,  67  Id.  186;  Miles  v.  Richards,  Walker,  477;  12 
Am.  Dec.  584;  Morgan  v.  Hecker,  74  Cal.  540. 

Though  a  donor  is  considerably  indebted  at  the  date  of  the  transfer,  if  he 
continues  solvent  for  a  long  period  of  time  afterwards,  during  which  his  credi- 
tors might  have  obtained  payme\it  of  his  debt  by  the  exercise  of  ordinary 
diligence,  they,  after  lying  supinely  by  until  their  debtor's  position  is  changed 
from  one  of  comparative  affluence  to  one  of  insolvency,  cannot  wrest  from  the 
voluntary  grantees  of  the  latter  property  which  he  bad  transferred  to  them, 
without  at  the  time  of  the  transfer  depriving  himself  of  the  means  to  fully 
satisfy  all  his  creditors:  Eiglebergerv.  Kibler,  1  Hill  Eq.  113;  26  Am.  Dec.  192; 
Lloyd  V.  Fulton,  91  U.  S.  479. 

It  remains  for  us  to  consider  when  a  voluntary  transfer  may  be  avoided  by 
a  creditor  of  the  grantor,  who  was  not  such  at  the  time  it  was  made.  Here, 
as  in  the  case  of  pre-existing  creditors,  the  inquiry  is  concerning  the  intent 
of  the  grantor,  as  it  must  be  inferred  from  all  the  circumstances,  both  prior 
and  subsequent,  which  may  properly  be  considered  as  throwing  light  upon 
such  intent  and  revealing  its  character.  For  if  it  be  established  that  the 
purpose  of  a  voluntary  transfer  was  to  hinder,  delay,  or  defraud  the  creditors 
of  the  grantor,  then  it  must,  as  a  general  rule,  be  adjudged  void  as  against 
subsequent  as  well  as  against  prior  creditors.  Subsequent  creditors  may 
therefore  avoid  a  voluntary  transfer  made  by  their  debtor  by  satisfactorily  es- 
tablishing that  it  was  made  with  a  design  to  defraud  the  grantor's  pre-exist- 
ing creditors:  Bassett  v.  McKenna,  52  Conn.  437;  Wyman  v.  Brown,  50  Me. 
139;  Lowry  v.  Fisher,  2  Bush,  70;  92  Am.  Dec.  754;  Barling  v.  Bishop,  29 
Beav.  417;  Hutchinson  v.  Kelly,  1  Rob.  (Va.)  123;  39  Am.  Dec.  250;  Vertner 
v.  Humphries,  14  Smedes  &  M.  130;  Carpenter  v.  Boe,  10  N.  Y.  227;  Pai-ish  v. 
Mnphee,  13  How.  92;  Walsh  v.  Byrnes,  39  Minn.  527;  Day  v.  dooley,  118 
Mass.  524;  Dewey  v.  Moyer,  72  N.  Y.  70;  Marston  v.  Marston,  54  Me.  476. 
While  the  rule  as  thus  stated  is  expressed  without  limitation  in  many  of  the 
adjudged  cases,  we  think  it  is  necessarily  subject  to  several  limitations  or  qual- 
ifications. A  voluntary  or  even  a  fraudulent  transfer  is  not  absolutely  void; 
it  is  valid  and  effectual  between  the  parties.  The  utmost  which  can  reason- 
ably be  claimed  in  favor  of  subsequent  creditors  is,  that  it  shall  not  be  per- 
mitted to  operate  as  a  fraud  upon  them.  A  voluntary  conveyance  may  have 
been  intended  as  a  fraud  upon  then  existing  creditors,  without,  as  we  think, 
making  it  necessarily  fraudulent  as  to  subsequent  creditors.  The  voluntary 
transfer  may  have  been  made  so  long  prior  to  the  contracting  of  a  subsequent 
debt  that  it  is  impossible  to  conceive  that  it  could  have  been  made  with  a 
view  of  contracting  it.  And  where  this  is  the  case,  we  do  not  understand 
how  it  can  properly  be  regarded  as  fraudulent  as  against  this  subsequent 
creditor,  nor  upon  what  principle  he  may  be  permitted  to  disregard  it,  if  he 
had  notice  of  it,  or  did  not  permit  the  debt  to  be  contracted  in  the  reasonable 
belief  that  his  debtor  was  still  the  owner  of  the  property  which  had  been  long 


March,  1889.]        Hagerman  v.  Buchanan.  751 

previously  transferred.  In  other  words,  it  seems  to  ns  that  a  voluntary 
transfer,  fraudulent  and  void  as  against  existing  creditors,  is  not  forever 
thereafter  void  as  against  subsequent  creditors,  however  remote  the  creation 
of  their  debts  may  have  been  from  the  execution  of  the  convejance. 

The  grantor  in  a  voluntary  deed  may  part  with  all  possession  and  domin- 
ion over  the  property,  or,  when  it  is  real  estate,  the  grantee  may  cause  the 
conveyance  to  be  recorded,  and  thereby  impart  notice  of  its  existence  to  all 
Bubsequent  purchasers  and  creditors  of  the  grantor.  In  either  event,  all  sub- 
sequent creditors  of  the  grantor  have  notice  of  his  existing  financial  condition. 
They  have  no  reason  to  expect  that  the  property  which  has  thus  been  trans- 
ferred can  be  made  available  to  them  for  the  satisfaction  of  their  debts. 
Knowing  that  the  debtor  no  longer  has  this  property,  they  may  contract 
with  him  or  not,  as  they  may  think  best,  in  view  of  his  apparent  financial 
condition.  It  is  difficult,  therefore,  to  understand  how  they  can  be  defrauded 
by  the  prior  transfer  of  which  they  are  thus  notified.  It  has  been  said  that 
if  they  liave  notice  of  the  transfer,  they  also  have  notice  that  it  was  fraudu* 
lent  as  against  pre-existing  creditors,  and  that  it  is  therefore  void,  and  that 
they  may  therefore  go  on  contracting  with  the  grantor  upon  the  assumption 
that  the  apparent  conveyance  is  in  fact  no  conveyance  at  all,  because  it  was 
fraudulent  and  void  in  its  inception.  But  the  better  rule,  we  think,  is,  that 
creditors  who  contract  debts  under  such  circumstances  that  the  knowledge 
of  previous  voluntary  transfers  must  be  imputed  to  them  cannot  be  regarded 
as  hindered,  delayed,  or  defrauded  by  such  transfers,  and  therefore  cannot 
avoid  them  for  the  purpose  of  obtaining  collection  of  their  debts:  Schumherg 
V.  Beberintein,  51  lex.  457;  Lews  v.  Castleman,  27  Id.  407;  Monroe  v.  Smith, 
79  Pa.  St.  459;  Snyder  v.  Christ,  39  Id.  499;  Fowler  v.  Stoncum,  11  Tex.  478; 
62  Am.  Dec.  490;  Leioh  v.  Simon,  72  Tex.  470;  Baker  v.  Gilman,  52  Barb.  39; 
De  Garcia  v.  Galvan,  55  Tex.  53;  Bullett  v.  Taylor,  34  Miss.  708;  69  Am.  Dec. 
412.  If,  on  the  other  hand,  a  conveyance  of  real  estate  is  not  recorded  so 
as  to  impart  constructive  notice  thereof  to  subsequent  purchasers  and  cred- 
itors, or  if,  in  the  case  of  a  voluntary  gift  of  personal  property,  the  donor  re- 
mains in  possession,  exercising  the  same  dominion  over  it  which  other  owners 
exercise  over  like  property,  then  subsequent  creditors  may  undoubtedly  assail 
the  transfer  as  fraudulent  upon  as  favorable  terms  as  if  they  had  been  cred- 
itors whose  debts  existed  before  the  transfer  which  they  seek  to  assail:  SeaU 
V.  Robinson,  75  Ala.  363;  Savage  v.  Muryhy,  34  N.  Y.  508;  90  Am.  Dec. 
733. 

As  we  have  heretofore  shown,  a  voluntary  transfer  by  one  who  is  indebted 
at  the  time  is  presumed  to  be  fraudulent  as  ayairist  pre-existing  creditors. 
Whether  a  transfer  by  one  in  like  circumstances  is  presumed  fraudulent  or 
not  as  against  subsequent  creditors,  is  a  question  less  easily  answered  from 
the  authorities.  The  principal  case,  as  well  as  some  others,  favors  the  rule 
that  a  subsequent  creditor  must  assume  the  burden  of  proving  that  a  volun- 
tary transfer  which  he  seeks  to  avoid  was  fraudulent  as  against  him;  or  in 
other  words,  that  ic  was  made  when  the  grantor  had  a  purpose  to  subse- 
quently contract  the  liability  in  question,  and  to  defraud  his  creditors  thereby: 
Crawford  v.  Beard,  12  Or.  447.  See  also  Niduolaa  v.  Ward,  1  Head,  323;  73 
Am.  Dec.  177. 

It  has  sometimes  been  held  that  if  the  facta  are  shown  to  be  such  as  to  ren- 
der a  transfer  fraudulent  as  against  prior  creditors,  it  will  be  presumed  also 
to  be  fraudulent  as  against  subsequent  creditors;  that  is  to  say,  it  will  ba 
presumed  to  have  been  made  with  the  intent  of  contracting  subsequent  debts, 
and  of  delaying,  hindering,  and  defrauding  subsequent  creditors:    Jiogeri  t. 


752  Hagerman  v.  Buchanan.  [New  Jersey, 

Verlander,  30  W.  Va.  619;  Edwards  v.  EiUnustle,  2  Mackey,  43;  Horn  v. 
Volcano  Water  Co.,  13  Cal.  62;  73  Am.  Dec.  569. 

We  apprehend  that  no  general  rule  can  be  formulated  equally  applicable 
to  all  cases,  and  that  such  judicial  declarations  as  have  been  made  upon  the 
subject  must  be  interpreted  with  reference  to  the  particular  facts  of  the  case 
in  which  they  were  made.  If  the  subsequent  debts  were  contracted  long 
after  the  voluntary  transfer  was  made,  the  presumption  that  it  might  have 
been  made  with  a  view  of  contracting  them  and  of  defrauding  the  siil). 
sequent  creditors  certainly  becomes  exceedingly  weak,  aud  may  reasonalily 
be  treated  as  entirely  destroyed,  unless  other  circumstances  appear  to  give 
it  renewed  vitality.  The  evidence  may,  on  the  other  hand,  disclose  that  the 
subsequent  debts  have  merely  taken  the  place  of  prior  ones,  or  that  the 
debtor  has  continued  or  embarked  in  a  business  in  which  his  becoming  indebted 
was  inevitable,  or  there  may  be  other  circumstances  of  the  like  persuasive 
character  creating  or  strengthening  the  presumption  that  as  the  transfer 
was  in  fraud  of  prior  it  was  also  in  fraud  of  subsequent  creditors.  In  the 
one  class  of  cases,  the  courts  are  likely  to  insist  that  the  transfer  must  be 
assumed  as  valid  as  against  subsequent  creditors,  and  that  they  must  rebut 
this  assumption.  In  the  other  class,  the  courts  are  almost  inevitably  led  to 
presume  that  the  transfer  was  fraudulent  as  against  prior  creditors,  and 
to  call  upon  the  donee,  or  those  claiming  under  him,  to  overcome  such  pre- 
sumption. 

In  some  of  the  states,  the  presumption  that  a  deed  shown  to  be  fraudulent 
as  against  existing  creditors  is  also  fraudulent  and  void  as  against  subsequent 
creditors  is  given  very  great,  if  not  absolutely  conclusive,  force,  if  the  grantor 
was  at  the  time  largely  indebted  or  seriously  embarrassed,  or  if  the  property 
80  transferred  constituted  the  whole  or  even  a  greater  part  of  his  fortune: 
Vertner  v.  Humphries,  14  Smedes  &  M.  143;  Lush  v.  Wilkinson,  5  Ves.  387; 
Holloway  v.  Millard,  1  Madd.  417. 

In  Roijers  v.  Verlander,  30  W.  Va.  619,  it  appeared  that  the  grantor  exe- 
cuted a  voluntary  conveyance  of  more  than  two  thirds  in  value  of  his  real 
estate,  and  that  he  had  no  personal  property,  and  that  within  less  than  a 
year  thereafter  executions  were  issued  against  him,  and  returned  unsatis- 
fied. The  court  was  convinced  that  the  property  which  he  retained  was  not 
ample  to  satisfy  all  his  existing  creditors,  and  that  the  inference  was  justified 
that  the  voluntary  gift  was  intended  not  only  to  hinder,  delay,  and  defraud 
his  existing  creditors,  but  that  it  was  also  actually  intended  to  defraud  his 
future  creditors.  The  English  cases  also  suppoi  t  the  rule  that  if  the  grantor 
was  insolvent  at  the  time  he  made  a  voluntary  conveyance,  or  if  the  transfer 
must  be  regarded  as  unreasonable  in  amount  and  value,  considered  with 
reference  to  his  remaining  fortune,  then  the  presumption  is  justified  that  the 
transfer  was  intended  to  defraud  subsequent  as  well  as  prior  creditors:  Spirett 
V.  Willows,  3  De  Gex,  J.  &  S.  293;  Taylor  v.  Coenen,  34  L.  T.,  N.  S.,  18. 
So  in  Connecticut,  when  it  appears  that  the  grantor  was  largely  indebted 
and  insolvent,  and  that  he  gave  away  the  only  means  of  his  satisfying  his 
creditors,  and  that  the  grantee  knew  of  his  financial  condition,  it  will  be  pre- 
sumed, either  that  the  grantor  was  incapable  of  managing  his  affairs,  or  in- 
competent to  make  a  conveyance,  or  that  he  made  it  "  under  some  secret 
hope  or  expectation  of  benefit  to  himself  from  the  use  of  the  property,  or 
some  equivalent  for  it  after  the  conveyance";  and  that  the  transaction  is 
corruptly  fraudulent,  and  that  "if  the  grantor,  at  the  time  the  deed  was 
made,  was  indebted  to  the  extent  of  insolvency,  or  perhaps  of  great  embar- 
rassment, so  as  to  create  a  reasonable  presumption  of  a  fraudulent  de»i>:ii. 


March,  1889.]        Hagerman  v.  Buchanan.  753 

the  deed  may  be  impeached  even  by  a  subsequent  creditor,  unless  the  pre- 
Bumption  is  repelled  by  showing  that  such  prior  debts  were  secured  by  pro- 
vision in  their  favor  in  the  deed  itself ":  Redjield  v.  Buck,  35  Conn.  328;  95 
Am.  Dec.  241. 

These  are  extreme  views,  and  in  our  judgment  not  sustainable  upon  prin- 
ciple. Before  subsequent  creditors  can  avoid  a  transfer,  it  must  appear  to  be 
at  least  probable  that  it  may  have  been  made  with  a  design  to  hinder,  delay, 
or  defraud  them.  Though  the  grantor  has  no  other  property,  and  never  ex- 
pects to  have  any,  his  conveyance  cannot  be  fraudulent  if  he  owes  no  debts, 
does  not  meditate  the  contracting  of  any,  and  is  not  in  any  business  nor 
about  to  enter  upon  any  business  in  the  transaction  of  which  he  is  likely  to 
become  indebted:  Thompson  v.  Allen,  103  Pa.  St.  44;  49  Am.  Rep.  116. 

If  the  creditor  is  but  little  indebted  at  the  time  of  making  a  voluntary 
transfer,  and  there  are  no  attending  nor  immediately  subsequent  circumstan- 
ces to  create  a  suspicion  of  meditated  fraud  on  his  part,  such  transfer  cannot 
be  successfully  attacked  by  subsequent  creditors:  Dodd  v.  McCraw,  8  Ark.  83; 
46  Am.  Dec.  301;  Pelhnm  v.  Aldrich,  8  Gray,  515;  69  Am.  Dec.  266,  If  the 
grantor  is  entirely  free  from  debts,  the  case  is  still  more  clear,  if  possible. 
There  not  only  cannot  be  any  presumption  in  favor  of  such  subsequent  credi- 
tors that  the  transfer  was  fraudulent;  the  presumption  must  necessarily  be 
the  other  way,  unless  it  appears  that  the  grantor  was  about  to  enter  upon 
some  business  or  meditated  some  scheme  in  which  he  was  about  to  become 
indebted,  and  was  seeking  in  some  manner  to  throw  the  hazard  of  such  busi- 
ness or  scheme  upon  his  subsequent  creditors  instead  of  assuming  it  himself, 
as  he  should  in  good  faith  do:  Smith  v.  Vodgers,  92  U.  S.  183;  Rock  Island 
Stove  Co.  V.  Walrod,  75  Iowa,  479;  Martin  v.  Olliva;  9  Humph.  561;  49  Am. 
Dec.  717;  Gilli'jan  v.  Lord,  51  Conn.  562;  Wheeler  &  W.  M.  Co.  v.  Monahan, 
S3  Wis.  198. 

There  is  no  doubt  that  a  creditor  who  becomes  such  after  an  involuntary 
transfer  had  been  made  by  him  may  attack  and  overthrow  it  by  establishing 
that  it  was  fraudulent  as  to  liim:  Lewis  v.  Simon,  72  Tex.  40.  And  there  are 
instances,  as  we  have  heretofore  shown,  where  the  debtor's  doubtful  financial 
condition  may  cast  the  burden  of  proof  upon  the  donee  or  his  successors  in 
interest:  Moritz  v.  Hoffman,  35  111.  559;  Stillman  v.  Ashdoivn,  2  Atk.  481. 
The  most  familiar  instances  of  a  voluntary  conveyance  being  declared  fraud- 
ulent as  against  subsequent  creditors  are  those  arising  when  the  transfer  is 
made  with  a  view  of  embarking  in  some  hazardous  business,  of  becoming  in- 
debted therein,  and  in  case  the  business  shall  prove  unprofitable,  of  escaping 
from  loss  through  the  aid  of  such  previous  transfer-  Mackay  v.  Douglas,  41 
L.  J.  Ch.  539.  "  A  settlement  on  a  wife  on  the  eve  of  a  new  business,  and 
with  a  view  of  providing  against  its  contingencies,  is  as  unavailing  against 
new  creditors  as  against  old  ones":  Littleton  v.  Littleton,  1  Dears.  &  B.  327; 
Bh,  ,[■  V.  Nease,  37  Pa.  St.  433;  Graham  v.  O'Keefe,  16  Irish  Ch.  1;  Murphy  v. 
Ahrahnm,  15  Ir.  Eq.,  N.  S.,  571;  Moritz  v.  Unpnan,  35  111.  558.  If  a  convey- 
ance is  "made  in  anticipation  of  becoming  indebted,  and  for  the  purpose  of 
defrauding  creditors,  and  without  consideration,  it  matters  not  whether  the 
grantor  was  insolvent  or  not,  and  the  conveyance  is  void  as  against  subse- 
quent creditors.  Hence,  where  a  debtor  in  failing  circumstances  made  a  con- 
veyance of  his  property  to  his  mother  without  consideration,  and  the  next 
day  after  the  execution  of  tliis  deed  received  a  loan  of  money,  for  which  loan 
he  had  previously  negotiated,  it  was  held  that  it  might  fairly  be  inferred, 
from  the  circumstances  attending  the  execution  of  the  deed  and  the  making 
of  the  debt,  that  tlie  conveyance  was  made  in  anticipation  of  becoming 
Am.  St.  Rkp..  Vol.  XIV.  -  48 


754  George  v.  Braddock.  [New  Jersey, 

indebted,  and  was  therefore  fraudulent  as  against  the  debt  subsequently  con- 
tracted": Morrill  v.  Kilner,  113  111.  318.  "But  a  voluntary  deed  may  likewise 
be  void  as  to  creditors  whose  claims  are  contracted  subsequent  to  its  execu- 
tion. If  the  grantor  of  such  a  deed  executes  it  in  the  expectation  of  shortly 
contracting  debts,  and  with  the  design  of  so  placing  the  property  so  conveyed 
that  if  misfortune  afterwards  befalls  him,  and  he  becomes  unable  to  pay  his 
debts,  it  shall  be  beyond  the  reach  of  his  creditors,  the  deed  will  be  held  void 
on  the  ground  of  fraud.  To  illustrate:  if  a  person  just  on  the  eve  of  em- 
barking in  a  business  which  requires  both  capital  and  credit  to  conduct  it 
successfully,  should,  by  a  voluntary  conveyance,  strip  himself  of  a  large  por- 
tion of  his  property,  and  make  it  over  to  his  wife,  or  distribute  it  among  his 
children,  and  then  procure  the  conveyance  to  be  M'ithheld  from  record,  so 
that  he  might  still  trade  upon  the  property  as  its  owner,  and  in  the  interval 
incur  debts  beyond  his  ability  to  pay,  the  transaction  would  furnish  such  co- 
gent evidence  of  fraud  against  both  grantor  and  grantee  that  no  court  would 
allow  the  deed  to  stand  for  an  instant  against  the  persons  who  had  been  de- 
frauded by  it.  The  law  on  this  subject  is  established.  A  citation  of  authori- 
ties is  only  useful  to  show  how  the  law  has  been  applied  in  particular 
instances":  City  National  Bank  v.  Hamilton,  34  N.  J.  Eq.  160;  MuUer  v.  WiU 
son,  44  Pa.  St.  413;  84  Am.  Dec.  416;  Beeckman  v.  Montgomery,  14  N.  J.  Eq. 
106;  80  Am.  Dec.  229. 

The  mere  fact  that  a  grantor  has  become  indebted  after  making  a  voluntary 
transfer,  and  that  he  is  unable  to  pay  such  debts,  is  not  conclusive  in  favor  of 
subsequent  creditors.  To  so  hold  would  place  prior  and  subsequent  creditors 
on  the  same  footing.  The  grantor  may  not  have  intended,  when  he  made  the 
transfer  in  question,  to  embark  in  any  business  or  to  become  indebted  to  any 
extent  whatever.  If  so,  his  conveyance  could  not  have  been  fraudulent  as 
against  subsequent  creditors:  Hornv.  Boss,  10  Ga.  210;  65  Am.  Dec.  64.  The 
court  or  jury  must  be  left  to  determine,  from  the  fact  of  the  subsequent  in- 
debtedness, its  proximity  to  or  remoteness  from  the  transfer,  and  all  the 
other  circumstances  disclosed  at  the  trial,  whether  the  creation  of  the  debt 
was  contemplated  at  the  time  of  the  transfer  or  not.  If  it  was  contemplated, 
its  holder  occupies  a  position  not  less  advantageous  than  if  he  were  a  prior 
creditor. 


George  v.  Braddock. 

[45  New  Jersey  Equity,  757.] 

Charitable  Use,  What  is.  —  A  Devise  of  Property,  to  "  Con.stitute 
A  Sacred  Trust  for  the  express  purpose  of  spreading  the  light  of 
social  and  political  liberty  and  justice  in  these  United  States  of  Amer- 
ica," creates  a  charitable  use. 

Charitable  Use.  —  The  Only  Restriction  Which  has  been  Imposed 
ON  Devises  for  the  Better  Distribution  of  Specified  Writings 
or  Books  is,  that  the  writings  to  be  circulated  must  not  have,  when 
considered  with  respect  to  their  purpose,  a  general  tendency  of  hostility 
to  religion,  law,  or  morals. 

Charitable  Use.  —  The  Courts  will  Permit  the  Enforcement  of  a 
Testamentary  Use  which  is  designed  to  circulate  works  calling  in 
question  fundamental  rules  and  establishments  of  the  law,  and  agitating 
the  question  whether  such  law  has  or  has  not  any  better  foundation  than 
wrong  and  injustice. 


AMERICAN  STATE  REPORTS. 

VoT,.   XV,   Paces  ;nS-3G0. 
McALTJSTER  v.  DETROIT  FREE  PRESS. 

[76  Michigan,  3'.>8.] 
Libel. 


318  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

whether  the  defendant  was  not  notified  in  writing  of  the  whole 
title,  and  of  the  purpose  to  protect  the  mortgage  interest.  But 
we  have  enough  to  show  that  the  existence  of  the  mortgage 
was  not,  by  itself,  of  any  effect  in  impairing  the  policy,  and 
the  destruction  of  it  by  the  beginning  of  foreclosure  would  be 
a  consequence  not  reasonable,  and  not  to  be  inferred  without 
convincing  provisions,  which  we  do  not  discover,  as  changing 
the  former  decision  of  this  court. 

We  think  the  judgment  should  be  affirmed. 


Insurance.  —  If  the  policy  requires  the  statement  of  certain  facta,  and 
their  expression  in  the  policy,  and  the  insured  states  the  facts  to  an  agent, 
but  the  agent  does  not  insert  them  in  the  policy  issued,  the  omission  cannot 
be  allowed  to  prejudice  the  insured:  Lycoming  Fire  Ins.  Co.  v.  Jackson,  83 
111.  302;  25  Am.  Rep.  386. 

Insurance.  —  Where  a  woman,  ignorant,  and  unable  to  read  English,  pro- 
cured insurance  upon  property  owned  by  her  children,  but  in  which  she  had 
a  dower  interest,  and  it  appearing  she  did  not  know  the  distinction  between 
"dower"  and  "fee,"  and  was  ignorant  of  the  provisions  of  the  policy  stipu- 
lating for  a  forfeiture  if  the  assured  did  not  own  in  fee  the  insured  property, 
the  policy  was  valid,  where  the  agent  had  knowledge  of  the  facts,  and  there 
was  no  fraud  on  the  part  of  the  assured:  Hartford  Ins.  Co.  v.  Haas,  87  Ky. 
532;  compare  Baker  v.  Ohio  Farmers'  Ins.  Co.,  70  Mich.  199;  14  Am.  St.  Rep. 
485,  and  note;  Home  Mutual  F.  Ins.  Co.  v.  Oarfield,  60  111.  124;  14  Am. 
Rep.  27. 


McAllister  v.  Detroit  Free  Press  Company. 

176  Michigan,  3S8.J 

Libel.  —  Publication  of  Newspaper  Item  Confessedly  Untrue  in 
Several  Particulars,  all  of  which  tended,  in  the  connection  used,  to 
carry  the  impression  that  the  parties  named  therein  were  guilty  of  felony, 
is  clearly  libelous  per  se,  and  the  question  for  the  jury  is  only  one  of 
damages. 

Libel.  —  No  Newspaper  has  Any  Right  to  trifle  with  the  reputation  of 
any  citizen,  or  by  carelessness  or  recklessness  to  injure  his  good  name 
and  business  without  answering  for  the  libel  in  damages,  and  the  greater 
the  circulation  of  the  paper  the  greater  the  wrong,  and  the  more  reason 
why  greater  care  should  be  exercised  in  the  publication  of  personal 
items. 

Libel.  —  Newspaper  Reporter  has  No  Right  to  collect  stories  on  the 
street,  or  gather  information  from  policemen  or  magistrates  out  of  court, 
about  a  citizen,  to  his  detriment,  and  to  publish  them  as  facts  in  his 
newspaper.  If  true,  such  publication  may  be  privileged;  but  if  false, 
the  newspaper  is  responsible  to  any  one  who  is  wronged  thereby. 

Libel  —  False  Publication  of  Arrest  and  Imprisonment. — A  party 
cannot  be  subjected  to  the  wrong  and  outrage  of  a  false  publication  of 
his  arrest  and  imprisonment,  looking  toward  his  guilt,  without  remedy; 
and  no  excuse  of  the  demajid  of  the  public  for  news,  or  of  the  peculiarity 


I 


Oct.  1889.]     McAllister  r.  Detroit  Free  Press  Co.         319 

and  magnitude  of  newspaper  work,  can  avail  to  alter  the  law  so  as  to 
leave  the  injured  party  without  redress  and  recompense  for  a  wrong, 
which,  under  the  law,  can  never  be  adequately  compensated  to  one  who 
values  his  reputation  more  than  money. 

Libel  —  Privileged  Communications.  —  The  truth  is  privileged  when  pub- 
lished from  good  motives  and  for  justifiable  ends,  and  that  which  is  not 
true,  but  honestly  believed  to  be  true,  and  published  in  good  faith  by 
one  in  the  performance  of  public  or  official  duty,  in  certain  cases,  is  also 
privileged. 

Libel  —  Privileged  Communications. — Communications  made  to  a  body 
or  officer  having  power  to  redress  a  grievance  complained  of,  or  having 
cognizance  of  the  subject-matter  of  the  communications,  to  some  intent 
or  purpose,  are  privileged,  and  so  in  cases  where  the  communication  is 
made  confidentially,  or  upon  request,  where  the  party  requiring  the  in- 
formation has  an  interest  in  knowing  the  character  of  the  person  inquired 
after.  So  a  person  may  be  justified  when  honestly  endeavoring  to  vin- 
dicate his  own  interests,  as  in  a  case  of  slander  of  title,  or  guarding 
against  any  transaction  which  might  operate  to  his  own  injury. 

Libel.  — Liberty  of  the  Press,  as' the  law  now  stands,  is  only  a  more  ex- 
tended and  improved  use  of  the  liberty  of  speech  prevailing  before 
printing  became  general;  and,  independent  of  statute,  the  law  recog- 
nizes no  distinction  in  principle  between  a  publication  by  a  newspaper 
and  a  publication  by  any  other  person.  A  newspaper  is  not  privileged, 
as  such,  in  the  dissemination  of  the  news,  but  is  liable  for  what  it  pub- 
lishes in  the  same  manner  as  any  other  individual. 

Corliss,  Andrus,  and  Leete,  and  Edwin  F.  Conely,  for  the  ap- 
pellant. 

F.  A.  Bakery  for  the  defendant. 

Morse,  J.  On  Saturday,  February  11,  1888,  the  plaintiff 
and  one  Lester  B.  French,  two  reputable  citizens  of  Detroit, 
crossed  over  to  Windsor.  French  went  to  Windsor  to  dispose 
of  about  twenty -seven  dollars  of  Canadian  postage-stamps 
which  he  had  purchased  of  Dr.  Kennedy,  of  Detroit.  McAl- 
lister went  with  French,  because  the  latter  asked  him  to,  and 
did  not  know  what  was  the  object  of  French's  visit. 

After  they  arrived  at  Windsor,  they  met  a  Mr.  Ronald,  who 
resided  there,  and  walked  up  to  the  Manning  House,  which 
was  soon  to  be  opened,  for  the  purpose  of  looking  through  it, 
having  been  invited  to  do  so  by  Mr.  Ronald.  When  they  got 
there,  the  house  was  locked,  and  Mr.  Ronald  had  no  key  to  it. 
From  there  they  went  to  the  post-office.  French  went  to  the 
Btamp-window,  and  asked  the  gentleman  there,  who  proved  to 
be  the  assistant  postmaster,  if  he  would  take  some  stamps 
*'that  had  been  sent  to  us  on  the  other  side";  told  him  that 
he  got  the  stamps  from  a  physician  on  this  (American)  side. 
The  man  said  (so  French  testifies,  and  it  is  not  disputed): 


820  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

"No,  we  cannot  take  them  here";  and  directed  him  to  a  book 
or  stationery  store  a  few  doors  below.  McAllister  stayed  in 
the  post-office  until  French  was  through,  but  did  not  know 
what  the  latter  was  doing. 

From  the  post-office  they  went  to  the  book-store.  French 
explained  at  this  store  how  he  came  to  have  the  stamps,  and 
offered  them  for  sale.  The  man  at  the  store  said  he  had  so 
many  on  hand  he  could  not  use  them,  and  directed  French 
to  another  book-store.  They  then  went  to  the  second  book- 
store, where  French  sold  about  ten  dollars'  worth  of  stamps, 
at  a  discount  of  from  three  to  five  per  cent.  Before  going  to 
this  store,  they  stopped  at  another  place,  where  French  offered 
stamps  for  sale,  but  sold  none.  McAllister  knew  what  French 
was  doing  after  they  left  the  post-office.  French  might  have 
sold  all  his  stamps  at  the  book-Store  at  ten  per  cent  discount, 
but  declined  to  do  so. 

As  they  came  out  of  this  store,  they  were  arrested,  and  taken 
to  jail  by  a  policeman,  accompanied  by  the  assistant  post- 
master. McAllister  wanted  to  know  what  the  trouble  was,  — 
what  they  were  arrested  for,  —  but  received  no  answer.  French 
said:  "If  there  is  anything  wrong,  if  you  will  take  us  to  the 
telephone  we  will  identify  ourselves.  Here  is  the  man  that 
owns  this  hotel  here.  I  can  telephone  to  him;  he  is  on  the 
other  side  of  the  river,  and  will  come  over.,  I  am  well  ac- 
quainted with  business  men  over  there,  and  we  will  satisfy 
you  that  everything  is  all  right."  The  officer  answered: 
"That  don't  make  any  difference.  Go  with  us,  and  we  will 
take  you  to  a  telephone  all  right." 

They  were  not  taken  to  a  telephone,  but  to  the  jail,  where 
they  were  searched,  and  everything  taken  from  them.  They 
told  the  officers  that  they  lived  in  Detroit,  and  who  they  were. 
The  effects  upon  them, — letters,  the  monogram  upon  McAl- 
lister's watch,  and  a  bank-book  in  the  possession  of  McAllister, 
—  corroborated  their  story,  but  it  was  of  no  avail.  The  chief 
of  police.  Bains,  came  to  them  at  the  station  dressed  in  citi- 
zen's clothes,  and  asked  French  where  he  got  the  postage- 
stamps.  French  asked  him,  "Who  are  you?  "  to  which  Bains 
replied,  "None  of  your  business."  French  then  said:  "Then 
it 's  none  of  your  business  where  I  got  them."  Thereupon 
Bains  fell  into  a  passion,  and  locked  them  up  in  different 
cells. 

After  they  were  locked  up.  Bains  asked  them  who  they 
were,  and  if  they  knew  any  one  in  Detroit.     McAllister  told 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         321 

him  where  he  lived;  that  he  boarded  at  the  Antisdel  House, 
but  had  been  away  from  there.  He  wished  to  send  for  Mr. 
Andrus,  his  attorney,  but  this  was  denied  him.  Bains  asked: 
"Do  you  know  any  detective  in  Detroit?"  They  could  not 
think  of  any,  and  then  Bains  said,  "If  you  don't  know  any 
detective  in  Detroit,  you  don't  live  there,"  and  went  away. 
They  were  put  in  jail  about  half-past  twelve,  and  remained  there 
until  about  seven,  p.  m.  About  three,  p.  m,,  detectives  McDonell 
and  Noble  came  over  from  Detroit,  and  were  asked  if  they 
knew  them,  and  McDonell  said  he  knew  McAllister  well,  and 
related  that  when  McAllister's  house  was  robbed  he  looked  up 
the  case  for  him.  He  also  said  that  he  had  seen  Mr.  French, 
but  could  not  place  him,  but  knew  his  face  well.  McAllister 
said  to  Bains:  "You  have  found  nothing  at  all  suspicious  on 
me.  Can't  you  let  us  sit  in  the  office,  instead  of  putting  us  in 
the  cell  again?" 

But  Bains  said:  "No;  you  go  right  back  in  there." 

He  refused  to  let  them  occupy  the  same  cell.  French- told 
Bains  that  he  got  the  stamps  of  Dr.  Kennedy. 

Bains  came  in  at  one  time  with  a  piece  of  paper  in  his  hand, 
and  said:  "French,  you  are  a  liar.  I  have  telegraphed  to  Dr. 
Kennedy,  and  he  says  he  don't  know  you." 

Bains  let  French  go  to  the  telephone  at  one  time,  but  for 
some  reason  he  could  not  get  Detroit;  and  Bains  said:  "Come 
away  from  there.  I  guess  you  don't  want  to  get  them  very 
bad,  anyway." 

It  seems  that  Mr.  Wigle,  the  postmaster,  made  a  complaint 
before  Alexander  Bartlett,  the  police  magistrate  at  Windsor, 
against  French  and  McAllister,  for  the  unlawful  sale  of  post- 
age-stamps, under  a  Canadian  statute    reading  as    follows: 

"No  person  other  than  a  postmaster  shall  exercise  the  busi- 
ness of  selling  postage-stamps  or  stamped  envelopes  to  the 
public,  unless  duly  licensed  to  do  so  by  the  postmaster-general, 
and  under  such  conditions  as  he  prescribes;  and  every  person 
who  violates  this  provision  by  selling  postage-stamps  or 
stamped  envelopes  to  the  public,  without  a  license  from  the 
postmaster-general,  shall,  on  summary  conviction,  incur  a 
penalty  not  exceeding  forty  dollars  for  each  offense":  38  Vict., 
0.  7,  sec.  74,  being  R.  S.  Can.,  c.  35,  sec.  106. 

Neither  French  nor  McAllister  had  any  knowledge  of  this 

statute,  or  that  they  were  doing  anything  wrong  in  selling  or 

oflFering  these  stamps  for  sale. 
Am.  St.  Kkp.,  Vol.  XV.  — ^1 


322  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

The  complaint  was  read  to  French  and  McAllister,  who 
were  taken  before  the  magistrate  for  that  purpose;  but  the 
magistrate  swears  that  Mr.  Wigle  was  convinced,  by  the  time 
the  complaint  was  read,  that  they  were  innocent  of  any  inten- 
tional violation  of  the  law,  and  withdrew  it.  No  complaint 
was  made  against  them  for  any  other  offense.  There  was 
some  talk  between  Mr.  Wigle  and  the  magistrate  about  the 
robbery  of  a  post-office  at  Bothwell,  Ontario.  The  magistrate 
could  not  swear  that  the  chief  of  police  informed  him  that  he 
suspected  these  men  of  that  robbery,  but  thinks  it  quite  prob- 
able that  he  did.  There  was,  the  magistrate  says,  no  hearing 
or  adjournment  on  the  complaint  made  by  Wigle.  Wigle 
withdrew  it,  and  that  was  the  end  of  it,  as  far  as  the  magis- 
trate was  concerned.  It  was  withdrawn  between  three  and 
four  o'clock,  p.  M. 

But  Mr.  Bains,  as  they  testify,  kept  these  men  incarcerated 
until  after  six  o'clock,  p.  m.,  and  told  them  then  that  he  was 
not  quite  satisfied,  but  they  could  go  if  they  would  come  back 
at  nine,  a.  m.,  on  Monday.  On  Monday  they  went  over,  and 
were  told  they  were  not  wanted.  Bains  swears  that  he  did 
not  require  them  to  return  on  Monday,  but  released  them  un- 
conditionally. While  in  Canada,  French  and  McAllister  re- 
ceived no  intimation  from  any  one  that  they  were  suspected 
of  the  Bothwell  robbery,  and  knew  nothing  about  it. 

The  Detroit  Free  Press  (daily),  on  Sunday,  February  12, 
1888,  contained  a  number  of  items  of  news  under  the  heading 
of  "Windsor."  In  these  items,  and  the  third  one  in  the  list, 
appeared  the  following:  "A  week  ago,  it  will  be  remembered 
that  a  safe  was  cracked  in  Bothwell,  and  that  two  thousand 
dollars  in  money  and  about  thirty  dollars'  worth  of  stamps 
were  stolen.  Yesterday  two  hard-looking  citizens  canvassed 
the  entire  business  part  of  Windsor,  in  the  effort  to  sell 
stamps  at  half-price.  They  at  last  tried  to  sell  the  stamps 
to  Postmaster  Wigle,  who  had  them  arrested.  They  were 
searched  at  the  station,  and  upon  one  of  them  was  found 
thirty  dollars'  worth  of  stamps.  They  gave  their  names  as 
Edward  H.  McAllister  and  Lester  B.  French.  Chief  Bains 
will  hold  them  to  await  developments." 

On  Tuesday,  the  14th  of  February,  1888,  under  the  heading 
of  "Windsor,"  the  Daily  Free  Press  published,  with  other 
items  of  news,  the  following:  "Edward  H.  McAllister  and 
Lester  B.  French,  the  men  who  were  arrested  on  Saturday  for 
trying  to  dispose  of  stamps  at  half-price,  have  been  released. 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         S23 

as  there  was  no  evidence  to  show  that  they  are  the  men  who 
are  wanted  at  Bothwell." 

It  is  not  shown  that  the  Free  Press  ever  made  any  other  or 
further  allusion  to  the  matter.  The  plaintiff  brought  suit 
against  the  Free  Press  company  for  libel,  declaring  upon  the 
first  publication. 

The  defendant  pleaded  the  general  issue,  and  gave  notice 
that  on  the  fourth  day  of  February,  1888,  the  post-office  build- 
ing at  Bothwell,  Ontario,  was  feloniously  broken  into  and 
•entered  by  a  person  or  persons  unknown,  who  did  then  and 
there  steal  Canadian  postage-stamps  of  the  value  of  thirty 
dollars,  and  also  money,  jewelry,  goods,  and  other  personal 
property  of  the  value  of  two  hundred  dollars;  and  that  on  the 
eleventh  day  of  February,  1888,  the  plaintiff  went  to  Wind- 
sor, with  a  companion,  and  offered  for  sale  a  quantity  of 
•Canadian  postage-stamps,  of  the  value  of  about  thirty  dol- 
lars, and  that  among  other  persons  to  whom  he  offered  them 
was  the  assistant  postmaster  at  Windsor;  that  said  assistant 
postmaster  reported  the  facts  of  said  burglary  and  larceny  at 
Bothwell,  and  the  attempt  of  said  plaintiff  and  his  companion 
to  sell  about  the  same  quantity  of  postage-stamps,  to  a  police- 
officer  at  Windsor;  that,  upon  such  information,  said  police- 
officer  had  reasonable  cause  to  suspect  the  said  plaintiff  and 
his  companion  to  have  been  guilty  of  the  felony  aforesaid; 
and  that  thereupon  the  said  police-officer,  by  virtue  of  his 
power  as  such  officer,  arrested  the  said  plaintiff  and  his  com- 
panion, and  took  them  before  Alexander  Bartlett,  a  police 
magistrate  in  Windsor,  to  be  dealt  with  according  to  law. 
*'And  the  said  defendant  will  further  insist  and  prove  that  if 
it  published  the  alleged  libelous  article  set  forth  in  the  plain- 
tiff's declaration,  the  same  was  a  true  and  correct  account  of 
the  said  felony,  and  of  the  arrest  of  the  said  plaintiff  and  his 
companion  by  a  police-officer,  on  his  suspicion  that  they  were 
guilty  of  said  felony;  and  said  article  was  and  is,  in  that 
€ense,  a  true  and  correct  statement  of  the  facts,  and  was  pub- 
lished as  a  privileged  publication,  and  for  good  purposes  and 
justifiable  ends." 

Upon  a  trial  had  in  the  circuit  court  for  the  county  of 
Wayne,  before  a  jury,  Hon.  C.  J.  Reilly,  the  presiding  judge, 
directed  a  verdict  for  the  defendant,  and  judgment  passed  ac- 
cordingly. 

It  is  to  be  presumed  that  the  trial  judge  held  the  publica- 


324  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

tion  to  have  been  privileged,  no  reason  being  stated  in  the 
record  for  his  action. 

In  addition  to  the  facts  of  the  arrest,  as  hereinbefore  stated, 
the  plaintiff  showed  that  he  then  lived  in  Bay  City,  Michigan, 
where  he  had  resided  since  October  16,  1888.  Previous  to  that 
time  he  had  lived  in  Detroit  fourteen  months;  two  years  before 
that  in  Chicago;  eight  months  before  going  to  Chicago  in  Flint, 
Michigan;  and  for  twenty-three  years  before  living  in  Flint  he 
had  resided  in  Detroit  steadily,  and  for  twenty  years  at  one 
place, —  244  Park  Street.  At  the  time  of  his  arrest  he  was 
dealing  in  and  owner  of  real  estate  in  Detroit;  and  French, 
his  companion,  was  also  in  the  same  business,  and  had  an 
office  on  Griswold  Street. 

Plaintiff  first  saw  the  article  in  the  Free  Press  on  the  after- 
noon of  February  12,  1888.  Heard  some  parties  speaking 
about  it  at  the  house  where  he  boarded.  After  the  publication, 
people  halloed  to  him  upon  the  street  in  different  ways,  and  he 
also  received  letters  in  relation  to  it.  At  the  time  he  was 
searched  he  had  two  fifty-cent  American  pieces,  and  two  five 
and  one  three  dollar  gold  pieces,  a  diamond  ring,  and  about 
fifty  dollars  in  money,  including  the  gold  pieces. 

The  defense  showed  the  commission  of  the  robbery  at  Both- 
well  by  some  unknown  person  on  the  night  of  February  4, 
1888.  William  Regan,  the  postmaster  at  that  place,  testified 
that  he  discovered  the  robbery  the  next  day,  and  at  once  no- 
tified the  post-office  inspector  at  London,  Ontario.  Bothwell 
is  about  sixty  miles  from  Windsor.  Regan  testified  that  about 
$110  of  Canadian  postage-stamps  were  taken,  and  about  $80 
in  money,  —  gold,  silver,  and  bills, — $194  in  all,  stamps  and 
money.  Some  jewelry  was  also  taken, — a  watch-chain  and 
some  charms,  —  and  some  gold  pieces,  —  one  five-dollar,  one 
two-and-a-half-dollar,  and  two  one-dollar  gold  pieces.  The 
five-dollar  piece  was  an  American  coin. 

The  defendant  proved  by  Bartlett,  the  magistrate,  that  this 
robbery  at  Bothwell,  under  the  laws  of  Ontario,  was  a  felony, 
and  the  selling  of  stamps  without  license  a  misdemeanor.  It 
also  appears  from  his  testimony  that  the  complaint  was  with- 
drawn before  McAllister  and  French  were  required  to  plead 
to  it. 

William  Bains,  the  chief  of  police,  was  also  sworn  on  behalf 
of  the  defendant.  His  main  evidence  was  given  in  the  attempt 
to  justify  his  conduct  towards  the  prisoners  while  in  his  charge, 
in  which  he  was  not  successful.     He  testified  that  he  gave  no 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         825 

directions  to  have  them  arrested,  and  first  saw  them  at  the 
lock-up,  where  he  went  after  hearing  of  their  arrest.  Before 
their  arrest  he  had  received  from  Mr.  Parker,  the  post-office 
inspector  at  London,  the  following  letter:  — 

"  Post-office  Inspector's  Office. 

"  London,  7  Feby.,  1888. 

*^  Dear  Sir,  —  I  beg  to  inform  you  that  on  the  night  of  Sat- 
urday, fourth  inst.,  the  Bothwell  P.  0.  was  burglarized,  and 
some  $200  in  cash  and  postage-stamps  stolen  from  the  safe. 
There  was  also  a  quantity  of  jewelry  taken,  the  property  of 
the  postmaster's  wife,  consisting  of  1  gold  chain,  long,  with 
fancy  link;  2  lockets,  silver,  —  one  with  gold  chain  attached; 
2  gold  pencil-cases;  1  $5  gold  coin;  1  $2.50  do.;  2  $1  do.;  1 
sovereign,  with  a  hole  in  it,  and  the  name  '  Ella  Rose'  stamped 
across  the  face;  1  25c  gold  coin.  I  will  feel  obliged  if  you 
will  have  such  inquiry  made  by  your  staff  for  the  stolen  goods 
as  you  may  deem  necessary,  as  they  may  be  ofi'ered  for  sale  in 
your  locality.         Yours  truly, 

*'  R.  W.  Parker,  P.  0.  Inspector. 

"  Mr.  Bains,  Chief  of  Police,  Windsor." 

He  was  present  when  French  and  plaintiff  were  searched, 
and  saw  the  articles  found  upon  them,  and  after  they  were 
locked  up  reported  the  case  to  Mr.  Bartlett. 

He  testifies  that  the  finding  of  the  stamps  and  the  gold 
coins  upon  their  persons,  and  the  letter  he  had  received  from 
Parker,  led  him  to  believe  or  suspect  that  these  men  might 
have  had  something  to  do  with  the  Bothwell  robbery;  that  he 
sent  an  officer  over  to  Detroit  to  find  out  about  them,  and  to 
see  Dr.  Kennedy;  that  the  officer  returned  about  six  o'clock, 
p.  M.,  and  reported  that  the  doctor  said  he  had  sold  the  stamps 
to  French,  and  also  that  he  had  been  to  tlie  magistrate,  Bart- 
lett, who  instructed  him  to  release  them. 

On  cross-examination  Bains  testified:  — 

"Q.  Did  you  have  any  talk  with  the  newspaper  reporters 
about  this  matter?  A.  When  these  gentlenjen  left,  one  of 
them  —  I  can't  say  which  —  turned  and  said  to  me:  'Don't 
give  this  to  the  papers.  We  don't  want  this  in  the  papers'; 
and  I  said:  'Gentlemen,  they  will  not  get  it  from  me.'  That 
is  what  passed.  Shortly  after  they  passed  through  the  front 
door,  a  reporter  came  to  me  and  asked  me  about  this  matter, 
and  I  said:  'The  gentlemen  are  released.  It  appears  there  is 
nothing  against  them,  and  I   was   requested    not  to  let  the 


326  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

papers  have  it.'  Who  that  reporter  was  there  for  I  can't  tell 
you. 

"  Q.  Do  you  know  his  name?  A.  No,  sir,  I  don't;  and  I 
don't  know  what  paper  he  was  for. 

"  Q.  You  can't  say  whether  he  was  a  reporter  for  the 
Detroit  Free  Press?  A.  I  don't  know.  That  is  the  only  re- 
porter I  spoke  to  about  it." 

The  policeman  who  arrested  them  testified  to  arresting 
them  on  information  that  they  were  selling  stamps  at  less 
than  their  face  value.  He  knew  about  the  Bothwell  robbery. 
The  assistant  postmaster  told  him  of  this,  and  pointed  the 
men  out  to  him.  He  also  knew  of  their  trying  to  sell  the 
stamps  at  two  other  places.  He  claims  he  arrested  them  on 
suspicion  of  the  Bothwell  robbery.  He  swears  he  did  not  talk 
with  or  give  any  information  about  the  affair  to  any  reporter. 

Ira  W.  Quinby,  exchange  editor  of  the  Free  Press,  testified 
that  at  the  time  of  the  publication  of  the  alleged  libel  he  was 
a  reporter  for  that  paper,  and  had  been  "  doing  "  Windsor  in 
that  capacity  for  about  two  years.  He  wrote  both  the  items 
published  in  the  Free  Press  in  relation  to  the  arrest  of  French 
and  plaintiff.  He  was  in  Windsor  on  the  day  of  such  arrest, 
and  was  in  Bartlett's  court-room  about  three  o'clock,  p.  m.,  as 
near  as  he  could  remember.  While  there  he  heard  a  conver- 
sation between  Mr.  Bains  and  the  magistrate.  He  had  no 
coversation  with  Bains,  but  talked  some  with  Bartlett.  He  was 
not  acquainted  with  plaintiff  or  French,  and  saw  them  for  the 
first  time  when  he  testified.  He  wrote  the  item  about  six 
o'clock,  p.  M.,  and  handed  it  to  the  city  editor  of  the  Free 
Press.  He  was  not  in  Bartlett's  court  over  eight  or  ten  min- 
utes, and  in  Windsor  but  half  an  hour. 

"Q.  Where  did  you  get  the  information  which  led  you  to 
write  this  article?  A.  When  I  came  in,  Mr.  Bains  was  there 
talking  with  the  magistrate  about  these  two  men.  Mr.  Bains 
said  there  had  been  a  burglary  committed,  and  he  thought 
that  these  two  men  were  the  ones.  That  is  what  he  was  tell- 
ing Bartlett  at  the  time.  Mr.  Bartlett  was  not  so  sure,  but  Mr. 
Bains  was  telling  him  the  stuff  he  found  on  them,  and  he  gave 
Bains  permission  to  keep  them  until  further  developments.  I 
think  I  arrived  there  shortly  after  they  had  been  examined 
and  returned  to  the  cell.     That  is  my  impression  now. 

"Q.  Yo  didn't  see  these  men  in  the  court-room  at  any  time? 
A.    No,  sir. 

"Did  you  hear  anybody  else  talking  about  it  besides  Bains 


Oct.  1889. J     McAllister  v.  Detroit  Free  Press  Co.         827 

and  the  magistrate?  A.  No,  sir;  I  did  not.  I  talked  with 
Bartlett  afterwards,  and  he  read  the  warrant  that  Mr.  Wigle 
had  sworn  to;  and  Mr.  Bartlett  gave  me  the  information  that 
I  got. 

"Q.  He  gave  you  the  information  about  the  Bothwell  rob- 
bery?    A.   Yes,  sir. 

"Q.  Did  you  know  about  it  before?  A.  No,  sir;  I  hadn't 
heard  about  it. 

"Q.  Will  you  state  whether  or  not  the  account  was  based 
upon  the  facts  that  you  learned  there?     A.   Yes,  sir. 

"Q.  Will  you  state  what,  if  anything,  was  said  in  that  con- 
versation about  their  being  hard-looking  characters?  A.  Yes, 
sir.  Mr.  Bains,  I  think,  said  it.  He  said  they  were  rather 
hard-looking  citizens.  The  idea  that  I  got  from  it  was,  that 
they  were  a  couple  of  tramps,  such  as  you  see  any  day  on  the 
railroad.     That  is  the  impression  conveyed  to  me." 

He  could  not  say  that  either  Bains  or  Bartlett  said  that  two 
thousand  dollars  in  money  had  been  taken  from  the  Bothwell 
post-office,  but  expects  they  did,  because  he  wrote  it  that  way. 
Mr.  Bartlett  said  that  about  thirty  dollars  of  stamps  had  been 
stolen  at  Bothwell.  He  also  told  witness  that  the  men  (plain- 
tiff and  French)  were  searched  at  the  station,  and  thirty  dol- 
lars' worth  of  stamps  found  upon  them. 

"Q.  Who  told  you  that  they  were  hard-looking  citizens? 
A.  Mr.  Bains  said  it  to  the  magistrate.  Nobody  told  me. 
There  should  be  quotation  marks  there. 

"Q.  Who  told  you  that  they  canvassed  the  business  part  of 
Windsor?     A.   The  magistrate,  also. 

"Q.  Who  told  you  that  they  were  making  an  effort  to  sell 
the  stamps  at  half-price?     A.    Mr.  Bartlett. 

"Q.  Where  did  you  get  their  names?  A.  I  found  them  on 
the  warrant." 

He  further  testifies  that  he  did  not  ask  any  particulars 
about  these  men;  nobody  seemed  to  know  where  they  came 
from. 

"I  asked  Mr.  Bartlett  if  he  knew  who  they  were,  and  he 
said  no,  he  did  not. 

"Q.  Did  you  ask  Mr.  Bains?  A.  No,  sir.  You  can't  ask 
Mr.  Bains  anything  when  he  is  excited. 

"Q.  Was  Bains  excited?  A.  Yes,  he  was.  Whenever  Mr. 
Bains  had  criminals  on  hand,  I  would  always  go  to  Mr.  Bart- 
lett for  information,  because  he  didn't  get  so  fiustrated." 

This  reporter  made  no  further  effort  to  find  out  who  these 


828  McAllister  v.  Detroit  Free  Press  Co.       [Mich. 

men  were,  or  the  particulars  of  the  transaction,  because,  as  he 
says,  "  there  was  no  use."  He  testified  that  Bartlett  was  not 
BO  strong  in  his  opinion  that  the  men  were  connected  with  the 
burglary  as  Bains;  but  Bartlett  told  the  reporter  that  Baing 
would  hold  them  for  developments.  On  Monday,  about  three 
o'clock,  P.M.,  he  learned  that  the  men  had  been  released. 
Before  he  wrote  the  last  item,  he  went  up  to  the  court-house 
at  Windsor.  Bains  and  Bartlett  were  inside.  Outside  of  the 
building  he  met  a  patrolman, — didn't  know  who  he  was, — 
and  asked  him  about  "  the  McAllister-French  business."  He 
said  they  were  discharged.  "I  said,  'What  was  the  matter?* 
and  he  said,  'No  evidence.'  I  said,  'Don't  you  know  who 
they  were?'  and  he  said,  '  No.'  " 

He  claims  he  went  back  to  the  town  hall  or  court-house 
twice  afterwards  that  day  to  see  Mr.  Bains,  but  he  and  Bart- 
lett had  gone  to  Sandwich. 

"Q.  When  did  you  write  that  item?  A.  Monday  night 
It  came  out  Tuesday. 

"Q.  Did  you  ever  make  any  effort,  up  to  that  time,  to  find 
out  whether  they  were  reputable  citizens  or  not?  A.  No,  sir. 
It  had  slipped  my  mind." 

Mr.  Fralick,  the  city  editor,  was  not  sworn,  but  Mr.  Quinby 
testified  that  he  didn't  know  that  Fralick  took  any  steps  to 
find  out  about  these  men.  He  heard  nothing  about  the  mat- 
ter afterwards. 

A.  G.  Boynton,  one  of  the  stockholders  of  the  defendant 
company,  was  sworn  for  the  defendant,  and  testified  that  he 
resided  on  Bagg  Street,  which  runs  into  Park  Street. 

"Q.  Some  allusions  were  made  by  counsel  in  this  case,  in 
his  opening,  to  the  fact  that  you  lived  in  the  same  neighbor- 
hood with  Mr.  McAllister.  A.  Mr.  McAllister  lived  a  neigh- 
bor to  me  for  some  years." 

He  testified  that  he  was  acquainted  with  plaintiff  in  a  gen- 
eral way  for  some  years,  but  never  knew  Mr.  French  until  he 
saw  him  in  the  court-room.  Boynton  never  heard  of  the  item 
complained  of  until  it  was  published. 

"Q.  Did  you  read  the  item  before  it  was  published?  A. 
No,  sir;  I  don't  remember  reading  it  at  all." 

It  was  not  an  item  that  came  in  his  department,  and  he 
knew  nothing  of  it  until  told  that  suit  was  brought,  and  then 
he  hunted  it  up. 

This  is  the  substance  of  the  material  testimony  taken  in  the 
case.     Mr.  Bartlett   having  returned   to  Windsor,  plaintiff's 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         329 

counsel  asked  the  court  to  adjourn  the  case  until  the  follow- 
ing morning,  so  that  he  could  be  produced  for  the  purpose  of 
contradicting  the  witness  Quinby  as  to  the  source  of  his  infor- 
mation. The  court  declined  to  allow  an  adjournment,  and 
exception  was  taken. 

It  does  not  appear  from  the  record  at  what  time  of  day  this 
motion  was  made,  and  therefore  we  are  not  entirely  satisfied 
that  this  refusal  was  an  abuse  of  discretion;  but  it  seems  to 
us  that  the  adjournment,  in  the  interest  of  justice,  should 
have  been  granted.  If  the  witness  Quinby  was  not  telling 
the  truth  as  to  his  source  of  information,  it  was  a  very  mate- 
rial fact  to  be  considered  in  the  case.  If  the  portions  of  the 
article  acknowledged  to  be  untrue  were  manufactured  by  the 
reporter,  they  were  certainly  not  privileged.  Such  fact  would 
also  have  a  bearing  upon  the  question  of  damages.  If,  as  the 
reporter  says,  he  did  not  get  to  the  court- room  of  the  magis- 
trate until  after  the  plaintiff  and  French  had  been  taken  out, 
the  warrant  read  to  them,  and  they  returned  to  their  cells,  it 
is  not  likely  that  Bartlett  gave  the  reporter  the  information  he 
claims  he  did,  if  Bartlett's  testimony  on  the  trial  is  true.  Mr. 
Bartlett  testified  as  follows:  — 

"Q.  About  what  time  upon  this  Saturday  did  Mr.  Wigle 
make  the  complaint,  and  swear  to  it?  A.  I  think  between  two 
and  three  o'clock. 

"  Q.  Were  the  accused  parties  arraigned  on  that  complaint? 
A.   The  complaint  was  read  to  them.  I  think. 

"Q.  What  was  done  when  it  was  read?  Were  they  required 
to  plead  to  it?  A.  Mr.  Wigle  appeared,  I  think,  at  the  same 
time  that  they  were  there,  and  the  complaint  was  read  to  these 
parties;  but  Mr.  Wigle,  by  the  time  we  read  the  complaint, 
had  become  convinced  that  they  were  innocent,  so  far  as  an 
intentional  violation  of  the  law  was  concerned,  and  he  with- 
drew the  complaint,  and  I  think  he  withdrew  it  in  the  pres- 
ence of  these  two  parties." 

He  also  testified  that  no  complaint  was  made  against  them 
on  account  of  the  Bothwell  robbery,  and  that  such  robbery 
was  only  a  matter  of  conversation  between  him  and  the  post- 
master, and  he  could  not  swear  that  Bains,  the  chief  of  police, 
informed  him  that  he  suspected  these  men  of  that  robbery, 
but  thought  it  quite  probable  that  he  did.  Nor  could  he  re- 
member that  there  was  any  conversation  between  himself  and 
Bains  in  regard  to  the  circumstance  of  these  parties  having 
postage-stamps  that  they  were  offering   for  sale.     It  would 


330  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

appear  from  the  record  that  Mr.  Bartlett  was  sworn  for  the 
defense,  and  had  gone  back  to  Windsor  before  Mr.  Quinby 
was  examined.  The  plaintiff  was  entitled  to  his  testimony, 
unless  the  circumstances  were  such  that  it  could  have  been 
procured  that  day  without  adjournment  over. 

This  case  clearly  ought  to  have  gone  to  the  jury.  The  item 
was  confessedly  untrue  in  several  particulars;  and  these  false 
items  all  tended,  in  the  connection  used,  to  carry  the  impres- 
sion that  plaintiff  and  French  were  guilty  of  a  felony:  1.  The 
coincidence,  which  was  not  a  true  one,  that  about  thirty  dol- 
lars' worth  of  stamps  had  been  stolen  from  Bothwell,  and  the 
same  amount  found  upon  these  parties;  2.  That  they  were 
"hard-looking  citizens,"  carrying  the  impression,  as  Quinby 
admits,  that  they  were  a  "couple  of  tramps";  3.  That  they 
canvassed  the  entire  business  part  of  Windsor,  in  the  effort  to 
sell  stamps  at  half-price,  which  contains  two  untruths;  4. 
That  they  at  last  tried  to  sell  the  stamps  to  the  postmaster. 

It  requires  but  a  glance  to  discover  a  vast  difference  between 
the  actual  facts  of  this  transaction,  and  the  story  as  published. 
A  true  account  would  have  shown  the  arrest  of  two  reputable 
American  citizens  for  the  offense  of  selling  stamps  without  a 
license,  discharged  by  the  magistrate  of  such  offense  as  soon 
as  the  complaint  was  read,  because  the  postmaster  was  satis- 
fied that  they  meant  no  intentional  violation  of  the  law,  but 
kept  by  the  chief  of  police  of  Windsor  for  three  hours  after- 
wards, and  treated  by  him  with  gross  indignity;  that  he  had 
suspicions  that  they  were  connected  with  the  Bothwell  robbery, 
because  of  the  stamps  and  gold  coin  found  upon  their  persons, 
but  he  refused  to  let  them  communicate  with  their  friends  or 
counsel  in  Detroit,  and  did  not  release  them  until  he  was 
obliged  to  by  the  order  of  the  magistrate,  although  he  had 
learned  that  they  were  all  right,  —  in  short,  an  inexcusable 
outrage  by  the  chief  of  police  upon  honest  men,  guilty  of  no 
crime,  and  innocent  of  any  intentional  wrong. 

The  publication  shows  a  couple  of  tramps,  trying  at  every 
business  place  in  Windsor  to  sell  postage-stamps  at  half-price, 
having  the  same  amount  in  their  possession  that  was  stolen  at 
Bothwell  the  week  before.  At  last  they  try  the  posmaster,  who 
has  them  arrested.  "  Chief  Bains  will  hold  them  to  await  de- 
velopments." 

Before  or  about  the  time  it  was  handed  to  the  city  editor, 
who,  it  seems,  took  no  steps  to  ascertain  its  truth,  these  men 
had  been  discharged;  and,  when  it  was  being  read  by  people 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         331 

on  Sunday  in  the  Free  Press,  French  and  the  plaintiff  were  at 
home  in  Detroit,  as  free  from  any  restraint  of  the  law,  and  from 
any  suspicion  of  wrong-doing,  except  for  this  article,  as  the 
reporter  who  wrote  it. 

If  it  were  not  possible,  as  contended,  that  a  true  statement 
of  the  whole  of  the  facts  could  have  been  published  at  that 
time,  certainly  a  little  inquiry  on  Monday  afterwards  by  this 
same  reporter  might  have  set  the  matter  aright.  But  it  was  a 
matter  of  so  small  consequence  to  him  that  "it  had  slipped 
his  mind,"  and  he  contents  himself  with  the  statement  of  a 
patrolman  on  the  streets  of  Windsor,  and  the  paper  on 
Tuesday  has  an  item  that  French  and  the  plaintiff  have  been 
discharged  because  there  was  no  evidence  that  they  were  the 
men  wanted  at  Bothwell.  In  other  words,  it  is  published,  not 
that  they  were  discharged  because  their  innocence  was  estab- 
lished, which  was  the  fact,  but  because  the  charge  or  sus- 
picion that  they  were  concerned  in  the  Bothwell  robbery  was 
"  not  proven." 

If  the  reporter  had  contented  himself  with  stating  that  these 
men  had  been  arrested,  and  a  complaint  made  against  them 
for  selling  stamps  without  a  license,  and  that  the  fact  of  their 
oflfering  to  sell  the  stamps,  and  having  them  in  theip  posses- 
sion when  searched,  led  the  chief  of  police  to  think  that  they 
might  be  connected  with  the  Bothwell  robbery,  and  that  Chief 
Bains  was  holding  them  to  await  developments,  it  might  have 
been  privileged,  although  not  true  at  the  time  it  was  pub- 
lished, and  not  the  whole  truth  at  any  time,  which  the  reporter 
had  the  means  and  opportunity  to  discover,  but  did  not.  But, 
as  the  case  stood,  it  was  not  privileged,  and  the  only  question 
for  the  jury  was  one  of  damages. 

It  will  be  noticed  that  the  item  as  published  was  not  in 
"quotation  marks,"  as  the  reporter  thinks  some  of  it  ought  to 
have  been.  It  was  printed  as  a  matter  of  fact  coming  from 
Windsor,  when  in  fact  it  was  written  by  an  employee  of  the 
paper  at  Detroit,  entirely  from  hearsay.  He  could  have  per- 
sonally investigated  the  matter,  but  did  not  do  so.  He  did 
not  ask  to  see  the  men,  or  go  where  they  were.  He  did  not 
talk  with  the  postmaster.  He  heard,  as  he  says,  a  talk  be- 
tween Bains  and  Bartlett,  and  asked  the  latter  a  few  questions. 
The  only  thing  that  he  saw  with  his  own  eyes  — the  com- 
plaint—  he  does  not  mention  in  his  publication.  If  he  had 
stated  the  nature  of  it,  it  might  not  have  carried  so  great  an 
impression  of  the  parties'  guilt.     The  publication  was  looking 


832  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

towards  a  felony.  The  complaint  he  saw  was  only  for  a  mis- 
demeanor. 

Nor  was  any  care  shown  by  the  newspaper.  It  was,  as  far 
as  the  record  shows,  publislied  as  handed  in  by  the  reporter, 
without  thought  of  verification.  It  is  argued  that  a  newspaper 
in  this  day  and  age  of  the  world,  when  people  are  hungry  for 
the  news,  and  almost  every  person  is  a  newspaper  reader, 
must  be  allowed  some  latitude  and  more  privilege  than  is 
ordinarily  given  under  the  law  of  libel  as  it  has  heretofore 
been  understood.  In  other  words,  because  the  world  is  thirst- 
ing for  criminal  items,  and  the  libel  in  a  newspaper  is  more 
far-reaching  and  wide-spread  than  it  used  to  be  when  tales 
were  only  spread  by  the  mouth,  or  through  the  medium  of 
books  or  letters,  there  should  be  given  greater  immunity  to 
gossip  in  the  newspaper,  although  the  harm  to  the  person  in- 
jured is  infinitely  greater  than  it  would  be  if  published  other- 
wise. 

The  greater  the  circulation  the  greater  the  wrong,  and  the 
more  reason  why  greater  care  should  be  exercised  in  the  pub- 
lication of  personal  items.  No  newspaper  has  any  right  to 
trifle  with  the  reputation  of  any  citizen,  or  by  carelessness  or 
recklessness  to  injure  his  good  name  and  fame  or  business. 
And  the  reporter  of  a  newspaper  has  no  more  right  to  collect 
the  stories  on  the  street,  or  even  to  gather  information  from 
policemen  or  magistrates  out  of  court,  about  a  citizen,  and  to 
his  detriment,  and  publish  such  stories  and  information  as 
facts  in  a  newspaper,  than  has  a  person  not  connected  with  a 
newspaper  to  whisper  from  ear  to  ear  the  gossip  and  scandal 
of  the  street.  If  true,  such  publication  or  such  speaking  may 
be  privileged,  but  if  false,  the  newspaper  as  well  as  the  citizen 
must  be  responsible  to  any  one  who  is  wronged  and  damaged 
thereby. 

It  is  indignity  enough  for  an  honest  man  to  be  arrested  and 
put  in  prison  for  an  offense  of  which  he  is  innocent,  and  for 
which  indignity  ofttimes  he  has  no  redress,  without  being 
further  subjected  to  the  wrong  and  outrage  of  a  false  publica- 
tion of  the  circumstance  of  such  arrest  and  imprisonment, 
looking  towards  his  guilt,  without  remedy.  And  no  sophistry 
of  reasoning,  and  no  excuse  of  the  demand  of  the  public  for 
news,  or  of  the  peculiarity  and  magnitude  of  newspaper  work, 
can  avail  to  alter  the  law,  except,  perhaps,  by  positive  statute, 
which  is  doubtful,  so  as  to  leave  a  party  thus  injured  without 
any  recompense  for  a  wrong  which  can  even  now,  as  the  law 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         833 

stands,  never  be  adequately  compensated  to  one  who  loves  his 
reputation  better  than  money. 

What  is  privileged  in  publications?  The  truth  is  privi- 
leged when  published  from  good  motives,  and  for  justifiable 
ends.  And  that  which  is  not  true,  but  honestly  believed  to 
be  true,  and  published  in  good  faith,  by  one  in  the  perform- 
ance of  a  public  or  official  duty,  in  certain  cases,  is  also  privi- 
leged. 

This  is  so  in  the  case  of  communications  made  to  a  body  or 
officer  having  power  to  redress  a  grievance  complained  of,  or 
having  cognizance  of  the  subject-matter  of  the  communica- 
tion, to  some  intent  or  purpose,  and  in  cases  where  the  com- 
munication is  made  confidentially,  or  upon  request,  where  the 
party  requiring  the  information  has  an  interest  in  knowing 
the  character  of  the  person  inquired  after.  So  may  a  person 
be  justified  where  he  is  honestly  endeavoring  to  vindicate  his 
own  interests,  as  in  the  case  of  the  slanderer  of  title,  or  guard- 
ing against  any  transaction  which  might  operate  to  his  own 
injury:  See  Usher  v.  Severance,  20  Me.  9,  16;  37  Am.  Dec.  33. 
As  is  well  said  by  Chief  Justice  Whitman  in  that  case:  "The 
case  at  bar  is  one  of  a  publication  addressed  to  no  person  or 
body  of  men  having  power  to  redress  a  grievance,  and  it  is 
rather  superfluous  to  add,  not  a  confidential  communication 
to  any  one,  and  does  not  appear  to  have  been  designed  to 
guard  against  any  injury  imminently  threatening  the  indi- 
vidual interests  of  the  publisher;  nor  does  it  present  a  case  of 
words  in  themselves  not  actionable." 

The  liberty  of  the  press,  as  the  law  now  stands,  is  only  a 
more  extensive  and  improved  use  of  the  liberty  of  speech 
which  prevailed  before  printing  became  general;  and,  inde- 
pendently of  certain  statutory  provisions,  the  law  recognizes 
no  distinction  in  principle  between  a  publication  by  the  pro- 
prietor of  a  newspaper  and  a  publication  by  any  other  person. 
A  newspaper  proprietor  is  not  privileged,  as  such,  in  the  dis- 
semination of  the  news,  but  is  liable  for  what  he  publishes  in 
the  same  manner  as  any  other  individual:  Townshend  on 
Slander  and  Libel,  sec.  252. 

The  judgment  of  the  court  below  is  reversed,  and  a  new  trial 
will  be  granted,  with  costs  of  this  court  to  plaintifl". 

Nkwspapkr  Libel.  —  The  object  of  this  note  is,  not  to  treat  of  the  gen- 
eral law  of  libel,  but  rather  to  state  the  rules  especially  applicable  to  cases 
wherein  complaint  is  made  of  libels  alleged  to  have  been  published  in  news- 
papers or  other  periodicals.     We  are  not  aware  that  the  rules  or  principles 


334  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

applicable  to  the  publication  of  libels  are  in  any  respect  different  when  their 
publication  ia  in  a  newspaper  from  what  they  are  when  such  publication  is 
in  some  other  periodical.  Therefore,  in  this  note,  we  shall  use  the  term  "peri- 
odical "  as  indicating  newspapers  as  well  as  other  publications  made  at  stated 
periods,  in  magazines  and  other  periodicals  of  more  enduring  and  pretentious 
character  than  ordinary  newspapers.  If  in  this  note  any  attention  is  given 
to  principles  not  exclusively  applicable  to  the  publishers  of  periodicals,  it  will 
be  found,  on  examination  of  the  adjudged  cases  in  which  these  principles  have 
been  announced  and  applied,  that  by.  far  the  greater  number  of  them  have 
been  actions  or  prosecutions  against  the  publishers  of  periodicals,  and  that 
while  the  principles  may  occasionally  be  applied  to  other  publishers,  yet  that 
such  is  so  rarely  the  case  that  their  consideration  is  amply  justified  in  a  note 
which  attempts  to  treat  of  the  law  of  newspaper  libel. 

For  the  publication  of  a  libel  in  any  periodical,  five  different  classes  of 
persons  may  be  answerable,  viz.,  the  author,  the  editor,  the  printer,  the  pro- 
prietor, and  any  other  person  who  engages  in  the  publication  or  distribution 
of  the  libelous  periodical  with  knowledge  of  the  libel  therein  contained.  In 
other  words,  all  who  knowingly  participate  in  or  contribute  to  the  libel  must 
respond  in  damages  to  the  subject  thereof,  if  he  is  injured  thereby. 

The  proprietor  of  a  periodical  in  which  a  libel  has  been  published  cannot 
escape  liability  otherwise  than  by  proving  that  it  was  a  matter  which,  not- 
withstanding its  libelous  character,  he  had  the  right  to  puljlish.  In  vain  may 
he  urge  that  he  knew  nothing  of  its  intended  publication,  that  he  was  absent 
from  the  city  or  other  place  where  his  paper  was  printed,  and  had  left  it  in 
charge  of  others,  who  in  the  publication  of  the  libel  complained  of  had  not 
acted  in  pursuance  of  his  instructions  to  them:  Hunter  v.  Sharp,  4  Fost.  &  F. 
983;  15  L.  T.,  N.  S.,  421;  Rex  v.  Walter,  3  Esp.  21;  Jiex  v.  Dodd,  2  Ses.  Cas. 
33;  Andres  v.  Wells,  7  Johns.  2G0;  5  Am.  Dec.  207.  "As  respects  a  publica- 
tion by  writing  a  libel,  not  only  the  publisher,  but  all  who  in  any  wise  aid  or  are 
concerned  in  the  production  of  the  writing,  are  liable  as  publisiiers.  The 
publication  of  the  writing  is  the  act  of  all  concerned  in  the  production  of  the 
writing.  Thus  if  one  composes  and  dictates,  a  second  writes,  and  a  third 
publishes,  all  are  liable  as  publishers,  and  each  is  liable  as  a  publisher.  The 
law  denominates  them  all  makers  and  all  publishers:  Townshend  on  Slander 
and  Libel,  sec.  115;  2  Starkie  on  Slander,  225;  Bishop's  Crim.  Law,  sec.  931. 
The  proprietor  of  a  newspaper  is  responsible  for  whatever  appears  in  its 
columns.  It  is  unnecessary  to  show  that  he  knew  of  tlie  publication  or  au- 
thorized it  {Huff  V.  Bennett,  4  Sand.  120);  for  he  is  liable,  even  though  the 
publication  was  made  in  his  absence,  and  without  his  knowledge,  by  an  agent 
to  whom  he  has  given  express  instructions  to  publish  nothing  exceptionalile, 
personal,  or  abn-sive,  which  might  be  brought  in  by  the  author  of  the  libel ": 
Buckley  v.  Knapp,  48  Mo.  152. 

Whenever  the  proprietor  of  a  periodical  leaves  it  in  charge  of  other  per- 
sons, he  provides  them  with  the  means  of  injuring  others  by  malicious  or 
careless  assaults  upon  their  reputation.  If  he  reserves  no  supervision  over 
them,  he  practically  authorizes  them  to  write  and  publish  whatever  they 
think  proper.  They  stand  in  his  place  and  represent  him;  and  if  they  publish 
a  libel,  he  is  as  responsible  as  if  it  had  been  done  by  him  personally  or  under 
his  direct  supervision,  and  whether  the  wrong  resulted  from  their  negligence 
or  from  a  wanton  and  reckless  purpose  to  injure  the  object  of  it.  In  such  a 
case,  the  fact  that  the  proprietor  was  not  present,  and  did  not  have  any 
previous  knowledge  of  the  libelous  publication,  does  not  constitute  a  sufiBcient 
defense,  even  to  a  criminal  prosecution  against  him  for  libel,  in  the  absence  oi 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         835 

any  statute  modifying  the  rule  of  the  common  law  upon  this  subject:  Bruce 
V.  Heed,  104  Pa.  St.  408;  49  Am.  Rep.  5S6;  Bex  v.  Gutch,  1  Moody  &  M.  433; 
22  Eug.  Com.  L.  353;  Commonivealth  v.  Morijan,  107  Mass.  199;  Lothrop  v. 
Adams,  133  Id.  471;  43  Am.  Rep.  528.  Even  if  those  placed  in  charge  of  a 
periodical  by  its  proprietor  publish  a  libel  in  defiance  of  his  express  instruc- 
tions, he  remains  answerable  therefor  in  a  civil  action;  but  at  the  present 
time  the  fact  that  the  libel  was  published  contrary  to  his  orders  would 
probably,  in  the  absence  of  any  negligence  or  carelessness  on  his  part,  be  suffi- 
cient to  prevent  his  conviction  if  prosecuted  criminally:  Perret  v.  Times  News- 
j)(iper,  25  La.  Ann.  170;  Commonwealth  v.  Monjan,  107  Mass.  199;  Rex  v. 
Gutch,  1  Moody  &  M.  433;  22  Eng.  Com.  L.  353;  Dunn  v.  Hale,  1  Ind.  344. 

The  author  of  a  libel  which  has  been  published  in  a  periodical,  while  gen- 
erally answerable  therefor  equally  M'ith  the  proprietor,  is  not  liable  merely 
because  he  is  its  author.  In  truth,  it  is  only  those  who  either  aid  in  or  as- 
sent to  the  publication  of  a  libel  who  are  answerable  therefor.  However 
much  one  may  contribute  to  the  libel  in  other  respects,  he  is  not  answerable 
therefor  if  he  can  show  his  innocence  of  its  publication:  Weir  v.  Hoss,  6  Ala, 
881 ;  Mayne  v.  Fletcher,  9  Barn.  &  C.  382.  One  who  composes  a  libel  does  not 
thereby  coniuiit  any  actionable  wrong.  It  is  only  when  his  act,  assent,  or 
perhaps  his  carelessness,  causes  its  publication  that  he  commits  an  actionable 
wrong  and  becomes  responsible  for  its  consequences.  It  need  not  be  shown 
by  direct  evidence  that  the  author  of  a  libel  procured  its  publication,  if  it 
appears  that  he  did  that  from  which  his  desire  for  or  his  assent  to  the  publi- 
cation may  be  presumed.  If,  for  instance,  he  sends  manuscript  to  the  pub- 
lisher of  a  periodical,  and  the  latter  prints  either  the  whole  thereof  or  a  part 
only,  the  author  must  be  regarded  as  guilty  of  the  publication,  and  lield  re. 
sponsible  accordingly:  Tarpley  v.  Blabey,  2  Bing.  N.  C.  437;  2  Scott,  (342;  7 
Car.  &  P.  395;  Bond  v.  Douijlus,  7  Id.  (>2G;  Pierce  v.  Ellis,  6  I.  C.  L.  R,  55; 
Pex  v.  Lovett,  9  Crim.  Law  Rep.  462;  Burdett  v.  Abbot,  5  Dow,  201;  14 
East,  1;  and  one  may  be  regarded  as  the  autlior  of  a  libel,  and  answerable  for 
its  publication,  although  he  does  not  himself  commit  it  to  writing,  as  when, 
being  present  at  a  public  meeting  where  libelous  charges  are  made,  he  calls 
attention  to  the  representatives  of  the  press  there  present,  and  states  that 
the  case  is  a  very  scandalous  one,  of  which  he  hopes  they  will  take  notice, 
and  that  they  will  give  publicity  to  the  matter:  Parkes  v.  Prescoti,  L.  R.  4 
Ex.  109;  38  L.  J.  Ex.  105;  17  Week.  Rep.  773;  20  L.  T.  537. 

In  Illinois,  at  the  trial  of  a  prosecution  for  libel,  it  appeared  that  the  de- 
fendant made  a  statement  of  the  facts  constituting  the  alleged  libel  to  a  re- 
porter of  a  newspaper,  who,  after  writing  part  of  an  article  embodying  these 
facts,  comnmnicated  theui  to  the  editor  of  the  paper,  who  wrote  and  pub- 
lished the  article  which  was  claimed  to  bo  libelous.  When  the  article  was 
set  up  in  type,  it  was  read  by  the  defendant  from  proof-sheets,  who  said  it 
was  a  little  rough,  but  it  was  true,  and  let  it  go.  Having  been  convicted, 
the  defenilaut  insisted  that  these  facts  did  not  justify  the  finding  that  he 
published  the  article,  and,  therefore,  that  he  was  wrongfully  convicted;  but 
the  supreme  court,  in  sustaining  the  conviction,  said:  "  It  is  a  familiar  maxim 
that  what  a  person  does  by  another  he  does  by  himself.  And  we  think  it 
applies  in  its  full  force  in  this  case.  He  voluntarily  gives  the  main  state- 
ments in  the  article  to  one  of  the  persons  connected  with  the  publication  of 
the  paper,  who,  after  writing  part  of  an  article  embodying  the  facts  thus 
giveu  him,  communicated  theni  to  the  editor  of  the  paper,  who  thereupon 
wrote  and  published  the  article  read  in  evidence.  After  it  was  in  type,  the 
article  was  read  to  plaintiiT  in  error  from  the  proof-sheet.     He  sugj^ested  a 


336  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

correction  as  to  the  course  the  family  referred  to  resided  from  Streator;  said 
it  was  a  little  rough,  but  it  was  true,  and  let  it  go.  That  he,  in  substance,  so 
said  to  Gale  and  Babcock,  we  think  so  abundantly  proved  as  to  require  the 
jury  to  so  find.  He  knew  it  was  in  type,  for  the  purpose  of  being  published 
in  the  paper.  He  must  have  known  it  was  read  to  him  to  get  his  indorse- 
ment of  the  truth  of  the  statements  it  contained.  He  made  no  protest  or 
objection  to  its  publication,  but,  on  the  contrary,  said  'let  it  go,'  and  it  was 
published  as  he  thus  directed.  We  may  reasonably  infer  that  had  he  pre- 
viously, or  even  at  that  time,  directed  the  editor  not  to  publish  the  article, 
as  it  might  not  be  true,  and  if  not,  that  it  would  inflict  a  grevious  wrong  on 
innocent  people,  it  would  never  have  appeared.  On  the  contrary,  he  volun- 
teered the  statements  on  which  the  article  is  based;  hears  it  read  after  it  is 
written  and  in  type;  hearing  it  read,  he  says  'let  it  go,' and  it  was  pub- 
lished as  it  was  thus  directed.  Although  the  editor  may  be  equally  liable, 
that  does  not  exonerate  the  plaintiff  in  error.  He  took  an  active  part  in  its 
production  and  publication,  and  is  essentially  one  of  its  authors  and  publish- 
ers, and,  as  such,  must  be  responsible  for  the  injury  he  has  inflicted  on  society 
by  his  reckless,  if  not  wanton  and  malicious,  conduct  in  this  matter.  It 
would  have  required  but  little  effort  to  have  learned  whether  the  rumor,  as 
he  calls  it,  was  true;  but  he  does  not  preten  1  to  have  made  any  effort.  He 
himself  admitted  that  it  was  rough,  but  that  did  not  restrain  his  action.  Wo 
have  no  doubt  of  the  sufficiency  of  the  evidence  to  sustain  the  verdict,  and, 
perceiving  no  error  in  the  record,  the  judgment  of  the  court  below  is  affirmed"; 
Clay  v.  People,  86  111.  147. 

The  liability  of  the  editor  of  a  periodical  is,  in  England,  coextensive  with 
that  of  its  proprietor:  Watts  v.  Eraser,  7  Car.  &  P.  369;  7  Ad.  &  E.  223;  1 
Moody  &  R.  449;  1  Jur.  671;  Kelzor  v.  Neivcomb,  1  Fost.  &  F.  559.  In  this 
country,  the  editor  may  escape  liability  by  showing  that  the  libel  complained 
of  was  published  without  his  orders  and  against  his  will:  Commonwealth  v. 
Kneeland,  Thach.  C.  C.  346. 

The  printer  of  a  periodical  is  also  answerable  for  any  libel  therein,  and  he 
cannot  avoid  liability  upon  any  grounds  which  are  not  equally  available  to 
its  proprietor:  Rex  v.  Dover,  8  How.  St.  Tr.  546;  Watts  v.  Eraser,  1  Car.  &  P. 
369;  6  Ad.  &  E.  225;  1  Jur.  671;  1  Moody  &  R.  449. 

Those  who  distribute  periodicals,  either  gratuitously  or  through  the  sale 
thereof,  thereby  become  publishers  of  any  libel  to  be  found  therein,  and 
equally  liable  with  the  proprietor,  except  that  they  may  exonerate  them- 
selves by  proving  that  they  did  not  know,  nor  have  any  reason  to  suspect, 
that  such  periodicals  contained  any  libelous  matter:  Stcmh  v.  Bentheusen,  36 
La.  Ann.  467;  Bex  v.  Matt,  8  Mod.  123;  Emmens  v.  Potlle,  L.  R.  16  Q.  B.  D. 
354;  55  L.  J.  Q.  B.  51;  34  Week.  Rep.  116;  53  L.  T.  SOS;  Day  v.  Bream,  2 
Moody  &  R.  54.  In  the  case  of  the  sale  of  a  great  or  unusual  number  of  the 
periodical  containing  the  libel,  it  is  obvious  that  a  defense  of  this  character 
ought  not  to  be  sustained;  for  the  unusual  sale  ought  to  put  the  vendor  on 
inquiry  for  the  cause  of  the  exceptional  demand,  and  no  one  should  be  per- 
mitted to  reap  unusual  profits  through  the  sale  of  a  libel,  and  then  shield 
himself  by  proof  of  his  own  negligence  in  closing  his  eyes  to  what  he  was 
then  doing:  Cliuh  v.  Elannagan,  6  Car.  &  P.  431. 

Though  several  persons  may  be  guilty  of  the  publication  of  a  libel,  and 
therefore  subject  to  an  action  therefor,  neither,  after  satisfying  a  judgment 
obtained  against  him,  has  any  right  to  contribution  from  the  other.  In  fact, 
there  does  not  appear  to  be  any  possible  case  in  which  one  who  is  guilty  of  a 
libel  may  compel  another  to  share  with  or  indemnify  him  for  the  couse* 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         337 

quences  thereof:  Colhurn  v.  Patmore,  1  Cromp.  M.  &  R.  75;  4  Tyrw.  677. 
An  agreement,  made  in  advance  of  the  publication  of  a  libel,  to  indemnify 
and  save  harmless  the  publisher  thereof  for  any  damages  which  may  be  re- 
covered of  him  by  the  party  libeled,  is  against  public  policy,  and  therefore 
void:  AtUm  v.  Johnson,  43  Vt.  78;  Arnold  v.  Clifford,  2  Sum.  2.38. 

The  publication  of  a  libel  in  a  periodical  may  be  proved  by  putting  in  evi- 
dence a  copy  of  such  periodical,  and  showing  that  it  came  from  defendant's 
office,  and  was  one  of  an  edition  of  the  same  date:  State  v.  Oeandell,  5  Harr. 
(Del.)  475;  Woodburn  v.  Miller,  Cheves,  194;  or  by  establishing  that  other 
copies  were  sold  by  the  defendant's  agent,  who  received  money  for  them: 
Respiililica  v.  Davis,  3  Yeates,  321.  A  periodical,  printed  and  published  in 
one  state,  may  also  be  generally  circulated  in  other  states,  and  when  this  is 
the  case,  the  same  person  may  be  answerable  for  its  publication  in  both 
states.  Thus  one  who  has  written  a  libel,  and  caused  it  to  be  published  in 
a  periodical  in  Rhode  Island,  may  be  convicted  of  publishing  it  in  an  adjoin- 
ing county  of  Massachusetts,  in  which  the  periodical  usually  circulated,  if  it 
appears  that  the  number  containing  the  libel  in  question  was  received  and 
circulated  in  such  county:  Commonwealth  v.  Blanding,  3  Pick.  304;  15  Am. 
Dec.  214;  Clinton  v.  Croswell,  2  Caines,  244;  2  Am.  Dec.  235.  There  is  no 
doubt  that  the  circulation  of  a  periodical  in  any  county  or  state  is  sufficient 
to  sustain  an  action  or  prosecution  for  its  publication  in  such  county  or  state: 
Root  v.  King,  4  Cow.  403;  Lucan  v.  CarendLsh,  10  Ir.  L.  T.  537;  Pichiey  v. 
Collins,  1  Term  Rep.  647;  Commonwealth  v.  Makom,  101  Mass.  6. 

Malice.  —  To  entitle  one  of  whom  a  libel  has  been  published  in  a  periodi- 
cal to  recover  liis  actual  damages  suffered  therefrom,  he  need  not  offer  any 
evidence  to  show  whether  or  not  its  author  or  publisher  was  actuated  by  ma- 
licious motives.  If  the  matter  published  is  both  libelous  and  untrue,  malice 
on  the  part  of  its  publisher  is  presumed:  Bradstreet  v.  Gill,  72  Tex.  115;  13 
Am.  St.  Rep.  768;  Ryan  v.  Collins,  111  N.  Y.  143;  7  Am.  St.  Rep.  726;  Bee- 
hee  V.  Missouri  Pacific  R'y,  71  Tex.  424;  Detroit  Daily  Post  Co.  v.  McArthur, 
16  Mich.  447;  Simmons  v.  HoUster,  13  Minn.  249;  Root  v.  King,  7  Cow.  613; 
Dillard  v.  Collins,  25  Gratt.  343;  Smart  v.  Blanchard,  42  N.  H.  137;  Eviston 
v.  Cramer,  4t7  Wis.  659;  Jo)tes  v.  Townsend's  Adm'r,  21  Fla.  431;  58  Am. 
Rep.  676.  With  respect  to  malice  in  law  this  presumption  is  conclusive. 
And  here  it  is  proper  to  observe  that  it  is  unfortunate  that  the  word 
"  malice  "  has  at  least  two  legal  meanings,  and  that  it  is  sometimes  difficult 
to  determine  in  which  it  is  intended  to  be  used  by  judges  and  text-writers  in 
discussing  the  law  of  libel.  In  its  ordinary  signification,  malice  means  ac- 
tual ill-will;  a  desire  to  injure  the  object  of  it,  or  at  least  a  reckless  disregard 
of  consequences,  and  indifference  whether  injury  is  indicted  or  not.  Whether 
malice  in  this  sense  existed,  or  not,  often  becomes  a  material  subject  of  in- 
quiry in  actions  and  prosecutions  for  libel,  because  its  existence  may  justify 
the  imposition  of  exemplary  damages,  or  render  the  defendant  answerable 
for  publications  which  are  privileged  when  made  upon  proper  occasions  and 
from  justifiable  motives.  But  the  presence  of  malice  in  this  sense  is  never 
essential  to  the  maintenance  of  an  action  for  libel  where  the  publication  is 
not  privileged.  "  In  a  legal  sense,  malice,  as  an  ingredient  of  actions  for  slan- 
der or  libel,  signifies  nothing  more  than  a  wrongful  act  done  intentionally 
without  just  cause  or  excuse"  :  King  v.  Patterson,  49 N.  J.  L.  417;  Blumhardt 
V.  Rohr,  70  Md.  328.  "  Malice  is  the  gist  of  an  action  for  slander.  But 
the  term  '  malice '  has  a  twofold  signification.  There  is  malice  in  law 
as  well  as  malice  in  fact.  In  the  former  and  legal  sense,  it  signifies  a 
wrongful  act  intentionally  done  without  any  justification  or  excuse.  In  the 
AM.  St.  Kki".,  Vol.  XV.  — ^2 


838  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

latter  and  popular  sense,  it  means  ill-will  towards  a  person;  in  other  words, 
an  actual  intention  to  injure  or  defame  him.  This  distinction  runs  through 
the  elementarj'  hooks  and  the  reports  of  adjudged  cases  "  :  Gilmer  v.  Euhank, 
13  111.  274.  "  If  I  traduce  a  man,  whether  I  know  him  or  not,  and  whether 
I  intend  to  do  him  an  injury  or  not,  I  apprehend  the  law  considers  it  as  done 
of  malice  because  ib  is  wron«;ful  and  intentional.  It  equally  works  an  injury 
wliether  I  meant  to  produce  an  injury  or  not;  and  if  I  had  no  legal  excuse 
for  the  slander,  why  is  he  not  to  have  a  remedy  against  me  for  the  injury  it 
produces  ?  And  I  appreliend  the  law  recognizes  the  distinction  between  these 
two  descriptions  of  malice  —  malice  in  fact  and  malice  in  law — in  actions  for 
slander.  In  an  ordinary  action  for  words,  it  is  sufficient  to  charge  that  the 
defendant  spoke  them  falsely;  it  is  not  necessary  to  state  that  they  were 
spoken  maliciously.  But  in  actions  for  such  slander  as  is  prima  facie  excus- 
able, on  account  of  the  cause  of  speaking  or  writing  it,  as  in  the  case  -of  ser- 
vants' characters,  confidential  advice  or  communication  to  persons  who  ask 
it,  or  have  a  right  to  expect  it,  malice  in  fact  must  be  proved  by  the  plaintiflf. 
But  in  an  ordinary  action,  for  libel  or  for  words,  though  evidence  of  malice 
may  be  given  to  increase  the  damages,  it  never  is  considered  as  essential,  nor 
is  there  any  instance  of  a  verdict  for  the  defendant  on  the  ground  of  a  want 
of  malice":  Bronuuje  v.  Prosser,  4  Barn.  &  C.  247.  The  absence  of  malice  in 
fact,  therefore,  will  not  relieve  the  defendant  from  lial)ility  for  such  injuries 
as  he  may  have  inflicted  on  the  plaintiff  by  the  publication  of  a  libel  upon 
him:  JJairev.  Wilson,  9  Barn.  &  C.  643;  4  ilan.  &  R.  605;  Fi^sher  v.  Clement, 
10  Barn.  &  C.  472;  5  Man.  &  R.  730;  Weno^an  v.  Ash,  13  Com.  B.  845;  22 
L.  J.  Com.  P.  190;  17  Jur.  579;  Huntley  v.  Ward,  6  Com.  B.,  N.  S.,  514;  6 
Jur.,  N.  S.,  18;  1  Fost.  &  F.  552;  Clark  v.  Molyneux,  L.  R.  3  Q.  B.  237;  47 
L.  J.  2.'^0;  and  even  in  a  criminal  prosecution  for  libel,  where  the  statute 
permits  the  defendant  to  give  in  evidence  in  his  defense  the  truth  of  the 
matter  contained  in  the  publication  charged  as  libelous,  if  he  further  satis- 
factorily shows  that  tlie  publication  was  with  a  good  motive,  and  for  justifi- 
able ends,  proof  tliat  the  matter  published  was  libelous  still  constitutes  a 
primajacie  case,  and  the  presumption  of  malice  must  be  rebutted  by  the  de- 
fendant: Commomoeiilth  v.  Snelliiuj,  15  Pick.  337;  Commonwealth  v.  Bonner,  9 
Met.  410. 

As  before  suggested,  the  presumption  of  malice  in  law  is  indisputable  when 
the  publication  is  false,  libelous,  and  not  privileged:  Dalcotav.  Taylor,  1  Dak. 
471.  The  publisher  cannot  rebut  this  presumption  by  proving  that  he  be- 
lieved the  matters  constituting  the  alleged  libel  to  be  true,  and  published  it 
from  good  motives:  Smart  v.  Blanchard,  42  N.  H.  147;  King  v.  Boot,  4  Wend. 
113;  21  Am.  Dec.  102;  Usher  v.  Severance,  20  Me.  9;  37  Am.  Dec.  33;  Cass 
v.  New  Orleans  Times,  27  La.  Ann.  214;  Conunonwealth  v.  SneUing,  15  Pick. 
337. 

There  may  be  circumstances  in  which  a  publisher  may  escape  liability  by 
showing  that  he  did  not  know  that  the  matter  published  was  libelous.  It 
was  so  held  in  a  case  where  the  defense  "  was  that  an  alleged  libel  was  a 
mere  fancy  sketch  or  fictitious  tale,  which  had  no  relation  to  the  plaintiff,  and 
was  not  intended  to  apply  to  him;  that  the  publisher  did  not  know  the  plain- 
tiff, nor  had  he  heard  of  any  of  the  facts  stated  in  the  alleged  libel  as  appli- 
cal>le  to  him,  and  if  it  was  intended  by  the  writer  to  be  so  applied,  the 
defendant  had  no  knowledge  of  such  intention":  Smith  v.  Ashley,  11  Met.  367; 
45  Am.  Dec.  216;  Dexter  v.  Spear,  4  Mason,  115.  The  facts  in  this  case  were 
exceptitiiial,  and  the  principles  stated  by  the  court  in  deciding  it  are  not  be- 
yond question.     Certainly  if  the  matters  published  are  libelous  on  their  face, 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         339 

or  if  there  is  anything  to  warn  the  publisher  that  he  may  injure  the  reputa- 
tion of  some  one,  or  bring  him  into  contempt,  the  defendant  will  not  be  per- 
mitted to  prove,  as  a  complete  defense,  that  he  did  not  know  that  the 
publication  was  libelous:  Curtis  v.  Musay,  6  Gray,  261. 

In  implying  that  an  act  must  be  done  intentionally  to  be  malicious  in  law, 
we  think  the  authorities  introduce  a  false  element  into  their  definitions  of 
malice  as  applied  to  the  law  of  libel,  unless  they  further  imply  that  every 
one  must  be  conclusively  presumed  to  intend  the  necessary  or  probable  re- 
sults of  his  acts.  One  who  has  published  a  libel  on  another  cannot  success- 
fully resist  the  latter's  actiou  for  redress  by  showing  he  did  not  intend  to 
publish  it,  and  that  its  publication  was  due  to  carelessness,  inadvertence,  or 
mistake.  Hence  it  is  not  a  sufficient  defense  that  the  publication  of  a  libel 
resulted  from  an  error  in  setting  type,  or  in  placing  plaintiff 's  name  under  a 
colunm,  headed  "first  meetings  in  bankruptcy,"  instead  of  that  headed  "dis- 
solutions of  partnership":  Shepherd  v.  Whitaker,  L.  R.  10  Com.  P.  502;  32 
L.  T.  402;  or  in  erroneously  stating  that  the  plaintiff's  name  had  been 
stricken  from  the  roll  of  attorneys,  when  it  was  intended  to  state  that  he  had 
been  suspended  only:  Blake  v,  Stevens,  4  Fost.  &  F.  232;  11  L.  T.  543. 
Mere  errors  in  printing  an  item  written  by  the  plaintiff  in  a  somewhat  illegi- 
ble hand  will  not  enable  him  to  maintain  an  action  for  libel,  though  the 
item,  as  printed,  necessarily  exposes  him  to  derision,  to  which  derision  the 
item  as  written  by  him  contributes  quite  as  much  as  the  errors  of  the  printers 
in  deciphering  his  manuscript:  Sulliiuj  v.  Shakespeare,  46  Mich.  408;  41  Am. 
Rep.  166. 

Damages. — So  much  of  the  law  of  damages  as  is  peculiar  to  the  law  of 
newspaper  libel  is  almost  inseparably  connected  with  the  consideration  of 
tlie  question  of  malice  in  making  the  publication  complained  of.  Of  course, 
as  in  all  other  cases  of  libel,  the  plaintiff,  when  entitled  to  recover  at  all, 
should  be  awarded  all  the  damages  actually  suffered  by  him.  The  more  ex. 
tensive  the  publication  of  the  libel,  the  greater  the  injury  probably  occasioned 
by  it.  Therefore,  as  bearing  on  the  question  of  the  actual  damages  done  to 
the  plaintiff,  lie  may  prove  the  extent  of  the  circulation  of  the  periodical  or 
pamphlet  in  which  it  was  published:  Gatherrole  v.  Miall,  15  Mees.  &  W.  319;  15 
L.  J.  Ex.  179;  10  Jur.  337;  Fry  v.  Bennett,  28  N.  Y.  324;  Bhjelowv.  Spragiie, 
140  Mass.  425;  and  the  principal  case.  "If  it  appears  upon  the  trial  that 
there  was  no  intention  in  fact  to  injure  the  plaintiff,  and  that  all  proper  pre- 
cautions were  observed  in  the  publication  of  the  article  complained  of,  such 
facts  will  not  prevent  a  recovery  of  such  damages,  but  will  reduce  the  amount 
thereof  to  such  sums  as  must  inevitably  residt  from  the  wrong  ":  Eveninr)  Neios 
Association  v.  Tryon,  42  Mich.  549;  36  Am.  Rep.  450;  Scripps  v.  Reilly,  38 
Mich.  23.  The  plaintiff,  if  the  matters  published  of  him  are  libelous  2'e/"  se, 
ueed  not  offer  any  evidence  of  special  damages,  unless  he  desires  thereby  to 
increase  the  amount  of  his  recovery;  for  if  he  has  been  libeled,  the  law  will 
presume  that  he  has  been  injured,  and  leave  the  amount  of  such  injury  to 
the  determination  of  the  jury:  Booijherv.  Knapp,  76  Mo.  457;  Pricev.  WIdtely, 
50  Id.  437;  Rep.  Puh.  Co.  v.  Miner,  12  Col.  77. 

There  are  various  matters  which  it  is  said  may  be  proved  in  mitigation  of 
damages.  We  do  not  understand  this  expression  to  mean  that  any  of  these 
matters  ought  to  or  can  deprive  plaintiff  of  his  right  to  recover  such  damages 
as  he  has  actually  suffered,  but  rather  that  they  may  wholly  or  partly  remove 
the  presumption  of  malice,  which  will  otherwise  be  indulged,  and  will  there- 
fore relieve  the  defendant  from  tlie  imposition  of  punitive  damages:  Rearick 
V.    Wilcox,  81  III.  77;  Shipp  v.  Story,  68  Oa.  47;  Wazelka  v.  Hettrick,  93  N.  C. 


340 


McAllister  v.  Detroit  Free  Press  Co.        [Mich. 


10.  Hence  it  has  been  held  that  a  defendant  may  prove,  in  mitigation  of  dam- 
ages, that  he  received  letters  pnrporting  to  have  been  written  l>y  reputable  cit- 
izens charging  the  plaintiff  with  certain  wrongful  acts;  that  these  letters  were 
in  fact  forgeries,  and  that  he,  believing  them  to  be  genuine,  was  imposed  upon 
and  induced  to  publish  the  libel  complained  of,  in  the  belief  that  it  was  true: 
Storey  v.  Earhj,  8(5  111.  461.  If  the  defendant  wishes  to  give  evidence  of  the 
truth  of  the  libelous  matter,  he  must  plead  it  in  justification;  and  failing  to 
so  plead  it,  he  is  not  entitled  to  place  in  evidence  before  the  jury,  in  mitiga- 
tion of  damages,  matters  which  ought  to  have  been  pleaded  in  justification. 
Hence  if  the  defendant's  belief  in  tiie  truth  of  a  libelous  publication  can  be 
proved  in  mitigation  of  damages,  it  can  only  be  in  those  cases  in  which  he 
distinctly  disavows  all  right  to  urge  that  the  words  published  were  true  in 
fact,  and  merely  seeks  to  remove  the  presumption  of  malice  by  disclosing 
"the  circumstances  which  induced  him  erroneously  to  make  the  charge  com- 
plained of  ":  Mineshger  v.  Kerr,  9  Pa.  St.  312;  Sliiilinjv.  Carson,  'SI  Md.  175; 
92  Am.  Dec.  632;  Howard  v.  Thoniipson,  21  Wend.  319;  34  Am.  Dec.  238; 
Petrie  v.  Bo-ie,  5  Watts  &  S.  3(i4.  In  criminal  prosecutions  for  libel,  there 
are  cases  where,  though  the  truth  of  the  defamatory  publication  is  not  a 
complete  defense,  it  may  be  given  in  evidence  in  mitigation  of  the  offense: 
Commonwealth  v.  Morris,  1  Va.  Cas.  175;  5  Am.  Dec.  515;  Commomcealth  v. 
BlamUng,  3  Pick.  304;  15  Am.  Dec.  214;  Gornmonwealth  v.  Clap,  4  Mass.  163; 
3  Am.  Dec.  212.  The  gross  negligence  of  the  defendant  may  be  shown  for  the 
purpose  cf  enhancing  damages:  Smith  v.  Harrison,  1  Fost.  &  F.  565;  Scripps 
V.  Redly,  35  Mich.  272.  On  the  other  hand,  evidence  is  admissible  to  rebut 
any  imputation  of  negligence  which  might  otherwise  exist,  and  the  proprietor 
of  a  periodical  is  therefore  entitled  to  show  the  circumstances  attending  it3 
publication,  the  necessity  of  prompt  action  on  his  part,  the  haste  incident  to 
issuing  the  paper,  the  time  at  which  the  libelous  article  was  handed  in,  and 
the  sufficiency  of  the  force  employed  on  the  paper  for  gathering  news  and 
preparing  and  supervising  articles  for  publication:  Scripps  v.  Reilly,  38  Mich. 
10.  It  is  not  proper,  however,  to  instruct  the  jury  that  they  may  consider 
in  mitigation  of  damages  the  excitement  attending  a  pending  election  at 
which  the  plaintiff  was  a  candidate,  and  that  the  alleged  libel  was  published 
for  the  purpose  of  assisting  in  his  defeat:  Bearick  v.    Wilcox,  81  111.  77. 

While  the  retraction  of  a  libel  does  not  relieve  its  publisher  from  liability 
for  its  publication,  it  may  be  proved  in  mitigation  of  damages:  Cass  v.  N^cw 
Orleans  Times,  27  La.  Ann.  214.  One  insult  does  not  justify  anothei-,  nor  has 
the  subject  of  a  libel  unbounded  liberty  to  indulge  in  libels  upon  his  adversary. 
Nevertheless,  a  libelous  retort  to  a  recently  published  libel  is  viewed  with 
great  charity.  If  it  is  in  the  nature  of  a  reply  to  the  previous  libel,  and  ia 
refutation  of  its  charges,  accompanied  with  disparaging  remarks  on  the 
libeler  not  entirely  irrelevant  to  the  subject  under  consideration,  the  previ- 
ous libel  will  be  in  many  instances  received  in  evidence  in  justification,  and 
in  all  cases  is  admissible  in  mitigation  of  damages:  Chaffin  v.  Lynch,  83  Va. 
106;  Myers  v.  Kaichen,  lb  Midi.  272;  Steivart  v.  Minneapolis  Tribune  Co.,  41 
Minn.  71.  The  publisher  may  also  prove  in  mitigation  of  damages  that  in 
publishing  the  article  complained  of  he  acted  from  an  honest  motive  to  pro- 
tect tlie  public  against  impostors,  and  upon  information  tending  to  show  that 
the  person  defamed  by  the  publication  was  engaged  in  a  corrupt  scheme  to 
obtain  and  appropriate  money  for  his  own  proht:  Mosier  v.  Stall,  119  Ind. 
244;  Hunter  v.  Sharpe,  4  Fost.  &  F.  983;  15  L.  T.,  N.  S.,  421. 

The  general  rule  controlling  the  reception  of  evidence  in  mitigation  of 
damages  is,  that  any  circumstances  may  be  proved  "which  tend  to  disprove 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co,         341 

malice,  but  do  not  prove  the  truth  of  the  charge  ":  Storey  v.  Early,  86  111. 
461;  Newell  on  Defamation,  882.  Evidence  may  therefore  be  admitted  to 
show  wliat  were  the  motives  of  the  defendant  in  making  the  publication; 
Heilnian  v.  Slutiikiin,  60  Ind.  441.  There  is  one  class  of  evidence  admissible 
in  mitigation  which  appears  to  estaljlish  rather  than  to  disprove  actual  mal- 
ice. We  refer  to  evidence  of  the  existence  of  circumstances  connected  with 
the  libelous  charge,  and  showing  any  provocation  therefor  received  from  the 
plaintiff:  Knott  v.  Burwdl,  96  N.  C.  279;  May  v.  Brown,  3  Barn.  &  C.  113; 
10  Eng.  Com.  L.  24. 

Exemplary  damages,  in  the  absence  of  statutes  denying  them,  may  always 
be  awarded  if  it  appears  that  the  defamatory  publication  proceeded  from  ex- 
press malice  or  ill-will:  Siii/der  v.  Fulton,  34  Md.  128;  and  various  circum- 
stances may  be  received  in  evidence  as  tending  to  establish  the  existence  of 
malice  in  fact.  Among  these  are,  that  other  libelous  publications  have  been 
made  by  the  same  defendant  against  the  same  plaintiff;  State  v.  Ri<jgs,  39 
Conn.  493;  Larrahee  v.  Minneapolis  Tribune  Co.,  36  Minn.  Ill;  Behee  v.  Bail- 
way,  71  Tex.  424;  though  made  at  so  remote  a  period  that  any  action  to 
recover  damages  therefor  is  barred  by  the  statute  of  limitations:  Evening 
Journal  Association  v.  McDerniott,  44  N.J.  L.  480;  43  Am.  Rep.  392;  or  a 
refusal  to  retract  a  libel,  or  to  publish,  except  as  an  advertisement  to  be  paid 
for  by  the  plaintiff,  any  card  or  statement  expressing  belief  in  his  innocence: 
Kkwin  V.  Baiirnan,  53  Wis.  244;  Barnes  v.  Campbell,  60  N.  H.  27. 

If  a  periodical  is  owned  or  published  by  two  or  more  partners,  malice  in 
fact  of  any  one  of  them  in  making  a  libelous  publication  entitles  the  plaintiff 
to  recover  against  all,  as  if  all  had  participated  in  such  malice:  Lothrop  v. 
Adams,  133  Mass.  471;  43  Am.  Rep.  528.  We  find  it  difficult  to  reconcile 
the  decisions  concerning  the  liability  for  libels  attributable  to  the  malice  of 
editors,  reporters,  and  other  employees,  in  which  the  proprietors  of  the  peri- 
odical in  which  the  publication  was  made  did  not  participate.  It  is  un- 
doubtedly true  tliat  a  proprietor  who  places  another  person  in  charge  of  a 
periodical  becomes  answerable  for  wliatever  he  may  publish,  "whether  the 
wrong  resulted  from  mere  negligence,  or  from  a  wanton  and  malicious  pur- 
pose to  accomplish  the  business  in  an  unlawful  manner ";  and,  perhaps,  in 
many  states,  a  proprietor  in  whose  periodical  a  libel  is  published  tlirough  the 
malice  or  ill-will  of  an  editor,  reporter,  or  other  employee  is  liable  to  the 
same  extent  as  if  the  malice  had  been  entertained,  and  the  publication  au- 
thorized by  the  proprietor  himself:  Bruce  v.  Jieed,  104  Pa.  St.  408;  49  Am. 
Rep.  586.  Probably,  however,  the  weight  of  authority  at  the  present  time 
is  in  favor  of  exonerating  a  proprietor  from  exemplary  damages  if  the  publi- 
cation is  due  to  the  malice  of  his  employees,  and  is  made  witliout  his  previ- 
ous knowledge  or  consent,  and  under  circumstances  which  relieve  him  Iroin 
the  charge  ot  negligence  in  permitting  such  publication:  Steviston  v.  Cramer, 
57  Wis.  570;  Detroit  Po-'it  Co.  v.  McArthur,  16  Mich.  447;  Scripps  v.  lieilly, 
38  Id.  10;  liubertson  v.  Wylde,  2  Moody  &  R.  101. 

In  a  few  of  the  states  exemplary  damages  are  not  allowed  in  actions  for 
slander  or  libel:  Rep.  Pub.  Co.  v.  Miner,  12  Col.  77;  Hose  water  v.  Hoffman, 
24  Neb.  222;  but  in  a  greater  number  they  may  be  awarded  in  all  cases 
where  the  jury  is  satisfied,  from  the  evidence,  that  the  defamatory  publication 
was  actuated  by  malice  or  ill-will  towards  the  defendant:  Templetonv.  Graves, 
59  Wis.  95;  Klewin  v.  Banman,  54  Id.  244;  Montgomei~y  v.  Knox,  23  Fla. 
595;  and  this  malice  or  ill-will  may  be  inerrod  from  the  fact  that  the  defend- 
ant has  published  defamatory  matter  of  the  plaintiff  which  falsely  charges 


342  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

him  with  an  indictable  ofiFense,  or  which  is  otherwise  libelous  per  se:  Btrgviann 
V.  Jones,  94  N.  Y.  51. 

The  plaintifif's  reputation  may,  previously  to  the  publication  of  the  libel 
of  which  he  complains,  have  been  bad,  in  which  case  the  publication  can  do 
him  little  or  no  harm.  The  defendant  is  entitled  to  prove  this  fact  in  miti- 
gation of  damages.  The  evidence  upon  this  subject,  to  be  admissible,  must 
not  be  in  regard  to  plaintiffs  having  in  fact  committed  specific  acts  or  crimes, 
but  must  be  restricted  to  the  plaintiff's  general  reputation:  Warner  v.  Lock- 
erly,  31  Minn.  421 ;  Stone  v.  Varney,  7  Met.  86;  39  Am.  Dec.  7(52;  Byrket  v. 
Monohon,  7  Blaclcf.  83;  41  Am.  Dec'.  212;  CLark  v.  Brown,  116  Mass.  504; 
Mahoney  v.  Bel/ord,  132  Id.  393;  Young  v.  Bennett,  4  Scam.  43;  or  his  reputa- 
tion of  having  committed  the  particular  act  with  which  he  is  charged  in 
the  publication  complained  of:  Wctherbee  v.  Marsh,  20  N.  H.  561;  51  Am. 
Dec.  244.  "The  authorities  are  numerous  to  prove  that  the  defendant  is  not 
confined  to  evidence  of  character  founded  upon  matters  of  tlie  same  nature  as 
were  specified  in  the  charges,  as,  for  instance,  to  evidence  of  the  plaintiff's 
character  as  a  thief,  whereas  in  this  case  the  charge  was  theft;  but  he  may 
give  in  evidence  the  general  bad  character  of  the  plaintiff,  not  by  way  of  jus- 
tification, but  in  mitigation  of  damages,  and  for  this  inquiry  the  plaintiff 
must  stand  prepared":  Lamos  v.  Snell,  6  N.  H.  415;  25  Am.  Dec.  468.  That 
it  had  been  generally  reported  and  believed  that  plaintiff  was  guilty  of  the 
offense  charged  against  him  may  in  some  of  the  states  be  proved  as  tending 
to  establish  that  his  reputation  had,  before  the  publication  complained  of, 
been  so  depreciated  that  the  libel  could  not  have  injured  him  to  the  same  ex- 
tent as  if  he  had  been  of  good  and  unquestionable  repute  in  the  neighborliood 
wlierein  he  lived,  or  where  the  publication  was  made:  Nelaon  v.  Evens,  1 
Dev.  9;  Calloway  v.  Mkldleton,  2  A.  K.  Marsh.  372;  12  Am.  Dec.  499;  Wether- 
bee  V.  Marsh,  20  N.  H.  561;  15  Am.  Dec.  244;  Sanders  v.  Johison,  6  Blackf. 
50;  36  Am.  Dec.  564. 

There  is  no  doubt  that  no  one  has  any  right  to  repeat  a  pre-existing  but 
false  defamatory  rumor  or  statement,  and  tlie  fact  that  a  slander  or  libel  is 
but  a  repetition  of  one  previously  existing  never  justifies  it,  and  will  not  be 
received  in  evidence  as  a  complete  defense:  Watkins  v.  Hall,  9  Best  &  S.  279; 
L.  R.  3  Q.  B.  396;  37  L.  J.  Q.  B.  125;  16  Week.  Rep.  857;  18  L.  T.,  N.  S., 
661;  Hotchkins  v.  Oliphant,  2  Hill,  410;  although  the  last  publisher  discloses 
the  name  of  some  previous  author  or  publisher  at  the  time  he  makes  the 
publication  complained  of:  McPherson  v.  Daniel,  10  Barn.  &  C.  263;  5  Man 
&  R.  251;  Tidman  v.  Anslie,  10  Ex.  63. 

If  a  defamatory  charge  is  published  without  any  reference  being  made  to 
its  author  or  previous  publisher,  the  last  publisher,  when  au  action  is  brought 
against  him  therefor,  cannot  show,  even  in  mitigation  of  damages,  that  he 
merely  repeated  wliathad  already  been  published  by  another:  Treat  v.  Brown- 
ing, 4  Conn.  408;  10  Am.  Dec.  156;  Inman  v.  Foster,  8  Wend.  602;  Peterson 
V.  Morgan,  116  Mass.  350;  Bradley  v.  Gihion,  9  Ala.  406;  Talbot  v.  Clark,  2 
Moody  &  R.  312;  Shehanv.  CoUm-%  20  111.  325;  71  Am.  Dec.  271;  Davis  v. 
Sladden,  17  Or.  259;  Marker  v.  Dunn,  68  Iowa,  720.  The  defendant  may, 
however,  prove,  in  mitigation  of  damages,  that  the  charge  had  been  pre- 
viously published,  if,  at  the  time  of  its  republication,  he  either  gave  the  name 
of  the  author  or  the  person  from  whom  he  had  heard  it,  or  disclosed  in  some 
other  appropriate  manner  that  he  did  not  make  the  charge  himself,  but 
merely  repeated  what  he  had  heard  or  had  seen  in  some  other  publication: 
McDonald  v.  Woodruff,  2  Dill.  244;  Bennett  v.  Bennett,  6  Car.  &  P.  586; 
Evans  V.  Smith,  3  Mou.  363;  Dunscombe  v.  Danville,  8  Car.  &  P.  222;  2  Jur. 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         343 

32;  Storey  v.  Early,  86  111.  461;  Galloway  v.  Courtney,  10  Rich.  414;  Young  v. 
Simons,  Wright,  124;  Williams  v.  Oreenwade,  3  Dana,  438.  In  Minnesota, 
and  perhaps  in  a  few  other  states,  the  defendant,  for  the  purpose  of  establish- 
ing his  belief  of  charges  published  by  him,  and  of  relieving  himself  from  the 
imputation  of  malice  in  fact,  may  prove,  in  mitigation  of  damages,  that  he 
had  seen  the  same  charges  in  another  periodical  before  he  published  them 
himself:  Hewitt  v.  Pioneer  Press  Co.,  23  Minn.  178. 

Newspapers  exist  in  response  to  a  demand  of  the  public  for  news,  or  for 
information  upon  divers  subjects,  both  public  and  private.  When  one  who 
publishes  a  libel  acts  in  the  bona  Jide  discharge  of  a  public  or  private  duty, 
legal  or  moral,  he  is  exonerated  from  liability,  unless  it  appears  that  he  acted 
with  a  malicious  intent:  While  v.  Nichols,  3  How.  286.  There  are  provisions 
in  the  constitution  of  many  of  the  states  guaranteeing  the  liberty  of  the 
press,  and  there  is  an  unquestionable  demand  for  news  upon  all  sorts  of 
topics,  and  especially  for  statements  concerning  the  character,  reputation, 
and  supposed  evil  doings  of  those  who  are  personally  known  in  the  commu- 
nity, or  whose  prominence  is  such  as  to  excite  interest  in  them  even  beyond 
localities  in  which  they  are  personally  known.  Because  of  these  provisions 
guaranteeing  the  liberty  of  the  press,  and  of  the  wide-.spread  demand  for  all 
kinds  of  news,  it  has  been  claimed  on  behalf  of  publishers  of  periodicals  that 
they  have  the  right  to  publish  whatever  they  may,  in  good  faith,  regard  as 
news,  and  as  supplying  a  well-known  demand,  provided  that,  in  what  they 
publish,  they  do  not  act  malevolently,  nor  otherwise  than  merely  in  response 
to  the  desire  of  the  public  for  information  respecting  the  matters  published. 
From  the  fact  that  there  is  a  demand  for  news,  they  argue  a  duty  on  their 
part  to  sujjply  such  demand,  and,  as  a  necessary  consequence,  that  they  can. 
not  be  held  answerable  for  performing  this  duty  as  long  as  they  do  not  act 
maliciously,  even  though  it  should  happen  that  the  statements  published  were 
not  true,  and  were  calculated  to  imperil  or  destroy  the  reputation  and  happi- 
ness of  the  persons  against  whom  they  were  made. 

If  the  duty  of  the  proprietor  of  a  periodical  is  to  be  measured  by  the  de- 
mand for  what  he  publishes,  then  the  more  libelous  his  publications  the  more 
imperative  his  duty  to  publish  them,  for,  doubtless,  the  demand  for  defama- 
tory news  is  more  eager  and  inexhaustible  than  for  any  other.  The  existence 
of  this  duty  cannot  be  conceded,  except  to  a  very  limited  extent.  In  consid- 
ering whether  it  may  be  conceded  at  all,  and  if  so,  under  what  circumstances, 
or  in  what  cases,  publications  may  profitably  be  divided  as  follows:  1.  Those 
relating  to  private  persons,  acting  in  their  private  capacity;  2.  Those  relat- 
ing to  persons  either  tilling  or  seeking  public  offices  or  stations,  or  to  the 
criticism  of  works  to  which  they  have  expressly  or  impliedly  invited  public 
attention;  3.  Those  relating  to  acts  done  or  proceedings  taking  place  in  some 
public  office  or  department,  —  legislative,  executive,  or  judicial. 

The  liberty  of  the  press,  which  is  guaranteed  under  the  constitution  of  many 
states,  does  not  confer  upon  it  any  greater  right  to  publish,  tlirough  periodi- 
cals, than  is  given  by  those  other  clauses  of  the  same  constitutions  guarantee- 
ing liberty  of  speech,  —  to  publish  through  the  vocal  organs.  In  either  case, 
the  publisher  is  subject  to  the  laws  of  the  land;  his  publication  nmst  not  be 
criminal,  nor  one  in  defiance  of  the  penal  laws;  and,  at  least,  when  false  and 
defamatory,  he  must  answer  in  damages  to  any  one  defamed  or  injured 
thereby:  Davidson  v.  Duncan,  7  El.  &  B.  229;  26  L.  J.  Q.  B.  104;  Palmer  v. 
Concord,  48  N.  H.  211;  97  Am.  Dec,  GOo;  Bar7ies  v.  Cainphell,  59  N.  H.  185; 
47  Am.  Rep.  183. 

A  leading  case  upon  this  subject  is  that  of  Sheckell  v.  Jackmn,  10  Gush.  25. 


344  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

The  defendants  had  published  a  libel  of  the  plaintiff,  charging  him  with 
treachery  and  bad  faith  in  regard  to  money  received  by  liim  to  obtain  manu- 
mission of  a  fugitive  slave,  and  with  then  inviting  the  slave  to  go  into  a  slave 
district  with  a  view  of  again  placing  him  in  a  state  of  slavery.  The  defend- 
ants sought  to  prove  that  there  was  a  general  anxiety  in  the  community  lest 
the  slave  in  question  had  been  deceived  in  transactions  with  the  plaintiff,  and 
reduced  to  slavery;  and  they  claimed  that,  as  publishers  of  a  periodical,  they 
had  a  duty  to  perform,  and  that  they  stated  what  they  honestly  thought  to 
be  true.  The  trial  court,  among  other  instructions,  gave  the  jury  the  follow- 
ing: "But  in  point  of  law,  the  occasion  of  this  publication  was  not  such  a 
one  as  affords  a  justification  to  the  defendants  for  publishing  what  was  not 
true.  The  defendants'  case  does  not  come  within  the  privileged  or  excepted 
cases  from  the  general  rule.  But  if  the  publication  is  libelous  upon  the 
plaintiff,  upon  the  definition  of  libel  as  before  given  to  you,  then  the  defend- 
ants are  by  law  responsible  to  the  plaintiff  in  damages  for  the  injury  they 
have  done  him.  Then  it  has  been  urged  upon  you  that  conductors  of  the 
public  press  are  entitled  to  peculiar  indulgence,  and  have  especial  rights  and 
privileges.  The  law  recognizes  no  such  pecixliar  rights,  privileges,  or  claims 
to  indulgence.  They  have  no  riglits  but  such  as  are  common  to  all.  They 
have  just  the  same  rights  that  the  rest  of  the  comnmuity  have,  and  no  more. 
Tliey  have  the  right  to  publish  the  truth,  but  no  right  to  pulili-h  falsehoods, 
to  the  injury  of  others.''  These  instructions,  when  assailed  in  the  appellate 
court,  were  pronounced  correct  in  point  of  law,  and  well  adapted  and  applied 
to  the  circumstances  of  the  case. 

"The  terms  '  freedom  of  the  press  '  and  ' liberty  of  the  press '  have  misled 
some  to  suppose  that  the  proprietors  of  a  newspaper  had  a  right  to  publish 
that  with  impunity  for  the  publication  of  which  others  would  have  been  held 
responsible.  But  the  proper  signification  of  these  phrases  is,  if  so  under- 
stood, misapprehended.  The  '  liberty  of  the  press  '  consists  in  a  right  in  the 
conductor  of  a  newspaper  to  print  whatever  he  chooses,  without  any  previous 
license,  but  subject  to  be  held  responsible  therefor  to  exactly  the  same  extent 
that  any  one  else  would  be  responsible  for  the  publication  ":  Sweeney  v.  Bake)', 
1.3  W.  Va.  158;  31  Am.  Rep.  757. 

"Freedom  of  the  press  and  freedom  of  speech  are  equally  sacred  and  equally 
protected  by  the  constitution.  Section  3  of  the  Bill  of  Rights  provides  that 
'  the  liberty  of  the  press  shall  forever  remain  inviolate,  and  all  persons  may 
freely  speak,  write,  and  publish  their  sentiments  on  all  subjects,  being  re- 
sponsible for  the  abuse  of  such  rights.'  In  this  country,  almost  all  ofRcers 
are  elective.  The  press  does  not  possess  any  immunity  not  shared  by  every 
individual.  In  every  election  the  same  freedom  of  discussion  of  the  merits 
and  demerits  of  candidates  is  allowed  equally  to  press  and  people,  and  every 
citizen  can  claim  to  be  interested  in  the  choice  of  his  rulers.  Now,  can  it  be 
said  that  every  household  visitation  made  by  itinerant  politicians,  poisoning 
the  minds  of  electors  with  libelous  and  slanderous  charges  against  candidates, 
every  public  harangue  filled  with  similar  matter,  every  club-room  discussion 
in  which  such  charges  are  bandied  about  with  licentious  freedom  and  exag- 
geration, are  privileged  communications,  and  imposing  upon  the  injured 
party  the  necessity  of  proving  that  they  were  uttered  and  published  with 
express  malice?  We  have  never  supposed  that  the  freedom  of  speech,  even 
in  this  country,  could  legally  be  carried  to  such  an  extent.  Yet,  if  such  is 
the  law  as  to  an  article  puldislied  in  a  public  journal,  there  can  be  no  good 
reason  shown  why  it  does  not  extend  to  all  cliannels  of  communication  be- 
tween man  and  man  during  the  pendency  of  an  election.     We  think  a  public 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         345 

journal  or  an  individual  who  indulges  in  defamatory  assertions  about  candi- 
dates for  office  is  equally  liable  for  his  acts  with  those  who  conmiit  the  same 
offense  against  private  individuals":  Aldrichv.  Press  PrintiiKj  Co.,  9  Minn. 
133;  S6  Am.  Dec.  84. 

So  far  as  our  researches  have  extended,  we  have  been  unable  to  dis- 
cover any  case  wherein  a  periodical  has  falsely  charged  a  person  acting  in 
his  private  capacity  with  the  commission  of  a  crime  in  which  tlie  proprietor 
of  the  periodical  has  been  permitted  to  justify  his  act  on  the  ground  that  the 
publication  was  privileged,  because  made  in  good  faith  as  an  item  of  news. 
'■  The  right  to  publish  through  the  newspaper  press  such  matters  of  interest 
as  may  thus  be  properly  laid  before  the  public  does  not  go  to  the  extent  of 
allowing  publications  concerning  a  person  of  false  and.  defamatory  matter, 
there  being  no  other  reason  of  justification  for  doing  so  than  merely  publish- 
ing the  news  ":  Mallory  V.  Pioneer  Pub.  Co., 'i^Mmw.  o2\;  Usher  w.  Severance, 
20  Me.  9;  37  Am.  Dec.  33.  "The  law  favors  the  freedom  of  the  press  so 
long  as  it  does  not  interfere  with  private  reputation,  or  other  rights  entitled 
to  protection.  And  inasmuch  as  the  ne«  spaper  pi-ess  is  one  of  the  necessi- 
ties of  civilization,  the  conditions  iinder  which  it  is  required  to  be  conducted 
should  not  be  unreasonable  or  vexatious.  But  the  reailing  public  are  not  en- 
titled to  discussions  in  print  upon  the  character  or  doings  of  private  persons, 
except  as  developed  in  legal  tribunals,  or  voluntarily  subjected  to  public 
scrutiny.  And  since  an  injurious  statement  inserted  in  a  popular  journal 
does  more  harm  to  the  person  slandered  than  can  possibly  be  wrought  by 
any  other  species  of  publicity,  the  care  required  of  such  journals  must  be 
such  as  to  reduce  the  risk  of  having  such  libels  creep  into  their  columns,  to 
the  lowest  degree  which  reasonable  foresight  can  assure  ":  Detroit  Daily  Post 
Co.  V.  Mc Arthur,  16  Mich.  452. 

In  the  case  of  Barnes  v.  Camphell,  59  N.  H.  128,  47  Am.  Rep.  183,  the 
defendants,  who  had  charged  plaiutiil  with  the  commission  of  a  crime, 
pleaded  that  they  were  the  publishers  of  a  newspaper,  and,  as  such,  that  it 
was  their  duty  to  give  to  their  readers  such  items  of  news  as  they  might 
judge  to  be  of  interest  and  value  to  the  community,  and  that,  as  such  pub- 
lishers, they  pul>lished  the  article  complained  of  in  good  faith,  without 
malice,  and  believing,  and  having  good  reason  to  believe,  the  same  to  be 
true.  In  determining  that  this  plea  was  insufficient,  and  ought  to  be 
stricken  out,  the  appellate  court  said:  "The  defendants  probably  intended 
to  set  out  the  excuse  of  a  lawful  occasion,  good  faith,  proper  purpose,  and 
belief,  and  probable  cause  to  believe,  that  the  publication  was  true.  They 
laid  stress  upon  their  business  of  publishing  a  newspaper.  But  professional 
publishers  of  news  are  not  exempt  as  a  privileged  class  from  the  conse- 
quences of  damage  done  by  their  false  news.  Their  communications  are  not 
privileged  merely  because  made  in  a  public  journal.  They  have  the  same 
right  to  give  information  that  others  have,  and  no  more.  The  occasion  of 
the  defendants'  publishing  a  false  charge  of  crime  against  the  plaintiff  was 
not  lawful,  if  the  end  to  be  attained  was  not  to  give  useful  information  to 
the  community  of  a  fact  of  which  the  comnmnity  had  a  right  to  be,  and 
ought  to  be,  informed,  in  order  that  they  might  act  upon  such  information: 
State  V.  Buniham,  9  N.  H.  34,  41,  42;  31  Am.  Dec.  217;  Palmer  v.  Concord, 
48  N.  H.  211,  217;  97  Am.  Dec.  605;  Carpenter  v.  Bailey,  53  N.  H.  590;  56 
Id.  283.  The  defendants  do  not  state  facts  that  would  constitute  a  lawful 
occasion.  They  make  a  loose  averment  of  their  general  duty  to  give  their 
readers  such  news  as  they  (the  defendants)  mii;ht  properly  judge  to  be  of 
interest  and  value  to  the  community.     This  should  be  struck  out  of  the 


346  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

record  as  insufficient  and  misleading.  It  is,  in  efifcct,  an  intimation  that 
they  published  the  libel  in  the  usual  course  of  their  business,  and  is  calcu- 
lated to  give  the  jury  the  erroneous  impression  that  the  defendants'  judg- 
ment of  the  propriety  of  the  publication  is  evidence  of  the  lawfulness  of  the 
occasion.  The  defendants'  general  business  of  publishing  interesting  and 
valuable  news  was  not,  of  itself,  a  lawful  occasion  for  publishing  this  partic- 
ular false  and  criminal  charge  against  the  plaintiff.  It  will  be  for  the  jury 
to  say  what  weight  the  defendants'  business  has  as  evidence  on  the  question 
of  malice.  But  however  high  the  defendants"  vocation,  and  however  inter- 
esting and  valuable  the  truth  which  they  undertake  to  give  their  readers, 
their  ordinary  and  habitual  calling  is  no  excuse  for  assailing  the  plaintiff's 
character  with  this  -false  charge  of  crime.  They  must  show  specific  facts, 
constituting  a  lawful  occasion  in  this  particular  instance,  as  if  this  false 
charge  had  been  the  only  thing  they  ever  published." 

While  the  decisions  to  which  we  have  referred  have  generally  related  to 
libels  charging  plaintiff  with  grievous  crimes  punishable  as  felonies,  the 
same  principles  must  prevail  where  the  libel  in  question  is  less  serious  in 
character:  Snyder  v.  Fulton,  M  Md.  128.  Thus  a  periodical  reflecting  upon 
the  integrity  of  a  professional  man,  and  charging  him  with  treachery  to  the 
interests  committed  to  his  protection,  cannot  be  justified  because  published 
as  an  item  of  news;  nor,  if  he  be  a  lawyer,  can  the  publication  be  justified  on 
the  ground  that  it  related  to  his  conduct  of  a  proceeding  in  court;  for,  in 
those  cases  in  which  publication  may  be  made  of  proceedings  in  court,  the 
publication  mnst  be  confined  to  what  actually  took  place,  and  not  accom- 
panied by  libelous  animadversions  on  the  participants:  Atkinson  v.  Detroit  Free 
Press  Co.,  45  Mich.  341;  Ludwij  v.  Cramer,  53  Wis.  193. 

Various  statutes  have  been  enacted  in  different  portions  of  the  United  States 
for  the  purpose  of  modifying  the  law  of  libel  with  a  view  of  enlarging  the 
circumstances  under  which  newspapers  may  either  wholly  escape  liability,  or 
may  diminish  the  damages  otherwise  recoverable.  Thus  in  Connecticut,  in 
the  year  1855,  it  was  enacted  "that  in  every  action  for  an  alleged  libel  the 
defendant  may  give  proof  of  intention;  and  unless  the  plaintifif  shows  proof 
of  malice  in  fact,  he  shall  recover  nothing  but  the  actual  damages  proved  and 
especially  alleged  in  the  declaration."  In  construing  this  statute  it  was  held 
that  a  belief  that  the  charge  is  true  is  not  a  defense  sufficient  to  excuse  the 
party  making  the  publication,  where  the  circumstances  were  such  as  to  show 
an  indifference  to  its  truth  or  falsity:  Moorev.  Stevenson,  27  Conn.  14.  It  was 
also  held  that  this  statute  permitting  the  defendant  to  give  evidence  of  his  in- 
tention was  but  an  extension  of  a  rule  previously  existing  as  to  the  admissibil- 
ity of  evidence;  that  such  evidence  had  always  been  admissible  in  reduction  of 
damages,  but  that  the  statute  made  it,  in  the  absence  of  rebutting  proof  on 
the  part  of  the  plaintiff,  a  bar  to  the  recovery  of  general  damages;  that  the 
provision  that  the  plaintiff  shall  prove  malice  in  fact  was  not  intended  to  pre- 
scribe any  new  rule  as  to  the  kind  and  degree  of  malice  to  be  proved,  or  as 
to  the  evidence  by  which  the  existence  in  fact  of  improper  motives  was  to 
be  shown,  but  only  to  require  that  it  be  shown  by  other  evidence  than  mere 
legal  presumption  from  the  fact  of  publication  that  the  defendant's  motives 
were  not  proper  and  justifiable;  that  the  motives  of  defendant  were  im- 
proper may  still  be  inferred  from  the  character  of  the  publication  itself  and 
from  the  attendant  circumstances,  and  that  it  was  not  necessary  for  the  plain- 
tiff to  prove  any  actual  hostile  motives;  and  finally,  that  any  construction  of 
the  act  which  would  make  it  abridge  beyond  these  limits  the  rights  of  plaintiff 
in  such  a  suit  would  bring  it  into  conliict  with  that  portion  of  the  constitu- 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         347 

tion  of  tlie  state  declaring  that  "  every  person  for  an  injury  done  him  in  his 
person,  property,  or  reputation  shall  have  remedy  by  due  course  of  law,  and 
right  and  justice  administered  without  sale,  denial,  or  delay  ":  Hotchkiss  v. 
Porter,  30  Conn.  414.  By  the  Michigan  statute  of  1885  it  was  enacted  "that 
in  any  suit  brought  for  the  publication  of  a  libel  in  any  newspaper,  the  plain- 
tiff shall  only  recover  actual  damages,  if  it  shall  appear  that  the  publica- 
tion was  made  in  good  faith  and  did  not  involve  a  criminal  charge,  and  its 
falsity  was  due  to  mistake  or  misappreliension  of  the  facts;  and  that  in  the 
next  regular  issue  of  said  newspaper  after  such  mistake  or  misapprehension 
was  brought  to  the  knowledge  of  the  publisher  or  publishers,  whether  before 
or  after  suit  was  brought,  a  correction  was  published  in  as  conspicuous  a  man- 
ner and  place  in  said  newspaper  as  was  the  article  sued  on  as  libelous  ";  and 
the  statute  further  declared  that  the  words  "  '  actual  damages  '  should  be  con- 
strued to  include  all  damages  the  plaintifif  may  show  he  has  suffered  in  re- 
spect to  his  property,  trade,  profession,  or  occupation,  and  no  other  damages. " 
In  the  case  of  Park  v.  Detroit  Free  Press  Co.,  72  Mich.  660,  16  Am.  St.  Rep., 
the  opinion  was  expressed  that  this  statute  was  not  "  within  the  power  of 
constitutional  legislation."  This  portion  of  the  opinion  was,  however,  not 
necessary  to  the  decision  of  the  case.  A  similar  statute  having  been  adopted 
in  Minnesota,  its  constitutionality  was  sustained  by  the  supreme  court  of 
that  state  in  Allen  v.  Pioneer  Press  Co.,  40  Minn.  117;  30  Alb.  L.  J.  294;  12 
Am.  St.  Rep.  707.  In  this  case  it  was  further  determined  that  mere  belief  in 
the  truth  of  the  publication  is  not  sufficient  to  constitute  good  faith  on  the 
part  of  the  publisher;  that  he  must  be  free  from  negligence  as  well  as  from 
improper  motives  in  making  the  publication;  and  that  it  is  his  duty,  not- 
withstanding the  statute,  to  take  all  reasonable  precautions  to  verify  the 
truth  of  the  statement  and  prevent  any  untrue  and  injurious  publication 
against  others. 

The  head-line  of  an  article  or  paragraph,  being  so  conspicuous  as  to  attract 
the  attention  of  persons  who  look  casually  over  a  paper  without  carefully 
reading  all  its  contents,  may  in  itself  inflict  very  serious  injury  upon  a  per- 
son, both  because  it  may  be  the  only  part  of  the  article  which  is  read,  and 
because  it  may  cast  a  graver  imputation  than  all  the  other  words  following 
it.  There  is  no  doubt  that  in  publications  concerning  private  persons,  as  well 
as  in  all  other  publications  which  are  claimed  to  be  libelous,  the  head-lines 
directing  attention  to  the  publication  may  be  considered  as  a  part  of  it,  and 
may  even  justify  a  court  or  jury  in  regarding  the  publication  as  libelous 
when  the  body  of  the  article  is  not  necessarily  so:  Lewis  v.  Clement,  2  Barn.  & 
Adol.  702;  Clementv.  Lewis,  7  Moore,  200;  3  Brod.  &B.  279;  Harvey  v.  French, 
2Tyrw.  585;  1  Car.  &  M.  11;  2  Moore  &  S.  519;  Hayes  v.  Press  Co.,  127 
Pa.  St.  642;  14  Am.  St.  Rep.  874. 

We  have  heretofore  shown  that  the  publication  of  a  libel  cannot  be  justi- 
fied on  the  gi'ound  that  it  is  a  mere  repetition  of  what  had  already  been  said 
or  otherwise  published  by  some  other  person  or  periodical.  The  fact  that  a 
former  publication  took  place  at  a  public  meeting  and  was  a  part  of  the  pro- 
ceedings of  such  meeting,  or  of  a  speech  there  delivered,  or  a  report  there 
made  or  filed,  does  not  render  the  rule  inapplicable,  unless  the  meeting  is  that 
of  some  official  body  whose  proceedings  may  be  riglitfully  published  within 
the  limits  to  be  hereafter  stated.  The  fact  that  defamatory  words  are  spoken 
or  written  to  or  by  an  assemblage  of  persons  does  not  entitle  a  proprietor  of 
aperiodical  to  republish  them:  Davison  v.  Duncan,  7  El.  &  B.  229;  3  Jur.,  N.  S., 
615;  26  L.  J.  Q.  B.  104;  Popham  v.  Pickburn,  7  Hurl.  &N.  891;  8  Jur.,  N.  S., 
179;  31  L.  J.   133;  10  U.   K.  324;  5  L.  T.,  N.  S.,  846;   Hearjie  v.  Stowell, 


348  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

12  Ad.  &  E.  719;  4  Perry  &  D.  G96;  6  Jur.  456;  and  if  the  republication  la 
incited  by  any  of  the  participants  in  such  meetings,  they  are  answerable 
therefor:  Parks  v.  Pre.^cott,  L.  R.  4  Ex.  169;  38  L.  J.  Ex.  105;  17  Week.  Rep. 
773;  20  L.  T.,  N.  S.,  537. 

While,  ordinarily,  a  periodical  cannot  justify  a  libelous  publication  on  the 
ground  that  it  had  a  duty  to  the  public,  or  some  portion  of  it,  to  make  the 
publication  in  question  as  an  item  of  news,  a  periodical  may  exist  for  the  spe- 
cial purpose  of  keeping  a  particular  body  or  class  of  men  informed  on  a 
special  subject,  and  where  this  is  so,  it  may  perhaps  justify  a  republication 
of  libelous  matter  as  falling  withiu  the  duty  which  it  has  voluntarily  as- 
sumed to  its  patrons.  The  least  questionable  instances  of  this  class  of  peri- 
odicals is  to  be  found  in  professional  and  religious  journals,  which  undertake 
to  keep  the  members  of  a  profession,  church,  or  association  informed  with 
respect  to  the  conduct  or  standing  of  their  fellow-members,  and  of  other 
matters  of  especial  interest  to  the  common  members  of  such  church,  profes- 
sion, or  association.  If  charges  h;tve  been  preferred  against  a  church 
member,  and  have  resulted  in  his  trial  and  excommunication  by  the  proper 
authorities,  his  sentence  may  afterwards  be  read  in  the  church  of  which  he 
was  a  member,  in  the  presence  of  his  fellow-members  and  others  who  may 
happen  to  be  there  present,  without  subjecting  his  pastor,  who  reads  it,  to 
an  action  for  libel:  Farmworth  v.  Storrs,  5  Cush.  412.  On  the  same  princi- 
ple, if  a  charge  is  made  against  a  minister  to  an  association  of  ministers  of 
the  same  church,  and  is  followed  by  the  adoption  by  them  of  a  resolution 
declaring  their  belief  in  the  truth  of  such  charges,  and  notifying  the  subject 
of  it  to  appear  and  show  cause  why  he  should  not  be  dismissed,  the  publica- 
tion of  this  resolution  in  those  periodicals  recognized  as  denominational  or- 
gans is  privileged:  Shurtleff  v.  Stevens,  51  Vt.  501;  31  Am.  Rep.  698.  A 
niedical  journal  may  also  publish  the  proceedings  of  a  medical  society,  when 
such  society  is  a  public  corporation  authorized  by  law,  though  the  proceed- 
ings include  charges  made  against  a  member  of  the  association  resulting  in 
his  expulsion:  Barrows  v.  Bell,  7  Gray,  301;  66  Am.  Dec.  479. 

The  decisions  upon  the  topic  which  we  are  now  considering  are  infrequent, 
and  are  hardly  sufficient  to  definitely  settle  the  law  controlling  it.  Possibly 
they  may  all  be  explained  and  supported  upon  the  ground  that  the  proceed- 
ings republished  took  place  before  quasi  judicial  tribunals  to  the  jurisdiction 
of  which  the  parties  claiming  to  have  been  libeled  were  subject,  and  that  the 
publications  were  justifiable  as  fair  reports  of  what  took  place  before  such, 
tribunals. 

If  it  were  possible  for  one  to  voluntarily  assume  the  duty  of  giving  infor- 
mation by  written  or  printed  publications  to  a  special  class  of  patrons,  and  to 
defend  whatever  he  might  thus  do,  in  good  faith  and  without  malice,  as 
privileged,  then  the  protection  of  the  rule  should  be  extended  to  the  proprie- 
tors of  commercial  agencies,  who  undertake  to  obtain  information  of  the  stand- 
ing of  persons  engaged  in  trade,  and  to  give  their  patrons  the  benefit  of  such 
information  by  circulars  or  other  printed  or  written  means  of  communication. 
But  while  it  is  lawful  to  collect  such  information,  and  to  impart  to  any  patron 
who  may  especially  apply  therefor  whatever  has  been  learned  concerning 
the  business  repute  or  affairs  of  any  one  in  whose  aflfairs  such  patron  has  anj' 
interest  (Ormshy  v.  Douglass,  37  N.  Y.  477;  State  v.  Lonsdale,  48  Wis.  348; 
Trusselly.  Scarlett,  18  Fed.  Rep.  214;  Sockv.  Bradstreet,  22  Id.  771),  yet  gen- 
eral publications  purporting  to  disclose  the  business  standing  or  acts  of  men, 
and  which  are  circulated  among  all  the  patrons  of  the  publisher,  and  may 
therefore  reach  persona  who  may  not  have  any  special  interest  in  the  business 


J 


Oct.  1889. J     McAllister  v.  Detroit  Free  Press  Co.         349 

or  afiFairs  of  the  person  of  whom  the  statements  are  made,  are  not  privileged, 
and  if  false  and  defamatory,  are  actionable.  This  rule  has  been  applied  with 
but  little  judicial  dissent  in  actions  for  libel,  brought  against  the  Bradstreet 
and  other  well-known  commercial  agencies:  Sunder lin  v.  Bradstreet,  46  N.  Y. 
188;  7  Am.  Dec.  322;  Taylcrr  v.  Church,  8  N.  Y.  452;  Bradstreet  Co.  v.  Gill, 
72  Tex.  115;  13  Am.  St.  Rep.  768;  Ever  v.  Dun,  12  Fed.  Rep.  526;  King  v. 
Patterson,  49  N.  J.  L.  417;  60  Am.  Rep.  622;  Johmon  v.  Bradstreet  Co.,  77 
Ga.  172;  4  Am.  St.  Rep.  77. 

The  freedom  with  which  libelous  statements  are  made  against,  and  dia- 
houest  and  corrupt  motives  attributed  to,  public  officers  in  periodicals  of 
.high  standing  and  wide  circulation  tends  to  produce  a  popular  impression 
that  such  officials  are  not  protected  by  the  law  against  libel.  If  this  impression 
is  to  any  extent  correct,  the  fault  is  in  the  administration  of  the  law,  and  not 
in  the  law  itself.  The  law,  instead  of  abandoning  its  agents  and  administra- 
tors, seeks  to  give  them  special  protection;  and  pronounces  as  libelous  pub- 
lications of  persons  in  their  official  capacities  which  might  be  regarded  aa 
innocent  if  they  were  private  citizens  only.  Words  spoken  of  a  person  to  dis- 
parage him  in  an  office  of  public  trust,  and  which  directly  tend  to  prejudice 
him  therein,  are  actionable,  without  any  proof  of  special  damages:  Bellamy 
V.  Burch,  16  Mees.  &  W.  590;  Tillotson  v.  Cheetham,  3  Johns.  56;  3  Am.  Dec. 
459. 

It  is  true  that  "it  is  the  duty  of  all  who  witness  any  misconduct  on  the 
part  of  a  magistrate,  or  any  public  officer,  to  bring  such  misconduct  to  the 
notice  of  those  whose  duty  it  is  to  inquire  into  and  punish  it;  and,  therefore, 
all  petitions  and  memorials  complaining  of  such  misconduct,  if  prepared  bona 
Jide  and  forwarded  to  the  proper  authorities,  are  privileged.  It  is  not  neces- 
sary that  the  informant  or  memorialist  should  be  in  any  way  personally  ag- 
grieved or  injured;  for  all  persons  have  an  interest  in  the  pure  administration 
of  justice,  and  the  efficiency  of  our  public  affairs  in  all  departments  of  state  ": 
Odgers  on  Libel  and  Slander,  225;  Harrison  v.  Bush,  5  El.  &  B.  344;  25  L.  J. 
Q.  B.  25,  99;  Lake  v.  Kimj,  1  Sev.  240;  1  Saund.  131;  1  Mod.  58;  Mclntyre 
V.  McBean,  13  U.  C.  Q.  B.  534.  Such  chai-ges,  to  be  privileged,  must  always 
be  made  in  good  faith  and  to  some  person,  officer,  or  tribunal  authorized  to 
consider  them;  and  must  not  be  spread  broadcast  over  the  land.  The  press 
has  no  more  privilege  to  lil)el  public  officials  than  it  has  to  libel  private 
citizens.  It  owes  no  duty  to  the  public  which  justifies  it  in  making  false  and 
defamatory  charges  against  public  officials.  "One  may  in  good  faith  pub- 
lish a  truth  concerning  a  public  officer,  but  if  he  states  that  which  is  false 
and  aspersive,  he  is  liable  therefor,  however  good  his  motive."  The  acta  of 
officers  may  be  criticised;  they  may  even  be  exposed  to  ridicule  and  sarcasm 
without  subjecting  the  publisher  to  liability  for  libel.  It  is  otherwise  with 
respect  to  the  private  characters  and  motives  of  officers.  Aspersions  upon 
them  are  at  the  peril  of  the  publisher.  He  may  escape  this  peril  by  showing 
that  they  were  true.  The  public  has  an  interest  in  knowing  the  truth  about  its 
officials,  but  has  not  any  such  interest  in  knowing  falsehoods  regarding  them. 
The  publisher  of  a  libel  upon  a  public  official  can  justify  his  publication  only 
by  proving  that  it  was  true:  HamiUon  v.  Eno,  81  N.  Y.  116;  Panneter  v. 
Coupland,  6  Mees.  &  VV.  105;  4  Jur.  701;  Wilson  v.  Heed,  2  Fost.  &  F.  149; 
Russell  V.  Anthony,  21  Kan.  450;  30  Am.  Rep.  436;  Bourreseau  v.  Detroit  etc 
Co.,  63  Mich.  425;  6  Am.  St.  Rep.  320;  Nebb  v.  Hope,  111  Pa.  St.  145;  Camp., 
bell  v.  Spottiswoode,  3  Best  &  S.  769;  9  Jur.,  N.  S.,  106J;  32  L.  J.  Q.  B.  185; 
11  Week.  Rop.  569;  Rowand  v.  De  Camp,  96  Pa.  St.  493. 

The  following  publications  regarding  public  officials  have  therefore   been 


850  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

adjudged  not  to  be  privileged,  and  to  be  actionable,  unless  shown  to  be  true: 
A  statement  that  an  award  made  by  a  public  officer  recommending  a  certain 
street  pavement  had  been  dictated  by  those  interested  in  such  pavement,  and 
made  in  consideration  of  a  reward  given  such  officer:  Haniilton  v.  Eno,  81  N.  Y. 
116;  a  charge  that  a  member  of  the  legislature  had  been  bribed,  or  had  voted  for 
or  against  any  particular  measure  from  corrupt  and  dishonest  motives:  Cramer 
V.  Biggs,  17  Wend.  209;  Wilso7i  v.  Nunan,  23  Wis.  105;  Negley  v.  Farrow,  60  Md. 
158;  that  the  plaintiff,  who  was  a  member  of  Congress,  was  a  fawning  sycophant, 
and  misrepresentative  in  Congress,  and  a  groveling  office-seeker,  and  had 
abandoned  his  post  in  Congress  in  pursuit  of  office:  Thomas  v.  Croawclt,  7 
Johns.  264;  5  Am.  Dec.  269;  that  plaintiff  had  openly  avowed  the  opinion 
that  government  had  no  more  right  to  provide  by  law  for  the  support  of  the 
worship  of  a  Supreme  Being  than  for  the  worship  of  the  Devil:  Stow  v.  Con- 
vei-se,  3  Conn.  325;  8  Am.  Dec.  189;  that  plaintiff  lacked  capacity  as  a  judge, 
had  abandoned  the  principles  of  truth,  and  bartered  away  the  office  of  clerk 
of  his  court  in  such  manner  as  to  cancel  some  of  his  private  debts:  Robhins  v. 
Treadway,  2  J.  J.  Marsh.  540;  19  Am.  Dec.  152;  that  it  was  expected  that 
the  plaintiff,  as  court  commissioner,  would  discharge  all  persons  who  might 
be  committed  by  the  legislature  for  refusing  to  testify,  merely  to  subserve 
the  views  of  other  parties,  whose  tools  and  toadies  the  plaintiff  was,  and  that 
whatever  he  might  do  in  the  future,  the  past  would  warrant  the  depriving 
him  of  his  office:  Lansing  v.  Car-penter,  9  Wis.  540;  76  Am.  Dec.  281;  that  the 
plaintiff  was  "a  damned-fool  justice":  Spiering  v.  Andi-ae,  45  Wis.  330;  that 
the  plaintiff,  subscribing  himself  chairman  of  the  Democratic  county  com- 
mittee, appeared  in  a  card  for  a  ring,  by  which  he  was  paid  a  fee,  and  the 
publication  of  which  was  paid  for  out  of  the  corruption  fund  of  the  ring;  that 
he  had  descended  from  the  high  calling  of  a  clergyman  to  the  recognized 
champion  and  professional  defender  of  prostitutes,  and  the  lowest  grade  of 
criminals  who  throng  the  audience  halls  of  police  courts,  and  seems  to  follow 
his  profession  solely  for  the  purpose  of  making  money,  and  his  opinions  are 
molded  by  the  extent  of  his  client's  means  to  pay:  Barr  v.  Moore,  87  Pa.  St. 
385;  30  Am.  Rep.  367;  that  a  city  physician  has  caused  the  death  of  a  child 
by  reckless  treatment:  Foster  v.  Scripps,  39  Mich.  376;  33  Am.  Rep.  403;  that 
the  plaintiff,  as  representative  in  Congress,  had,  for  the  purpose  of  obtaining 
votes,  intentionally  pressed  for  the  payment  of  public  money  on  claims  the 
validity  of  which  was  questionable:  State  v.  Schmitt,  49  N.  J.  L.  579;  that 
plaintiff,  while  holding  the  office  of  sealer  of  weights  and  measures,  had  made 
a  practice  of  tampering  with  the  weights  and  scales  in  order  to  swell  the  fees 
of  his  office:  Eviston  v.  Cramer,  57  Wis.  570;  that  the  plaintiffs,  who  were  offi- 
cers of  the  state  penitentiary,  had  been  grossly  derelict  in  their  duty,  and  in 
the  management  of  the  prison:  Banner  Pub.  Co.  v.  State,  16  Lea,  176;  57  Am. 
Rep.  214;  that  the  plaintiff  was  a  "retail  liquor  dealer,  and,  we  are  informed, 
is  under  indictment  for  not  canceling  the  stamps  on  liquor-casks,  the  con- 
tents of  which  he  has  sold":  Jones  v.  Townsend's  Adm'r,  21  Fla.  431;  58  Am. 
Rep.  676;  that  a  county  superintendent  of  schools,  for  a  consideration  in 
money,  had  induced  the  county  board  of  education  to  order  a  change  in 
school-books:  Hartford  v.  State,  96  Ind.  461;  that  a  school-teacher  had  pun- 
ished a  pupil  so  excessively  as  to  cause  its  death:  Doan  v.  Kelky,  121  Id.  413. 
While  the  motives  and  private  characters  of  public  officials  cannot  be  as- 
sailed in  periodicals  without  subjecting  their  proprietors  to  actions  for  libel, 
in  which  they  must  assume  the  burden  of  establishing  the  truth  of  their  de- 
famatory assertions,  criticism  of  all  official  acts  may  be  safely  indulged,  and 
the  language  employed  may  be  caustic  and  irritable  in  the  extreme.     A  peri- 


Oct.  18y9.]     McAllister  v.  Detroit  Free  Press  Co.         351 

odical  may  comment  on  the  conduct  of  a  magistrate  in  dismissing  a  case  with- 
out hearing  the  wiiole  evidence,  or  in  committing  a  prisoner  for  trial  on 
insufficient  evidence,  if  the  motives  of  the  magistrate  in  so  doing  are  not 
questioned:  Hihhins  v.  Lee,  4  Fost.  &  F.  245;  II  L.  T.  541.  Comment  may 
also  he  made  on  the  management  of  the  poor,  and  the  administration  of  the 
poor  law:  Purcell  v.  Soivler,  L.  R.  2  C.  P.  D.  218;  L.  R.  46  C.  P.  D.  308;  25 
Week.  Rep.  362;  on  the  official  conduct  of  way-wardens:  Harle  v.  Catherall, 
14  L.  T.  801;  and  on  that  of  all  other  officials  in  the  discharge  of  the  duties 
devolving  upon  them  as  such. 

Doubtless  it  is  impossible  to  prescribe  the  precise  limits  to  which  the  crit- 
icism of  official  action  or  inaction  may  extend  without  becoming  unlawful, 
and  therefore  actionable.  But  few  attempts  have  been  made  to  describe 
these  limits.  One  of  these  may  be  found  in  the  opinion  of  the  court  in  Pal- 
mer V.  City  of  Concord,  48  N.  H.  211;  97  Am.  Dec.  605.  Palmer  brought  an 
action  against  the  city  to  recover  damages  for  property  destroyed  by  a  mob. 
The  statute  under  which  tlie  action  was  autliorized  declared  that  no  recovery 
could  be  had  thereunder  in  favor  of  any  person,  if  the  destruction  of  his  prop- 
erty was  caused  by  his  illegal  or  improper  conduct.  The  defendant,  for  the 
purpose  of  proving  that  the  loss  of  plaintiff's  property  grew  out  of  his  illegal 
and  improper  conduct,  offered  evidence  that  its  destruction  was  the  act  of 
soldiers  justly  enraged  at  articles  in  the  plaintiff's  periodical  reilecting  on  the 
conduct  of  the  war,  and  imputing  to  the  officers  and  men  constituting  the 
army  of  the  nation  cowardice,  murder,  and  robbery.  The  court  held  that,  as 
the  charges  were  made  against  a  body  of  men,  without  specifying  individuals, 
that  probably  no  single  soldier  could  maintain  any  action  therefor;  but  that 
ail  indictment  might  nevertheless  have  been  found  and  successfully  prose- 
cuted therefor,  because  it  tended  to  a  breach  of  the  peace,  and  to  the  disturb- 
ance of  society  at  large.  Upon  the  question  whether  the  publications  made 
by  plaintiff  were  defensible  as  criticisms  on  the  conduct  of  public  affairs, 
made  in  good  faith  and  for  justifiable  motives,  the  court  said:  "Conductors 
of  the  public  press  have  no  rights  but  such  as  are  common  to  all:  Sheckell  v, 
Jackson,  10  Cush.  25-27.  But  in  this  country  every  citizen  has  a  right  to 
call  the  attention  of  his  fellow-citizens  to  the  maladministration  of  public 
affairs,  or  the  misconduct  of  public  servants,  if  his  real  motive  in  so  doing  is 
to  bring  about  a  reform  of  abuses  or  to  defeat  the  re-election  or  reappointment 
of  an  incompetent  officer.  If  information,  given  in  good  faith,  to  a  private 
individual  of  the  misconduct  of  his  servants  is  'privileged,'  equally  so  must 
be  the  communication  to  the  voters  of  a  nation  concerning  the  misconduct  of 
those  whom  they  are  taxed  to  support,  and  whose  continuance  in  any  service 
virtually  depends  on  the  national  voice.  To  be  effectual,  the  latter  communi- 
cation must  be  made  in  such  form  as  to  reach  the  public.  If  the  end  which 
Palmer  had  in  view  —  the  controlling,  moving  purpose  of  the  publication  — 
was  to  inform  the  public  of  the  manner  in  which  the  war  was  conducted,  for 
the  purpose  of  inducing  citizens  to  use  their  influence  with  government  to  re- 
press abuses,  or  to  vote  for  members  of  Congress  and  other  elective  officers 
who  would  check  such  abuses,  reform  the  army,  stop  the  war,  or  conduct  it 
in  a  more  humane  manner,  his  end  or  motive  was  justifiable.  If  the  end  to 
be  attained  is  '  to  give  useful  information  to  the  community,  or  to  those  who 
have  a  right  and  ought  to  Icnow,  in  order  that  they  may  act  upon  such  in- 
formation, the  occasion  is  lawful':  Parker,  C.  J.,  in  State  v.  Burnham,  9 
N.  H.  34,  41,  42;  31  Am.  Dec.  217.  If  sucli  were  Palmer's  motives,  he  is  not 
gudty  of  libel,  if  the  facts  he  alleged  were  true,  or  if  he  had  probable  cause 
to  believe,  and  did  believe,  that  they  were  true.     But  if  he  had  no  justifiable 


352  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

motive,  inasmuch  as  the  natural  and  iiievitaLle  tendency  of  the  publication 
is  to  injure  and  degrade,  he  is  guilty  of  libel,  even  though  the  facts  alleged 
in  the  article  vrere  true. " 

In  Miner  v.  Detroit  Post  and  Tribune  Co.,  49  Mich.  358,  the  alleged  libel 
consisted  of  reflections  upon  the  plaintiff's  conduct  as  a  justice  of  the  peace, 
the  substance  of  which  was,  that  when  a  complaint  had  been  filed  in  his  court 
against  a  Chinaman,  the  judge,  without  the  assent  of  the  complainant,  had  in- 
serted the  name  of  another  and  different  Chinaman;  that  tliough  the  evi- 
dence completely  exonerated  this  second  man,  he  was  held  for  trial  under 
heavy  bonds;  that  his  being  so  held  was  an  inexcusable  outrage;  that  if  the 
justice  would  enforce  the  law  against  the  violation  of  the  liquor  and  gambling 
laws,  when  they  were  brought  before  him,  people  would  be  more  lenient  in 
their  judgment,  but  instead  of  so  doing  he  turns  upon  a  helpless  Chinaman, 
who  has  no  political  influence.  The  trial  court  ruled  that  so  much  of  the  de- 
famatory article  as  related  to  the  enforcement  of  the  liquor  and  gambling 
laws  was  privileged,  but  that  the  imputations  concerning  the  holding  for  trial 
of  the  Chinaman  were  not.  The  appellate  court  dissented  from  this  latter 
ruling,  and  in  an  opinion  by  Mr.  Justice  Cooley,  said:  "  When  a  judge  or- 
ders a  man  into  confinement  without  a  charge  against  him,  he  deprives  him  of 
liberty  without  due  process  of  law,  and  in  doing  so  violates  the  earliest  and 
most  important  guaranty  of  constitutional  freedom.  When  in  a  case  where 
bail  is  of  right,  he  demands  security  in  a  sum  which,  considering  the  position 
in  life  and  probable  means  and  ability  to  give  it,  of  the  person  accused,  is 
altogether  beyond  his  power,  the  demand  is  unreasonable,  and  for  that  rea- 
son is  repugnant  to  a  further  provision  of  the  constitution,  the  importance  of 
which  is  only  second  to  the  other.  There  must  be  some  great  and  most 
serious  defect  in  the  administration  of  the  law  when  such  things  can  take 
place,  and  the  matter  is  one  which  concerns  every  member  of  the  political 
community;  for  if  constitutional  principles  fail  to  protect  the  most  humble 
of  the  people,  they  protect  no  one.  'ihe  defendant  contends  that  to  call  pub- 
lic attention  to  what  so  vitally  concerns  the  public  is  matter  of  privilege; 
and  that,  by  presumption  of  law,  its  motives  in  doing  so  must  be  deemed 
proper,  and  not  actuated  by  malice.  The  trial  judge  denied  this  claim  alto- 
gether. In  doing  so  he  put  the  case  precisely  on  the  same  footing  with  pub- 
lications which  involve  merely  private  gossip  and  scandal.  The  truth  was 
allowed  to  be  a  defense,  if  made  out,  and  so  it  would  liave  been  if  the  injuri- 
ous charge  which  was  published  had  been  one  in  which  the  public  was  not 
concerned.  If  there  is  no  difference  in  moral  quality  between  the  publica- 
tion of  mere  personal  abuse  and  the  discussion  of  matters  of  grave  personal 
concern,  then  this  judgment  may  be  right,  and  should  be  afiirmed.  But  it  ia 
very  certain,  I  think,  that  no  declaration  of  this  or  any  other  court  can  con- 
vince the  common  reason  that  the  distinction  is  not  plain  and  palpable.  Few 
wrongs  can  be  greater  than  the  public  detraction  which  has  only  abuse,  or 
the  profit  from  abuse,  for  its  object.  Few  duties  can  be  plainer  than  to  chal- 
lenge public  attention  to  the  official  disregard  of  the  principles  which  protect 
public  and  personal  liberty.  I  know  of  nothing  more  likely  to  encourage  the 
license  of  a  dissolute  press  than  to  establish  the  principle  that  the  discussion 
of  matters  of  general  concern  involving  public  wrongs,  and  the  publication  of 
personal  scandal,  come  under  the  same  condemnation  of  the  law;  for  this  in- 
evitably brings  the  law  itself  into  contempt,  and  creates  public  sentiment 
against  its  enforcement.  If  a  law  is  to  be  efficiently  enforced,  the  approvad 
of  the  people  must  attend  its  penalties,  and  there  must  be  some  presumption, 
ftt  least,  that  an  act  which  it  punislies  involves  some  element  of  wrong-doing. 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         353 

If,  prima  facie,  the  punishment  is  as  likely  to  be  inflicted  for  a  right  act  as  for 
a  wrong  act,  the  violation  of  law  will  not  only  be  without  disgrace,  but  the 
reckless  libeler,  when  ranked  by  the  law  in  the  same  company  with  respect- 
able and  public-spirited  journalists,  will  shield  himself  to  some  extent  behind 
their  commendable  public  spirit,  and  will  find  some  protection  for  his  license 
in  the  public  opinion  which  condemns  the  law  which  it  cannot  respect." 

That  a  candidate  for  an  elective  office  puts  in  issue  his  fitness  for  the  office 
in  question,  is  undoubted;  and  there  can  be  but  few,  if  any,  public  offices  or 
trusts  in  respect  to  wliich  a  good  moral  character  is  not  an  essential  clement 
of  fitness.  In  every  species  of  service,  whether  public  or  private,  fidelity  is 
a  requisite  the  absence  of  which  no  other  qualities  can  adequately  supply; 
and  a  probable  want  of  fidelity  may  reasonably  be  anticipated  from  one  who 
has  previously  been  guilty  of  any  breach  of  trust,  or  has  engaged  in  any 
single  act  or  any  persistent  course  of  conduct  indicative  of  a  willingness  to 
disregard  the  principles  of  right.  Therefore,  in  the  discussion  of  the  fitness 
of  a  candidate  for  an  office  which  he  seeks,  or  which  others  seek  to  impose 
upon  him,  his  moral  character  and  much  of  his  private  life  are  relevant.  As 
the  question  of  the  fitness  of  the  candidate  affects  the  whole  people,  it  may 
be  discussed  before  the  whole  people;  and  every  person  who  engages  in  the 
discussion,  whether  in  private  conversation,  in  public  speeches,  or  in  periodi- 
cals, may,  while  keeping  within  proper  limits,  and  acting  in  good  faith,  be 
regarded  and  protected  as  one  in  the  discharge  of  a  duty. 

But,  conceding  that  the  fitness,  and,  incidentally,  the  character  of  a  candi- 
date are  in  issue,  and  that  every  citizen  is  under  a  duty  to  assist  in  deter- 
mining the  issue,  does  not,  necessaiily,  carry  with  it  the  further  concession 
that  he  may,  if  he  can,  determine  the  issue  by  the  aid  of  foul  means  as  well  as 
of  fair.  Certainly  he  may  not  be  knowingly  a  false  witness.  The  doubtful 
question  is,  whether,  though  he  does  hot  assert  what  he  knows  to  be  false, 
he  may,  without  being  responsible  to  the  injured  party,  affirm  that  which  is 
known  to  be  defamatory,  and  is  not  known  to  be,  and  is  not,  true.  The 
people  have  an  interest  in  the  ch  iracter  of  the  candidate;  but  both  he  and 
they  have  an  interest  tliat  they  shall  not  be  induced  to  reject  him  through 
false  aspersions  against  his  character  and  previous  conduct.  The  exigencies 
of  an  impending  election  often  require  prompt  action.  An  accusation  must 
sometimes  be  accepted  or  rejected,  iu  the  absence  of  a  full  opportunity  to 
either  obtain  or  duly  weigh  all  the  evidence  bearing  upon  it;  and  it  may, 
though  false,  be  republished  in  a  periodical  by  those  who  act  in  good  faith, 
and  in  the  belief  that  it  is  true,  and  ought  to  be  known  to  all  persons  enti- 
tled to  vote  for  or  against  the  candidate  upon  wliom  it  reflects.  On  the 
other  hand,  to  grant  immunity  to  political  libelers,  in  all  cases  where  their 
bad  faith  and  malice  in  fact  cannot  be  established  by  the  libeled  candidate, 
leads  to  the  grossest  abuse  of  the  privileges  of  the  press,  including  the  flood- 
ing of  the  country  with  shrewdly  conceived  libels,  purposely  withheld  until 
it  is  too  late  for  their  refutation  or  denial  before  the  voting  is  to  take  place. 
These  conflicting  considerations  have  necessarily  led  the  judiciary  to  con- 
flicting decisions,  one  class  of  which  inclines  to  protect  candidates  against 
false  and  defamatory  statements  concerning  their  private  acts  and  charac- 
ters, and  the  other  cleiss  of  which,  in  efi'ect,  thoui;h  not  in  express  terms, 
abandons  them  to  all  the  furious  tempest  of  defamation  which  either  per- 
sonal spite  or  personal  or  political  self-interest  may  engender,  leaving  them 
no  other  protection  than  such  as  may  be  found  in  denial,  in  resort  to  counter- 
defamation,  and  sometimes  to  personal  violence. 

We  shall  first  refer  to  decisions  wliich,  in  our  judgment,  belong  to  the 
▲h.  St.  Kep..  Vol.  XV.  — 23 


354  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

class  last  mentioned.  In  Briggs  v.  Garrett,  111  Pa.  St.  404,  56  Am.  Rep. 
274,  it  appeared  that  the  plaintiff  was  a  Judge  of  one  of  the  courts  of  the 
city  of  Philadelphia,  and  was  a  candidate  for  re-election;  that  at  a  meeting 
of  an  association  of  citizens  a  letter  was  read,  which,  in  substance,  charged 
that  a  certain  steal  had  been  made  possible  through  Judge  Briggs's  instruc- 
tions to  the  jury.  The  defendant  was  the  person  who  brought  this  letter  to 
the  meeting  of  the  association,  and  caused  it  to  be  read  in  the  presence  and 
hearing  of  the  reporters  of  the  city  press  and  others.  As  a  matter  of  fact, 
Judge  Briggs  did  not  preside  at  the  trial  intended  to  be  referred  to  in  the 
letter,  and  the  charge  which  was  delivered  by  the  judge  who  did  preside  at 
such  trial  "was  fair,  impartial,  and  in  every  way  proper."  The  appellate 
court  conceded  that  the  charge  contained  in  the  letter  was  false,  defama- 
tory, and  libelous;  but  maintained  that  as  it  was  a  charge  made  by  a  citizen 
against  a  candidate  for  office,  it  was  a  matter  in  which  all  the  electors  had 
an  interest;  that,  as  such,  the  defendant,  unless  he  knew  it  to  be  false,  had 
a  right  to  communicate  it  to  the  meeting  at  which  the  reporters  were  pres- 
ent; that  it  was,  in  effect,  a  privileged  communication;  and,  finally,  that  the 
plaintiff  was  entitled  to  no  redress,  "because  of  a  rule  of  policy  of  far  more 
importance  than  the  inconvenience  of  a  single  citizen.  That  rule  requires 
that  free  discussion,  especially  upon  political  topics  and  candidates,  shall 
not  be  so  hampered  as  to  make  it  dangerous."  In  Marks  v.  Baker,  28  Minn. 
162,  the  facts  were,  that,  while  the  plaintiff  was  a  candidate  for  re-election 
to  the  office  of  city  treasurer,  the  defendants,  who  were  residents  and  tax- 
payers of  the  city,  published  in  a  periodical  of  such  city  an  article  calling 
attention  to  a  discrepancy  between  certain  official  reports,  from  which  the 
inference  might  reasonably  be  drawn  that  the  plaintiff  had  not  charged  him- 
self with  all  moneys  received  by  him  as  such  treasurer,  but  had,  on  the 
other  hand,  embezzled  some  of  them.  An  action  having  been  brought  for 
libel  in  making  the  publication  mentioned,  the  defendants,  in  their  answer, 
alleged  that  the  publication  was  made  in  good  faith;  that  they  believed,  at 
the  time  of  making  it,  there  was  reasonable  cause  therefor,  and  that  they 
were  discharging  a  sacred  and  moral  obligation  as  editors  and  publishers. 
At  the  trial,  they  admitted  that,  notwithstanding  the  discrepancy  which 
existed,  and  to  which  they  had  called  attention,  the  plaintiff  had  in  fact 
accounted  for  all  moneys  received  by  him  in  his  official  capacity,  and  that 
any  charge  or  insinuation  to  the  contrary  was  false.  The  defendant  Baker, 
being  called  as  a  witness  for  the  defense,  was  permitted,  as  against  the  ob- 
jection and  exception  of  the  plaintiff,  to  testify  that,  at  the  time  of  making 
the  publication  complained  of,  he  believed  it  to  be  true;  that  he  published  it 
for  the  general  interest,  and  for  no  other  purpose;  and  that  he  did  not  in- 
tend to  charge  the  plaintiff  with  embezzling  any  sum  whatever.  A  judg- 
ment was  entered  in  favor  of  the  defendants;  and  upon  an  appeal  therefrom, 
the  admissibility  of  the  evidence  offered  in  their  behalf  was  sustained.  Tiie 
court  held  that  the  subject-matter  of  the  publication  was  one  of  public  in- 
terest in  the  community  of  which  the  defendants  were  members,  that  it 
was  therefore  a  privileged  comnmnication,  if  made  in  good  faith,  and  that 
it  was  made  in  good  faith,  if  the  defendants  published  the  article  believing 
it  to  be  true,  and  with  a  good  motive  or  for  a  good  object,  and  without  any 
intention  to  do  wrong,  and  with  an  affirmative  intention  to  do  that  which, 
in  view  of  the  fact  that  the  subject-matter  of  the  article  published  was  one 
of  public  interest,  was  right,  and  in  a  certain  sense  a  duty;  and  further- 
more, that,  whether  this  intention  established  the  full  defense  of  a  privileged 
communication  or  not,   it  was  admissible,   as  showing   mitigating  circum- 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         855 

stances,  under  the  statute  of  Minnesota  providing  that,  in  an  action  for  libel 
or  slander,  "the  defendant  may,  in  his  answer,  allege  both  the  truth  of  the 
matter  charged  as  defamatory  and  any  mitigating  circumstances,  to  reduce 
the  amount  of  damages;  and  whether  he  proves  a  justification  or  not,  he 
may  give  in  evidence  the  mitigating  circumstances."  We  understand  the 
■courts  of  Texas  to  be  in  substantial  harmony  with  those  of  Minnesota  re- 
specting the  questions  now  under  consideration:  Express  Printing  Co.  v.  Cope- 
land,  64  Tex.  354.  In  Iowa  and  Kansas,  tlie  liability  of  the  publisher  of  a 
periodical  for  libel  published  of  a  candidate  tor  office  has  not,  as  far  as  we 
are  aware,  been  directly  in  question;  but,  in  those  states,  it  is  clear  that  an 
elector  who  speaks  or  writes  to  other  electors  defamatory  words  respecting 
a  candidate  for  office  is  not  answerable  therefor,  if  such  elector,  at  the  time, 
believed  what  he  thus  communicated  to  his  fellow-electors  to  be  true,  and 
acted  in  good  faith  and  with  justifiable  motives  in  making  the  communica- 
tion: Buyn  V.  Hart,  60  Iowa,  251;  State  v.  Black,  31  Kan.  465;  Matt  v.  Davh 
-son,  46  Iowa,  533. 

The  device  of  calling  as  a  witness  a  defendant  who  has  published  of  an- 
other that  which  is  admitted  to  have  been  both  false  and  defamatory,  and 
who  is  being  pursued  in  the  courts  for  this  grievous  wrong,  and  having  him 
testify  that  his  motives  were  pure,  his  conduct  actuated  by  an  irresistible 
impulse  to  promote  the  public  weal,  and  that,  upon  the  whole,  he  regards 
himself  as  having  acted  the  part  of  an  exceptionally  praiseworthy  citizen 
"discharging  a  sacred  and  moral  obligation  as  editor  and  publisher,"  has  the 
recommendation  of  simplicity  and  effectiveness.  The  simplicity  might,  how- 
ever, be  still  further  simplified  by  dispensing  with  court,  jury,  and  other 
witnesses,  and  submitting  the  question  to  the  defejidjuit  without  argument. 
The  oidy  safe  evidence  of  a  man's  motives  must  relate  to  his  acts,  and  to 
the  circumstances  under  which  he  acted;  and  if  he  calls  another  man  a 
felon,  he  must  be  conclusively  presumed  to  intend  to  injure  that  man; 
and  if  the  charge  is  false,  lie  ought  not  to  be  permitted  to  shield  himself 
from  making  just  compensation,  by  interposing  between  himself  and  his 
victim  the  insubstantial  form  of  his  self -assumed  public  spirit,  "  dischar- 
ging a  sacred  and  moral  ol)ligation  as  editor  or  publisher."  The  better 
opinion,  and  the  one  sustained  by  tiie  preponderance  of  the  authorities, 
both  English  and  American,  is,  that  false  and  defamatory  publications 
concerning  the  acts  or  character  of  a  candidate  are  not  privileged,  and  are 
actionable:  Onslow  v.  Home,  3  Wils.  177;  2  W.  Black.  750;  Harwood  v.  Astley, 
1  Bos.  &  P.,  N.  R.,  47;  Parkhurst  v.  Hamilton,  3  Times  L.  R.  500.  "How- 
ever large  the  privilege  of  electors  may  be,  it  is  extravagant  to  suppose  that 
it  can  justify  tlie  publication  to  all  the  world  of  facts  injurious  to  a  person 
who  happens  to  stand  in  the  situation  of  a  candidate  ":  Dttncomhe  v.  Daniell, 
8  Car.  &  P.  222;  2  Jur.  32;  1  W.  W.  &  H.  101.  "  The  authorities  fully  sus- 
tain the  position  that  a  publication  in  a  newspaper,  made  either  of  a  public 
officer  or  a  candidate  seeking  an  office  from  the  votes  of  the  people,  which  im- 
putes to  him  a  crime  or  moral  delinquency,  is  not  a  privilegeil  communica- 
tion, either  absolute  or  conditional;  but  such  publication  is  per  se  actionable, 
the  law  imputing  malice  to  the  author  or  publisher  ":  Sweeney  v.  Baker,  13 
W.  Va.  158;  31  Am.  Rep.  757.  "If  one  accuse  another  of  crime,  he  is  pre- 
sumed to  make  a  false  accusation;  and  malice  is  inferred  from  the  falsehood. 
That  the  plaintiff  was  a  candidate  for  office  is  no  excuse  for  slandering  him. 
We  have  no  right  to  tell  a  lie  of  another  because  he  is  a  candidate  for  office, 
■or  is  in  office;  though  we  may  speak  tlie  truth  of  him,  we  have  no  right  to 
'bear  false  witness  against  our  neighbor.     It  would  subvert  our  government 


356  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

to  allow  the  promulgation  of  falsehood,  which  would  drive  from  office  men 
who  regard  character,  and  leave  it  only  to  those  without  any  ":  Seeley  v. 
Blair,  Wright,  358.  "The  electors  of  a  congressional  district  are  interested 
in  knowing  the  truth,  not  falsehoods,  concerning  the  qualifications  and  char- 
acter of  one  who  offers  to  represent  them  in  Congress,  and  it  is  the  right  and 
privilege  of  any  elector,  or  person  also  having  an  interest  to  be  represented, 
to  freely  criticise  the  act  and  conduct  of  such  candidate,  and  show,  if  he  can, 
why  such  person  is  unfit  to  be  intrusted  with  the  office,  or  why  the  suffrages 
of  the  electors  should  not  be  cast  for  him.  But  defamation  is  not  a  necessary 
and  indispensable  concomitant  of  an  election  contest.  'Slander,'  says  Judge 
Overton,  '  is  no  more  justifiable  when  spoken  of  a  man  with  a  view  to  hia 
election  than  on  any  other  occasion.  Unhappy,  indeed,  would  be  any  people 
when  in  the  exercise  of  one  right  you  destroy  as  important  a  one.  Let  his 
talents,  his  virtues,  and  such  vices  as  are  likely  to  affect  his  public  character 
be  freely  discussed,  but  no  falsehoods  be  propagated.'  To  hold  that  falsa 
charges  of  a  defamatory  character  made  against  a  candidate  are  privileged  as 
matters  of  law,  if  made  in  good  faith,  and  that  the  party  making  them  is 
absolutely  shielded  against  liability,  it  seem*  to  me  is  a  most  pernicious 
doctrine.  It  would  deter  all  sensible  and  honorable  men  from  accepting  the 
candidacy  to  office,  and  leave  the  field  to  the  profligate,  the  unprincipled, 
and  unworthy;  to  men  who  have  no  character  to  lose,  and  no  reputation  to 
blemish":  Bromon  v.  Bruce,  59  Mich.  4ii7;  60  Am.  Rep.  307.  When,  there- 
fore, the  publisher  of  a  periodical  falsely  charges  a  candidate  with  having 
been  guilty  of  crimes  or  immoral  practices,  he  cannot  escape  lial)ility  on  the 
ground  that  the  publication  was  made  with  good  motives  and  for  justifiable 
ends,  without  malice,  and  in  the  honest  belief  that  the  occasion  required  it: 
Bronson  v.  Brace,  supra;  Jones  v.  Toivnsend,  21  Fla.  431;  58  Am.  Rep.  676; 
King  v.  Boot,  4  Wend.  113;  21  Am.  Dec.  102;  Aldrich  r.  Press  Printing  Co., 
9  Minn.  133;  86  Am.  Dec.  84;  Curtis  v.  Mmgey,  6  Gray,  261;  Bearick  v.  Wil- 
cox, 81  111.  77.  But  if  the  charge  was  substantially  true,  though  not  correct 
in  some  particulars,  or  in  the  proper  teclinical  designation  of  the  crime 
charged,  and  was  made  in  good  faith,  and  for  justifiable  motives,  and  by  one 
who  honestly  believed  it  to  be  true,  all  these  facts  may  be  received  in  evi- 
dence, not  as  a  technical  justification,  but  as  establishing  that  the  plaintiff 
had  suffered  no  substantial  injury:  Bailey  v.  Kalamazoo  Pub.  Co.,  40  Mich. 
251. 

An  attack  upon  a  candidate,  if  otherwise  privileged,  must  not  be  given  a 
wider  publicity  than  is  necessary  to  accomplish  the  purposes  which  the  pul)- 
lisher  professes  to  seek.  If  the  office  is  to  be  filled  by  appointment,  or  133^  an 
election  in  which  only  the  members  of  a  certain  board  or  tribunal  can  par- 
ticipate, there  can  be  no  justification  of  a  false  and  defamatory  publication 
in  the  public  press,  and  which  must  reach,  and  be  intended  to  reach,  a  large 
number  of  persons  who  liave  no  share  in  filling  the  office  to  which  the  person 
libeled  is  an  aspirant:  Hunt  v.  Bennett,  19  N.  Y.  173. 

In  accordance  with  the  principles  announced  in  the  decisions  heretofore 
referred  to  as  maintaining  the  better  opinion  concerning  the  defamation  of 
candidates,  the  following  charges  have  been  held  not  to  be  privileged,  and, 
when  false,  to  be  actionable:  That  the  candidate  had  committed  perjury: 
Seeley  v.  Blair,  Wright,  358;  or  forgery:  Seeley  v.  Blair,  Id.  686;  "was  a 
scoundrel,  a  coward,  a  liar,  an  assassin,  and  a  murderer":  Harwood  v.  Astley, 
4  Bos.  &  P.  47;  had  been  guilty  of  cheating  in  two  specified  transactions: 
Buncombe  v.  Daniell.  8  Car.  &  P.  222;  2  Jur.  32;  1  W.  W.  &  H.  101;  was  a 
professional  gambler,  a  repr<)sentative  from  the  prize-ring  or  gambling-den. 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         357 

a  bully,  and  black-leg,  one  "whom  you  wouldn't  trust  in  your  hen-coop": 
Sweeney  v.  Baker,  13  W.  Va.  158;  31  Am.  Rep.  757;  was  a  foiger,  had  stolen 
the  deposits  of  poor  men  and  women,  and  cheated  laboring  men  out  of  their 
hard  earnings:  Bronson  v.  Bruce,  59  Mich.  467;  60  Am.  Rep.  307;  had  been 
indicted  for  not  canceling  stamps  on  empty  liquor-casks:  Jones  v.  Townsend, 
21  Fla.  431;  58  Am.  Rep.  676;  had  "committed  a  misdemeanor,  for  which  he 
was  arrested  and  tried  for  his  life,  was  arraigned  at  the  bar  in  the  state  of 
North  Carolina,  and  I  will  show  it  in  black  and  white  ":  Brewer  v.  Weakley, 
2  Over.  99;  5  Am.  Dec.  656;  was  in  a  drunken  condition,  and  as  such  the 
object  of  loathing  and  disgust  while  acting  as  presiding  officer  of  a  state 
senate:  King  v.  Root,  4  Wend.  113;  21  Am.  Dec.  102;  had  been  guilty  of 
"legal  Jesuitism,"  and  in  making  a  decision  had  acted  from  partisan  and 
ignoble  motives:  Curtis  v.  Mussey,  6  Gray,  261;  had  been  guilty  of  entering 
into  a  corrupt  understanding  with  certain  persons  to  control  the  political  and 
legislative  power  of  the  state  with  a  view  to  his  own  advantage,  and  to  the 
serious  injury  of  the  public;  and,  if  elected,  would  use  his  influence  to  em- 
barrass and  defeat  a  great  public  improvement:  Powers  v.  Dubois,  17  Wend.  63. 

If  a  publication  consisting  of  an  aspersion  of  a  candidate  can  fairly  be 
deemed  a  mere  criticism,  or  an  opinion  which  the  author  or  publisher  has 
drawn  of  his  fitness  for  the  office  sought,  and  not  as  an  assertion  of  a  fact 
involving  moral  delinquency,  it  is  privileged.  Thus  in  Siveeney  v.  Bnker,  13 
W.  Va.  15S,  31  Am.  Rep.  757,  it  was  said  that  "as  when  the  alleged  libels 
were  published,  the  plaintiff  was  a  candidate  for  popular  suffrage,  any  alle- 
gations which  referred  to  his  fitness  for  the  office  he  sought,  mentally  or 
physically,  were  privileged  communications,  and  could  not  be  the  basis  of  a 
libel  suit;  nor  any  other  allegations  which  did  not  refer  to  his  moral  charac- 
ter, though  they  were  ever  so  harsh  and  uncomplimentary."  It  was  there- 
fore held  that  such  charges  as  merely  implied  that  the  candidate  was  "an 
uneducated,  lazy,  and  ignorant  man,  and  as  such  unfit  to  represent  the 
people,"  were  not  actionable,  though  "expressed  in  coarse  and  harsh  lan- 
guage." Words  imputing  to  a  candidate  mental  weakness  resulting  to  his 
mind  from  disease,  and  impairing  it  to  the  extent  of  disqualifying  liim  for  the 
proper  discharge  of  the  duties  of  the  office,  are  not  actionable:  May  rant  v. 
Richardson,  1  Nott  &  McC.  347;  9  Am.  Dec.  707. 

The  rule  which  permits  adverse  newspaper  criticism  of  public  officials  is 
justified  upon  the  ground  that  they  have  assumed  duties  toward  the  public; 
that  the  public  has  an  interest  in  the  proper  performance  of  those  duties; 
and  that  publications  made  in  good  faith,  and  for  the  purpose  of  advising 
the  public  of  the  conduct  of  its  servants,  may  fairly  be  regarded  as  made  in 
the  discharge  of  a  duty  which  every  citizen  owes  to  his  fellow-citizens.  The 
same  reasoning  must  justify  criticism  of  all  other  persons  who,  though  not 
public  officers,  voluntarily  assume  duties  of  a  public  nature,  in  the  fit  per- 
formance of  which  large  nuuibers  of  persons  have  an  interest.  Tlie  most 
familiar  instances  are  clergymen  and  teachers  of  public  and  private  schools. 
Their  private  characters  and  motives  may  not  be  safely  maligned  by  the 
press.  To  falsely  impute  to  them  the  commission  of  crimes  or  of  actswliich, 
though  not  punishable  as  criminal,  are  obviously  grossly  at  variance  with 
their  callings,  and  such  as,  if  true,  ought  to  deprive  them  of  their  positions, 
is  actionable:  Chaddock  v.  Brings,  13  Mass.  248;  McMillan  v.  Buck,  1  Binn. 
178;  Demarest  v.  Haring,  6  Cow.  76;  Hayden  v.  Cowden,  27  Ohio  St.  292; 
Highinore  v.  Harrington,  3  Com.  B.,  N.  S.,  142;  Pemberton  v.  CoiU,  10  Q.  R 
461;  16  L.  J.  Q.  B.  403;  11  Jur.  1011;  Galhercole  v.  Miall,  15  Mees.  &  W. 
319;  10  Jur.  337;  15  L.  J.  Ex.  179.     But  the  conduct  of  public  worship  by 


358  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

a  clergyman,  and  the  uses  to  which  he  puts  his  church  and  vestry,  are  lawful 
subjects  of  public  comment:  Kelly  v.  Tinling,  L.  R.  1  Q.  B.  699;  14  Week. 
Rep.  51;  13  L.  T.,  N.  S.,  255;  35  L.  J.  Q.  B.  940;  12  Jur.,  N.  S.,  940.  In 
Press  Company  v.  Stewart,  119  Pa.  St.  584,  it  was  determined  that  one  who 
had  opened  a  school,  to  which  he  attracted  attention  by  advertisements  of 
an  extraordinary  nature,  and  wherein  he  assumed  to  teach  his  patrons 
the  arts  of  shorthand  writing,  type-writing,  and  phono-scribing,  became 
"thereby  a  quasi  public  character";  that  "whether  he  was  a  proper  person 
to  instruct  the  young,  and  whether  his  school  was  a  proper  place  for  them  to 
receive  instruction,  were  matters  of  importance  to  the  public  ";  that  the 
newspaper  '*  was  in  the  strict  line  of  its  duty  when  it  sought  such  informa- 
tion, and  gave  it  to  the  public;  and  if  that  information  tended  to  show  that 
the  plaintiff  was  a  charlatan,  and  his  system  an  imposture,  the  more  need 
that  the  public,  and  especially  parents  and  guardians,  should  be  informed 
of  it." 

Directors  and  other  managers  of  quasi  public  corporations,  such  as  rail- 
ways, may  also,  when  dealing  with  great  enterprises  by  which  the  citizens  of 
large  portions  of  a  state  or  nation  may  be  affected,  may  properly  be  regarded 
as  public  persons,  and  subjected  to  hostile  criticism  as  such:  Crane  v.  Waters, 
10  Fed.  Rep.  619;  26  Alb.  L.  J.  212. 

In  California  it  has  been  held  that  the  office  of  director  of  a  mining  corpo- 
ration should  not  be  regarded  as  a  public  office,  exposing  its  holder  to  the 
same  liberty  of  adverse  criticism  to  which  public  officials  are  subjected.  In 
determining  this  question,  the  supreme  court  of  that  stats  said:  "Another 
point  made  by  the  defendants  is,  that  the  publication  was  privileged,  and  that 
the  defendants  could  not  be  held  liable  except  on  the  proof  of  express  malice, 
of  which,  it  is  claimed,  there  was  no  evidence  whatever.  It  is  said  to  be 
privileged,  because  it  was  published  by  public  journalists  as  a  matter  of  gen- 
eral and  peculiar  interest,  and  related  to  the  conduct  of  plaintiff  in  his  capa- 
city of  trustee  of  a  mining  corporation.  But  this  was  a  private,  and  not  a 
public,  corporation.  The  plaintiff  was  in  no  ser.se  a  public  officer,  and  was 
responsible  only  to  the  stockholders  and  creditors  of  the  corporation  for  the 
fidelity  of  his  conduct  as  a  trustee.  His  office  was  no  more  a  public  office 
than  that  of  a  trustee  of  a  private  corporation  to  build  a  bridge  or  construct 
a  wagon-road.  Officers  of  this  character  have  never  been  deemed  public  offi- 
cers in  such  sense  as  to  render  them  amenable  to  criticism,  as  in  case  of  per- 
sons filling  public  offices  of  trust  and  confidence,  in  the  proper  administration 
of  which  the  whole  community  has  an  interest.  In  the  latter  class  of  officers 
public  policy  demands  that  the  official  conduct  should  be  open  to  unrestricted 
criticism,  in  which  no  malice  is  implied  by  law;  and  express  malice  must  be 
proved,  to  render  the  author  liable.  No  case  has  been  cited,  nor  am  I  aware 
of  any,  which  holds  that  the  trustee  of  a  private  corporation  is  a  public  offi- 
cer in  the  sense  claimed  by  the  defendants.  Nor  can  a  defamatory  publica- 
tion in  a  public  journal  be  said  to  be  privileged  simply  because  it  relates  to  a 
subject  of  public  interest,  and  was  published  in  good  faith,  without  malice, 
and  from  laudable  motives.  No  adjudicated  case,  that  I  am  aware  of,  has 
ever  gone  so  far.  But  while  such  publication  cannot  be  deemed  privileged, 
so  as  to  require  proof  of  express  malice,  the  publisher,  in  order  to  rebut  the 
presumption  of  malice,  should  be  allowed  the  fullest  opportunity  to  show  the 
circumstance  under  which  the  publication  was  made,  the  sources  of  his  in- 
formation, and  the  motives  which  induced  the  publication.*  The  public  inter- 
est, and  a  due  regard  to  the  freedom  of  the  press,  demands  that  its  conductor 
should  not  be  mulcted  in  punitive  damages  for  publication  on  subjects  for  pub- 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         859 

lie  interest,  made  from  laudable  motives,  after  due  inquiry  as  to  the  truth  of 
the  facts  stated,  and  in  the  honest  belief  that  they  were  true.  On  the  other 
hand,  if  the  rule  were  further  relaxed,  so  that  such  pul)lication  in  respect  to 
private  persons  would  be  deemed  privileged,  thereby  shifting  the  burden  of 
proof  from  the  defendant  to  the  plaintiff  in  respect  to  malice,  there  would  be 
but  little  security  for  private  character  ":    IVil.soji  v.  Fitch,  41  Cal.  363. 

Authors,  artists,  and  all  other  persons  voluntarily  exposing  the  result  of 
their  labors  to  the  public,  seeking  to  gain  favorable  recognition  of  their  work 
if  found  to  be  meritorious,  become  public  characters,  so  far,  at  least,  as  their 
works  are  concerned.  Any  periodical  may  publish  an  estimate  of  such 
works,  whether  favorable  or  unfavorable;  and  if  unfavorable,  it  may  use  strong 
terms  of  condemnation,  and  expose  the  work  to  merciless  ridicule.  No  ac- 
tion can  be  sustained  for  such  adverse  criticism,  unless  it  is  shown  or  on  it3 
face  it  appears  to  be  actuated  by  malice  in  fact:  Tabart  v.  Tepper,  1  Camp. 
351;  Carr  v.  Hood,  1  Id.  355,  note;  Thompson  v.  Shackell,  Moody  &  M. 
187;  Soane  v.  KnUjht,  1  Id,  74.  A  condemnatory  criticism  of  a  literary  work 
or  of  a  painting,  though  imputing  profanity  or  indecency,  will  be  excused, 
unless  so  unfair  and  reckless  in  its  character  as  to  justify  the  presumption  of 
malice:  Strauss  v.  Francis,  4  Fost.  &  F.  1107;  15  L.  T.,  N.  S.,  674.  An  au- 
thor may  be  written  of  so  far  as  he  is  connected  with  the  work  which  he  has 
given  to  the  public,  but  criticism  of  his  work  must  not  be  used  as  a  pretext 
for  an  attack  upon  his  private  character  or  reputation;  and  if  a  critic,  whde 
professing  to  give  an  estimate  of  a  literary  work,  proceeds  to  attack  the  author 
and  to  impute  to  him  either  the  commission  of  offenses  or  of  being  actuated 
by  dishonorable  motives,  either  in  the  work  under  consideration  or  in  other 
works  or  respects,  then  the  publisher  may  be  guilty  of  libel.  In  other  words, 
it  is  only  the  work,  and  the  author  as  he  exhibits  himself  in  the  work,  which  are 
subject  to  criticism,  to  the  extent  that  such  criticism,  even  though  erroneous, 
will  not  subject  the  publisher  to  an  action  for  libel.  To  the  work  the  author 
has  invited  criticism.  It  is  otherwise  with  his  acts  and  life,  of  which  the 
work  so  offered  for  public  consideration  is  no  part.  For  any  defamation  of 
an  author  or  artist  not  necessarily  connected  with  his  public  works,  the  pub- 
lisher of  such  defamation  is  answerable,  though  it  may  have  been  puljlished 
as  a  part  of  a  professed  criticism  of  such  work-  Cooper  v.  Stone,  24  Wend. 
434;  Fraser  v.  Berkerley,  7  Car.  &  P.  621;  Macleod  v.  Wakeky,  3  Id.  311; 
Steioart  v.  Lovell,  2  Stark.  93.  A  public  entertainment  of  any  character  is 
always  a  proper  subject  for  criticism  in  a  periodical:  Ryan  v.  Wood,  4  Fost. 
&  F.  734;  and  so  is  any  thing  or  article  which  by  its  owner  is  made  the 
subject  of  public  exhibition:  Gott  v.  Pulsifer,  122  Mass.  235;  23  Am.  Rep. 
322. 

Tlie  case  last  cited  was  an  action  to  recover  damages  for  an  alleged  false 
and  malicious  statement  concerning  the  plaintiff 's  property,  a  stone  statue, 
commonly  known  as  the  "Cardiff  Giant."  The  plaintiff  claimed  that  the 
statue  was  of  great  value  as  a  scientific  curiosity,  and,  for  the  purpose  of  ex- 
hibitioi^  had  long  been  a  source  of  profit  to  him.  It  appeared  at  the  trial 
that  the  defendant  had  published  a  statement  that  the  Cardiff  Giant  had 
been  sold  for  eight  dollars;  that  "  the  man  who  brought  the  colossal  mono- 
lith to  light  confessed  it  was  a  fraud";  that  the  plaintiti"  was  on  the  eve  of 
effecting  a  sale  of  one  half  of  his  interest  in  the  statue  for  several  thousand 
dollars,  and  that  the  purchaser  refused  to  carry  out  the  agreement  because 
of  the  defamatory  statement  made  by  the  defendant.  The  judgment  of  the 
trial  court  was  in  favor  of  the  defendants;  but  it  was  reversed  by  the  appel- 
late court  because  of  error  in  giving  instructions  at  the  instance  of  the   de- 


360  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

fendant,  and  also  in  refusing  to  give  an  instruction  requested  by  the  plain- 
tiff. In  considering  the  law  applicable  to  the  subject,  the,  appellate  court 
said:  "This  action  is  not  for  a  libel  upon  the  plaintiff,  but  for  publishing  a 
false  and  malicious  statement  concerning  his  property,  and  could  not  be  sup- 
ported without  allegation  and  proof  of  special  damages:  Malachy  v.  Soper,  3 
Bing.  N.  C.  371;  3  Scott,  723;  Swan  v.  Tappan,  5  Cush.  104.  The  special 
damage  alleged  was  the  loss  of  the  sale  of  the  plaintiff's  statue  to  Palmer. 
Evidence  of  the  value  of  the  statue  as  a  scientific  curiosity  or  for  purposes  of 
exhibition  was  therefore  rightly  rejected  as  immaterial.  The  editor  of  a 
newspaper  has  the  right,  if  not  the  duty,  of  publishing,  for  the  information  of 
the  public,  fair  and  reasonable  comments,  however  severe  in  terms,  upon  any- 
thing which  is  made  by  its  owner  a  subject  of  public  exhibition,  as  upon  any 
other  matter  of  public  interest;  and  such  a  puI)lication  falls  within  the  class 
of  privileged  communications  for  which  no  action  can  be  maintained  without 
proof  of  actual  malice:  Dibdin  v.  Swan,  1  Esp.  28;  Carr  v.  Hood,  1  Camp. 
355;  Henwoodv.  Harrison,  L.  R.  7  Com.  P.  606.  But  in  order  to  constitute 
such  malice,  it  is  not  necessary  that  there  should  be  direct  proof  of  an  inten- 
tion to  injure  the  value  of  the  property;  such  an  intention  may  be  inferred 
by  the  jury  from  false  statements,  exceeding  the  limits  of  fair  and  reason- 
able criticism,  and  recklessly  uttered  in  disregard  of  the  rights  of  those  who 
might  be  affected  by  them.  Malice  in  uttering  false  statements  may  consist 
either  in  a  direct  intention  to  injure  another,  or  in  reckless  disregard  of  his 
rights,  and  of  the  consequences  that  may  result  to  him:  Commonwealth  v. 
Bonner,  9  Met.  410;  Moore  v.  Stevenson,  27  Conn.  14;  Erie,  C.  J.,  in  Hibba 
V.  Wilkinson,  1  Fost.  &  F.  608,  610;  and  in  Paris  v.  Levy,  2  Id.  71,  74,  and 
9  Com.  B.,  N.  S.,  342,  350;  Cockburn,  C.  J.,  in  Morrison  v.  Belcher,  3  Fost, 
&  F.  614,  620;  in  Hedley  v.  Barlow,  4  Id.  224,  231;  and  in  Strauss  v.  Francis, 
4  Id.  1107,  1114.  The  only  definition  of  malice  given  by  the  learned  judge 
who  presided  at  the  trial  was  therefore  erroneous,  because  it  required  the 
plaintiff  to  prove  'a  disposition  willfully  and  purposely  to  injure  the  value 
of  this  statue,' aa  well  as  'wanton  disregard  of  the  interest  of  the  owner.' 
The  jury,  upon  the  evidence  before  them,  and  under  the  instruction  given 
them,  may  have  been  of  opinion  that  the  defendant's  statements  that  the 
plaintiff's  statue  was  an  'ingenious  humbug,'  'a  sell,'  and  'a  fraud,'  were 
false,  reckless,  and  unjustifiable,  and  had  the  effect  of  injuring  plaintiff's 
property,  and  caused  him  special  damage;  and  may  have  returned  their  ver- 
dict for  the  defendants  solely  because  they  were  not  convinced  that  they  in- 
tended such  injury." 

We  have  heretofore  shown  that,  as  a  general  rule,  the  publication  of  a 
libelous  charge  could  not  be  justified  on  the  ground  that  it  was  merely  a 
repetition  of  what  had  before  been  stated  or  published,  and  that  the  defend- 
ant had  merely  republished  it  as  a  matter  of  news,  and  for  the  purpose  of 
informing  the  public  of  existing  events  of  which  he,  being  the  publisher  of  a 
periodical,  had  assumed  the  duty  of  keeping  the  public  informed.  An  ex- 
ception to  this  rule  exists  in  the  proceedings  taking  place  in  the  legislative 
and  judicial  departments  of  the  government,  and  in  the  proceedings  of  some 
other  public  tribunals  or  departments,  of  which,  upon  grounds  of  public 
policy,  it  is  regarded  as  proper  to  keep  the  public  fully  informed,  though 
thereby  libelous  charges  may  be  republished. 

"It  seems  to  us  impossible  to  doubt  that  it  is  of  paramount  public  and 
national  importance  that  the  proceedings  of  the  houses  of  Parliament  shall  be 
communicated  to  the  public,  who  have  the  deepest  interest  in  knowing  what 
passes  within  their  walls,  seeing  that  on  what  is  there  said  and  done  the 


i 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         361 

welfare  of  the  community  depends.  Where  would  be  our  confidence  in  the 
government  of  the  country,  or  in  the  legislature,  by  which  our  laws  are 
framed,  and  to  whose  charge  the  great  interests  of  the  country  are  commit- 
ted,—  where  would  be  our  attachment  to  the  constitution  under  which  we 
live,  —  if  the  proceedings  of  the  great  council  of  the  realm  were  shrouded  in 
secrecy,  and  concealed  from  the  knowledge  of  the  nation?  "  Was.son  v.  Walter, 
8  Best  &  S.  671;  L.  R.  4  Q.  B.  7.3;  38  L.  J.  Q.  B.  34;  19  L.  T.,  N.  S.,  409;  17 
Week.  Rep.  1G9.  Fair  reports  of  the  proceedings  of  legislative  bodies,  ia 
which  the  public  has  an  interest,  including  the  speeches  of  their  menibera 
and  reports  made  by  committees,  may  be  published  in  periodicals  without 
entitling  any  one  falsely  defamed  thereby  to  maintain  an  action  for  libel 
against  their  proprietors:  Wasson  v.  Walter,  supra;  Bex  v.  Wricjht,  S  Term 
Rep.  293;  Kane  v.  Mulvanis,  2  I.  R.  C.  L.  402;  Heamood  v.  Harrison,  41 
L.  J.  C.  P.  206;  L.  R.  7  Com.  P.  606;  20  Week.  Rep.  1000;  26  L.  T.,  N.  S., 
938;  Curry  v.  Walter,  1  Bos.  &  P.  525;  1  Esp.  457.  Periodicals  are  also 
privileged  to  publish  the  testimony  taken  before  an  investigating  committee 
of  a  legislative  body:  Terry  y.  Fellows,  21  La.  Ann.  375.  There  is  probably 
attached  to  the  general  rule  authorizing  tlie  publication  of  such  testimony 
the  limitation  that  the  proceeding  in  which  it  was  taken  must  not  be  secret 
and  ex  parte:  Belo  v.  Wren,  63  Tex.  686.  The  privilege  which  secures  immu- 
nity for  the  publication  of  fair  reports  of  the  proceedings  of  Parliament,  of 
Congress,  and  of  the  state  legislatures,  extends  to  minor  legislative  bodies, 
such  as  town  councils,  with  the  same  limitation,  that  the  proceedings  must 
have  been  open  and  public:  Wallis  v.  Bejet,  34  La.  Ann.  131;  Allbuttv.  Oen- 
tral  Council,  L.  R.  23  Q.  B.  D.  400. 

The  public  undoubtedly  has  an  interest  in  the  proceedings  of  all  courts  of 
justice,  whether  civil  or  criminal,  superior  or  inferior.  In  all  cases  where 
the  proceedings  of  such  courts  are  open  to  the  public,  so  that  any  individual 
who  may  choose  has  the  right  to  be  present  to  see  what  is  done  and  to  hear 
what  is  said,  he  may,  though  not  present,  be  given  the  same  information 
through  the  columns  of  a  periodical  that  he  might  have  secured  by  his  pres- 
ence in  court:  AIcBee  v.  Fulton,  47  Md.  403.  "The  general  advantage  to  the 
country  in  having  these  proceedings  made  public  more  than  counterbalances 
the  inconvenience  to  private  persons  whose  conduct  may  be  the  subject  of 
such  proceedings  ":  Bex  v.   Writjht,  8  Term  Rep.  298. 

Cockburn,  C.  J.,  instructed  the  jury  as  follows,  upon  this  topic,  at  the  trial 
of  the  case  of  Risk  Allah  Bey  v.  Whifehurst,  18  L.  T.,  N.  S.,  615:  "  Whatever 
may  have  been  thought  in  past  times,  nowadays  we  are  agreed  on  this,  that 
fair  and  impartial  reports  of  the  proceedings  in  courts  of  justice,  although 
incidentally  those  proceedings  may  prejudice  indiviihials,  are  of  so  great 
public  interest  and  public  advantage  that  the  publishing  of  them  to  the 
world  predominates  so  much  over  tlie  inconvenience  to  individuals  as  to  ren- 
der these  reports  highly  conducive  to  the  public  good;  but  the  conditions  on 
which  the  privdege  can  be  maintained  are,  that  the  report  shall  be  fair, 
truthful,  honest,  and  impartial.  It  need  not  be  a  report  of  every  word  that 
passes  upon  a  trial.  No  newspaper,  however  large,  could  report  the  pro- 
ceedings in  the  full  extent  to  which,  upon  a  long  trial,  these  proceedings 
necessarily  extend.  You  may  either  have  it  to  the  utmost  possible  extent 
the  limits  of  the  paper  will  allow  it  to  be  given,  or  in  the  more  condensed 
form  of  a  summary  or  epitome,  but  you  must  have  the  report  honest  and 
fair.  A  paper  may  give  a  report  of  the  proceedings  of  courts  of  ju.^tice  prop- 
erly condensed  and  fair,  but  it  is  not  entitled,  under  pretense  of  giving  a 
report,  to  add  comments  of  its  own,  or  to  display  facts  not  brought  forward 


862  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

in  the  proceedings,  but  coming  out  of  the  reporter's  own  head.  This  is  ad- 
mitted on  all  hands  to  be  the  state  of  law." 

If  the  proceedings  are  such  that  the  court  deems  them  unfit  for  publication, 
and  therefore  sits  with  closed  doors,  or  enters  an  order  prohibiting  the  pub- 
lication, either  of  the  whole  proceedings  or  of  some  part  thereof,  doubtless 
no  periodical  could  have  any  privilege  of  publishing  that  which  the  court  had 
expressly  or  impliedly  declared  ought  not  to  be  generally  known;  and  any 
publisher  violating  the  injunction  of  secrecy  would  surely  be  answerable  in 
damages  for  any  libel  included  in  his  publication.  If  the  subject-matter  of 
the  trial  was  itself  a  blasphemous  or  obscene  libel,  no  right  to  indefinitely 
repeat  or  publish  it  could  be  gained  from  the  fact  that  it  had  been  made  the 
subject  of  judicial  investigation  and  condemnation:  Rex  v.  Carlile,  3  Barn.  & 
Aid.  167;  Steele  v.  Brannan,  L.  R.  7  Com.  P.  261;  41  L.  J.  M.  C.  85;  20 
Week.  Rep.  607;  26  L.  T.  509.  But  a  fair  report  of  the  proceedings  of  a 
public  trial,  including  the  testimony  of  the  witnesses,  the  arguments  of  coun- 
sel, the  remarks  of  the  judge  during  the  progress  of  the  cause,  and  his  final 
instructions  to  the  jury,  are  all  matters  which  any  one,  whether  the  proprie- 
tor of  a  periodical  or  not,  is  privileged  to  publish.  The  proceedings  need  not 
be  published  in  full.  They  may  be  greatly  condensed;  but  still,  however 
condensed,  they  must  be  a  fair  statement  of  what  took  place,  and  must  not, 
by  their  omission  of  exculpatory  and  their  emphasis  of  inculpatory  evidence 
or  remarks,  deal  unjustly  with  an  accused  person,  and  thereby  produce  an 
impression  of  guilt  which  a  candid  statement  of  the  whole  proceedings  would 
be  unlikely  to  create.  Any  report  in  a  periodical  of  judicial  proceedings, 
whether  in  full  or  a  mere  synopsis,  is  privileged,  unless  it  appears  to  liave 
been  made  for  malicious  or  unworthy  motives,  or  is  so  manifestly  unfair  as 
to  evince,  either  an  intent  to  injure  the  person  complaining,  or  a  reckless  in- 
difference as  to  whether  he  should  be  injured  or  not:  Barrows  v.  Bell,  7  Gray, 
301;  66  Am.  Dec.  479;  Cincinnati  Gazette  Co.  v.  Timberlake,  10  Ohio  St.  548; 
78  Am.  Dec.  285;  Smith  v.  Scott,  8  Car.  &  K.  580;  Hoare  v.  Silverlock,  9  Com. 
B.  20;  19  L.  J.  Com.  P.  215;  Turner  v.  Sulliran,  6  L.  T.,  N.  S.,  130;  Runje 
V.  Franklin,  72  Tex.  585;  13  Am.  St.  Rep.  833;  Risk  Allah  Bey  t.  Whitehurst, 
18  L.  T.  615. 

Unquestionably  a  sound  public  policy  demands  that  periodicals  shall,  to  a 
certain  extent  at  least,  be  privileged  to  publish  the  proceedings  of  courts  of 
justice;  but  this  policy  extends  no  further  than  keeping  the  public  advised 
of  the  acts  of  their  judicial  servants,  in  order  that  abuses  may  be  corrected, 
worthy  service  rewarded  by  continuing  confidence  and  renewed  trust,  and 
unworthy  service  visited  by  opprobrium,  and  cut  short  by  the  withdrawal  of 
public  confidence  and  the  selection  of  a  more  worthy  minister  of  justice. 
Whether  the  judiciary  has  properly  discharged  its  functions  in  any  given  in- 
stance can  only  be  known  from  a  report  of  everything  upon  which  its  action 
was  based.  Hence  public  policy  will  not  permit  any  suitor  or  other  person 
to  complain  of  the  publication  of  any  part  of  the  proceedings  at  a  public 
trial,  on  the  ground  that  it  may  injuriously  afi'ect  his  reputation.  But  a  gar- 
bled or  one-sided  statement  of  what  took  place,  or  the  publication  of  the  con- 
tents of  a  petition  or  affidavit  upon  which  the  court  has  never  been  and  may 
never  be  called  to  act,  is  prohibited,  rather  than  demanded,  by  public  policy, 
and  contributes  to  no  other  end  so  surely  as  that  of  assaulting  the  reputation 
of  one  who  has,  as  yet,  no  opportunity  to  repel  the  assault.  Garbled  or  one- 
sided statements  are  nowhere  favored;  and  a  publication  of  the  defamatory 
evidence  of  a  witness,  or  the  still  more  defamatory  invective  of  counsel,  is  not 
privileged,  where  it  does  not  amount  to  a  fair  statement  of  the  whole  evidence 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         363 

bearing  upon  the  reputation  of  the  person  against  whom  it  reflects:  Saunders 
V.  Mills,  .3  Moore  &  P.  520;  6  Bing.  213;  Kane  v.  Mulraine,  2  I.  R.  C.  L.  402. 

The  publication  of  an  ex  parte  pleading  or  affidavit  before  a  trial  is  mani- 
festly as  unfair  as  is  the  publication  of  a  one-sided  statement  of  what  occurs 
at  the  trial  itself.  In  either  case  there  is  likely  to  l)e  an  unjust  aspersion  on 
the  reputation  of  some  one  who  has  no  opportnnity  to  reply,  and  in  neither 
is  any  sound  public  policy  subserved  by  permitting  a  statement  to  be  made 
with  impunity,  if  false  and  defamatory.  There  was  formerly  a  very  strong 
judicial  inclination  against  regarding  as  privileged  any  publication  of  an  ex 
parte  proceeding,  or  of  any  matter  of  evidence  or  of  pleading  taken  or  filed 
prior  to  the  commencement  of  the  trial:  Hoare  v.  Silverlock,  9  Com.  B.  23; 
19L.  J.  Com.  P.  215;  Duncan  v.  Thwaites,  3  Barn.  &  C.  556;  PitrceU  v. 
Sowler,  2  Com.  P.  Div.  215;  46  L.  J.  Com.  P.  308;  25  Week.  Rep.  362;  36  L.  T. 
416.  It  is  now  settled  in  England  that  the  mere  fact  that  a  judicial  proceed- 
ing was  ex  parte  will  not  deprive  a  publication  of  what  took  place  in  open 
court  of  protection  as  being  privileged.  Thus  where  a  statement  was 
published  that  three  gentlemen,  civil  engineers,  had  applied  to  a  magistrate 
for  criminal  process  against  another  civil  engineer,  and  that  their  spokesman 
stated  that  they  had  been  engaged  in  certain  surveys,  and  that  their  money, 
or  some  portion  of  it,  had  been  paid  to  the  other  engineer,  who  had  withheld 
it,  and  in  their  judgment  had  been  guilty  of  the  criminal  offense  of  with- 
holding the  money,  but  that  the  magistrate  had  regarded  it  as  a  matter  of 
contract  between  the  parties,  and,  though  on  the  face  of  the  application  they 
had  been  badly  treated,  said  he  must  refer  them  to  the  county  court,  it  was 
held  that  if  the  publication  complained  of  was  a  fair  and  impartial  report  of 
what  took  place  before  the  magistrate  that  it  was  privileged:  Usill  v.  Hales, 
L.  R.  3  C.  P.  D.  319;  47  L.  J.  Com.  P.  Div.  323;  38  L.  T.,  N.  S.,  65;  26  W.  Rep. 
371.  In  England,  publication  of  proceedings  before  magistrates  of  the  pre- 
liminary examination  of  a  prisoner:  Regina  v.  Gray,  10  Cox  C.  C.  184;  Lewis 
V.  Levy,  El.  B.  &  E.  537;  4  Jur.,  N.  S.,  970;  27  L.  J.  Q.  B.  282;  or  before 
judges  at  chambers:  S)iiith  v.  Scott,  2  Car.  &  K.  580;  or  before  registrars  in 
bankruptcy  upon  the  examination  of  a  debtor:  Jiayalls  v.  Leader,  L.  R.  1  Ex. 
296;  12  Jur.,  N.  S.,  503;  4  N.  &  C.  555;  35  L.  J.  Ex.  185;  or  before  exam- 
iners to  inquire  into  the  sufficiency  of  sureties,  — are  all  privileged,  whether 
ex  parte  or  not:  Cooper  v.  Lawson,  8  Ad.  &  E.  746;  1  W.  W.  &  H.  601;  2  Jur. 
919;  1  Perry  &  D.  15. 

In  all  these  instances  the  proceedings,  though  ex  parte,  take  place  before  a 
judicial  or  quasi  judicial  tribunal;  and  the  decisions  treating  their  publication 
as  privileged  do  not  necessarily  authorize  the  publication  of  other  ex  parte 
matters  upon  which  no  action  has  been  taken.  Early  English  decisions  have 
condemned  the  publication  of  depositions  taken  for  use,  but  not  yet  used,  at  a 
trial:  Carry.  Jones,  3  Smith,  491;  Stiles  v.  Nokes,  7  East,  493;  Rix  v.  Fisher,  2 
Camp.  563.  In  this  country,  the  fact  that  a  party  has  been  arrested,  and  what 
is  the  charge  against  him,  may  be  published,  provided  no  assumption  of  his 
guilt  is  implied  in  the  language  used:  Usher  v.  Severance,  20  Me.  9;  37  Am.  Dec, 
33;  Tresca  v.  Maddox,  11  La.  Ann.  206;  66  Am.  Dec.  198.  The  tendency  of  the 
American  cases  is  to  limit  the  privilege  of  publishing  judicial  proceedings  to 
matters  which  take  place  in  pul)lic,  either  at  the  trial  or  at  some  other  iiear- 
ing  of  the  case  in  open  court,  or  if  not  in  open  court,  then  at  some  place  and 
before  some  officer  or  triljunal  where  the  public  have  a  right  to  be  present. 
Thus  in  Michigan,  it  has  been  said  "that  there  is  no  rule  of  law  which  au- 
thorizes any  but  the  parties  interested  to  handle  the  files  or  publish  the  con- 
tents of  other  matters  in  litigation.     The  parties,  and  none  but  the  parties, 


364  McAllister  v.  Detroit  Free  Press  Co.       [Mich. 

control  them.  One  of  the  reasons  why  parties  are  privileged  from  suit  for 
accusations  made  in  their  pleadings  is,  that  the  pleadings  are  addressed  to 
courts,  where  the  facts  can  he  fairly  tried,  and  to  no  other  readers.  If  the 
pleadings  and  other  documents  can  be  published  to  the  world  by  any  one  who 
has  access  to  them,  no  more  effectual  way  of  doing  malicious  mischief  with 
impunity  could  be  devised  than  filing  papers  containing  false  and  scurrilous 
charges,  and  getting  these  printed  as  news.  The  public  has  no  right  to  any 
information  on  private  suits  until  they  come  up  for  public  hearing  or  action 
in  open  court;  and  when  any  publication  is  made  involving  such  matters, 
they  possess  no  privilege,  and  the  publication  nmst  rest  on  either  nou-libel- 
ous  character  or  truth  to  defend  it.  A  suit  thus  brought  with  scandalous  ac- 
cusations may  be  discontinued  without  any  atteinpt  to  try  it,  or,  on  trial,  the 
case  may  easily  fail  of  proof  or  probability.  The  law  has  never  authorized  any 
such  mischief":  Park  v.  Detroit  Fi-ee  Press  Co.,  72  Mich.  560;  16  Am.  St.  Rep. 
Hence  a  pleading  tiled  in  a  cause  containing  libelous  assertions,  but  which 
has  never  been  presented  to  the  court  for  its  action,  or  for  the  determination 
of  the  truth  or  falsity  of  its  allegations,  may  not,  nor  may  any  portion  of  ita 
contents,  be  published  in  a  periodical,  and  the  publication  protected  as  a 
publication  of  privileged  matters:  Barber  v.  St.  Louis  Dispatch  Co.,  3  Mo. 
App.  377;  Park  v.  Detroit  Free  Pi-ess  Co.,  supra;  nor  may  ex  parte  charges 
and  affidavits  filed  in  a  criminal  proceeding,  or  in  proceedings  taken  to  pro- 
cure the  disbarment  of  an  attorney,  be  published  as  privileged.  "If  a  pub- 
lisher of  a  newspaper  may,  in  virtue  of  his  vocation,  without  responsibility, 
publish  the  details  of  every  criminal  charge  made  before  a  police-officer,  how- 
ever groundless,  and  whether  emanating  from  mistake,  or  malice  of  a  third 
person,  then  must  private  character  be  indeed  imperfectly  protected.  Such 
publications  not  only  inflict  injury  of  the  same  kind  with  any  other  species 
of  defamation,  but  their  tendency  is  also  to  interfere  with  the  fair  and  impar- 
tial administration  of  justice,  by  poisoning  the  public  mind,  and  creating  a 
prejudice  against  a  party  whom  the  law  still  presumes  to  be  innocent":  C'«w- 
cinnati  v.  Tiraherlake,  10  Ohio  St.  548;  78  Am.  Dec.  285;  Cowley  v.  Pulsi/er, 
137  Mass.  392;  50  Am.  Rep.  318.  The  report  of  a  justice  of  the  peace  of 
statements  made  by  certain  persons  to  him  on  applying  for  a  warrant,  which 
statements  have  not  been  incorporated  into  an  affidavit  or  other  paper  on  file, 
nor  made  the  subject  of  any  judicial  action,  cannot  be  published  as  a  privi- 
leged matter:  McDermott  v.  Evening  Journal  Association,  43  N.  J.  L.  488. 

If  a  proceeding  is  such  that  a  periodical  has  a  right  to  make  it  public,  such 
periodical  may,  nevertheless,  be  held  answerable  for  damages,  if  it  appears 
to  have  acted  from  malicious  motives:  Stevens  v.  Sampson,  L.  R.  5  Ex.  Div. 
53;  49  L.  J.  Ex.  Div.  129;  41  L.  T.,  N.  S.,  782. 

As  before  suggested,  a  publication  of  judicial  proceedings  ia  not  privileged, 
unless  it  is  fair  and  impartial.  It  must  not  be  accompanied  by  any  malicious 
or  defamatory  commetit:  Cincinnati  Co.  v.  Timherlake,  10  Ohio  St.  548;  78  Am. 
Dec.  285;  State  v.  Nokes,  7  East,  493;  C«?t  v.  Jones,  3  Smith,  49;  or  libel- 
ous insinuations:  Commonwealth  v.  Blanding,  3  Pick.  304;  15  Am.  Dec.  214; 
Thomas  v.  Cronswell,  7  Johns.  264;  5  Am,  Dec.  269;  McNally  v.  Oldham,  16 
I.  R.  0.  L.  298;  8  L.  T.,  N.  S.,  604;  Scripp  v.  Reilly,  38  Mich.  10;  Delegal  v. 
Highley,  5  Scott,  154;  5  Bing.  N.  C.  950;  8  Car.  &  P.  444;  or  statments  drawn 
from  other  sources;  Bathrirk  v.  Detroit  Post  Pub.  Co.,  50  Mich.  629. 

A  periodical  is  not  prohibited  from  commenting  upon  the  proceedings  in 
a  court  of  justice,  or  the  parties  or  witnesses  connected  therewith,  nor  is  it 
limited  to  the  bare  recital  of  what  took  place;  but  whatever  comments  it 
makes  must  be  just  and  fair,  "  and  it  is  for  the  jury  to  say  whether  they  are 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.        365 

80  or  not ":  McBee  v.  Fulton,  47  Md.  403.  The  comments  must  be  from  the 
facts  in  evidence,  and  if  there  is  any  departure  from  them,  or  if  a  one-sided 
personal  view  of  them  is  given,  this  will  be  evidence  of  unfairness:  Woodgate 
V.  Riilout,  4  Fost.  &  F.  202.  It  has  been  held  that  the  evidence  may  be  de- 
clared unfounded,  unconscious,  or  careless,  but  it  must  not  be  stigmatized  as 
willful  and  malicious,  or  recklessly  false:  Hedley  v.  Barlow,  4  Id.  224;  nor  as 
being  unsupported,  liaving  no  effect,  and  as  being  commented  upon  with  cut- 
ting severity:  Roberts  v.  Brown,  10  Bing.  519;  4  Moore  &  S.  407.  A  publica- 
tion denouncing  the  verdict  of  a  jury  as  infamous,  and  declaring  that  it  was 
impossible  to  express  sufficient  contempt  for  the  jurors  who  had  thus  offended 
public  opinion,  and  done  injustice  to  their  oaths,  is  libelous,  and  not  pro- 
tected as  privileged:  Byres  \.  Martin,  2  Col.  605. 

The  recent  English  decisions  incline  to  be  lenient  with  the  press  when  pur- 
sued for  alleged  libelous  comments  or  statements  either  upon  or  concerning 
judicial  proceedings,  and  the  persons  affected  by  them,  or  upon  other  matters 
in  which  the  public  has  an  interest,  and  concerning  which  it  is  admitted 
that  newspapers  and  public  writers  have  a  duty  to  keep  it  informed.  If  the 
matters  under  consideration  are  such  as  to  excite  great  public  interest,  and 
necessarily  to  arouse  a  deep  conviction  in  the  mind  of  a  writer  or  publisher 
that  he  has  a  duty  to  perform  in  laying  bare  the  facts,  and  in  holding  soma 
evil-doer  up  to  public  condemnation,  the  courts  will  generally  excuse  his 
mistake  of  fact  made  in  good  faith,  or  his  intemperance  of  expression  gene- 
rated by  natural  aversion  to  what  he  believes  to  be  a  wrong  that  ought  to  be 
exposed  and  thereby  suppressed.  Speaking  of  alleged  libelous  comments 
upon  a  plaintiff  who  pretended  to  unusual  skill  and  knowledge  respecting 
the  treatment  of  disease,  Cockburn,  C.  J.,  in  charging  the  jury,  said: 
"  Here  is  a  man  bringing  forward  what  professes  to  be  a  scientific  book,  in- 
Titiug  the  public  to  come  and  be  treated  for  the  saddest  disease  that  is  known 
among  us.  If  he  does  that,  he  challenges  public  criticism,  and  then  if  a  pub- 
lic writer  of  competent  knowledge  deals  with  his  theory,  and,  looking  upon 
all  the  circumstances,  using  that  forbearance  and  moderation,  and  exercising 
that  temperate  judgiiient  which  every  man  is  bound  to  exercise  who  not  only 
criticises  the  conduct  of  another,  but  proceeds  to  impute  to  him  evil  motives 
and  designs,  —  if  the  public  writer  executes  his  task  with  that  spirit,  goes 
beyond  the  limits  to  which  a  more  sound  knowledge  of  the  facts  would  have 
warranted  him  in  going,  he  is  nevertheless  privileged;  the  occasion  is  a  privi- 
leged one,  and  if  the  privilege  is  exercised  honestly  and  faithfully,  and  with 
reasonable  regard  to  what  truth  and  justice  require,  he  is  exempt  from  the 
consefjunnces  if  he  sliall  have  gone  beyond  what  the  limits  of  truth  more 
carefully  ascertained  would  have  justified.  It  is,  therefore,  not  necessary 
that  justification  should,  to  all  intents  and  purposes,  be  made  out  if  you 
thiuk  the  defendant  or  the  party  who  wrote  this  article  for  which. the  defend- 
ant is  made  liable  was,  in  the  reasonable  and  honest  exercise  of  his  duty  as  a 
public  writer,  warranted  by  the  circumstances  in  drawing  the  inferences 
which  he  has  drawn  as  to  the  motives  and  conduct  of  the  plaintiff,  although 
it  may  turn  out  that  he  has  not  been  to  the  fullest  extent  accurate  ":  Hunter 
V.  Sluu-pe,  4  Fost.  &  F.  983;  15  L.  T.,  N.  S.,  421. 

In  the  case  of  Risk  Allah  Bey  v.  Whitehurst,  18  L.  T.  515,  the  defendant 
was  the  publisher  of  the  Dady  Telegraph,  and  the  matters  complained  of  as 
libelous  were  a  leading  article  and  parts  of  letters  from  a  correspondent  of 
that  periodical  at  Brussels  relative  to  the  triai  of  the  plaintiff  for  the  murder 
of  his  ward.  The  letters,  so  far  as  complained  of,  commenced  by  suggesting 
that  the  defendant  in  the  criminal  prosecution  "  has  certainly  to  meet  a 


366  McAllister  v.  Detroit  Free  Press  Co.        [Mich, 

formidable  array  of  charges  ";  they  next  detail  the  circumstances  accompany- 
ing the  murder,  and  call  attention  to  various  supposed  facts  tending  to  in- 
culpate the  accused,  and  to  other  facts,  some  of  which  tended  to  support  and 
others  to  refute  the  assumption  that  his  ward's  death  could  have  been  due  to 
suicide;  the  speech  of  the  counsel  for  the  prosecution  and  that  of  the  counsel 
for  the  accused  were  referred  to  at  considerable  length,  some  parts  of  the 
latter  being  given  verbatim,  though  that  part  of  it  detailing  the  facts  was 
omitted.  The  letters  written  after  the  accused  had  been  acquitted  restated 
the  case  against  him  with  very  great  force  and  dramatic  power,  and  from 
them  no  other  conclusion  could  fairly  be  drawn  than  that  it  was  not  the  ex- 
culpatory evidence,  but  the  prosperity,  skill,  and  power  of  the  prisoner  and 
his  counsel  which  averted  a  conviction.  In  commenting  on  these  letters  to 
the  jury,  Cockbnrn,  C.  J.,  called  attention  to  the  fact  that  they  were  writ- 
ten in  a  foreign  country,  where  the  tendency  was  to  present  judicial  proceed- 
ings in  a  sensational  and  dramatic  form,  and  exhibited  his  preference  for  the 
more  prosy  and  less  theatrical  modes  employed  by  writers  in  England;  he 
admitted  that  the  writer  must  have  felt  that  the  evidence  bore  strongly 
against  the  accused,  and  that  he  had  no  right  to  give  the  impression  which 
had  been  formed  in  his  own  mind.  "He  is  not  called  upon  to  give  an  opin- 
ion. He  is  not  called  upon  to  tell  the  impression  produced  upon  a  court  of 
justice,  but  he  takes  upon  himself  to  say  that  there  is  no  prohibition  against 
any  one  at  this  time  to  say  that  the  man  was  a  villain.  You  can  judge 
how  far  that  is  consistent  with  a  fair  report  of  the  proceedings.  I  am 
bound  to  tell  you  it  is  not.  It  is  beyond  the  province  of  a  reporter  or  pub- 
lisher to  go  beyond  reporting,  and  say  of  a  person  on  his  trial,  'that  man  is 
a  villain. '"  The  chief  justice  concluded  that  portion  of  his  charge  having 
reference  to  the  letters  as  follows:  "Gentlemen,  while  on  the  one  hand  we 
uphold  the  liberty  of  the  press,  and  especially  in  the  matter  of  reporting  the 
proceedings  of  our  courts  of  justice,  which  it  is  to  the  interest  of  the  whole 
public  should  be  made  known  as  widely  as  possible,  we  must  take  care  those 
who  exercise  that  all-important  function  shall  act  under  a  due  sense  of  the 
duties  they  have  to  perform,  and  the  responsibility  under  which  they  exer- 
cise those  functions;  and  if  you  are  of  opinion  that,  looking  at  the  whole  of 
these  communications,  they  do  not  contain  a  fair,  honest,  and  faithful  repre- 
sentation of  what  passed  under  the  proceedings  of  that  trial,  but  that,  yield- 
ing to  the  impressions  of  the  moment,  or  with  the  idea  of  making  his  articles 
as  taking,  as  attractive,  and  effective  as  possible,  the  writer  has  gone  beyond 
the  legitimate  bounds  of  privilege,  and  that  on  these  considerations  he  has 
stated  that  which  is  unfair  and  prejudicial  to  the  man  about  whom  he  was 
writing,  —  if  you  think  there  are  passages  where  the  reporter  is  merely 
repeating  his  own  statements,  —  you  are  bound  to  say  so  by  your  verdict. 
You  will  have  to  say  what  the  damages  are.  The  issue  presented  to  you  is, 
whether  this  was  a  fair  report  of  the  proceedings  of  a  court  of  justice,  or 
whether  it  is  a  garbled,  prejudiced,  and  passionate  description  of  what  took 
place. " 

Proceeding  with  his  charge  in  the  same  case,  the  chief  justice  next  re- 
ferred to  the  editorial  article  which  had  been  published  by  the  defendant  in 
his  journal,  and  to  the  claim  made  by  the  one  side  that  it,  in  effect,  merely 
suggested  that  the  plaintiff  had  been  a  fortunate  man  to  have  had  his  inno- 
cence affirmed  by  the  jury,  and  on  the  other  hand,  as,  in  substance,  stating 
that  he  was  "a  fortunate  man  to  have  escaped,  not  because  the  circumstances 
against  him  had  been  cleared  up  at  the  last  moment,  but  because  he  had  been 
ft  lucky  man,  or  had  the  advantage  of  an  ingenious  advocate,   or  had  the 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         367 

good  fortune  to  be  tried  by  a  stupid  jury";  and  the  court  said  that  if  the 
latter  meaning  was  properlj'  attributable  to  the  article,  it  would  be  a  "pub- 
lication of  which  an  innocent  man  would  have  just  ground  of  complaint." 
The  judge  then  concluded  as  follows:  "Now,  gentlemen,  it  is  for  you,  in  the 
first  place,  to  form  your  own  judgment  upon  what  the  effect —  the  intended 
effect  —  of  that  article  was.  Is  it  simply  to  say,  as  the  defendant  puts  it,  that, 
under  all  the  circumstances,  Risk  Allah  was  innocent,  but  that  appearances 
have  been  against  him,  and  that  his  innocence  had  been  proved?  Or  is  it  in- 
tended to  suggest  that,  although  ilisk  Allah  had  been  pronounced  not  guilty 
by  the  verdict  of  the  jury,  given  with  the  entire  approbation  of  the  court,  ii 
was  only  from  the  skillfulness  of  the  defense  and  his  own  good  fortune  that 
he  escaped  conviction?  That  is  the  question  for  you,  in  the  first  instance.  I? 
you  are  of  the  opinion  that  the  writer,  upon  reflection,  rejoiced  that  his  in- 
nocence was  proved  over  all  appearances  of  guilt,  that  is  a  thing  nobody  can 
complain  of;  but  if  you  are  of  opinion  that,  either  directly  or  indirectly,  he  as- 
serts that  the  guilt  of  the  man  was  confirmed,  then  you  will  have  to  consider 
how  far  he  was  justified  by  the  privileges  the  law  gives  to  those  who  discuss 
matters  of  public  interest.  There  is  no  difference  here  about  law.  It  is 
agreed  bj'  counsel  on  both  sides.  The  discussion  of  public  questions  is  so  im- 
portant to  the  well-being  of  society,  and  especially  the  discussion  of  what 
takes  places  in  courts  of  justice  and  the  results  of  trials,  that  those  who  in 
the  pul)lic  press  of  this  country  discuss  those  matters  have  a  decided  right 
and  privilege  to  treat  upon  the  administration  of  justice;  and  even  if  a  pub- 
lic writer  in  the  press  should  write  that  which  turns  out  not  to  be  founded 
upon  the  inferences  he  draws,  and  is  unable  to  justify  the  conclusion  he  has 
arrived  at,  yet  if  he  has  acted  in  good  faith  in  the  discharge  of  his  duty, 
bringing  to  it  the  amount  of  care,  reason,  and  judgment  which  a  man  who 
takes  it  upon  himself  to  discuss  public  questions  is  bound  to  bring,  so  that 
tlie  jury  is  of  opinion  that  he  has  acted  reasonably  and  properly,  he  will  be 
protected  by  that  privilege,  although  he  may  turn  out  to  have  been  in  error. 
Therefore,  it  is  for  you  to  consider  whether  the  circumstauces  were  such  as 
to  warrant  that  article,  even  upon  the  nssumption  that  they  did  intend  to 
impute  to  Risk  Allah  the  crime  of  murder,  even  after  his  recent  acquittal. 
In  C(jnsidering  this  you  must  take  all  the  circumstances  of  the  case,  and  see 
what  tells  in  his  favor  and  what  tells  against  him,  and  then  see  how  far  the 
writer,  in  the  calm,  fair,  and  dispassionate  exercise  of  the  judgment  which  he 
was  bound  to  bring  to  the  consideration  of  such  a  case,  was  justified  in  mak- 
ing these  imputations.  I  can  well  understand  that  at  the  first  outset  anyone 
who  was  made  cognizant  of  the  facts  bearing  against  Risk  Allah,  as  stated  in 
the  acie  a'accttsation,  would  have  thought  him  guilty;  and  if  the  case  stopped 
there  I  should  not  have  blamed  any  one  who,  in  discussing  that  matter,  had 
come  to  that  conclusion.  But  the  question  is,  whether  they  could  bring  an 
accusation  of  guilt  against  him  when  all  the  facts  were  heard.  It  is  for  you 
to  judge  whether  Risk  Allah  was  innocent  of  the  charge,  or  whether  any 
man,  in  the  exercise  of  sound  judgment,  and  desirous  of  doing  justice,  could 
come  to  any  other  conclusion.  I  quite  agree  that  if,  by  some  oversight  or 
want  of  firmness  on  the  part  of  the  judge  or  jury,  a  great  criminal  escapes, 
and  by  a  miscarriage  of  justice  a  scandal  is  brought  on  its  administration, 
and  the  criminal  is  let  loose  on  society,  rehabilitated  and  let  loose  when  he 
ought  to  be  suffering  punishment,  —  in  such  a  case  a  public  writer  would  be 
doing  no  more  than  his  duty  in  coming  forward  to  remonstrate  with  the  tri- 
bunal through  whose  want  of  firmness  the  man  has  been  acquitted.  If  that 
is  done  through  that  fair  and  reasonable  exercise  of  judgment  which  the  casa 


368  McAllister  v.  Detroit  Free  Press  Co.        [Mich. 

demands,  no  jury  ought  to  visit  a  pul)lie  writer  with  damages,  because  he  haa 
fairly  and  conscientiously  discharged  a  public  duty.  On  the  other  hand,  if 
you  think  there  has  been  rashness  and  recklessness  in  quarreling  with  the 
verdict  of  acquittal,  which  has  declared  the  man  to  be  innocent,  and  espe- 
cially under  a  criminal  prosecution,  your  verdict  will  be  based  on  those  con- 
siderations. You  will  take  all  these  things  into  your  consideration,  and  you 
must  also  take  into  consideration  that  human  judgment  is  liable  to  error, 
and  must  ask  yourselves  whether  there  was  any  intention  to  single  out  Risk 
Allah  for  animadversion  on  the  part  of  the  writer." 

At  the  common  law,  the  defense  that  a  defamatory  publication  was  true 
was  admissible  as  a  justification  only  in  civil  actions:  2  Bishop's  Grim.  Law, 
sec.  918.  In  the  majority  of  the  United  States,  either  the  constitutional  or 
the  statutory  law  provides,  in  substance,  that  "the  truth  may  be  given  in 
evidence  to  be  a  defense  only  when  the  further  fact  appears  that  the  publi- 
cation was  made  with  good  motives,  and  for  justifiable  ends.  In  some  of 
our  states,  the  statute  is  even  more  favorable  to  defendants  than  this":  Id., 
sec.  920;  Castle  v.  Houston,  19  Kan.  417.  Even  in  the  absence  of  these  stat- 
utes, the  truth  was  sometimes  received  in  evidence  in  criminal  prosecutions. 
Thus  in  Commonwealth  v.  Clap,  4  Mass.  163,  3  Am.  Dec.  212,  Chief  Justice 
Parsons  said:  "Although  the  truth  of  words  is  no  justification,  in  a  criminal 
prosecution,  for  a  libel,  yet  the  defendant  may  repel  the  charge  by  proving 
that  the  publication  was  for  a  justitiable  purpose,  and  not  malicious,  nor 
with  intent  to  defame  any  man.  And  there  may  be  cases  where  the  defend- 
ant, having  proved  the  purpose  justifiable,  may  give  in  evidence  the  truth 
of  the  words,  when  such  evidence  will  tend  to  negative  the  malice  and  in- 
tent to  defame."  Hence  when  one  is  an  officer,  or  a  candidate  for  office,  a 
newspaper,  for  the  purpose  of  showing  whether  he  is  fit  for  such  office,  may 
publish  of  him  that  which  is  clearly  defamatory,  and,  in  justification  of  what 
it  did,  prove  the  truth  of  the  charges  made  by  it,  even  though  there  is  no 
statute  conceding  this  defense  in  express  terms:  Commonwealth  v.  Clap, 
supra;  Commonwealth  v.  Blaiiding,  3  Pick.  304;  15  Am.  Dec.  214;  Common- 
wealth V.  Morris,  1  Va.  Cas.  175;  5  Am.  Dec.  515;  State  v,  Burnham,  9  N.  H. 
34;  31  Am.  Dec.  217. 

In  many  instances,  publications  may  be  both  libelous  and  true,  and  yet 
made  for  unworthy  motives.  One  might  have  the  public  thus  kept  in  re- 
membrance of  an  early  indiscretion  which  he  had  long  since  repented,  or 
advised  of  some  physical  defect  or  deformity  for  which  he  is  in  no  wise 
blamable.  In  these  instances,  as  the  publication  is  tnie,  he  is  not  permitted 
to  maintain  any  civil  action  therefor.  If  the  publication  was  not  made  for 
justifiable  ends,  the  publisher  is  guilty  of  a  crime,  for  which  he  may  be 
prosecuted  and  convicted;  but  he  is  not  answerable  in  damages  to  the  per- 
son libeled,  however  malicious  or  otherwise  unworthy  his  motive  may  be: 
Cattle  V.  Houston,  19  Kan.  417;  Perry  v.  Man,  1  R.  I.  263;  Rayne  v.  Taylor, 
14  La.  Ann.  406;  Baum  v.  Clause,  5  Hill,  196;  Heibnan  v.  Shanklin,  60  Ind. 
441;  Sullings  v.  Shakespeare,  46  Mich.  408;  Foss  v.  Hildreth,  10  Allen,  76. 
In  Massachusetts,  in  1855,  the  law  was  changed  by  a  statute  which,  in 
effect,  prohibits  a  recovery  of  damages  for  a  defamatory  publication,  though 
proved  to  be  true,  "unless  malicious  intention  shall  be  proved."  Under 
this  statute,  criminal  prosecutions  and  civil  actions  are  placed  on  a  common 
ground.  In  either,  if  the  defendant  shows  that  the  matters  published  were 
true,  he  makes  out  a  complete  .defense,  unless  the  government  in  the  one 
case,  or  the  plaintiff  in  the  other,  shows  affirmatively  "that  the  publication 
was  made  with  malicious  intention":  Perry  y.  Porter,  124  Mass.  338.     This 


Oct.  1889.]     McAllister  v.  Detroit  Free  Press  Co.         369 

statute,  therefore,  shifts  the  burden  of  proof  in  criminal  prosecutions.  But 
for  it,  the  defendant  must  assume  the  burden  of  establishing,  in  addition  to 
the  truth  of  the  publication,  that  it  "was  published  for  good  motives  and 
jiMtifiable  ends":  Commonwealth  v.  Bonner,  9  Met.  410. 

The  presumption  respecting  a  libelous  charge,  in  the  absence  of  any  statute 
upon  the  subject,  is,  that  it  is  false,  and  without  sufficient  excuse.  A  de- 
fendant, whether  in  a  civil  action  or  a  criminal  prosecution,  who  desires  to 
urge  that  what  he  said  was  true,  must,  therefore,  assume  the  burden  of  es- 
tablishing it  by  competent  and  suliicient  evidence:  Russell  v.  Anthony,  21 
Kan.  450. 

Whether  one,  knowing  or  suspecting  that  a  libel  is  about  to  be  published, 
to  the  injury  of  his  property  or  his  reputation,  is  entitled  to  any  preventive 
relief,  is  a  question  upon  which  the  adjudged  cases  are  unsatisfactory  and 
conflicting.  The  decision  in  Prudential  L.  I.  A.  v.  Knott,  23  Week.  Rep.  249, 
L.  R.  10  Ch.  App.  142,  44  L.  J.  Ch.,  31  L.  T.  8G6,  7  Chic.  L.  N.  405,  seemed 
to  settle  the  question  in  England,  and  to  establish  the  rule  that  in  no  case 
would  an  injunction  be  issued  to  restrain  the  publication  of  a  libel,  whether 
against  the  person  or  the  property  of  the  complainant.  While  that  decision 
has  not,  as  far  as  we  can  ascertain,  been  overruled,  it  has  been  so  frequently 
disregarded,  and  so  many  adjudications  have  been  made  at  variance  with  it, 
that  it  can  no  longer  be  regarded  as  correctly  stating  the  law.  If  a  libel  is 
one  containing  false  and  defamatory  statements  respecting  the  complainant's 
property  or  business,  and  is  calculated  to  injure  him  in  liis  property  or  busi- 
ness, the  more  recent  as  well  as  some  of  the  earlier  English  decisions  indi- 
cate that  an  injunction  may  properlj'  issue:  Hayward  v.  Hayward,  34  Ch.  D. 
198;  Quavlz  Hill  C.  G.  M.  Co.  v.  Beall,  20  L.  J.  Ch.  Div.  501;  51  L.  J.  Ch.  874; 
46  L.  T.  746;  Saxhy  v.  Esterhrook,  L.  R.  3  Com.  P.  Div.  339;  27  Week.  Rep.  188; 
Thorley's  Cattle  Food  Co.  v.  Massam,  L.  R.  14  Ch.  Div.  763;  42  L.  T.,  N.  S.,  851; 
28  Week.  Rep.  966;  Thomas  v.  Williams,  L.R.  14  Ch.  Div.  864;  49  L.  J.  Ch.  605; 
43  L.  T.  91;  28  Week.  Rep.  983.  The  decisions  upon  this  subject  by  the  Amer- 
ican courts  are  infrequent,  and  are  chiefly  characterized  by  an  attempt  to 
follow  the  adjudications  upon  the  same  subject  in  England;  and  in  this  at 
tempt  the  American  courts  have  necessarily  reached  conclusions  as  irrecon^ 
cilable  as  those  which  they  sought  to  follow:  Singer  M/g.  Co.  v.  Domestic  Co. 
49  Ga.  70;  Bell  v.  Singer  Mfg.  Co.,  65  Id.  452;  High  on  Injunctions,  sec.  1015 
With  respect  to  libels  which  reflect  upon  the  reputation  of  the  person  libeled 
and  which  do  not  directly  otherwise  injure  his  person  or  property,  no  at 
tempt,  so  far  as  we  are  aware,  has  ever  been  made  to  prevent  their  publica 
tion  by  injunction,  and  hence  no  reference  can  be  given  to  any  decisions, 
whether  English  or  American,  upon  that  topic. 
▲m.  St.  Rkp.,  Vol.  XV.  — 24 


AMERICAN  STATE  REPORTS. 

Vol.    XVIT,   Pages  -291-308. 

BEACH  v.  MILLER. 

[130  Tf.r.iNois,    MW.] 

Dealings  of  directors  of  corporations. 

Pages  8«4-S9'.t. 

PEOPLES  BK.  V.  FRANKLIN   BK. 

[88  Tknnksskk,  3!M).] 

Liability  of  Bank  for  forged  check. 


Oct.  1889.]  Beach  v.  Miller.  291 

Beach  v.  Miller. 

1130  Illinois,  162.] 

Corporations  —  Proof  of  Fraudulent  Sale  by.  — Where  the  good  faith 
of  a  sale  by  a  corporation  to  one  of  its  directors  is  attacked,  evidence  of 
the  insolvency  of  the  corporation  at  the  time  that  the  sale  was  made  is 
admissible. 

Solvent  Corporation  —  Director  may  Contract  with.  —  A  director  of  a 
solvent  corporation  may,  with  the  knowledge  of  the  stockholders,  deal 
with  the  corporation,  loan  it  money,  take  security,  or  buy  property  of  it 
in  like  manner  as  a  stranger. 

Insolvent  Corporations — Directors  cannot  Contract  with.  — The  as- 
sets of  an  insolvent  corporation  are  regarded  as  a  trust  fund  for  the  pay- 
ment of  all  its  creditors;  the  directors  occupy  the  position  of  trustees  of 
such  fund,  and  may  be  prohibited  from  purchasing  the  trust  property,  and 
thus  securing  a  preference  over  other  creditors. 

Insolvent  Corporations  —  Rights  of  Creditors.  — The  directors  of  an  in- 
solvent corporation  are  trustees  of  its  assets  for  its  creditors,  and  cannot 
give  the  funds  away,  or  sell  them  at  a  sacrifice  in  the  interest  of 
others,  even  with  the  consent  of  the  stockholders;  and  if  themselves 
creditors,  tliey  cannot  receive  any  advantage  or  preference  in  the  pay- 
ment of  their  claims  at  the  expense  of  the  other  creditors. 

Insolvent  Corporation  —  Purchase  by  Director  —  Rights  of  Creditors. 
—  A  director  of  an  insolvent  corporation  cannot  lawfully  purchase  its 
property  in  satisfaction  of  his  own  debt,  to  the  exclusion  of  other  credi- 
tors, with  whom  he  is  only  entitled  to  share  equally,  but  he  takes  the 
property  charged  with  the  trust  in  favor  of  the  other  creditors,  which 
may  be  enforced  in  equity,  but  it  is  not  subject  to  the  execution  of  an- 
other judgment  creditor. 

Corporation — Sale  to  Direcior  —  Ratification. — A  sale  of  corporate 
property,  made  by  a  corporation  to  a  director,  in  payment  of  its  notes 
held  by  him,  though  irregular  because  made  without  an  order  from  the 
board  of  directors,  is  subject  to  ratification,  and  the  fact  that  the  corpo- 
ration took  up  the  notes  canceled  and  retained  them  in  its  possession 
will  be  regarded  as  a  ratification  of  the  sale. 

Weigley,  Bulkley,  and  Gray,  for  the  appellants. 

Bennett  and  Green,  for  the  appellee. 

Craig,  J.  This  was  an  action  of  trespass,  brought  by 
JoGeph  T.  Miller,  in  the  circuit  court  of  \\'^hiteside  County, 
against  Thomas  S.  Beach  and  George  C.  Keefer.  The  decla- 
ration contained  four  counts.  In  the  first  and  second  it  is 
alleged  that  defendants,  with  force  and  arms,  broke  and 
entered  two  certain  rooms  in  a  certain  warehouse,  known  as 
the  warehouse  of  the  Rock  River  Packing  Company,  which 
said  rooms  were  then  and  there  in  the  possession  of  the  plaintiff. 
The  third  and  fourth  counts  are  trespass  de  bonis  asporiatis, 
for  taking  and  carrying  away  94,612  tomato-cans,  3,516  sheets 
of  tin,  and  a  few  other  articles,  alleged  to  belong  to  the  plain- 


292  Beach  v.  Miller.  [Illinois, 

tiff.  The  defendants  pleaded  the  general  issue  and  several 
special  pleas,  in  which  they  averred  that  on  the  twenty-third 
day  of  October,  1885,  E.  W.  Blatchford  &  Co.  recovered  a 
judgment  against  the  Rock  River  Packing  Company,  in  the 
circuit  court  of  Whiteside  County,  for  $1,415.40;  that  an  exe- 
cution issued  ou  the  judgment,  which  was  placed  in  the  hands 
of  defendants,  as  sheriff  and  deputy  sheriff,  to  collect.  It  is 
also  alleged  that  the  goods  named  in  the  declaration  belonged 
to  the  Rock  River  Packing  Company,  and  as  such  they  w^ere 
ievied  upon  by  defendants  under  and  by  virtue  of  the  execu- 
tion, and  sold  in  satisfaction  thereof.  Issue  was  formed  on 
the  pleas,  and  on  a  trial  the  plaintiff  recovered  a  judgment  for 
$1,996.41,  which  was  affirmed  in  the  appellate  court. 

In  order  to  get  a  correct  understanding  of  the  questions  pre- 
sented by  the  record,  a  brief  statement  of  the  facts  seems  to 
be  required.  The  Rock  River  Packing  Company  is  a  corpo- 
ration organized  in  1881,  with  a  capital  stock  of  sixteen  thou- 
sand dollars,  the  incorporators  being  James  A.  Ingersoll, 
Edward  H,  Sears,  William  N.  Herman,  and  Joseph  T.  Miller, 
the  plaintiff  here.  The  corporation  was  formed  for  "  packing, 
pickling,  canning,  and  bottling  of  meats,  vegetables,  and  fruits, 
and  dealing  in  the  same,"  and  was  located  at  Sterling,  where 
it  provided  itself  with  a  factory  and  warehouse,  in  which  its 
business  was  transacted.  During  the  spring  and  summer  of 
1885,  the  corporation  borrowed  of  Miller,  who  was  then  a  di- 
rector, money  to  be  used  in  its  business,  amounting  to  the 
sum  of  two  thousand  dollars.  To  secure  Miller  for  the  money 
loaned,  the  corporation  executed  and  delivered  to  him  its  four 
judgment  notes,  one  dated  May  30,  1885,  amount  five  hun- 
dred dollars;  one  July  6,  1885,  amount  five  hundred  dollars; 
and  one  for  one  thousand  dollars,  on  August  17,  1885.  On 
the  sixteenth  day  of  October,  1885,  these  notes  being  due  and 
unpaid,  the  president  and  secretary  of  the  corporation  sold 
Miller  80,000  cans  and  a  small  quantity  of  tin  for  $1,877,  to 
be  applied  as  a  payment  on  the  notes.  On  the  same  day,  In- 
gersoll, president  and  secretary  of  the  corporation,  leased 
Miller  two  small  rooms  in  the  north  end  of  the  company's 
warehouse.  On  the  morning  of  the  17th,  all  property  belong- 
ing to  the  company  was  removed  from  the  two  rooms,  and  the 
possession  was  turned  over  to  Miller.  Miller  placed  the  goods 
purchased  in  the  rooms,  and  nailed  up  the  doors  communicat- 
ing with  other  parts  of  the  warehouse,  and  placed  new  locks 
on  the  other  doors.     On  the  seventeenth  day  of  October,  1885, 


Oct  1889.]  Beach  v.  Miller.  293 

the  corporation  delivered  to  E.  W.  Blatchford  &  Co.  a  judg- 
ment note  for  $1,415.40,  upon  which  judgment  was  entered. 
On  the  twenty-third  day  of  October  an  execution  issued  on  the 
judgment,  and  on  the  24th,  defendant  Beach,  as  sheriff,  and 
defendant  Keefer,  as  deputy  sheriff,  levied  on  the  goods  which 
had  been  purchased  by  Miller. 

In  the  circuit  court  it  was  contended  that  the  sale  of  the 
goods  from  the  Rock  River  Packing  Company  to  Miller  was 
fraudulent  as  against  creditors,  and  being  fraudulent,  the 
goods  were  liable  to  be  seized  and  sold  by  the  sheriff  on  the 
execution  in  favor  of  Blatchford  &  Co.  against  the  Rock  River 
Packing  Company.  For  the  purpose  of  showing  the  sale 
fraudulent,  the  defendants  offered  to  prove  that  the  Rock 
River  Packing  Company  was,  at  the  time  of  the  sale,  in- 
solvent; that  on  the  sixteenth  day  of  October,  1885,  the 
company  executed  a  mortgage  on  its  real  estate  for  seven 
thousand  dollars  to  three  of  its  directors;  that  the  company 
turned  over  one  thousand  dollars  of  its  accounts  to  the  Sterling 
National  Bank  to  apply  on  a  debt  due  from  the  company  to 
the  bank,  which  debt  was  secured  by  three  of  the  directors  of 
the  company;  that  between  the  sixteenth  and  the  twenty-third 
days  of  October,  the  corporation  sold  the  product  of  their  manu- 
facture to  a  certain  party  in  Chicago.  This  offered  evidence, 
with  other  evidence  of  a  like  import,  was  ruled  out  by  the  court, 
and  the  decision  is  relied  upon  as  error.  We  are  of  opinion 
that  the  court  erred  in  excluding  this  evidence  from  the  jury. 
If,  at  the  time  this  sale  was  made,  the  corporation  was  insol- 
vent, or  if,  at  or  about  the  time  when  the  sale  was  made,  large 
mortgages  were  placed  on  all  of  the  property  owned  by  the 
corporation,  so  that  it  had  no  property  left  liable  to  execution, 
these  were  facts  proper  for  the  consideration  of  the  jury  on  the 
question  whether  the  sale  to  Miller  was  fraudulent  or  made  in 
good  faith.  What  weight  should  be  given  to  this  character  of 
evidence  was  a  question  for  the  jury.  We  only  determine  that 
it  was  competent  evidence  for  the  consideration  of  the  jury  on 
the  issue  presented  by  the  pleadings.  Where  the  good  faith 
of  a  sale  of  property  is  attacked,  it  is  always  competent  to 
prove  that  the  vendor  was  embarrassed  or  insolvent:  Geisert' 
dorf  v.  Eagles,  106  Ind.  38;  Bump  on  Fraudulent  Convey- 
ances, 591. 

But  appellants  rely  upon  another  ground  to  defeat  the  sale, 
—  that  it  was  void  for  the  reason  that  Miller  was,  at  the  tiine, 
a  director  of  the  corporation,  and  could  not  contract  with  it. 


294  Beach  v.  Miller.  [Illinois, 

This  proposition  is  discussed  in  the  argument  under  several 
distinct  heads,  and  various  authorities  have  been  cited  in  its 
support.  There  is  a  conflict  of  authority  on  this  question,  but 
on  the  general  proposition  whether  a  director  may  deal  with 
the  corporation  we  think  the  weight  of  authority  is  that  he 
may.  This  court  so  held  in  Merrick  v.  Peoria  Coal  Co.,  61  111. 
479,  and  in  Harts  v.  Brown,  77  111.  226.  The  supreme  court 
of  the  United  States  hold  the  same  doctrine.  In  Twin  Lick  Oil 
Co.  V.  Marhury,  91  U.  S.  587,  it  is  said:  "It  is  very  true  that, 
as  a  stockholder,  in  making  a  contract  of  any  kind  with  the 
corporation  of  which  he  is  a  member,  he  is  in  some  sense  deal- 
ing with  a  creature  of  which  he  is  a  part,  and  holds  a  com- 
mon interest  with  the  other  stockholders,  who,  with  him, 
constitute  the  whole  of  that  artificial  entity,  and  is  properly 
held  to  a  larger  measure  of  candor  and  good  faith  than  if  he 
were  not  a  stockholder.  So  when  the  lender  is  a  director, 
charged,  with  others,  with  the  control  and  management  of  the 
affairs  of  the  corporation,  representing,  in  this  regard,  the  ag- 
gregated interest  of  all  the  stockholders,  his  obligation,  if  he 
becomes  a  party  to  a  contract  with  the  company,  to  candor 
and  fair  dealing  is  increased  in  the  precise  degree  that  his 
representative  character  has  given  him  power  and  control,  de- 
rived from  the  confidence  reposed  in  him  by  the  stockholders 
who  appointed  him  their  agent."  See  also  the  foUoAving  au- 
thorities, where  the  same  doctrine  is  announced:  Angell  and 
Ames  on  Corporations,  sec.  233;  Whiiwell  v.  Warner,  20  Vt. 
425;  Smith  v.  Lansing,  22  N.  Y.  526;  City  of  St.  Louis  v.  Alex- 
ander, 23  Mo.  483. 

While  a  corporation  remains  solvent,  we  perceive  no  reason 
why  a  director,  with  the  knowledge  of  the  stockholders,  may 
not  deal  with  the  corporation,  loan  it  money,  take  security,  or 
buy  property  of  it  in  like  manner  as  a  stranger;  but  whether 
a  director  in  an  insolvent  corporation  may  purchase  the  assets 
in  payment  of  a  debt,  and  thus  secure  a  preference  over  other 
creditors,  presents  a  different  question.  So  long  as  a  corpora- 
tion remains  solvent,  its  directors  are  agents  or  trustees  for 
the  share-holders.  They  owe  no  duties  or  obligations  toothers. 
But  the  moment  a  corporation  becomes  insolvent,  its  directors 
occupy  a  different  relation.  The  assets  of  the  corporation 
must  then  be  regarded  as  a  trust  fund  for  the  payment  of  all 
its  creditors,  and  the  directors  occupy  the  position  of  trustees, 
and  a  fiduciary  relation  then  existing,  they  may,  with  pro- 
priety, be  prohibited  from  purchasing  the  trust  property.    The 


Oct.  1889.]  Beach  v.  Miller.  295 

relation  that  directors  occupy  to  the  property  of  a  corporation 
is  well  stated  in  Ogden  v.  Murray,  39  N.  Y.  202,  as  follows: 
"The  appellants  and  their  associates  were  not  in  a  situation 
permitting  them  to  secure  to  themselves  a  personal  advantage 
in  the  matter.  The  stockholders  and  creditors  were  entitled 
not  only  to  their  vote  in  the  board,  but  to  their  influence  and 
argument  in  the  discussion  which  led  to  the  passage  of  the 
resolution,  in  pursuance  of  which  they  took  title  as  trustees. 
This  brings  the  case  within  the  rule,  which  rests  in  the  sound- 
est wisdom,  and  is  sustained  by  the  best  consideration  of  the 
infirmities  of  our  human  nature,  and  called  for  by  tlie  only 
safe  protection  of  the  interests  of  cestuis  que  trust  or  benefi- 
ciaries, viz.,  that  trustees  and  persons  standing  in  similar 
fiduciary  relations  shall  not  be  permitted  to  exercise  their 
powers,  and  manage  or  appropriate  the  property  of  which  they 
have  control,  for  their  own  profit  or  emolument,  or,  as  it  has 
been  expressed,  shall  not  take  advantage  of  their  situation  to 
obtain  any  personal  benefit  to  themselves  at  the  expense  of 
their  cestuis  que  trust.^'  S^e  also  Drury  v.  Cross,  7  Wall. 
299. 

In  Curran  v.  State  of  Arkansas,  15  How.  307,  Mr.  Justice 
Curtis,  delivering  the  opinion  of  the  court,  speaking  of  an  in- 
solvent banking  corporation,  says:  "The  assets  of  such  a  cor- 
poration are  a  fund  for  the  payment  of  its  debts.  If  they  are 
held  by  the  corporation  itself,  and  so  invested  as  to  be  subject 
to  legal  process,  they  may  be  levied  on  by  such  process.  If 
they  have  been  distributed  among  stockholders,  or  gone  into 
the  hands  of  others  not  creditors  or  purchasers,  leaving  debts 
of  the  corporation  unpaid,  such  holders  take  the  property 
charged  with  the  trust  in  favor  of  the  creditors,  which  a  court 
of  equity  will  enforce,  and  compel  the  application  of  the  prop- 
erty to  the  satisfaction  of  their  debts.  This  has  often  been  de- 
cided, and  rests  upon  the  plainest  principles." 

In  Richards  v.  New  Hampshire  Ins.  Co..,  43  N.  H.  263,  on  a 
bill  in  equity  filed  by  creditors,  it  was  held  that  directors  and 
managers  of  insolvent  corporations  are  trustees  of  the  funds 
for  the  creditors,  and  are  bound  to  apply  them  pro  rata,  and 
cannot  use  them  to  exonerate  themselves,  to  the  injury  of  other 
creditors.  It  is  there  said:  "Every  agent  and  trustee  who 
has  claims  of  his  own  must  be  regarded  as  agent  for  himself 
and  others,  and  bound  to  give  his  diligence  and  care  equally 
to  all  the  claims  in  his  hands,  and  consequently  to  apply  all 
moneys  paid  to  him,  without  an  appropriation  by  the  debtor, 


296  Beach  v.  Milleb.  [Illinois, 

to  the  payment  of  all  claims  in  his  care,  whether  of  his  own 
or  others,  in  just  proportions  to  their  amounts." 

In  Morawetz  on  Corporations,  1st  ed.,  section  579,  it  is  said: 
**It  is  the  duty  of  the  directors  and  other  agents  of  an  insol- 
vent corporation  to  preserve  its  assets  for  the  benefit  of  cred- 
itors. The  legal  ownership  of  the  assets  is  not  altered  by 
insolvency,  and  the  regular  agents  of  the  company  retain  the 
same  powers  of  management  with  which  they  were  originally 
invested.  But  upon  the  insolvency  of  the  corporation,  the 
equitable  lien  of  creditors  attaches  upon  all  of  the  company's 
assets;  and  the  directors,  who  originally  stood  in  a  fiduciary 
relation  to  the  company's  members,  become  placed  in  a  fidu- 
ciary relation  to  its  creditors.  Accordingly,  it  has  been  held 
....  that  they  cannot  give  away  the  company's  property 
gratuitously,  or  sell  it  at  a  sacrifice  in  the  interest  of  others, 
even  with  the  consent  of  the  stockholders;  and  if  themselves 
creditors,  they  cannot  receive  any  advantage  or  preference  in 
the  payment  of  their  claims  at  the  expense  of  other  credi- 
tors." 

In  Haywood  v.  Lincoln  Lumber  Co.,  64  Wis.  639,  where 
an  action  was  brought  to  foreclose  a  mortgage  given  by  the 
company  to  its  directors  to  secure  an  indebtedness  due  from 
the  company  to  them,  on  the  hearing  it  appeared  that  at  the 
time  the  mortgage  was  executed  the  company  was  insolvent, 
and  it  was  insisted  as  a  defense  that  the  mortgage  was  invalid. 
The  court,  in  deciding  the  case,  said:  "The  main  question  is 
the  validity  of  the  mortgage  in  suit.  There  was  abundant 
evidence  to  justify  the  finding  of  the  circuit  court  that  at  the 
time  it  was  given  the  company  was  insolvent.  In  such  case 
the  authorities  seem  to  be  uniform  that  the  directors  and  offi- 
cers of  a  corporation  are  trustees  of  the  creditors,  and  must 
manage  its  property  and  assets  with  strict  regard  to  their  in- 
terests; and  if  they  are  themselves  creditors,  while  the  insol- 
vent corporation  is  under  their  management  they  cannot  secure 
to  themselves  any  preference  or  advantage  over  other  creditors. 
The  directors  are  then  trustees  of  all  the  property  of  the  cor- 
poration for  all  its  creditors,  and  an  equal  distribution  must  be 
made,  and  no  preference  to  any  one  of  the  creditors,  and  much 
less  to  the  directors  or  trustees,  as  such."  See  also  Fort  v. 
Russell,  36  Ind.  60;  10  Am.  Rep.  5;  and  Lippincott  v.  Shaw 
Carriage  Co.,  21  Fed.  Rep.  577. 

The  language  used  in  Merrick  v.  Peoria  Coal  Co.,  61  111.  479, 
is  broad  enough  to  authorize  a  director  of  an  insolvent  corpo 


Oct.  1889.]  Beach  v.  Miller.  297 

ration  to  deal  with  the  corporation;  but  the  question  of  the 
power  of  a  director  to  purchase  property  of  or  deal  with  an  in- 
solvent corporation  did  not  arise  in  that  case,  and  what  was 
eaid  was  mere  obiter  dictum.  There  the  Peru  Coal  Company, 
a  corporation,  executed  certain  notes  payable  to  the  Michigan 
Car  Company,  and  also  drew  certain  drafts  in  favor  of  the 
company.  These  notes  and  drafts  were  purchased  by  Merrick, 
who  was  an  officer  of  the  corporation,  with  his  own  funds,  and 
brought  an  action  on  the  notes  and  drafts,  and  the  only  ques- 
tion was,  whether  he  was  entitled  to  recover,  and  the  court 
properly  held  he  might  recover  upon  the  notes  and  drafts. 

Harts  V.  Brown,  77  111.  226,  is  another  case  where  expres- 
sions may  be  found  similar  to  those  used  in  the  Merrick  case, 
which  were  not  justified  by  the  questions  presented  for  de- 
cision. That  was  a  bill  brought  by  stockholders  to  vacate  a 
sale  under  a  trust  deed  given  by  the  company  to  secure  the 
payment  of  certain  bonds  issued  by  the  company  and  sold  to 
one  of  the  directors.  The  question  arose  whether  the  com- 
pany had  the  power  to  execute  a  trust  deed,  and  whether  it 
could  borrow  money  of  a  director.  It  was  held  that  the  char- 
ter conferred  power  to  borrow  money  and  secure  it  by  mort- 
gage or  deed  of  trust,  and  that  the  board  of  directors  might 
borrow  money  of  one  of  its  members.  The  question  before 
the  court  was  properly  decided,  but  the  expression  that  a  di- 
rector may  trade  with,  borrow  from,  or  loan  money  to  the  com- 
pany of  which  he  is  a  member,  on  the  same  terms  and  in  like 
manner  as  other  persons,  was  not  authorized  by  the  case  made 
by  the  record. 

After  a  careful  examination  of  the  authorities,  we  are  in- 
clined to  the  opinion  that  if  this  corporation  was  insolvent  at 
the  time  of  the  sale.  Miller,  who  was  a  director,  could  not  law- 
fully purchase  the  property  in  satisfaction  of  his  own  debt  to 
the  exclusion  of  other  creditors,  but  he  took  the  property 
charged  with  the  trust  in  favor  of  other  creditors,  which  may 
be  enforced  in  an  appropriate  action.  Miller,  being  a  creditor, 
would  doubtless  be  entitled  to  share  with  the  other  creditors 
in  the  property,  but  he  could  not  appropriate  the  entire 
amount  to  the  payment  of  his  own  debt.  This,  however,  con- 
ferred no  right  upon  appellants  to  seize  the  property,  and  sell 
it  in  satisfaction  of  the  debt  of  Blatchford  &  Co.  As  creditors 
of  the  corporation,  they  occupied  no  better  position  than  Miller. 
It  may  be,  and  no  doubt  is,  true,  that  if  Blatchford  &  Co.  had 
levied  on  the  property  while  in  the  hands  of  the  corporation, 


298  Beach  v.  Miller.  [Illinois, 

before  the  sale  to  Miller,  they  would,  under  such  circum- 
Btances,  have  been  entitled  to  hold  it.  But  after  the  sale  and 
delivery  to  Miller  they  had  no  such  right;  the  property  had 
passed  beyond  the  reach  of  their  execution.  It  had  passed 
into  Miller's  hands  charged  with  a  trust  which  a  court  of 
equity  might  enforce  in  favor  of  all  the  creditors  of  the  cor- 
poration, or  such  as  might  invoke  the  aid  of  that  court. 

One  other  question  remains  to  be  considered.  The  sale  was 
made  to  Miller  without  an  order  of  the  board  of  directors  of 
the  corporation,  and  upon  this  ground  it  is  claimed  to  be  in- 
valid. Conceding  that  the  sale  was  irregular,  we  think  it 
might  be  ratified  by  the  corporation,  and  the  fact  that  it  took 
up  the  notes  held  by  Miller  and  canceled  them,  and  retained 
them  in  its  possession,  may  be  regarded  as  a  ratification  of 
the  sale.  As  to  the  lease  of  that  part  of  the  building  where 
the  goods  were  stored,  whether  it  was  strictly  valid  or  invalid 
was  of  no  moment.  The  only  purpose  of  the  lease  was  to  give 
Miller  possession  of  that  part  of  the  building,  and  there  was 
ample  evidence  to  establish  possession  independent  of  the 
lease. 

For  the  error  indicated,  the  judgments  of  the  appellate  and 
circuit  courts  will  be  reversed,  and  the  cause  remanded. 


Director  and  Corporation,  Transactions  between.  — Directors  of  a  cor- 
poration are  sometimes  spoken  of  as  its  trustees,  and  at  other  times,  with  more 
accuracy,  their  relation  to  it  is  compared  with  that  of  a  trustee  to  his  cestui 
que  Utist.  They  are  not  trustees  in  the  sense  of  holding  the  legal  title  to  all 
or  any  of  its  property  for  the  benefit  of  the  corporation  or  of  its  stockholders 
or  creditors.  It  is  true  that  its  directors  are,  upon  sound  principles  of  public 
policy,  inhibited  from  dealing  with  the  corporation  under  very  much  the  same 
circumstances  that  a  trustee  is  inhibited  from  dealing  with  his  cestui  que  trust, 
and  if  they  disregard  the  duties  and  proprieties  of  their  position  by  undertak- 
ing to  represent  their  own  interest  and  that  of  the  corporation  at  the  same 
time,  they  will  not  be  encouraged  in  thus  walking  in  the  path  of  temptation, 
nor  be  permitted  to  retain  the  fruits  gathered  while  in  pursuit  of  their  own 
advancement  when  they  should  have  pursued  none  other  than  that  of  the  cor- 
poration: Memphis  <5s  G.  R.  R.  v.  Woods,  88  Ala.  630;  16  Am,  St.  Rep.  81. 
The  relation  of  director  and  corporation  is,  however,  merely  that  of  principal 
and  agent,  and  transactions  between  a  director  and  a  corporation  are  sustain- 
able when  they  could  be  siistained  between  a  principal  and  agent,  and  not 
otherwise,  with  this  exception,  that  as  a  corporation  may  have  no  other  means 
of  obtaining  information  respecting  a  transaction  and  its  subject-matter  than 
through  its  director,  he  may  have  more  difficulty  than  if  his  principal  were 
a  private  person  in  establishing  that,  in  its  dealings  with  him,  the  corpora- 
tion was  not  overreached  by  means  of  his  superior  knowledge  and  its  reliance 
upon  him  as  its  agent  and  representative. 

Undoubtedly  there  are  expressions  in  several  decisions  from  which  the  in- 
ference might  be  drawn,  either  that  a  director  is  absolutely  incompetent  to 


Oct.  1889.]  Beach  v.  Miller.  299 

contract  with  his  corporation,  or  to  deal  with  it,  in  any  matter  in  which  he 
is  personally  interested,  or,  at  least,  that  the  corporation  may  at  any  time 
avoid  or  disregard  such  contract  or  other  transaction,  whether  fair  or  unfair, 
advantageous  or  prejudicial:  Port  v.  Bussell,  36  Ind.  60;  10  Am.  Rep,  6; 
Aberdeen  R'y  Co.  v.  Blakie,  1  Macq.  461.  These  expressions,  however,  were 
generally  arguments  adduced  in  justification  of  judgments  about  to  be  en- 
tered, and  while  they  doubtless  adequately  supported  such  judgments,  they 
are  of  doubtful  applicability  in  cases  in  which  the  real  question  is,  whether 
or  not  a  director  was  disqualilied  from  contracting  or  otherwise  dealing  with 
his  corporation.  In  PicJceU  v.  School  Dlsirlct  No.  1,  25  Wis.  551,  3  Am.  Rep. 
105,  the  court  said:  "We  think  there  is  one  fatal  objection  to  the  plaintiff's 
right  to  maintain  this  action,  which  renders  it  unnecessary  to  consider  any  of 
the  other  questions  discussed.  That  is,  that  inasmuch  as  it  appears  that  the 
plaintiff  was  himself  the  director  of  the  district  at  the  time  the  contract  was 
let,  and  took  part  as  such  in  the  proceedings  to  let  it,  it  was  against  publio 
policy  to  allow  him,  while  holding  that  fiduciary  relation  to  the  district,  to 
place  himself  in  an  antagonistic  position,  and  obtain  the  contract  for  himself 
from  the  board  of  which  he  was  a  member.  The  general  principle  upon  which 
this  position  must  rest  is,  that  no  man  can  faithfully  serve  two  masters  whose 
interests  are  in  conflict.  And  as  men  usually  and  naturally  prefer  their  own 
interests  to  those  of  others,  where  one  attempts  to  act  in  a  fiduciary  capa- 
city for  another,  the  law  will  not  allow  him,  while  so  acting,  to  deal  with 
himself  in  his  individual  capacity.  This  princijjle  has  been  most  fre- 
quently illustrated  in  cases  of  sales  by  officers,  agents,  and  trustees,  in  all  of 
which  it  has  been  held  that  they  cannot  become  the  purchasers,  because  thia 
would  allow  their  interests  to  come  in  conflict  with  their  duties  to  their  prin- 
cipals. The  same  doctrine  is  as  applicable  to  the  question  of  taking  a  con- 
tract as  that  of  making  a  sale.  And  the  only  doubt  would  be,  whether  it 
should  be  held  applicable  in  a  case  where  a  board,  consisting  of  several,  are 
authorized  to  act  in  a  fiduciary  capacity,  and  attempt  to  deal  in  that  capa- 
city with  one  of  their  own  members.  I  think  it  is;  and  that  although  the  im- 
propriety of  it  would  not  be  so  glaring  as  in  the  case  of  a  single  agent  dealing 
with  himself,  yet  the  danger  of  undue  and  improper  influences,  and  of  fre- 
quent sacrifices  of  the  interest  of  the  principal  in  a  manner  not  always  open 
to  detection,  would  be  extremely  great." 

The  court  employing  the  language  just  quoted  relied  upon  Cumherland  Coal 
Co.  V.  Sherman,  30  Barb.  553,  and  People  v.  Toionship  Board,  11  Mich.  222, 
both  of  which  were  in  point.  In  fact,  the  case  last  cited  is  an  extreme  one. 
It  is  vaguely  reported.  As  we  understand  it,  certain  persons  who  were 
members  of  a  board  of  freeholders,  and,  as  such,  authorized  to  participate  in 
the  letting  of  a  contract,  themselves  bid  for,  obtained,  and  fully  performed 
such  contract,  and  being  refused  payment  for  the  services  rendered,  applied 
for  a  writ  of  mandate  to  compel  the  allowance  and  payment  of  their  demands. 
Though  the  applicants  for  the  writ  did  not  constitute  a  majority  of  the  board 
of  freeholders,  and  it  did  not  appear  that  their  votes  were  essential  to  pro- 
cure them  the  contract,  the  court  declared  it  void,  and  denied  them  relief. 
This  is,  perhaps,  the  only  American  case  piaintaiuing  that  the  corporation 
may  accept  and  knowingly  retain  the  fruits  of  the  contract,  and  yet  avoid 
payment  on  the  ground  that  the  contract,  being  against  public  policy,  is  void 
to  the  extent  that  no  rights  whatever  can  be  based  upon  it.  In  the  Wiscon- 
sin case,  previously  quoted,  the  court  conceded  that  "perhaps  the  true 
theory  is,  that  in  all  cases  where  the  principle  we  have  discussed  is  applica- 
ble, the  contract  is  rather  voidable  in  equity  at  the  option  of  the  principal 


300  Beach  v.  Miller.  [Illinois, 

than  absolutely  void  at  law.  Undoubtedly,  in  such  cases,  the  principal,  hav- 
ing full  knowledge  of  all  the  facts,  may  affirm  the  contract.  And  if  he 
should  do  so,  it  would  become  binding.  If  it  had  been  fully  executed  by  the 
contracting  party,  and  the  principal  should,  knowing  all  tlie  facts,  elect  to 
accept  and  retain  the  benefit  of  it,  he  might  be  held  to  have  thereby  ratified 
it  according  to  all  its  terms  and  conditions.  And  where  it  had  not  been  so 
executed,  but  had  been  partially  fulfilled,  and  he  elected  to  accept  and  retain 
Buch  partial  benefit,  he  might  become  liable,  upon  a,  quantum  meruit,  upon  the 
Bame  principles  as  in  other  cases."  In  San  Diego  v.  S.  D.  d:  L.  A.  R.  R.  Co.,  44 
CaL  106,  the  plaintiff,  a  municipal  corporation  of  the  state  of  California, 
brought  an  action  to  have  a  deed  declared  void,  and  canceled  as  a  cloud  upon 
its  title.  The  deed  in  question  was  executed  to  the  defendant  by  two  of  the 
plaintiff's  trustees,  and  purported  to  convey  to  the  defendant  certain  lands  be- 
longing to  the  plaintiff,  pursuant  to  an  act  of  the  legislature  under  which  the 
trustees  of  plaintiff  were  authorized  to  select  and  convey  certain  lauds  to  the 
defendant  at  such  prices  as  such  trustees  might  deem  advisable,  and  upon 
such  terms  and  conditions  as  they  might  determine.  At  the  time  when  the 
resolution  was  passed  by  the  plaintiff's  trustees,  directing  a  deed  to  be  given 
the  defendant,  one  of  the  trustees  voted  in  the  negative  and  two  in  the 
affirmative,  and  of  the  two  thus  voting  in  the  affirmative,  one  was  interested 
in  the  defendant  corporation,  being  both  a  stockholder  and  a  director 
therein.  The  deed  made  pursuant  to  the  resolution  was  adjudged  void,  and 
canceled;  but  this  adjudication  might  well  be  rested  solely  upon  the  ground 
that  the  vote  by  which  it  was  carried  included  that  of  the  director  of  the  de- 
fendant corporation,  and  that  without  his  vote  no  resolution  whatever  could 
have  been  passed. 

It  is  unquestionably  true  that  a  director  acting  in  his  quasi  legislative  capa- 
city as  a  member  of  a  board  of  trustees  is  incompetent  to  act  in  matters  in 
which  his  interest  is  adverse  to  the  corporation.  Probably  an  interested 
director  may  be  counted  as  one  of  the  parties  whose  presence  is  necessary  to 
constitute  a  quorum  of  a  board  of  directors,  and  if  a  resolution  could  have 
been  adopted,  had  he  voted  against  it,  the  mere  fact  that  his  presence  was 
necessary  to  constitute  a  quorum  will  not  deprive  the  resolution  of  validity: 
Buell  V.  Buckingham,  16  Iowa,  284;  85  Am.  Dec.  516.  His  vote,  however, 
cannot  properly  be  counted  when  it  is  necessary  to  constitute  a  majority,  if 
the  question  is  one  in  which  he  is  personally  interested,  and  if,  without  his 
vote,  the  resolution  could  not  have  been  carried  by  the  requisite  number  of 
votes.  In  other  words,  it  is  not  adopted  at  all,  and  he  cannot  enforce  any 
claim  or  right  which  is  based  solely  upon  it:  Bennett  v.  St.  Louis  Car  Roofing 
Co.,  19  Mo.  App.  349;  Chamberlain  v.  Pacific  Wool  O.  C.  Co.,  54  Cal.  103. 
Hence  a  resolution  fixing  the  compensation  of  the  president  of  a  corporation 
cannot  be  regarded  as  binding  upon  it  if  his  vote  was  necessary  to  the  adop- 
tion of  such  resolution.  Copeland  v.  Johnson  Mfg.  Co.,  47  Hun,  235.  If  a 
resolution  authorizes  the  renewal  of  two  notes,  one  of  which  is  in  favor  of  a 
director,  and  the  other  in  favor  of  a  third  person,  and  the  vote  of  such  direc- 
tor is  necessary  to  constitute  a  majority  of  the  quorum,  by  which  alone  the 
resolution  can  be  passed,  it  will,  df  so  passed,  be  absolutely  void,  and  it  can 
neither  support  the  note  of  the  director  nor  that  of  the  third  person:  Smith 
V.  Lo»  Angeles  I.  &  L.  C.  Assn,  78  Cal.  289;  12  Am.  St.  Rep.  53. 

Where  a  director  does  not  at  the  same  time  represent  his  own  interest  and 
that  of  a  corporation,  there  is  little  or  no  doubt  that  he  may  contract  with  it, 
and  buy  or  sell  its  property,  or  borrow  its  money  and  give  his  note  therefor, 
or  loan  it  his  money  and  take  in  consideration  thereof  its  notes  and  other 


Oct.  1889.]  Beach  v.  Miller.  301 

securities,  and  enforce  their  payment  in  case  default  should  be  made  therein: 
Ward  V.  Polk,  70  Ind.  309;  Beach  v.  Miller,  23  111.  App.  151;  OarreU  v.  Bur- 
Ungton  Plow  Co.,  70  Iowa,  697;  59  Am.  Rep.  461;  Ten  Eyck  v.  P.  0.  <k  P.  A. 
R'y  Co.,  74  Mich.  226;  16  Am.  St.  Rep.  633.     Contracts  and  other  transac- 
tions between  a  director  and  his  corporation  are  not  void  at  law,  though  they 
are  often  voidable  at  the  instance  of  the  corporation:  Little  Rock  <Se  F.  S.  Co. 
y.  Page,  35  Ark.  304.     In  fact,  a  purchase  by  a  director  of  the  property  of 
his  corporation  cannot  be  regarded  in  a  more  unfavorable  light  than  a  pur- 
chase by  a  trustee  of  the  property  of  his  cestui  que  trust,  in  which  event  the 
latter  may  undoubtedly  have  the  purchase  set  aside  by  repudiating  it  within 
a  reasonable  time  after  it  comes  to  his  knowledge:  Buell  v.  BuckingJiam,  16 
Iowa,  2S4;  85  Am.  Dec.  516;  Ashhurst's  Appeal,  60  Pa.  St.  290.    If  a  cestui  que 
trust  knew  of  and  assented  to  the  purchase  before  it  was  made,  his  right  to 
■ubsequeutly  set  it  aside,  if  its  existence  can  be  afBrmed  at  all,  must  be 
placed  upon  the  ground  that  his  relation  to  his  trustee  is  such  as  to  give  the 
latter  an  undue  ascendency  over  him,  and  to  deprive  him  either  of  freedom 
of  action  or  of  power  to  properly  judge  of  his  own  business  affairs.    Though 
the  relations  of  a  director  and  his  fellow-directors  are  such  as  often  to  give 
him  and  them  opportunity  and  inducement  for  collusive  action  to  the  detri- 
ment of  the  corporation,  it  cannot  be  said  that  a  contracting  director's  rela- 
tion to  his  fellow-directors  is  such  as  necessarily  or  ordinarily  to  give  him  an 
undue  ascendency  over  them,  or  to  deprive  them  of  the  power  to  correctly 
understand  and  judiciously  manage  the  affairs  of  the  corporation.     There- 
fore, if  it  is  clear  that  a  contract  or  other  business  transaction  entered 
into   between   a   director   and   the   corporation  was  not   tainted   by   collu- 
sion between  him  and  his  fellow-directors,  and  that  they  represented  the 
corporation  according   to   their   best   judgment,   and  that   the   contract  or 
other  transaction  was  open  and  fair,  and  without  any  concealment  on  the 
part  of  the  contracting  director,  and  without  taking  advantage  of  any  in- 
formation which  he  may  have  had  to  the  exclusion  of  his  fellow-directors, 
then  his  contract  or  other  transaction  should  not  be  treated  as  voidable  until 
avoided,  but  as  unavoidable  and  therefore  as  enforceable,  both  at  law  and  at 
equity,  whether  the  corporation  acquiesces  in  or  resists  such  enforcement: 
Watt's  Appeal,  78  Pa.  St.  370;  Deane  v.  Hodge,  35  Minn.  146;  59  Am.  Rep. 
321;  Beachv.  Miller,  130  111.  162;  ante,  p.  291;  Twin  Lick  Oil  Co.  v.  Marbury, 
91  U.  S.  587;  GarreU  v.  Burlington  Plow  Co.,  70  Iowa,  697;  59  Am.  Rep.  461. 
It  is  of  the  utmost  importance  that  a  corporation  and  its  officers  should 
know  whether  or  not  a  director  who  is  participating  in  its  management  has 
an  interest  adverse  to  that  of  the  corporation,  or  is  deriving  secret  profits 
out  of  transactions  in  which  he  is  believed  to  have  no  interest,  other  than 
as  a  member  or  officer  of  the  corporation.     If  a  director  is  about  to  contract 
with  a  corporation,  or  to  cause  it  to  enter  upon  a  business  transaction,  in  or 
from  which  he  may  derive  a  profit  or  personal  interest,  he  must  let  his  fellow- 
officers  know  his  true  situation.     Otherwise  the  corporation,  upon  becoming 
aware  of  his  interest,  may  elect  either  to  rescind  the  transaction,  or  to  charge 
him  as  its  trustee  and  compel  him  to  account  to  it  for  any  profits  which  he 
may  have  realized;  and  no  device  to  which  he  may  have  resorted  to  conceal 
his  true  interest  will  be  sufficient  to  protect  him  in  equity  from  the  operation 
of  this  rule. 

One  of  the  most  familiar  devices  fraudulent  in  law  resorted  to  by  direc- 
tors for  the  purpose  of  furthering  their  own  interests  bo  the  detriment  of  the 
corporation  is  that  of  forming  another  corporation  for  the  purpose  of  enber- 
iag  into  advantageous  contracts  or  transactions  with  the  principal  corpora- 


302  Beach  v.  Miller.  [Illinois 

tion.     Thug,  during  the  construction  of  the  Union  Pacific  railway,  the  ex- 
ecutive committee   of   the  board  of   trustees  entered  into  a  contract  with 
Godfrey  and  Wardell  that  the  latter  might  prospect  for  coal  along  the  whole 
line  of  the  Union  Pacific  railway  and  its  branches  and  extensions,  and  open 
and  operate  any  mines  discovered,  and   that   the   railroad   company  would 
purchase  of  them  all  marketable  coal  needful  for  engines,  depots,  shops,  and 
other  purposes,  and  pay  therefor   certain  prices    specified   in  the  contract. 
Afterwards,  a  corporation  was  formed,  called  the  Wyoming  Coal  and  Mining 
Company,  to  develop  and  work  coal  mines,  and  a  majority  of  the  stock  therein 
was  taken  by  six  of  the  directors  of   the  railway  company,  and  to  this  last 
formed  corporation   the   contract  with   Godfrey  and  Wardell  was  by  them 
assigned.     Wardell  was  an  officer  and  manager  of   the  coal  company,  and 
the  railroad  company  having  by  order  of  its  directors  taken  forcible  posses- 
sion of  the   mines  and  other  property  of   the  coal  company,  he  brought  an 
action  in  his  own  name  to  have  an  account  taken  of  coal   delivered  to  the 
railroad  company,  and  for  the   ascertainment  and   settlement  of  the  rights 
and   interests  of  the   several  parties  to   the  action.     To  this  suit  the  rail- 
road company  answered  that  the  original   contract  with  Godfrey  and  War- 
dell was  a  fraud  upon  the  company;  that  it  was  made  on  its  part   by  the 
executive  committee    of    its    board   of    directors,    and  that   a   majority  of 
this    committee  had,   before  entering  into  the  contract,    made    an    agree- 
ment by  which  they  were  to  be   interested  with   the  contractors,  and   on 
that  account  the  terms  of    the    contract  were  made  so  favorable    to    the 
contractors  and  were  so  unfavorable  to  the  company  as  to  enable  the  former 
to  make  large  gains  at  the  expense  of  the  latter,  and  that  the  organization 
of  the  coal  company  was  a  mere  device  to  enable  these  directors  to  partici- 
pate in  the  profits,  and  that  therefore  the  contract  was  of  no  validity  and 
binding   obligation   on   the   railroad   company.     The  trial  court   found   the 
answer  of  the  railroad  company  to  be  true,  and  determined  that  the  contract 
was  a  fraud  upon  the  company,  and  that  the  complainant  was  not  entitled 
to  any  redress  based   upon   the   contract.     In   affirming  this   decision,  the 
supreme  court  of  the  United  States   said:  "  It  is  among  the  rudiments  of 
the  law  that  the  same  person  cannot  act  for  himself  and  at  the  same  time, 
with  respect  to  the  same  matter,  as  the  agent  of  another,  whose  interests  are 
conflicting.     Thus  a  person  cannot  be  a  purchaser   of  property  and  at  the 
same  time   the   agent  of   the  vendor.     The  two   positions  impose  difl'erent 
obligations,  and  their  union  would  at  once  raise  a  conflict  between  interest 
and  duty;  and,   'constituted  as  humanity  is,  in  the  majority  of   cases,  duty 
would  be   overborne    in  the  struggle':  Marsh   v.   Whitmore,  21  Wall.    183. 
The  law,  therefore,  will  always  condemn  the  transactions  of  a  party  on  his 
own  behalf  when,  in  respect  to  the  matter  concerned,  he   is   the   agent   of 
others,  and  will  relieve  against  them  whenever  their  enforcement  is  season- 
ably resisted.     Directors  of  corporations    and  all  persons  who    stand  in  a 
fiduciary  relation  to  other  parties,    and  are  clothed  with  power  to  act  for 
them,  are  subject  to  this  rule;  they  are   not   permitted  to  occupy  a  position 
which  will  conflict  with  the  interest  of  parties  they  represent  and  are  bound 
to  protect.     They  cannot,  as   agents  or  trustees,  enter  into  nor  authorize 
contracts  on  behalf  of  those  for  whom  they  are  appointed  to  act,  and  then 
personally  participate  in  the  benefits.     Hence  all  arrangements  by  directors 
of  a  railway  company   to  secure  an   undue  advantage  to  themselves  at  its 
expense,  by  the  formation  of  a  new  company  as   an  auxiliary  to  the  original 
one,  with  an  understanding  that  they  or  some  of  them  will  take  stock  in  it, 
and  then  that  valuable  contracts  shall  be  given  to  it,  in  the  profits  which 


Oct.  1889.]  Beach  v.  Miller.  303 

they,  as  stockholders  in  the  new  company,  are  to  share,  are  bo  many  unlaw- 
ful devices  to  enrich  themselves  to  the  detriment  of  the  stockholders  and 
creditors  of  the  original  company,  and  will  be  condemned  whenever  properly 
brought  before  the  courts  for  consideration:  R.  R.  Co.  v.  Magnay,  25  Beav.  5S6; 
Beiison  v.  Heathorn,  1  Younge  &  C.  Ch.  326;  Flint  R.  R.  Co.  v.  Deioey,  U  Mich. 
477;  European  etc.  R.  R.  Co.  v.  Poor,  59  Me.  277;  and  Drury  v.  Cross,  7  Wall. 
299.  The  scheme  discloses  here  no  feature  which  relieves  it  of  its  fraudulent 
character,  and  tlie  contract  of  July  16,  18G8,  whicli  was  an  essential  part 
of  it,  must  go  down  with  it.  It  was  a  fraudulent  proceeding  on  the  part  of 
the  directors  and  contractors  who  devised  and  carried  it  into  execution,  not 
only  against  the  company,  but  also  against  the  government,  which  had 
largely  contributed  to  its  aid  by  the  loan  of  bonds  and  by  the  grant  of  lands. 
By  the  very  terms  of  the  charter  of  the  company,  five  per  cent  of  its  net 
earnings  were  to  be  paid  to  the  government.  These  earnings  were  neces- 
sarily reduced  by  every  transaction  wliich  took  from  the  company  its  legiti- 
mate profits.  It  is  true  that  some  of  the  directors  who  approved  of  or  did 
not  dissent  from  the  contract  early  stated  that  they  held  their  stock  in  the 
coal  company  for  the  benefit  of  the  railroad  company,  and  transferred  it, 
or  were  ready  to  transfer  it,  to  the  latter;  but  the  majority  expressed  such  a 
purpose  only  when  the  character  and  terms  of  the  contract  became  known, 
and  they  were  desirous  to  screen  themselves  from  censure  for  their  conduct": 
Warded  V.  Union  Pacijic  Railway  Co.,  103  U.  S.  651.  A  somewhat  similar  case 
was  that  of  Thomas  v.  Broionville  etc.  R'y  Co.,  109  U.  S.  522,  in  which  it  ap- 
peared that  the  directors  of  the  railroad  company  contracted  with  a  con- 
struction company  in  which  some  of  them  were  interested,  and  upon  sub- 
stantial consideration  to  other  directors,  and  it  was  determined  tliat  this 
contract  was  fraudulent  and  void;  that  the  construction  company  could 
maintain  no  suit  upon  it;  and  that  the  bonds  given  in  pursuance  of  it  could 
not  be  enforced  unless  they  were  negotiable  instruments  in  the  hands  of 
innocent  purchasers  for  value;  but  that,  on  a  suit  to  foreclose  a  mortgage 
given  in  pursuance  of  the  contract  for  the  construction  of  the  railroad,  re- 
lief might  be  had  upon  a  quantum  meruit  for  the  work  actually  done  and 
accepted  without  regard  to  the  prices  fixed  by  the  contract,  and  tliat  the 
mortgage  should  stand  as  security  for  the  reasonable  value  of  what  tlie  rail- 
way company  actually  received  in  tlie  way  of  construction. 

If  a  director  has  any  interest  in  a  transaction  of  wliich  the  corporation  is 
not  informed,  and  he  realizes  profits  tlierefrom,  the  corpoi«,tion  may,  by 
proper  suit,  compel  him  to  account  for  and  to  pay  over  to  it  such  profits: 
European  and  North  American  R.  R.  Co.  v.  Poor,  59  Me.  277;  Great  Luxemburg 
R.  R.  Co.  v.  Maijenay,  25  Beav.  586;  Benson  v.  Heatheron,  1  Younge  &  C. 
324.  This  rule  is  well  sustained  and  illustrated  by  Farmers'  and  Merchants' 
Bank  v.  Doiuney,  53  Cal.  466;  31  Am.  Hep.  62.  In  that  case,  it  appeared 
that  a  director  in  a  banking  corporation  loaned  its  moneys,  taking  proper 
notes  for  the  repayment  thereof,  and  exacting  as  a  condition  precedent  to 
the  granting  of  the  loan  an  agreement  that  he  should  have  a  share  in  the 
profits  of  the  purchase  of  lands,  which  the  borrower  expected  to  afifect  with 
the  aid  of  the  money  so  borrowed.  Tlie  corporation,  subsequently  becoming 
advised  of  this  agreement,  demanded  that  its  director  assign  the  same  to  it, 
and  this  demand  being  refused,  brought  a  suit  to  charge  the  director  as  its 
trustee.  In  sustaining  the  relief  demanded,  the  court  said:  "Upon  well- 
settled  principles  governing  courts  of  equity,  the  defendant  cannot  be  per- 
mitted to  retain  these  profits  for  himself.  They  constituted  part  of  the 
consideration  which  the  borrower  paid,  or  agreed  to  pay,  in  obtaining  the 


304  Beach  v.  Miller.  [Illinois 

loan,  and  are  as  clearly  the  property  of  the  corporation  as  is  the  interest 
accrued  and  stipulated  to  be  paid  on  the  face  of  the  note  itself.  In  making 
the  loan,  the  defendant  was  acting  as  director  of  the  corporation,  plaintiff 
here.  He  was  its  trustee.  All  officers  and  directors  of  a  corporate  body  are 
trustees  of  the  stockholders,  and  cannot,  without  being  guilty  of  fraud,  se- 
cure to  themselves  advantages  not  common  to  the  latter." 

A  trustee's  authority  to  represent  a  corporation  must  be  interpreted  as 
extending  only  to  cases  in  which  he  has  no  personal  interest;  and  if  he 
undertakes  to  exercise  it  in  a  case  in  which  he  has  an  interest,  the  trans- 
action may  be  treated  as  unauthorized.  Thus  if  a  president  of  a  bank 
which  holds  the  note  of  a  director  purchases  of  the  latter  his  stock  in  the 
bank,  and  directs  the  cashier  to  hold  the  stock  in  place  of  the  note,  and  to 
surrender  the  note,  this  act,  being  in  the  personal  interest  of  the  president, 
is  not  within  the  limits  of  his  authority.  The  surrender  of  the  note  by  the 
cashier  is  therefore  invalid,  and  its  payment  may  still  be  enforced:  Rhodes 
V.  Webb,  24  Minn.  292.  If  a  trustee  or  other  officer  of  a  corporation,  acting 
in  its  behalf,  enters  into  a  contract  for  building  and  equipping  a  road,  and 
afterwards  a  portion  of  the  contract  is  assigned  to  him,  he  will  not  be  per- 
mitted, as  agaiust  the  corporation,  to  retain  any  portion  of  the  profits  or 
proceeds  of  such  contract:  Flint  <fe  P.  M.  R'y  Co.  v.  Dewey,  14  Mich.  477.  If 
a  note  is  made  by  the  directors  of  one  corporation,  as  individuals,  and  trans- 
ferred to  another  corporation,  and  one  of  the  makers  of  the  note  is  also  the 
payee  and  indorser  thereof,  and  is  president  of  both  corporations,  he  cannot, 
as  an  officer  of  the  corporation  to  which  the  note  is  thus  transferred,  consent 
to  any  arrangement  releasing  or  impairing  the  individual  liability  of  himself 
or  of  his  co-directors:  Gallery  v.  National  Exchange  Bank,  41  Mich.  169:  32 
Am.  Rep.  149.  If  a  director  is,  by  a  resolution  of  the  board,  authorized  to 
borrow  money,  and  to  execute  therefor  a  mortgage  of  the  corporation,  the 
money  so  borrowed  to  be  applied  to  the  payment  of  the  corporate  debts,  and 
he  purchases  such  debts,  assigns  them  to  a  firm  of  which  he  is  a  member, 
and  then  executes  a  mortgage  to  such  firm  in  the  name  of  the  corporation, 
the  execution  of  such  mortgage  will  be  treated  as  unauthorized:  Davis  v. 
Rock  Creek  F.  L.  M.  Co.,  55  Cal.  359;  36  Am.  Rep.  40.  In  this  case,  the 
court,  in  addition  to  holding  that  the  execution  of  the  mortgage  was  unau- 
thorized, expressed  the  opinion  that  the  mortgage  was  also  incapable  of 
enforcement,  upon  the  further  ground  that  the  director,  in  executing  it,  and 
in  the  transactions  preceding  its  execution,  was  representing  conflicting 
interests.  The  language  of  the  court  upon  this  subject  was  as  follows: 
"But,  apart  from  this  consideration,  the  transaction  in  question  cannot  be 
upheld.  The  law,  for  wise  reasons,  will  not  permit  one  who  acts  in  a  fidu- 
ciary capacity  thus  to  deal  with  himself  in  his  individual  capacity.  The 
position  of  A.  Wolf  as  a  member  of  the  firm  of  A.  Wolf  &  Co.,  and  hia 
position  as  trustee  and  president  of  the  corporation  defendant,  were  incon- 
sistent and  conflicting.  In  purchasing  the  debts  of  the  corporation  in  hia 
individual  capacity,  it  was  to  his  interest  to  buy  them  at  as  great  discount 
as  possible.  The  greater  the  discount,  the  greater  the  gain.  If  he  succeeded 
in  purchasing  the  debts  at  any  discount,  to  that  extent  he  secured  to  him- 
self an  advantage  not  common  to  all  the  stockholders.  To  permit  this  to  be 
done  would  be  to  permit  the  violation  of  one  of  the  plainest  principles  of 
equity  applicable  to  trustees.  In  this  particular  case,  it  does  not  appear 
that  Wolf  secured  the  demands  against  the  corporation  at  any  discount; 
neither  does  it  appear  that  he  did  not.  Nor  does  the  policy  of  the  law  per- 
mit any  inquiry  into  that  question.     Occupying,  as  he  did,  the  position  of 


Oct.  1889.]  Beach  v.  Miller.  305 

trustee,  he  should  not  have  put  himself  in  a  position  adverse  to  his  cestuis 
que  trust.  One  cannot  faithfully  serve  two  masters  whose  interests  are 
diverse."  Other  cases  illustrating  the  rule  that  directors,  because  of  their 
fiduciary  relations  to  the  corporation,  are  inhibited  from  speculating  with  its 
funds  for  their  own  benefit,  or  from  making  secret  profits  on  transactions 
entered  into  by  tbem  on  its  behalf,  are  cited  in  the  note  to  Hodyes  v.  New 
England  Screw  Co.,  53  Am.  Dec.  642,  to  which  the  reader  is  referred. 

In  all  cases  where  a  director  acts  secretly,  as  where  he  takes  a  contract  or 
obligation  of  the  corporation  for  his  own  benefit,  in  the  name  of  a  third  per- 
son, there  is  little  doubt  that  a  court  of  equity  will  either  vacate  it  or  com- 
pel him  to  account  to  the  corporation  for  all  profits  and  advantages  derived 
from  or  under  it.  Thus  where  a  director  of  a  corporation  procured  its  notes 
and  mortgage  to  be  made  to  his  partner,  who,  however,  never  had  anj  real 
or  beneficial  interest  therein,  and  never  advanced  any  part  of  the  considera- 
tion, and  the  director  advanced  a  certain  sum  of  money  in  the  name  of  his 
partner,  and  procured  therefor  the  notes  and  mortgage  already  mentioned, 
and  the  rate  of  interest  stipulated  in  the  notes  was  excessive,  and  the  amount 
thereof  greater  than  the  sum  actually  borrowed,  the  excess  being  intended  to 
secure  the  lender  against  taxes  on  the  mortgage,  it  was  determined  that  the 
corporation  was  entitled  to  have  the  notes  and  mortgages  canceled,  upon  pay- 
ment of  the  actual  amount  advanced,  with  reasonable  interest  thereon  ac- 
cording to  the  current  market  rates  at  the  time  when  the  loan  was  made,  and 
without  paying  any  of  the  additional  sum  stipulated  to  be  paid  over  and  above 
the  amount  actually  loaned:  Sutter  Street  R.  R.  Co.  v.  Baum,  66  Cal.  44. 

The  cases  assert  in  general  terms  the  right  of  a  corporation  to  elect  to  re- 
scind or  set  aside  all  contracts  between  the  corporation  and  one  of  its  direc- 
tors upon  prompt  and  reasonable  application.  Thus  Hoffman  Steam  Coal 
Co.  V.  Cumberland  C.  <Se  I.  Co.,  16  Md.  456,  77  Am.  Dec.  311,  was  a  suit  in 
equity  seeking,  among  other  things,  to  have  declared  void  certain  deeds  by 
the  plaintiff  corporation  to  one  of  its  directors  and  a  third  person.  The 
plaintiff  contended  that  the  conduct  of  the  director  had  been  fraudulent;  in 
fact,  that  he  had  brought  about  the  sale  of  the  lands  in  question  through  his 
influence  as  a  director,  and  with  a  view  to  profit  thereby  to  the  detriment  of 
the  corporation.  The  court,  however,  was  of  the  opinion  that  the  evidence 
did  not  require  it  to  brand  the  motives  of  the  director  and  his  fellow-grantee 
as  willfully  dishonest.  It  did  not  rest  its  judgment  upon  the  ground  that 
the  director  had  taken  advantage  of  his  po.sition  or  of  superior  information 
possessed  by  him,  but  maintained  the  broad  proposition  that  a  transaction 
between  a  corporation  and  one  of  its  directors,  like  one  between  a  cetitui  que 
trust  and  his  trustee,  is  voidable  at  the  instance  of  the  former,  and  that  no 
inquiry  would  be  matle  to  ascertain  whether  it  was  for  his  benefit  as  long  as 
he  was  unwilling  to  remain  bound  by  it.  The  court  of  errors  and  appeals  of 
the  state  of  New  Jersey,  in  Stnourt  v.  Lelihjli,  Valley  R.  R.  Co.,  38  N.  J.  L. 
522,  expressed  its  views  upon  this  topic  as  follows:  "The  position  thus  as- 
sumed by  the  plaintiff  rests  upon  the  broad  principle  that  it  was  the  duty  of 
the  director  to  so  deal  with  the  property  and  franchises  of  the  corporation  — 
to  so  manage  its  affairs  —  as  would  most  conduce  to  the  corporate  interest,  and 
that  he  would  not  perform  that  duty  while  contracting  with  it  in  his  own  be- 
half, or  if,  by  possibility,  his  own  interest  was  consistent  with  the  best  interest 
of  the  company  in  so  contracting,  yet,  so  insidious  are  the  promptings  of 
selfishness,  and  so  great  is  the  danger  that  it  will  override  duty  when  brought 
in  conflict  with  it,  that  sound  pi)licy  requires  that  such  contract  should  not 
be  enforced  or  regarded.  After  an  examination  of  all  the  cases  cited,  and 
Am.  St.  Kep..  Vol.  XVII.  — 20 


306  Beach  v.  Miller.  [Illinois, 

such  others  as  I  have  found,  and  a  careful  consideration  of  the  principle  and 
the  results  of  regarding  and  of  disregarding  it,  I  have  come  to  the  conviction 
that  the  true  legal  rule  is,  that  such  a  contract  is  not  void,  but  voidable,  to  be 
avoided  at  the  option  of  the  cestui  que  trust,  exercised  within  a  reasonable 
time.  I  can  see  no  further  safe  modification  or  relaxation  of  the  principle 
than  this.  A  director  of  a  corporation  may  have  rights  not  arising  out  of  ex- 
press contract,  such  as  the  right  to  pass  over  its  railroad,  or  transport  his 
goods  over  its  canal,  on  paying  reasonable  tolls,  or  to  have  money  which  he 
has  loaned  it  repaid  to  him;  but  where  the  right  is  one  which  must  stand,  if 
at  all,  upon  an  express  contract,  and  which  does  not  arise  by  operation  or 
implication  of  law,  then  he  shall  not  hold  it  against  the  will  of  his  cestui  que 
trust;  for  in  the  very  bargain  which  gave  rise  to  it,  in  which  he  should  have 
kept  in  view  the  interest  of  that  cestui  que  trust,  there  intervened  before  his 
eyes  the  opposing  interest  of  himself.  The  vice  which  inheres  in  the  judg- 
ment of  a  judge  in  his  own  cause  contaminates  the  contract;  the  mind  of 
the  director  or  trustee  is  the  forum  in  which  he  and  his  cestui  que  trust  are 
urging  their  rival  claims,  and  when  his  opposing  litigant  appeals  from  the 
judgment  there  pronounced,  the  judgment  must  fall.  It  matters  not  that  the 
contract  seems  a  fair  one.  Fraud  is  too  cunning  and  evasive  for  courts  to 
establish  a  rule  that  invites  its  presence.  There  may  be  isolated  cases  in 
which  the  trustee  is  willing  to  make  a  contract  on  more  favorable  terms  for 
the  cestui  que  trust  than  any  one  else,  but  the  opportunities  for  self-advance- 
ment at  the  expense  of  those  whose  concerns  he  has  in  charge,  and  under 
circumstances  where  concealment  is  easy,  are  so  much  more  numerous  than 
those  isolated  cases,  that  in  declaring  a  rule  the  latter  are  not  worthy 
of  consideration.  Nor  is  it  proper  for  one  of  the  board  of  directors  to  sup- 
port his  contract  with  his  company  upon  the  ground  that  he  abstained  from 
participating  as  director  in  the  negotiations  for  and  final  adoption  of  the  bar- 
gain with  his  CO- directors.  The  very  words  in  which  he  asserts  his  right 
declare  his  wrong;  he  ought  to  have  participated,  and  in  the  interest  of  the 
stockholdei-s,  and  if  he  did  not,  and  they  have  thereby  suffered  loss,  of  which 
they  shall  be  the  judges,  he  must  restore  the  rights  he  has  obtained;  he 
must  hold  against  them  no  advantages  that  he  has  got  through  neglect  of 
his  duty  towards  them.  Many  authorities  exemplifying  the  rule  may  be 
found."  Of  the  propriety  of  these  views  as  applied  to  cases  in  which  a  pur- 
chasing or  contracting  director  has  undertaken  to  represent  both  himself  and 
the  corporation,  there  can  be  no  doubt:  Gardner  v.  Butler,  30  N.  J.  Eq. 
702;  N.  Y.  Central  I.  Co.  v.  National  Prot.  Ins.  Co.,  14  N.  Y.  85.  So  if  con- 
tracts are  entered  into  between  two  corporations,  a  majority  of  the  boards  of 
directors  of  each,  consisting  of  the  same  persons,  the  interests  which  they 
assume  to  represent  being  adverse,  such  contracts  may  be  set  aside  at  the  in- 
stance of  any  person  having  an  interest  which  may  have  been  sacrificed;  and 
the  contracts  cannot  be  sustained  by  proving  that  the  directors,  though  they 
represented  conflicting  interests,  acted  in  good  faith:  Pearson  v.  Concord 
R.  R.  Co.,  62  N.  H.  537;  13  Am.  St.  Rep.  590;  Goodinv.  Cinn.  &  W.  C.  Co.,  18 
Ohio  St.  1G9;  98  Am.  Dec.  95;  Mem-phis  ,&  C.  R.  R.  v.  Woods,  88  Ala.  630;  16 
Am.  St.  Rep.  81. 

From  the  general  rule,  hereinbefore  asserted,  that  a  purchase  made  by  a  di- 
rector from  his  corporation,  or  a  contract  entered  into  between  him  and  it, 
is  not  void,  but  voidable  only  at  the  instance  of  the  corporation,  it  foUowa 
that  a  third  person  cannot  treat  it  as  void,  and  proceed  as  though  it  had  not 
been  made,  or  if  made,  had  already  been  avoided  by  the  corporation:  Jonet 
V.  Arkansas  A.  d:  M.  Co.,  38  Ark.  17. 


Oct.  1889. J  Beach  v.  Milleb.  307 

A  director  of  a  corporation,  as  is  already  shown,  may  contract  witb  it  in 
cases  where  he  does  not  represent  both  parties,  may  purchase  its  notes  and 
drafts  or  loan  it  moneys,  and,  to  some  extent  at  least,  deal  with  it  in  the  same 
manner  as  a  stranger:  Merrick  v.  Peru  Coal  Co.,  61  111.  472;  Harts  v.  Broron, 
77  111.  226;  Garrett  v.  Burlington  P.  Co.,  70  Iowa,  697;  59  Am.  Rep.  461. 
It  necessarily  follows  from  this  that  he  may  accept  or  enforce  payment  of 
his  debt  under  ordinary  circumstances.  Payments  made  in  the  usual  course 
of  business,  and  not  in  view  of  the  probable  insolvency  of  the  corporation, 
and  while  it  expects  in  good  faith  to  proceed  with  its  business,  are  not  frauds 
upon  the  other  creditors,  and  cannot  be  recovered  by  them  of  the  directors 
to  whom  such  payments  were  made:  Hoit  v.  Bennett,  146  Mass.  437. 

If  a  corporation  does  not  voluntarily  pay  a  debt  due  to  it  from  one  of  its 
directors,  he  may  undoubtedly  coerce  payment  by  any  appropriate  action.  At 
a  sale  under  the  judgment  which  may  be  entered  in  such  action,  he  may  be- 
come a  purchaser  of  the  corporate  property,  and  may  retain  the  benefit  of  such 
purchase,  unless  it  is  for  so  inadequate  a  price  as  to  excite  suspicion  that  the 
director  therein  acted  unfairly  in  the  sale,  or  in  not  having  the  corporation 
efifect  a  redemption:  Hallam  v.  Indianola  Hotel  Co.,  56  Iowa,  178.  A  director 
may  also  become  a  purchaser  of  the  property  of  the  corporation  at  a  sale  made 
nnder  a  mortgage  executed  by  it:  Salt  Marsh  v.  Spaulding,  147  Mass.  224. 
He  may  also  become  a  purchaser  of  the  property  at  an  execution  or  judicial 
sale,  though  in  either  event  it  is  probable  that  the  corporation  may  elect  to 
compel  him  to  hold  the  property  for  its  benefit,  or  to  disaffirm  the  sale  and 
have  the  property  resold:  Hoyle  v.  Platt.shurg  M.  R.  R.  Co.,  54  N.  Y.  314; 
13  Am.  Rep.  595;  McAllen  v.  Woodcock,  60  Mo.  174;  Raleigh  v.  Fitzpatrick, 
43  N.  J.  Eq.  501. 

The  right  of  a  director  to  exact  payment  of  a  debt  due  him  from  the  cor- 
poration must  not  be  so  exercised  as  to  give  him  a  preference  over  its  other 
creditors,  and  if  so  exercised,  the  preference  will  be  set  aside:  Hopkins's  Ap- 
peal, 90  Pa.  St.  69;  Smith  v.  Putnam,  61  N.  H.  632;  Adam.t  v.  Kehlor  Mining 
Co.,  35  Fed.  Rep.  433.  Directors  of  an  insolvent  corporation  are  trustees  of 
its  funds  and  property,  for  its  creditors  as  well  as  for  the  corporation  and  its 
stockholders,  and  are  bound  to  apply  such  funds  pro  rata  to  the  payment  of 
the  corporate  debts,  and  not  use  them  to  pay  their  own  debts  or  to  exonerate 
themselves  to  the  injury  of  their  creditors:  Richards  v.  .New  Hampshire  Ins, 
Co.,  43  N.  H.  263.  If  a  corporation  is  insolvent,  and  its  directors,  or  some  of 
them,  are  among  its  creditors,  every  device  resorted  to  for  the  purpose  of  giv- 
ing them  a  preference  over  its  other  creditors  is  fraudulent  and  void  as  against 
them.  Hence  a  mortgage  given  for  such  a  purpose  cannot  be  enforced:  Hay- 
wood V.  Lincoln  Lundjer  Co.,  64  Wis.  639;  59  Am.  Rep.  466.  A  conveyance 
made  to  such  directors  in  payment  of  their  debts  will  be  vacated  at  the  in- 
stance of  the  other  creditors  injuriously  affected  thereby:  Beach  v.  Miller, 
130  111.  162;  ante,  p.  291;  Sweeney  v.  Q rape  Sugar  Co.,  30  W.  Va.  443;  8  Am. 
St.  Rep.  88. 

In  Illinois,  it  has  been  decided  that  when  a  corporation  was  insolvent,  and 
without  means  to  discharge  its  debts  or  to  redeem  its  property,  which  had 
been  sold  at  judicial  sale,  and  the  directors  gave  all  the  stockholders  an  op- 
portunity to  make  advances  to  relieve  the  company,  which  they  refused  to 
do,  then  that  the  directors  who  afterwards  purchased  the  indebtedness  due 
from  the  corporation,  and  acquired  title  to  the  corporate  property  by  enfor- 
cing its  sale  under  a  deed  of  trust  given  to  secure  such  indebtedness,  were  en- 
Itled  to  hold  such  property  for  their  own  benefit,  and  that  the  other  stock- 

olders,  who  refused  to  make  such  advances  had  no  just  cause  of  complaint: 


308  Beach  v.  Miller.  [Illinois, 

Harts  V.  Brown,  77  111.  226.  The  courts  of  Iowa  have  proceeded  one  step 
further,  and  have  placed  directors  who  take  and  enforce  the  securities  of  an 
insolvent  corporation  on  substantially  the  same  basis  as  though  they  were 
strangers  to  the  corporation,  and  have  refused  to  permit  such  securities  to  be 
assailed  except  upon  the  ground  that  the  directors  were  guilty  of  bad  faith  or 
dishonest  practices,  and  this  although  the  debts  for  which  the  security  was 
given  were  in  excess  of  the  indebtedness  prescribed  by  the  articles  of  incorpo- 
ration: Garrett  v.  BurUmjton  Plow  Co.,  70  Iowa,  697;  59  Am.  Rep.  461.  The 
court  in  this  case  said  that  it  could  not  assent  to  the  proposition  "that  a 
director  of  an  insolvent  corporation  cannot  take  from  it  security  by  mort- 
gage or  other  conveyance  creating  a  lien  upon  its  property,  even  though  given 
in  good  faith  and  without  fraud  in  the  transaction.  A  creditor  may  accept 
payment  or  security  from  an  insolvent  debtor  free  from  any  claim  of  other 
creditors.  A  corporation  may  make  payment  of  its  debts,  or  give  its  prop- 
erty in  security  therefor,  just  as  a  natural  person  may  do.  If,  therefore,  a 
director  holds  the  indebtedness  of  an  insolvent  corporation,  he  may  take  pay- 
ment or  security  in  good  faith  and  honest  transaction.  No  reason  can  be 
given  why  a  director  who  holds  a  valid  debt  against  his  corporation  may  not, 
though  it  be  insolvent,  in  a  fair  and  honest  way  take  its  property  in  security. 
If  the  property,  money,  or  other  consideration  of  the  debt  was  fairly  used 
for  the  benefit  of  the  corporation,  was  added  to  its  assets,  or  used  in  its  busi- 
ness, it  would  be  unreasonable  to  hold  that  the  director  is  deprived  of  rights 
and  remedies  held  by  other  creditors." 

A  contract  which  is  originally  voidable  because  entered  into  between  two 
corporations,  represented  by  the  same  persons  as  trustees  of  both,  or  because 
entered  into  between  a  corporation  and  one  of  its  directors,  may  subsequently 
be  ratified,  and  becomes  enforceable,  and  such  ratification  may  be  presumed 
from  the  long-continued  acquiescence  of  the  corporation:  U.  S.  RolUmj  Stock 
Co.  V.  Atlanta  etc.  E.  R.  Co.,  34  Ohio  St.  450.  "The  law  governing  ques- 
tions of  ratification  in  cases  like  the  present  is  well  settled.  To  render  the 
act  of  ratification  effective  and  conclusive,  certain  considerations  are  neces- 
sary. At  the  time  of  the  supposed  ratification,  the  principal  must  have  been 
fully  aware  of  every  material  circumstance  of  the  transaction,  the  real  value 
of  the  subject  of  the  contract,  aud  his  act  of  ratification  must  have  been  an 
independent  and  substantive  act,  founded  on  complete  information,  and  of 
perfect  freedom  of  volition.  And,  in  addition  to  all  this,  the  cestui  que  trust 
must  not  only  have  been  acquainted  with  the  facts,  but  apprised  of  the  law, 
how  those  facts  would  be  dealt  with  if  brought  before  a  court  of  equity  ":  Hoff- 
man SteamCoal  Co.  v.  Cumberland  C.  <Sc  I.  Co.,  16 Md.  456;  77  Am.  Dec.  311. 


884  People's  Bank  v.  Franklin  Bank.  [Tenn. 

an  opinion:  Pender  v.  Lancaster,  14  S.  C.  25;  37  Am.  Rep. 
720. 

The  view  we  have  reached  is  in  accord  with  the  cases  of 
North  V.  Shearn,  15  Tex.  174;  Trotter  v.  Dobbs,  38  Miss.  198. 
We  have  been  unable  to  find  any  holding  to  the  contrary,  and 
the  learned  counsel  for  appellants  have  cited  us  to  none. 

The  decree  must  be  affirmed. 


Homestead  —  Marriage.  —  The  marriage  of  an  execution  debtor  after 
levy  upon  personal  property,  but  before  sale,  does  not  entitle  him  to  a  home- 
Btead  exemption:  Fender  v.  Lancaster,  14  S.  C.  25;  37  Am.  Rep.  720. 


People's  Bank  v.  Feanklin  Bank. 

[88  Tennessee,  299.] 

Forged  Check,  Liability  of  Bank  for  Negligently  Cashing. — A  bank 
which  negligently  cashes  a  forged  check  purporting  to  be  drawn  upon 
another  bank,  and  upon  its  indorsement  of  tlie  check  receives  payment 
from  the  drawee  bank,  is  liable  to  the  latter  bank  for  the  amount  re- 
ceived, upon  subsequent  discovery  that  the  check  was  forged. 

Negligence  in  Bank  Cashing  Forged  Check,  What  is  Evidence  of.  — 
Where  a  bank  that  cashes  a  forged  check  is  unable  to  give  the  name  of 
the  person  who  presented  such  check,  or  of  the  person  to  whom  it  was 
paid,  or  to  state  positively  that  it  required  identification  of  such  party, 
this  is  sufficient  evidence  of  its  negligence  to  render  it  liable  to  the 
drawee  bank  to  which  it  indorsed  it.  And  the  drawee  bank  will  not  be 
precluded  from  recovery  because,  relying  upon  the  indorsement  of  the 
other  bank,  it  paid  the  check  without  investigation  aa  to  its  genuine- 
ness. 

Bill  to  recover  amount  paid  by  mistake  on  a  forged  check. 
The  opinion  states  the  case. 

Stark  and  Stark,  for  the  complainant. 

Leech  and  Savage,  for  the  respondent. 

FoLKES,  J.  Young  was  a  depositor  of  the  complainant 
bank.  His  name  was  forged  to  a  check  drawn  on  the  com- 
plainant, payable  to  the  order  of  one  Morgan.  Morgan's  name 
was  also  forged  as  an  indorser  on  the  check.  This  check, 
with  the  forged  name  of  Young,  the  maker,  and  of  Morgan, 
the  indorser,  was  presented  to  the  defendant,  the  Franklin 
Bank,  and  was  cashed  or  purchased  by  the  defendant,  and 
transmitted,  after  indorsement  by  the  defendant,  to  the 
complainant  bank,  by  mail.  The  complainant  bank  had 
and   kept   an  account  with   the   defendant   bank,  and  upon 


Dec.  1889.]     People's  Bank  v.  Franklin  Bank.  885 

the  receipt  of  the  check,  passed  the  amount  thereof  to 
the  credit  of  the  defendant  bank.  The  complainant  bank 
was  located  and  did  business  at  Springfield,  in  the  county 
of  Robertson;  the  defendant  bank  was  located  and  did 
business  at  Clarksville,  in  Montgomery  County.  The  check, 
which  had  been  received  by  the  complainant  bank,  and  passed 
to  the  credit  of  defendant  bank,  as  above  stated,  on  December 
8,  1888,  was  ascertained,  thirty-one  days  thereafter,  to  be  a 
forgery,  this  discovery  being  made  by  the  depositor.  Young, 
when  he  came  to  examine  his  pass-book,  together  with  the 
checks  returned  therewith.  Thereupon  the  complainant 
bank  canceled  the  charge  against  Young,  the  depositor,  and 
at  once  notified  the  defendant  bank  of  the  forgery,  and  de- 
manded that  the  same  be  made  good  by  the  defendant  bank. 
Upon  refusal,  complainant  filed  this  bill  to  recover  the  amount 
of  the  check  as  having  been  paid  by  it,  through  mistake,  upon 
the  forged  check,  charging  in  the  bill  the  facts  above  stated, 
and  also  the  further  fact  that,  when  presented,  the  check  bore 
the  indorsement  of  the  defendant  bank,  and  that  upon  the 
faith  of  such  indorsement,  the  complainant's  teller  accepted 
the  check,  and  gave  credit  to  the  defendant  bank,  with  less 
careful  scrutiny  of  the  genuineness  of  the  drawer's  signature, 
by  reason  of  the  confidence  reposed  in  the  genuineness  of  the 
paper  as  evidenced  by  the  indorsement  of  the  defendant  bank. 
The  defendant  answered  the  bill,  admitting  that  it  had  re- 
ceived and  cashed  the  check,  as  charged,  and  stating  that  it 
was  unable  to  furnish  the  name  of  the  party  or  parties  by 
whom  the  check  had  been  presented,  and  to  whom  it  had  been 
paid  by  it,  but  presumed  that  it  had  required  identification; 
but  of  this  they  do  not  remember.  The  allegations  of  the  bill 
were  sustained  by  the  proof;  but  the  chancellor,  being  of 
opinion  that  the  plaintiff  should,  at  its  peril,  know  the  genu- 
ineness of  the  signature  of  its  depositor,  refused  the  relief 
prayed  for,  and  dismissed  complainant's  bill,  from  which  com- 
plainant has  appealed,  assigning  errors. 

The  general  rule  undoubtedly  is,  that  the  bank  has,  at  its 
peril,  to  know  the  genuineness  of  the  signature  of  its  deposi- 
tor; and  if  it  pays  a  forged  check,  the  loss  must  fall  upon  the 
bank,  and  not  upon  the  depositor,  except  in  cases  where  the 
negligence  of  the  depositor  has  induced  or  brought  about 
the  payment  by  the  bank.  This  duty,  with  reference  to  the 
bank,  may  be  said  to  be  an  exception  to  the  general  rule  that 
money  paid  by  mistake  can  be  recovered,  and  to  the  general 


886  People's  Bank  v.  Franklin  Bank.  [Tenn. 

statement  of  another  equally  well-settled  rule  that  the  pay- 
ment of  a  forged  paper  conveys  no  title;  for  it  is  well  settled 
that  the  deposit  of  a  forged  bill  or  base  coin  creates  no  in- 
debtedness, although  credited  to  the  depositor's  account,  for 
the  reason  that  payment  in  such  material  could  not  discharge 
a  debt,  and  cannot  create  one.  The  bank  is  not  only  respon- 
sible to  the  depositor,  where  the  check  with  the  depositor's 
signature  forged  is  paid  by  the  bank  (except  where  the  de- 
positor has  been  guilty  of  negligence  sufficient  to  mislead  the 
bank),  but  the  bank  is  precluded  from  recovering  from  a 
party  to  whom  a  forged  check  has  been  paid,  where  such 
party,  being  without  fault,  would  be  prejudiced  by  being  re- 
quired to  refund  to  the  bank,  upon  whom  rests  the  duty  of 
determining  the  genuineness  of  the  depositor's  signature. 
Notwithstanding  some  conflict  of  authority  upon  the  subject, 
a  careful  investigation  of  the  adjudged  cases  and  of  the  text- 
books leads  us  to  the  conclusion  that  the  bank  can  recover  of 
a  party  to  whom  payment  is  made  on  a  forged  check,  indorsed 
by  the  party  to  whom  paid,  where  the  party  to  whom  paid 
has  been  guilty  of  negligence  in  receiving  and  indorsing  the 
check;  for,  notwithstanding  the  negligence,  to  some  degree, 
that  the  paying  bank  has  been  guilty  of  in  paying  the  forged 
check,  without  detecting  the  forgery  of  its  depositor's  signa- 
ture, it  often  happens,  or  may  happen,  that  the  party  to 
whom  payment  is  made  has  been  guilty  of  the  first  negligence, 
in  purchasing  and  indorsing  the  forged  paper.  The  bank 
upon  whom  the  check  is  drawn,  in  the  practical  administra- 
tion of  banking  business,  may  well  be  lulled  to  a  less  careful 
scrutiny  of  its  depositor's  signature  of  a  check,  where  the  same 
is  indorsed  by  another  bank  with  which  it  is  in  correspond- 
ence or  interchange  of  business,  than  it  would  exercise  in  ac- 
cepting and  paying  the  same  check,  not  so  indorsed,  to  a 
stranger.  The  indorsement  of  the  check,  by  the  payee,  may 
be  said,  ordinarily,  to  be  a  guaranty  of  the  genuineness  of  the 
indorsements  theretofore  on  the  paper,  and  also  of  the  genu- 
ineness of  the  drawer's  signature,  subject,  perhaps,  to  some 
exception  in  particular  cases,  as,  for  instance,  where  the  in- 
dorsement is  made  after  the  genuineness  of  the  preceding 
signatures  has  been  approved  by  the  paying  bank.  Applying 
these  principles  to  the  case  at  bar,  we  are  of  opinion,  and  so 
adjudge,  that  the  first  fault  was  with  the  defendant  bank. 
This  bank  accepted  and  cashed  a  check  drawn  on  a  bank  in 
another  county,  to  which  the  name  of  the  drawer  and  the 


Dec.  1889.]     People's  Bank  v.  Feanklin  Bane.  887 

payee  had  both  been  forged,  and  so  far  as  this  record  dis- 
closes, without  requiring  any  identification  of  tlie  parties  to 
whom  sucli  payment  was  made;  certainly  without  reserving 
any  evidence  of  the  identity  of  such  parties  for  the  benefit  of 
itself  or  of  otliers  who  might  be  injured  by  such  forgery.  The 
complainant  bank,  upon  receiving  such  check,  in  due  course 
of  mail,  for  deposit  to  credit  of  defendant,  might  well  rely  upon 
the  exercise  of  due  prudence  and  diligence  on  the  part  of  its 
depositor,  the  defendant  bank,  and  might  well  regard  the  lat- 
ter's  indorsement  of  the  check  as  significant  of  the  fact  that 
such  prudence  had  been  exercised,  and  if  not,  that  the  in- 
dorsement would  stand  as  a  guaranty  to  the  paying  bank  from 
loss  that  might  otherwise  fall  upon  it  by  reason  of  its  passing 
the  amount  of  the  check  to  the  credit  of  such  indorser. 
Such  would  not  only  seem  to  be  sound  in  theory,  and  sup- 
ported by  authority,  but  is  in  accordance  with  the  proof  in 
this  case,  and  it  is  a  matter  of  such  general  information  that 
perhaps  the  court  might  be  warranted  in  taking  judicial 
knowledge  of  it,  that  in  dealings  between  banks,  and  espe- 
cially with  reference  to  clearings  and  clearing-houses,  banks 
will  adjust  and  pay  differences  between  each  other,  or  between 
itself  and  the  clearing-house,  upon  the  faith  of  the  indorse- 
ment, by  other  banks,  of  the  checks  involved  in  such  settle- 
ment, before  they  examine  the  signature  to  the  checks 
involved  or  embraced  in  the  settlement,  relying  on  such  in- 
dorsements as  protecting  it  in  such  payment  should  a  subse- 
quent and  more  careful  scrutiny  of  the  signatures  disclose 
forgeries  in  the  making  and  indorsing  of  the  checks  so  paid. 

Mr.  Daniel,  in  his  work  on  negotiable  instruments,  after 
discussing  and  criticising  the  cases  that  are  supposed  to  hold 
a  bank  liable  at  all  hazards,  and  to  the  last  extremity,  where 
it  pays  the  check  with  the  signature  of  its  depositor  forged, 
lays  down  the  rule  substantially  as  we  have  above  stated  it:  2 
Daniel  on  Negotiable  Instruments,  sees.  1655,  1655a,  1656, 
and  1657,  with  cases  cited  in  the  notes. 

And  the  rule  is  stated  by  the  learned  contributor  to  the  ar- 
ticle on  forged  checks  in  3  Am.  &  Eng.  Ency.  of  Law,  p.  223, 
as  follows:  "Where,  however,  the  loss  has  been  traced  to  the 
fault  or  negligence  of  the  drawer  or  holder,  it  will  be  fixed 
upon  him."     See  cases  cited  in  note  1. 

And  on  page  225  of  3  Am.  &  Eng.  Ency.  of  Law,  it  is  said: 
"Also,  the  holder,  by  indorsing  a  check,  warrants  the  genuine- 
ness of  all  prior  indorsements."     See  note  1,  citing  numerous 


888  People's  Bank  v.  Franklin  Bank.  [Tenn. 

cases,  amongst  which  is  the  case  of  Harris  v.  Bradley,  7  Yerg. 
810,  where  Judge  Green  lays  down  the  doctrine  as  to  the 
effect  of  an  indorsement  in  guaranteeing  the  genuineness  of 
prior  indorsements  in  the  language  as  quoted.     It  is  true  that 
in  the  Yerger  case  the  language  was  used  with  reference  to  a 
note,  and  not  a  check,  and   such  may  also  be  the  case  with 
other  of  the  authorities  cited  in  said  note  which  we  have  not 
examined.     Now,  while  we  concede  that  there  is  quite  a  dif- 
ference between  this  rule  as  applicable  to  indorsers  on  com- 
mercial paper  and  as  applied  to  checks,  so  far  as  the  liability 
of  the  drawee  is    concerned,  yet  we  see  no  reason  why  the 
bank  should  not  have  the  benefit  of  such  rule,  where  the  in- 
dorsement is  made  under  circumstances  which  establish  or  im- 
pute negligence  to  the  indorser.     The  cases  of  Levy  v.  Bank  of 
United  States,  4  Dall.  234,  and  Bank  of  United  States  v.  Bank 
of  Georgia,  10  Wheat.  333,  are  relied  on  as  authority  for  the 
judgment  of  the  chancellor  in  the  case  at  bar.     The  facts  of 
the  case  in  4  Dallas  are  so  briefly  stated  as  to  leave  us  unin- 
formed as  to  the  manner  in  which  the  question  was  presented. 
The  case  of  Bank  of  United  States  v.  Bank  of  Georgia,  10  Wheat. 
333,  w^as  where  a  forgery  was  by  raising  the  notes  of  the  de- 
fendant bank;  the  notes,  coming  in  due  course  to  the  United 
States  Bank,  were  presented  to  the  Bank  of  Georgia,  and  passed 
to  the  credit  of  the  United  States  Bank.    Nineteen  days  there- 
after, the  forgery  was  discovered,  and  notice  given.      Upon  re- 
fusal of  the  United  States   Bank  to  make  good  the  loss,  the 
credit  was,  by  the  Georgia  Bank,  withdrawn  from  the  account, 
and  the  United  States  Bank  brought  its  suit  for  money  had 
and  received.     It  was  held  that  the  plaintiff  could  recover. 
While  the  reasoning  of  the  learned  judge  and   much  of  the 
argument  tends  to  sustain  the  contention  of  the  defendant  here, 
still,  the  court  put  its  judgment  in  that  case  distinctly  "  upon 
the  ground  that  the  defendants  were  bound  to  know  their  own 
notes,  and  having  received  them  without  objection,  they  can- 
not recall  their  assent."     While  these  two  cases  are  criticised 
by  Mr.  Daniel  as  unsound,  that  critiscism,  so  far  as  the  latter 
case  is  concerned,  may  be  well  confined  to  the  argument  con- 
tained in  the  opinion;  for  the  point  decided  is  in  no  manner 
hostile,  as  we  understand  it,  to  the  principle  as  announced  by 
Mr.  Daniel,  and  adopted  by  us  in  the  disposition  of  the  case  at 
bar;  for  there  is  nothing  to  show  that  there  had  been  any  neg- 
ligence on  the  part  of  the  United  States  Bank  in  receiving  the 
notes  of  the  Georgia  Bank,  and  we  can  well  understand  how 


Dec.  1889.]     People's  Bank  v.  Fravklin  Bank.  889 

there  could  and  ought  to  be  a  higher  obligation  upon  the  bank 
to  know  the  genuineness  of  its  notes  of  issue  passing  current 
as  money  than  rests  upon  it  to  know  the  signature  of  the  de- 
positor on  a  check  indorsed  bj'  a  solvent  correspondent.  But 
putting  them  both  on  the  same  footing,  there  is  wanting  in  the 
report  of  the  case  in  10  Wheaton  any  evidence  of  negligence 
on  the  part  of  the  United  States  Bank. 

The  view  we  have  expressed,  and  the  principle  upon  which 
wj  reverse  the  chancellor,  and  award  judgment  here  for  com- 
plainant, is  not  only  sustained  by  Mr.  Daniel,  but  also  by  Mr. 
Chitty,  Mr.  Parsons,  and  Mr.  Bolles,  who  fortify  their  conclu- 
sions by  ample  authority:  See  Chitty  on  Bills,  13th  Am. 
ed.,  *431,  *485;  2  Parsons  on  Notes  and  Bills,  80;  Bolles 
on  Banks  and  Depositors,  sec.  189;  Hardy  v.  Chesapeake 
Bank,  51  Md.  585;  34  Am.  Rep.  325;  Leather  Manuf.  Bank  v. 
Morgan,  117  U.  S.  96,  112;  Ellis  v.  Ohio  Life  Lns.  &  Trust  Co., 
4  Ohio  St.  628;  McKleroy  v.  Southern  Bank  of  Kentucky,  14 
La.  Ann.  458;  74  Am,  Dec.  438;  National  Bank  of  N.  A.  v.  Bangs, 
106  Mass.  441;  8  Am.  Rep.  348;  Rouvant  v.  San  Antonio  Nat. 
Bank,  63  Tex.  610;  First  National  Bank  v.  Ricker^  71  111.  439; 
22  Am.  Rep.  104. 

It  results,  therefore,  that  the  decree  of  the  chancellor  must 
be  reversed,  and  judgment  rendered  here  for  the  amount  of 
the  check,  with  interest  and  costs. 


Snodgrass,  J.,  concurred  in  the  result,  on  account  of  the  negligence  of  the 
indorsing  bank,  but  dissented  from  what  might  be  implied  from  the  argu- 
ment of  the  prevailing  opinion,  that  that  bank  would  have  been  liable  had  it 
not  been  negligent,  but  had  taken  the  check  from  a  known  and  good-faith 
indorser.  The  view  taken  in  the  case  in  4  Dallas  is  a  sound  one.  As  between 
itself  and  good- faith  indorsees  the  paying  bank  should  be  the  place  of  final 
settlement,  where  all  prior  mistakes  and  forgeries  should  be  corrected.  If 
they  were  not  then  corrected,  the  acceptance  and  payment  should  be  treated 
as  final.  The  paying  bank  and  the  time  of  payment  are  the  proper  place  and 
time  to  settle  and  end  these  things  as  to  innocent  indorsers.  If  the  paying 
bank  fails  to  perform  its  duty  to  itself,  to  its  depositors,  and  to  all  indorsers 
and  parties  interested,  by  then  settling  all  questions  that  could  arise,  it 
should  take  the  consequences.  It  will  not  do  to  say  that  the  paying  bank 
does  not  injure  an  indorsing  bank  by  payment  and  delay.  Any  delay  may 
be,  and  much  delay  must  be,  injurious.  Nor  is  this  question  affected  by  the 
clearing-house  arrangement.  Banks  are  represented  there  as  well  as  at  their 
own  counters,  and  they  should  not  be  allowed  to  escape  liability  for  failure 
to  exercise  the  usual  care  to  detect  errors  and  forgeries.  If  the  arrangement 
is  not  safe,  they  should  change  it  for  one  that  is  safe. 

RioHT3  AND  Remedies  of  the  Several  Parties  when  a  Forged  Check 
HAS  BEEN  Paid.  — It  is  a  well-established  rule  of  law,  both  in  England  and  in 
this  country,  that  money  paid  under  a  mistake  of  fact  may  be  recovered  back, 


890  People's  Bank  v.  Franklin  Bank.  [Tenn. 

however  negligent  the  party  paying  may  have  been  in  making  the  mistake, 
where  the  party  who  has  received  the  payment  has  no  right  to  retain  the 
money.  And  the  tendency  of  the  modern  authorities  is  to  extend  rather  than 
to  curtail  the  operation  of  this  rule.  In  delivering  the  opinion  of  the  court 
in  National  Bank  of  Commerce  v.  National  Mechanics'  Bankinrj  Association,  55 
N.  Y.  211,  215,  Rapallo,  J.,  said:  "The  rules  of  law  in  relation  to  the  cor- 
rection of  mistakes  of  fact  have  been  gradually  growing  more  liberal,  and  are 
molded  so  as  to  do  equity  between  the  parties.  The  exceptions  which  have 
been  established  by  authority,  and  have  been  ingrafted  upon  the  commer- 
cial law,  it  is  not  our  purpose  to  disturb;  but  they  should  not  be  extended; 
unless  a  case  is  clearly  brought  within  them,  the  general  principles  should 
govern." 

Exceptions  to  This  Rule.  —  One  generally  received  exception  to  the  rule 
stated  above  is,  that  where  the  drawee  of  a  bill  of  exchange,  or  the  banker 
upon  whom  a  check  has  been  drawn,  pays  a  bill  or  check  upon  which  the 
drawer's  signature  has  been  forged,  he  cannot,  upon  the  discovery  of  the  for- 
gery, recover  back  the  amount,  if  the  party  to  wliom  ne  paid  it  was  a  bona 
fide  holder.  The  drawee  is  held  bound  to  know  the  signature  of  his  drawer, 
and  the  banker,  even  more,  to  know  that  of  his  depositor;  and  if  they  fail  to 
discover  the  forgery  before  payment,  they  must  stand  the  loss:  Price  v.  Neal, 
3  Burr.  1355;  Smith  v.  Mercer,  6  Taunt.  80;  Redimjton  v.  Woods,  45  Cal.  406; 
]3  Am.  Rep.  190;  Lahorde  v.  Consolidated  Association,  4  Robt.  (La.)  190;  39 
Am.  Dec.  517;  Howard  v.  Mississippi  Valley  Bank,  28  La.  Ann.  727;  26  Am. 
Rep.  105;  Commercial  and  Fa7-mers'  Nat.  Bank  v.  First  Nat.  Bank,  30  Md.  11; 
96  Am.  Dec.  554;  Hardy  v.  Chesapeake  Bank,  51  Md.  562;  34  Am.  Rep.  325; 
Mackintosh  v.  Eliot  Nat.  Bank,  123  Mass.  393;  First  Nat.  Bank  v.  State  Bank, 
22  Neb.  769;  3  Am.  St.  Rep.  294;  Star  F.  Ins.  Co.  v.  New  Hampshire  Nat. 
Bank,  60  N.  H.  442;  National  Bank  of  CommomoeaUh  v.  Grocers'  Nat.  Bank, 
35  How.  Pr.  412;  Salt  Sprimjs  Bank  v.  Syracuse  Samigs  Institution,  62  Barb. 
101;  Weisserv.  Denison,  10  N.  Y.  68;  61  Am.  Dec.  731;  National  Park  Bajik 
V.  Ninth  Nat.  Bank,  46  N.  Y.  77;  7  Am.  Rep.  310;  National  Bank  of  Com- 
■mercev.  National  Mechanics'  Banking  Ass' n,  55  N.  Y.  211;  14  Am.  Rep.  232; 
Frank  v.  Chemical  Nat.  Bank,  84  N.  Y.  209;  38  Am.  Rep.  601;  Levy  v.  Bank 
of  United  States,  4  Dall.  234;  1  Binn.  27;  2  Daniel  on  Negotiable  In- 
struments, 3d  ed.,  sees.  1359,  1655;  2  Morse  on  Banks  and  Banking,  3d  ed., 
sec.  463.  Alvey,  J.,  in  delivering  the  opinion  of  the  court  in  Hardy  v. 
Chesapeake  Bank,  51  Md.  562,  34  Am.  Rep.  325,  said:  "If  the  bank  pays 
money  on  a  forged  check,  no  matter  under  what  circumstances  of  caution,  or 
however  honest  the  belief  in  its  genuineness,  if  the  depositor  himself  be  free 
of  blame,  and  has  done  nothing  to  mislead  the  bank,  all  the  loss  must  be 
borne  by  the  bank;  for  it  acts  at  its  peril,  and  pays  out  its  own  funds,  and 
not  those  of  the  depositor."  The  exception  under  consideration  was  estab- 
lished by  Lord  Mansfield  in  the  year  1762  in  the  case  of  Price  v.  Neal,  3  Burr. 
1355.  In  that  case  the  drawee  of  two  bills  of  exchange  had  paid  one  bill  and 
accepted  and  subsequently  paid  another.  After  paying  them,  he  discovered 
that  the  drawers  signature  had  been  forged,  and  brought  suit  against  the 
holder  to  recover  back  the  money  paid.  Lord  Mansfield  stopped  the  defend- 
ant's counsel,  saying  the  case  was  one  that  could  not  be  made  plainer  by  ar- 
gument; that  it  was  incumbent  upon  the  plaintiff  to  be  satisfied  that  the  bill 
drawn  upon  him  was  the  drawer's  hand,  before  he  accepted  or  paid  it;  that 
he  had  made  no  objection  to  the  bills  at  the  time  of  paying  them;  that  what- 
ever neglect  there  was  was  on  his  side;  and  that  the  misfortune  which  had 
happened  was  without  the  defendant's  fault  or  neglect.     This  case  became  a 


Dec.  1889.]     People's  Bank  v.  Franklin  Bank.  891 

leading  one,  and  its  authority  has  been  generally  accepted,  as  will  be  oeen  by 
reference  tc  the  list  of  cases  cited  above.  Mr.  Justice  Story,  in  delivering  the 
opinion  of  the  court  in  Bank  of  United  States  v.  Bank  of  Georgia,  10  Wheat. 
3.33,  decided  in  1825,  referring  to  Price  v.  Neal,  3  Burr.  1355,  said:  "After 
Bome  research  we  have  not  been  able  to  find  a  single  case  in  which  the  general 
doctrine  thus  asserted  has  been  shaken  or  even  doubted."  And  Allen,  J.,  in 
delivering  the  opinion  of  the  court  in  National  Park  Bank  v.  Ninth  National 
Bank,  46  N.  Y.  81,  7  Am.  Rep.  310,  referring  to  Price  v.  Neal,  3  Burr.  1355, 
said:  "But  as  applied  to  the  case  of  a  bill  to  which  the  signature  of  the 
drawer  is  forged,  accepted,  or  paid  by  the  drawee,  its  authority  has  been  uni- 
versally and  fully  sustained,  and  the  rule  extends  as  well  to  the  case  of  a  bill 

paid  upon  presentment,  as  to  one  accepted  and  afterward.?  paid A 

rule  so  well  established,  and  so  firmly  rooted  and  grounded  in  the  jurispru- 
dence of  the  country,  ought  not  to  be  overruled  or  disregarded." 

Dissent  from  the  Doctrine  of  the  Exception.  — Writers  of  recognized 
learning  and  ability  have,  however,  shown  a  disposition  to  question  the  cor- 
rectness of  the  principle  established  by  the  exception  under  consideration. 
Daniel  says:  "Notwithstanding  these  high  authorities  and  numerous  other 
cases  which  decide  that  the  drawee  paying  a  forged  draft  cannot  recover  back 
the  amount  from  the  party  to  whom  he  paid  it,  whether  such  party  received 
it  before  acceptance  or  afterward,  a  distinction  has  been  taken  between  the 
two  cases  which  is  clearly  philosophical,  and,  as  it  seems  to  us,  much  better 
calculated  to  effectuate  justice  than  the  doctrine  of  Mansfield  and  Story. 
When  the  holder  has  received  the  bill  after  its  acceptance,  the  acceptor  stands 
toward  him  as  the  warrantor  of  its  genuineness,  and  receiving  the  bill  upon 
faith  in  the  acceptor's  representation,  there  is  obvious  propriety  in  main- 
taining his  right  to  hold  the  acceptor  absolutely  bound.  Indeed,  the  ac- 
ceptor, being  the  primary  debtor,  stands  just  as  the  maker  of  a  genuine  prom- 
issory note.  But  when  the  holder  of  an  unaccepted  bill  presents  it  to  the 
drawee  for  accejjtance  and  payment,  the  very  reverse  of  this  rule  would  seem 
to  apply;  for  the  holder  then  represents,  in  effect,  to  the  drawee,  that  he 
holils  the  bill  of  the  drawer,  and  demands  its  acceptance  and  payment  as 
such.  If  he  indorses  it,  he  warrants  its  genuineness;  and  his  very  assertion 
of  ownership  is  a  warranty  of  genuineness  in  itself.  Therefore,  should  the 
drawee  pay  it  or  accept  it  upon  such  presentment,  and  afterward  discover 
that  it  was  forged,  he  should  be  permitted  to  recover  the  amount  from  the 
holder  to  whom  he  pays  it,  or  as  against  him  to  dispute  the  binding  force  of 
his  acceptance,  provided  he  acts  with  due  diligence":  2  Daniel  on  Negotiable 
Instruments,  3d  ed.,  sec.  1361.  And  subsequently,  in  discussing  the  right 
of  a  bank  to  recover  money  paid  on  a  forged  check,  he  says:  "  But  where  the 
bank  discovers  the  forgery  immediately,  and  demands  restitution,  offering  to 
return  the  check,  before  the  holder  has  lost  anything  by  regarding  the  mat- 
ter as  all  right,  we  cannot  help  thinking  that  it  should  be  entitled  to  recover 
back  the  amount.  Mr.  Chitty  seems  to  have  had  the  same  opinion,  and 
Professor  Parsons  has  expressed  it  in  favorable  terms.  And  the  better  doc- 
trine, as  we  think,  is,  that  the  bank  should  have  the  right  to  recover,  unless 
the  circumstances  of  the  holder  had  been  changed  so  as  to  render  it  unjust. 
Forgeries  often  deceive  the  eye  of  the  most  cautious  expert;  and  when  a  bank 
has  been  so  deceived,  it  is  a  harsh  rule  which  compels  it  to  suffer,  although 
no  one  has  suffered  l)y  its  being  deceived.  It  is  also  a  rule  which  tends  to 
render  those  who  trade  for  checks  incautious,  if  by  any  means  they  can  pro- 
cure their  payment  by  the  bank.  Parties  often  pronounce  forgeries  of  their 
own  signatures  genuine.     Why  blame  a  third  party  so  severely  ?     And  why 


892  People's  Bank  v.  Franklin  Bank.  [Tenn. 

make  an  exception  to  a  rule  so  just  in  its  universal  application":  2  Daniel  on 
Negotiable  Instruments,  3d  ed.,  sec.  1655  a. 

Professor  Parsons,  discussing  the  same  subject,  says:  "We  think  the  law 
must  be  this:  the  bank  can  recover  it  from  the  payee  if  the  payee  were  in 
fault,  or  if  an  innocent  payee  will  then  be  in  no  worse  condition  than  if  the 
bank  had  refused  to  pay  it":  2  Parsons  on  Notes  and  Bills,  80.  And  Chitty, 
discussing  the  case  of  the  payment  of  a  forged  bill  of  exchange,  says:  "  It 
may  be  observed  that  the  holder  who  obtained  payment  cannot  be  consid- 
ered as  having  altogether  shown  sufficient  circumspection;  he  might,  before 
he  discounted  or  received  the  instrument  in  payment,  have  made  more  in- 
quiries as  to  the  signatures  and  genuineness  of  the  instrument  even  of  the 
drawer  or  indorsers  themselves;  and  if  he  thought  fit  to  rely  on  the  bare 
representation  of  the  party  from  whom  he  took  it,  there  is  no  reason  why  he 
should  profit  by  the  accidental  payment  when  the  loss  had  already  attached 
upon  himself,  and  why  he  should  be  allowed  to  retain  the  money  when  by 
an  immediate  notice  of  the  forgery  he  is  enabled  to  proceed  against  all  other 
parties  precisely  the  same  as  if  the  payment  had  not  been  made,  and  conse- 
quently the  payment  to  him  has  not  in  the  least  altered  his  situation  or  oc- 
casioned any  delay  or  prejudice":  Chitty  on  Bills,  13th  Am.  ed.,  485,  *431. 
The  reasoning  of  the  writers  of  the  extracts  quoted  above  seems  sound  and 
just,  and  the  tendency  of  modern  authorities  is  to  limit  and  pare  down  the 
application  of  the  exception,  rather  than  to  extend  its  operation:  See  2  Morse 
on  Banks  and  Banking,  sees.  463  et  seq. 

Fate  of  the  Exception  in  Pennsylvania. —  Pennsylvania  was  the  first 
state  to  recognize  and  adopt  the  exception  under  discussion,  in  the  case  of 
Levy  V.  Bank  of  United  States,  4  Dall.  234,  1  Binn.  27,  and  it  is  also  the  first  state 
to  abrogate  the  exception  by  legislative  enactment.  The  act  of  April  5,  1849, 
of  that  state,  provides  that  "  whenever  any  value  or  amount  shall  be  received 
as  a  consideration  in  the  sale,  assignment,  transfer,  or  negotiation,  or  in  pay- 
ment, of  any  bill  of  exchange,  draft,  check,  order,  promissory  note,  or  other  in- 
strument negotiable  within  this  commonwealth,  by  the  holder  thereof,  from 
the  indorsee  or  indorsees,  or  payer  or  payers,  of  the  same,  and  the  signature 
or  signatures  of  any  person  or  persons  represented  to  be  parties  thereto, 
whether  as  drawer,  acceptor,  or  indorser,  shall  have  been  forged  thereon, 
and  such  value  or  amount  by  reason  thereof  erroneously  given  or  paid,  such 
indorsee  or  indorsees,  as  well  as  such  payer  or  payers,  respectively,  shall  be 
legally  entitled  to  recover  back  from  the  person  or  persons  previously  hold- 
ing or  negotiating  the  same  the  value  or  amount  so  as  aforesaid  given  or 
paid  by  such  indorsee  or  indorsees,  or  payer  or  payers,  respectively,  to  such 
person  or  persons,  together  with  lawful  interest  thereon  from  the  time  that 
demand  shall  have  been  made  for  repayment  of  the  same."  In  Pennsylvania, 
therefore,  there  is  no  longer  any  doubt  but  a  bank  paying  out  money  by 
mistake  on  a  forged  check  or  draft  may  recover  it  back:  Tradesmen's  Nat. 
Bank  v.  Third  Nat.  Bank,  G6  Pa.  St.  435;  Chambers  v.  Union  Nat.  Bank,  78 
Pa.  St.  205;  People's  Savings  Bank  v.  Cupps,  91  Pa.  St.  315. 

Limitations  and  Modifications  of  the  Exception.  —  In  the  present 
condition  of  the  question,  it  is  not  easy  to  definitely  state  when  a  case  may 
be  said  to  fall  without  the  exception,  and  consequently  to  come  within  the 
rule  that  money  paid  by  mistake  may  be  recovered  back.  But  an  analysis  of 
t)ie  modern  cases  will,  we  think,  show  that  where  there  has  not  been  abso- 
lute good  faith  on  the  part  of  the  payee  in  communicating  circumstances  of 
suspicion  known  to  him  at  the  time  of  payment,  and  not  known  to  the  drawee, 
the  money  may  be  recovered  back;  so  where  the  holder  has  been  negligent 


Dec.  1889.]     People's  Bank  v.  Franklin  Bank.  893 

in  not  making  due  inquiry  as  to  the  validity  of  the  check  or  draft  before 
taking  it,  and  the  drawee,  having  the  right  to  presume  that  the  holder  had 
made  such  inquiry,  is  excused  from  making  inquiry  before  paying  it,  the 
money  paid  may  be  recovered  back;  so,  too,  where  the  loss  had  already  at' 
tached  before  the  forged  bill  or  check  was  paid,  and  the  drawee  has  given 
immediate  notice  to  the  holder  and  indorser  after  discovering  the  forgery,  he 
may  recover  back  the  money  paid;  and,  generally,  that  the  exception  applies 
only  to  cases  where  the  party  who  received  the  money  on  the  forged  check 
or  draft  has  in  no  way  contributed  to  the  consummation  of  the  fraud,  or  to 
the  mistake  of  fact  under  which  the  payment  was  made:  First  Nationcd  Bank 
V.  Bicker,  71  111.  439;  22  Am.  Rep.  104;  McKleroy  v.  Southern  Bank  of  Ken- 
tucky, 14  La.  Ann.  458;  74  Am.  Dec,  438;  De  Feriet  v.  Bank  of  America,  23 
La.  Ann.  310;  8  Am.  Rep.  597;  National  Bank  o/  North  America  v.  Bangs, 
106  Mass.  441;  8  Am.  Rep.  349;  Ellis  v.  Ohio  L.  I.  d-  T.  Co.,  4  Ohio  St.  628; 
64  Am.  Dec.  610;  Goddard  v.  Merchants'  Bank,  4  N.  Y.  147;  Rourant  v.  San 
Antonio  Nat.  Bank,  63  Tex.  610;  United  States  v.  National  Park  Bank,  6  Fed. 
Rep.  852;  Wilkinson  v.  Johnson,  3  Barn.  &  C.  428;  2  Daniel  on  Negotiable 
Instruments,  3d  ed.,  sec.  1657. 

The  case  of  First  National  Bank  v.  Bicker,  71  111.  439,  22  Am.  Rep.  104, 
was  an  action  brought  by  Ricker  to  recover  back  the  amount  of  a  forged  check 
paid  by  him  to  the  defendant,  the  First  National  Bank  of  Quincy.  The  check 
purported  to  have  been  drawn  by  Manning  Brothers  upon  Ricker'a  bank 
and  was  payable  to  the  order  of  Hundrack  &  Co.  The  latter  deposited  the 
check  in  the  defendant's  bank,  and  drew  against  it  nearly  the  full  amount  of 
it.  Directly  after,  the  defendant  had  reason  to  doubt  the  genuineness  of  the 
signature  to  the  check,  and  sent  it  by  one  Mills,  a  clerk,  to  the  plaintiEF's 
bank  for  payment.  Plaintifif's  teller  said  that  he  was  not  familiar  with  the 
drawer's  signature,  but  that  if  Mills  would  indorse  it  for  his  bank  he  would 
pay  it.  Mills  indorsed  it,  got  the  money,  and  returned  it  to  the  defendant, 
and  informed  his  cashier  of  what  he  had  done,  and  the  cashier  replied  it  was 
all  right.  The  check  was  discovered  to  be  a  forgery,  and  notice  of  that  fact 
was  given  in  a  few  hours  after  the  payment  was  made,  and  the  plaintiif 
offered  to  return  the  check,  and  demanded  back  the  money  paid.  The  plain- 
tiff had  judgment  in  the  court  below,  and  the  supreme  court  affirmed  the 
judgment.  Scott,  J.,  who  delivered  the  opinion  of  the  court,  referring  to  the 
exception  under  discussion,  said:  "The  rule,  however,  presupposes  the  good 
faith  of  the  transaction,  that  the  holder  was  a  purchaser  bonajide  for  a  valu- 
able  consideration;  for  the  law  certainly  is,  the  drawee  or  payer  can  recover 
where  the  payee  or  holder  is  himself  at  fault,  or  has  been  guilty  of  fraudulent 

practices  which  may  have  thrown  him  off  his  guard There  is  wanting 

in  this  case  that  element  of  good  faith  tliat  is  to  be  found  in  nearly  all  the 
adjudged  cases  where  a  recovery  has  been  denied.  It  is  doubtles.s  true,  the 
appellant  bank  received  the  check  in  the  usual  course  of  business  of  Hun- 
drack, without  any  suspicion  it  was  a  forgery.  But  when  it  was  presented 
for  payment  the  bank  officers  had  every  reason  to  believe  it  was  spurious. 
....  Without  imparting  the  information  in  their  possession,  the  check  was 

presented  at  appellee's  bank No  one  can  believe  appellee  would  have 

paid  the  check  had  his  teller  been  put  in  possession  of  the  facts  then  known 
to  the  officers  of  the  appellant  bank  or  the  Union  Bank.  The  cashier  was  in 
possession  of  such  facts  as  made  it  morally  certain  at  least  that  it  was  a  for- 
gery, before  he  sent  the  check  to  appellee's  bank  for  certification.  This  in- 
formation was  withheld.  Was  this  good  faith?  These  facts  rendered  it 
'  against  conscience ' .  .  .  .  for  appellant  to  retain  appellee's  money."     The 


894  People's  Bank  v.  Franklin  Bank.  [Tenn. 

learned  judge  also  said:  "  The  forger  had  fled  before  the  check  was  presented, 
and  hence  it  cannot  be  said  that  the  delay  worked  any  i-jury  to  appellant,  or 
prevented  the  bank  from  securing  itself,  or  that  the  payment,  if  retracted 
made  its  condition  any  worse  than  if  appellee  had  refused  payment  in  the 
first  instance." 

In  De  Feriet  v.  Bank  of  America,  23  La.  Ann.  310,  8  Am.  Rep.  597,  the 
plaintiff  kept  a  bank  account  with  the  defendant  bank,  his  book-keeper  kept 
the  cash  account  and  made  the  deposits,  etc.,  and  his  relations  toward  the 
plaintiff  were  well  known  to  the  bank.  This  book-keeper  forged  the  plaintifif 's 
name  tp  a  check  for  two  thousand  five  hundred  dollars,  and  as  that  sum  ex- 
ceeded his  deposit,  the  bank  notified  hiui  and  showed  him  the  check.  He 
denied  having  signed  the  check,  but  did  not  denounce  it  as  a  forgery,  and 
after  seeing  the  book-keeper,  reported  to  the  bank  that  it  was  all  right.  Some 
time  after,  the  book-keeper  forged  another  check  of  the  plaintiff  for  seventeen 
hundred  dollars,  and  the  bank  paid  it.  On  discovering  this,  the  plaintiff  de- 
nounced the  second  forgery.  It  was  held  that  the  plaintiff's  act  in  ratifying 
the  first  forgery  exonerated  the  bank  for  having  paid  it;  that  his  subsequent 
retention  of  the  book-keeper  in  his  employ  misled  the  bank  and  threw  it  off 
its  guard;  and  that  as  he  had  ratified  the  first  forgery,  the  bank  was  excused 
for  paying  the  second  check,  and  he  must  therefore  bear  the  loss. 

Howell,  J.,  in  delivering  the  opinion  in  that  case,  said:  "We  are  led  to  the 
conclusion  that  the  peculiar  facts  and  circumstances  of  this  case,  taken  to- 
gether, must  relieve  the  bank  from  the  stringent  rule  that  the  depositary 
must  take  care  to  pay  none  but  the  checks  or  drafts  of  the  depositor  himself 
or  his  acknowledged  special  agent,  and  that  this  is  a  proper  case  to  apply  the 
equitable  principle  that  where  one  of  two  innocent  parties  must  suffer,  it 
should  be  he  who  was  the  cause  or  occasion  of  the  confidence  and  consequent 
injury  of  the  other." 

In  the  case  of  National  Bank  of  North  America  v.  Bangs,  106  Mass.  441,  8 
Am.  Rep.  349,  the  firm  of  E.  D.  &  G.  W.  Bangs  &  Co.,  the  defendants,  on 
September  21,  1SG9,  sold  some  gold  to  a  person  who  gave  them  in  return  a 
check  on  the  plaintiff  bank  payable  to  their  order,  signed  W.  D.  Bickford. 
This  check  was  on  the  same  day  indorsed  by  them  iu  blanK  and  deposited 
with  their  bank  for  collection.  On  the  next  day,  it  was  passed  through  the 
clearing-house,  and  paid  in  the  ordinary  course  of  business  by  the  plaintiff 
bank,  of  which  W.  D.  Bickford  was  a  customer  and  depositor.  On  October 
4,  1869,  Bickford,  upon  examining  the  checks  sent  to  him  l)y  the  bank  two 
or  three  days  1)efore,  pronounced  this  a  forgery,  and  informed  the  bank  of  it, 
and  on  the  same  day  the  bank  notified  the  defendants  that  the  check  was 
forged.  The  plaintiff  was  held  entitled  to  recover  back  the  money  paid  by 
it.  Wells,  J.,  delivering  the  opinion  of  the  court,  said:  "The  check  iiad  not 
gone  into  circulation,  and  could  not  get  into  circulation  until  it  was  indorsed 
by  the  defendants.  Their  indorsement  would  certify  to  the  public,  that  is, 
to  every  one  who  should  take  it,  the  genuineness  of  the  drawer's  signature. 
Without  it,  the  check  could  not  properly  be  paid  by  tlie  plaintiff.  Their  in- 
dorsement tended  to  divert  the  plaintiff  from  inquiry  and  scrutiny,  as  it  gave 
to  the  check  the  appearance  of  a  genuine  transaction,  to  the  inception  of 
which  the  defendants  were  parties.  Tlieir  names  upon  the  check  were  ap- 
parently inconsistent  with  any  suspicion  of  a  forgery  of  the  drawer's  name. 
But  to  the  defendants  the  presentation,  by  a  stranger  or  third  party,  of  a 
check  purporting  to  be  drawn  to  their  own  order,  which  such  third  party 
proposed  to  negotiate  to  them  for  value,  was  a  transaction  which  should  have 
aroused  their  suspicions.     It  ought  to  have  put  them  upon  inquiry  for  ex- 


Dec.  1889.]     People's  Bank  v.  Franklin  Bank.  895 

planations;  and  if  inquiry  had  been  properly  made,  it  would  have  disclosed 
the  fraud,  and  preventeel  the  success.  The  case  finds  that  they  acted  in  good 
faith.  But  that  does  not  exclude  such  omission  of  due  precautions  as  to  de- 
prive them  of  the  right  to  throw  the  loss  upon  another  party,  who  acted  in 
like  good  faith,  and  also  without  fault  or  want  of  due  care." 

In  the  case  of  Ellis  v.  Ohio  L.  1.  &  T.  Co.,  4  Ohio  St.  628,  64  Am.  Dec.  610, 
a  check  drawn  upon  one  bank  was  presented  to  another,  within  a  short  dis- 
tance of  the  former,  and  was  discounted,  without  asking  any  questions  of  the 
presenter  as  to  who  he  was  or  as  to  his  right  to  the  check.  Later  in  the  day, 
this  check  was  presented  to  the  drawee  bank  by  the  discounting  bank,  and 
was  paid  without  examination.  Ten  days  later,  the  check  was  discovered  to 
be  a  forgery,  and  the  discounting  bank  was  so  notified.  In  an  action  by  the 
drawee  bank  to  recover  back  the  money  paid,  the  plaintiff  introduced  evi- 
dence to  show  a  custom  among  the  banks  of  the  city  to  inquire,  when  a 
stranger  presented  a  check  to  the  bank  other  than  the  one  on  which  it  is 
drawn,  "in  reference  to  his  right  to  the  check,  and  the  identity  of  the  per- 
son," and  that  there  was  "  not  generally  so  strict  a  scrutiny  when  checks  came 
from  other  banks,  it  being  presumed  that  caution  had  already  been  exercised." 
It  was  held  that  the  plaintiff  could  recover,  as  the  bank  which  discounted 
the  check  had  been  negligent  in  not  making  the  proper  investigation  as  to  the 
validity  of  the  check,  and  that  the  drawee  was  excused  from  making  such 
inquiry,  it  liaving  a  right  to  presume  that  the  discounting  bank  had  done  so. 
Ranney,  J.,  who  delivered  the  opinion  of  the  court  in  that  case,  said: 
"  To  entitle  the  holder  to  retain  the  money  obtained  by  mistake  upon  a 
forged  instrument,  lie  must  occupy  the  vantage-ground  by  putting  the  drawee 
alone  in  the  wrong;  and  he  must  be  able  truthfully  to  assert  that  he  put  the 
whole  responsibility  upon  the  drawee,  and  relied  upon  him  to  decide,  and 
that  the  mistake  arising  from  his  negligence  cannot  now  be  corrected  with- 
out placing  the  holder  in  a  worse  position  than  though  payment  liad  been  re- 
fused. If  the  holder  cannot  say  this,  and  especially  if  the  failure  to  detect 
the  forgery,  and  consequent  loss,  can  be  traced  to  his  own  disregard  of  duty 
in  negligently  omitting  to  exercise  some  precaution  which  he  had  undertaken 
to  perform,  he  fails  to  establish  a  superior  equity  to  the  money,  and  cannot 
with  a  good  conscience  retain  it.  To  allow  him  to  do  so  would  be  to  permit 
him  to  take  advantage  of  his  own  wrong,  and  to  pervert  a  rule  designed  for 
his  protection  against  the  negligence  of  the  drawee  into  one  for  doing  injus- 
tice to  him." 

In  the  case  of  McKleroy  v.  Sonthern  Bank  of  Ky.,  14  La.  Ann.  458,  74  Am. 
Dec.  438,  one  Zimmer,  assuming  the  name  John  Belmont  forged  a  draft  on 
the  plaintiffs  in  the  name  of  James  Smith,  a  planter  residing  in  the  state  of 
Arkansas.  He  also  forged  a  letter  of  introduction  in  Smith's  name  to  Shot- 
well  and  Son,  of  Louisville,  Kentucky,  whose  house  had  been  in  correspondence 
with  Smith  for  many  years.  Shotwell  and  Son,  being  deceived  by  the  forger, 
indorsed  the  draft,  to  enable  the  holder  to  negotiate  it.  The  draft,  bearing 
the  indorsements  of  John  Belmont  and  of  Shotwell  and  Son,  was  tlien  pre- 
sented to  the  Southern  Bank  of  Kentucky  for  discount,  and  being  con- 
sidered good,  was  purchased  by  it.  The  draft  was  then  remitted  to  the 
Louisiana  State  Bank,  with  this  additional  indorsement  upon  it:  "Pay  to  R. 
J.  Palfrey,  cashier.  J.  B.  Alexander,  cashier,"  and  in  this  form  was  presented 
to  the  plaintiffs,  and  accepted  and  paid  at  maturity  to  the  defendant's  agent. 
A  few  weeks  after,  James  Smith,  upon  going  through  his  account  with  the 
plaintiflfs,  informed  them  that  the  draft  was  a  forgery,  whereupon  they  gave 
prompt  and  formal  notice  to  the  banks  and  to  Shotwell  and  Son.  The  suit  was 


896  People's  Bank  v.  Franklin  Bank.  [Tenn, 

afterwards  brought  to  recover  back  the  money  paid  on  the  draft.  The  su- 
preme court  gave  judgment  for  the  plaintiffs,  holding  that  as  the  loss  had 
already  occurred  before  the  bill  was  either  accepted  or  paid  the  holder  had 
suffered  no  loss,  and  it  ought  not  to  be  permitted  to  profit  by  the  mere  acci- 
dent of  payment.  See  also  National  Bank  of  Commerce  v.  National  M.  B. 
Ass'n,  55  N.  Y.  211;  14  Am.  Rep.  232. 

In  Rouvant  v,  San  Antonio  Nat.  Bank,  63  Tex.  610,  the  holder  of  a  check 
signed  by  a  person  in  a  certain  name  took  it  from  the  person,  although  he 
had  previously  taken  from  him  a  check  signed  in  a  different  name.  On  pre- 
senting the  check,  which  proved  to  be  a  forgery,  to  the  bank  for  payment, 
he  did  not  mention  this  fact,  and  he  was  held  bound  to  repay  the  money, 
because  of  his  neglect  to  impart  this  knowledge  of  suspicious  circumstances 
at  the  time  he  received  the  money. 

The  Exception  not  Generally  Applicable  to  Raised  or  Altered 
Checks  or  Drafts.  —  The  exception  applies  only  to  cases  in  which  the 
drawer's  signature  to  a  check  or  draft  has  been  forged.  It  does  not  apply 
to  cases  where  the  forgery  consists  in  altering  the  body  of  the  check  or 
draft.  The  bank  or  drawee  is  not  bound  to  know  the  handwriting  in  the 
body  of  the  instrument.  Where,  therefore,  money  is  by  mistake  paid  by  a 
bank  upon  a  raised  or  altered  check,  or  by  a  drawee  upon  a  raised  or  altered 
draft,  neither  party  being  in  fault,  it  may  generally  be  recovered  back,  as 
paid  without  consideration;  but  if  either  party  has  been  guilty  of  negligence 
or  carelessness,  by  which  the  other  has  been  injured,  the  negligent  party 
must  bear  the  loss:  2  Daniel  on  Negotiable  Instruments,  3d  ed.,  sec.  1661; 
Espy  V.  Bank  of  Cincinnati,  18  Wall.  604;  Rediwjton  v.  Woods,  45  Cal.  406; 
13  Am.  Rep.  190;  Parke  v.  Bofier,  67  Ind.  500;  33  Am.  Rep.  102;  Third 
Nat.  Bank  of  St.  Louis  v.  Allen,  59  Mo.  310;  Bank  of  Commerce  v.  Union 
Bank,  3  N.  Y.  230;  National  Bank  of  Commerce  v.  National  Mechanici'  Bank- 
ing Ass'n,  55  N.  Y.  211;  14  Am.  Rep.  2.32;  Marine  Nat.  Bank  v.  National 
City  Bank,  59  N.  Y.  67;  17  Am.  Rep.  305;  White  v.  Continental  Nat.  Bank, 
64  N.  Y.  316;  21  Am.  Rep.  612;  Security  Bank  v.  National  Bank  of  the  Re- 
public, 67  N.  Y.  458;  23  Am.  Rep.  129;  Hall  v.  Fuller,  5  Barn.  &  C.  750. 
But  see  Louisiana  Nat.  Bank  v.  Citizens^  Bank,  28  La.  Ann.  189;  26  Am. 
Rep.  92. 

In  delivering  the  opinion  of  the  court  in  Marine  Nat.  Bank  v.  National 
City  Bank,  59  N.  Y.  77,  17  Am.  Rep.  312,  Allen,  J.,  said:  "Moneys  paid 
upon  checks  and  drafts  which  have  been  forgeries,  either  in  the  body  of  the 
instrument  or  in  the  indorsements,  or  in  any  respect,  except  the  name  of 
the  drawer,  have  uniformly  been  held  recoverable  as  for  money  paid  by  mis- 
take, and  expressly  upon  the  ground  that  payment,  as  an  admission  of  the 
genuineness  of  the  instrument,  was  the  same  as  an  acceptance,  and  only 
operated  as  an  admission  of  the  signature  of  the  drawer.  The  doctrine  ia 
applied  to  cases  of  bills  altered  in  the  body  by  the  raising  of  the  amount  for 
which  they  were  drawn,  and  also  to  those  in  which  the  name  of  the  payee 
has  been  feloniously  changed,  in  several  cases,  and  uniformly  applied  when- 
ever the  question  has  arisen  in  this  state." 

But  if  a  bank  on  which  a  raised  draft  is  drawn  pays  it  through  mistake, 
upon  its  presentation  to  it  by  a  correspondent  bank,  as  agent,  to  which  it  ia 
forwarded  for  collection,  the  collecting  bank  cannot  be  compelled  to  repay  it, 
where  it  has  paid  over  to  its  principal  before  notice  of  the  mistake:  National 
Park  Bank  v.  Seaboard  Bank,  114  N.  Y.  28;  11  Am.  St.  Rep.  612;  National 
CUy  Bank  v.  Wtstcott,  118  N.  Y.  468. 


Dec.  1889.]     People's  Bank  v.  Franklin  Bank.  897 

Negligence  in  Filling  up  Check,  Effect  of.  —  If  the  customer  of  a  bank 
draws  his  check  in  such  a  careless  or  incomplete  manner  that  a  material  alter- 
ation may  be  readily  made  without  leaving  a  perceptible  mark,  or  giving  the 
check  a  suspicious  appearance,  he  may,  if  a  fraud  be  perpetrated,  be  held  to 
sufifer  the  loss.  lu  the  case  of  Young  v.  Orotc,  4  Bing.  253,  a  depositor  in  a 
bank,  on  leaving  home,  gave  to  his  wife  several  checks  signed  in  blank,  to  be 
filled  up  according  to  her  needs.  She  filled  up  one  for  fifty-two  pounds  two 
shillings,  but  began  the  word  "  fifty  "  with  a  small  letter,  and  wrote  it  in  the 
middle  of  a  blank  line.  In  writing  the  figures  in  the  margin,  she  also  left  a 
considerable  space  between  tlie  mark  "£"  and  the  figures  "52."  She  gave  the 
check  in  this  form  to  her  husband's  clerk,  to  get  the  money,  and  he  inserted 
the  words  '*  three  hundred  "  before  the  "  fifty,"  and  the  figure  "  3  "  before  the 
figures  "52,"  and  drew  £352  upon  it.  The  court  held  that  the  loss  must  be 
borne  by  the  drawer,  because  the  careless  drawing  of  the  check  had  made 
the  forgery  easy  and  simple:  2  Daniel  on  Negotiable  Instruments,  3d  ed., 
sec.  1659;  2  Morse  on  Banks  and  Banking,  3d  ed.,  sec.  480.  But  a  mer- 
chant is  not  guilty  of  such  negligence  as  will  render  him  liable  on  his 
check  in  the  hands  of  a  holder  in  good  faith,  and  for  value,  in  sending  to  the 
post-office,  by  a  clerk  who  knew  its  contents,  a  sealed  letter  containing  such 
check,  which  was  made  payable  to  order,  and  which  check  the  clerk  ab- 
stracted, and  passed,  after  altering  it  by  forging  the  words  "or  bearer,"  and 
obliterating  the  words  "or  order  ":  Belknap  v.  National  Bank  of  North  Amer- 
ica, 100  Mass.  376;  97  Am.  Dec.  105.  And  in  Mackintosh  v.  Eliot  National 
Bank,  123  Mass.  393,  it  was  held  that  a  bank  which  pays  out  money  on  a 
check  purporting  to  be  signed  by  a  depositor,  but  the  signature  on  which  is 
in  fact  forged  by  his  clerk,  is  not,  in  the  absence  of  evidence  that  the  clerk 
had,  or  was  supposed  by  the  bank  to  have,  authority  to  sign  the  depositor's 
name,  exempt  from  liability  to  the  depositor,  by  proof  that  the  forgery  was 
committed  on  a  blank  form  taken  from  the  depositor's  check-book,  which 
was  left  lying  about  in  iiis  oflSce  during  the  day;  that  it  was  stamped  with  a 
hand-stamp,  sometimes  used  on  his  checks,  and  which  was  accessible  to  any 
one  in  the  office;  that  the  clerk  was  allowed  to  fill  up  checks,  and  was  intro- 
duced by  the  depositor  to  the  officers  of  the  bank  as  the  person  who  was 
authorized  to  receive  money  on  the  depositor's  checks. 

It  is  a  general  rule  that  if  the  loss  can  be  traced  to  the  fault  or  negligence 
of  any  party,  it  will  be  fixed  upon  him:  2  Daniel  on  Negotiable  Instruments, 
3d  ed.,  sec.  1G57;  First  National  Bank  v.  Tappan,  6  Kan.  456;  Oloucester  Bank 
V.  Salem  Bank,  17  Mass.  32;  Clews  v.  Bank  of  N.  Y.  Nat.  B.  Assn,  114  N.  Y. 
70.  In  the  case  last  cited,  a  draft  upon  defendant  was  indorsed  by  the  payee 
and  mailed  to  the  indorsee.  It  never  reached  him,  but  fell  into  the  hands  of  a 
knave,  who  presented  it  to  defendant  to  be  certified.  A  memorandum  show- 
ing the  number  and  amount  of  the  draft,  and  that  it  was  certifie<l,  was  en- 
tered in  a  register  kept  by  the  defendant.  The  drawer  notified  the  defendant 
by  letter  of  the  loss  of  the  draft,  and  not  to  pay  it.  The  defendant  then 
added  to  the  memorandum:  "Stop'pay't;  see  letter."  Subsequently,  the 
knave  raised  the  amount  and  changed  the  date  and  the  name  of  the  payee, 
and  offered  it  to  the  plaintiffs  in  payment  for  certain  bonds.  In  an  action  to 
recover  the  amount  of  the  draft  as  raised,  plaintiffs  proved  that  they  sent 
their  messenger  to  the  defendant  to  ascertain  whether  the  certificatitm  was 
good.  The  person  in  attendance  answered,  "Yes,"  without  referring  to 
the  register;  and  upon  the  messenger's  return  with  this  reply,  the  plaintiffs 
received  the  draft  in  payment  for  the  bonds.  The  court  held  that  tliere  was 
aurticient  evidence  to  justify  the  finding  that  the  defendant  was  negligent  in 
Am.  St.  Rkp.,  Vol.  XVII.  — 67 


898  People's  Bank  v.  Franklin  Bank.  [Tenn. 

failing  to  disclose  the  facts  to  the  plaintiffs'  messenger,  and  to  authorize  a 
recovery.  But  in  Goddard  v.  Merchants'  Bank,  4  N.  Y.  147,  the  plaintiffs,  in 
New  York  City,  being  informed  that  the  draft  of  the  drawer,  residing  in 
Ohio,  had  been  protested,  went  to  the  notary  to  take  it  up,  and  the  notary 
being  out,  lefb  a  check  for  the  amount  and  the  notary's  fees.  The  notary 
paid  the  bank  and  got  the  draft,  which  plain tififs  discovered  to  be  a  forgery 
as  soon  as  it  was  shown  to  them.  It  was  held  that  they  could  recover  back 
the  money  paid,  and  that  they  were  not  negligent,  under  the  circumatances> 
in  paying  the  money  without  seeing  the  draft. 

Money  Paid  upon  Forged  Indorsement  of  Check  or  Draft  may  be  re- 
covered back.  The  bank  or  drawee  is  not  bound  to  know  the  signature  of  an 
indorser.  And  the  holder,  whether  he  indorses  the  instrument  or  not,  war- 
rants the  genuineness  of  all  prior  indorsements.  If,  therefore,  a  check  or 
draft  upon  which  the  name  of  a  prior  indorser  has  been  forged  is  paid,  tlie 
amount  may  be  recovered  back  from  the  party  to  whom  it  has  been  paitl,  or 
from  any  party  who  indorsed  it  suljsequent  to  the  forgery. 

And  if  a  check  is  drawn  payable  to  the  order  of  an  existing  person,  and 
the  indorsement  of  such  person  is  forged,  and  thereafter  payment  is  made  by 
the  bank,  such  payment  will  be  no  acquittance  to  it.  A  payment  made  otli- 
erwise  than  according  to  the  depositor's  directions  is  no  discharge  of  the 
bank's  obligations  to  liim:  2  Daniel  on  Negotiable  Instruments,  sec.  1663;  2' 
Morse  on  Banks  and  Banking,  sec.  474;  Af.lanta  Nat.  Bank  v.  Burke,  81  Ga. 
598;  Vanhihher  v.  Bank  of  Louisiana,  14  La.  Ann.  481;  74  Am.  Dec.  442;  Levi/ 
V.  Bank  of  Amerira,  24  La.  Ann.  220;  13  Am.  Rep.  124;  T^ennon  v.  Brahiard, 
36  Minn.  330;  First  Nat.  Bank  v.  S'nte  Bank,  22  Neb.  769;  3  Am.  St.  Rep. 
294;  ."itar  F.  L  Co.  v.  New  Hampshire  Nat.  Bank,  CO  N.  H.  442;  Buckley  v. 
Second  Nat.  Bank,  35  N.  J.  L.  400;  10  Am.  Rep.  249;  Johnson  v.  First  Nat. 
Bank,  6  Hun,  124;  Canal  Bank  v.  Bank  of  Alhany,  1  Hill,  287;  Cogjill  v.. 
American  Exrliawie  Bank,  1  N.  Y.  113;  49  Am.  Dec.  310;  Morgan  x.  Bank  of 
State  of  New  York,  11  N.  Y.  404;  Turnhull  v.  Bowijer,  40  N.  Y.  456;  100  Am. 
Dec.  523;  Thomson  v.  Bank  of  B.  N.  A.,  82  N.  Y.  1;  Citizens'  Nat.  Bank  v. 
Importers'  and  Traders'  Bank,  119  N.  Y.  195;  Shaffer  v.  McKee,  19  Ohio  St. 
526;  Dodge  v.  National  Ex.  Bank,  20  Ohio  St.  234;  5  Am.  Rep.  648;  30  Ciio- 
St.  1;  Pickle  v.  Muse,  88  Tenn.  380,  post,  p.  900;  Leather  Mfrs.  Bank  v.  Mer- 
chants' Bank,  128  U.  S.  26. 

If,  however,  the  drawer  puts  in  circulation  a  draft  or  check,  with  t!ie  in- 
dorsement of  the  payee  already  upon  it,  and  it  is  purchased  in  the  market  by 
a  bona  fide  holder,  who  presents  it  to  the  drawee,  by  whom  it  is  paid,  the 
drawee  cannot  recover  back  the  money  he  paid  to  such  bona  fide  holder: 
Hortsman  v.  Henshaw,  11  How.  177;  Star  F.  I.  Co.  v.  New  Hampshire  Nat. 
Bank,  60  N.  H.  442;  Meacher  v.  Fort,  3  Hill  (S.  C.)  227;  30  Am.  Dec.  364; 
York  Bank  v.  Asbary,  1  Biss.  233;  2  Morse  on  Banks  and  Banking,  sec.  476. 
And  where  the  drawer  of  a  bill  of  exchange  payable  to  order  himself  in- 
dorses the  bill,  and  passes  it  to  a  bank,  which  discounts  it,  and  collects  the 
amount  from  the  drawee,  the  latter  caninot  recover  back  from  the  bank  the 
money  paid  to  it  by  him:  Co<ji/iU  v.  American  Ex.  Bank,  1  N.  Y.  113;  49  Am. 
Dec.  310.  Bronson,  J.,  in  delivering  the  opinion  in  this  case,  said:  "A  bona 
fide  holder  may  treat  it  as  a  bill  payable  to  bearer.  The  bank  had  a  good  title 
to  the  bill  as  ag  linst  the  drawers  and  the  payee,  and  that  was  a  good  title 
against  all  the  world.  No  one  is  injured  by  this  doctrine.  The  bill  has  an- 
swered the  end  for  which  it  was  drawn.  The  plaintiff  has  paid  money  for  the 
drawers  in  pursuance  of  their  request;  and  he  has  the  same  remedy  against 
them  that  he  would  have  had  if  the  indorsement  had  been  genuine." 


Dec.  1889.]     People's  Bank  v.  Franklin  Bank.  899 

Certification  of  Check,.  Effect  of,  on  Rights  of  Bank  Paying  Forged 
Check. — The  better  opinion  is,  that  a  bank,  by  certifying  a  check,  either 
verbally  or  in  writing,  warrants  only  the  genuineness  of  the  drawer's  signa- 
ture, and  that  it  has  funds  to  meet  the  check;  that  it  does  not  thereby  war- 
rant the  genuineness  of  the  body  of  tli^  check,  or  of  any  indorsement  upon 
it;  and  that  if  there  has  been  any  fraudulent  alteration,  or  forged  indorse- 
ment, prior  to  the  certification,  the  certification  is  not  binding.  And  if  the 
bank  afterwards,  through  mistake,  pays  the  sum  to  which  tlie  check  has  been 
raised,  it  may  recover  back  the  difference  between  that  and  the  original  sum 
for  which  it  was  drawn:  2  Daniel  on  Negotiable  Instruments,  sec.  1G03;  2 
Morse  on  Banks  and  Banking,  sec.  4S2;  Eupy  v.  BcmJc  of  Cincinnati,  18  Wall. 
604;  Park  v.  Boser,  67  Ind.  500;  33  Am.  Rep.  102;  National  Bank  of  Com- 
merce V.  National  M.  B.  Assn,  55  N.  Y.  211;  14  Am.  Rep.  232;  Marine  Nat. 
Bank  v.  National  City  Bank,  59  N.  Y.  67;  17  Am.  Rep.  305;  Security  Bank  v. 
National  Bank  of  the  Republic,  67  N.  Y.  458;  23  Am.  Rep.  129;  contra,  Louisi- 
ana Nat.  Bank  v.  Citizens'  Bank,  28  La.  Ann.  189;  26  Am.  Rep.  92. 

Notice  of  Forgery  and  Demand  for  Restitution,  when  to  be  Given 
OR  Made. — It  is  only  reasonable  that  a  party  who  has  paid  money  on  a 
forged  instrument,  and  seeks  to  recover  it  back,  should  be  required  to  give 
notice  of  the  forgery,  and  make  demand  of  restitution  within  a  reasonable 
time.  The  earlier  cases,  both  in  England  and  in  this  country,  required  no- 
tice to  be  given  with  very  great  promptitude:  Cocks  v.  Masterman,  1  Barn.  & 
C.  902;  Smith  v.  Mercer,  6  Taunt.  76;  Gloucester  Bank  v.  Salem  Bank,  17 
Mass.  33;  Bank  of  St.  Albans  v.  Farmers'  and  Mechanics  Bank,  10  Vt.  141; 
33  Am.  Dec.  188;  2  Daniel  on  Negotiable  Instruments,  sec.  1371;  2  Morse  on 
Banks  and  Banking,  sec.  488.  In  Codes  v.  Masterman,  1  Barn.  &  C.  902,  a 
delay  of  one  day  was  held  to  be  fatal. 

But  the  doctrine  established  by  the  great  weight  of  modern  authority  in 
this  country  is,  that  mere  lapse  of  time  in  the  abstract,  however  long,  will 
not  bar  the  right  of  the  party  to  allege  the  forgery,  and  recover  back  the 
money  paid,  provided  he  gives  notice  and  makes  demand  within  a  reasonable 
time  after  he  discovers  the  forgery:  2  Daniel  on  Negotiable  Instruments,  sec. 
1372;  2  Morse  on  Banks  and  Banking,  sec.  487;  Schroeder  v.  Harvey,  75  111. 
368;  First  Nat.  Bank  v.  Tappan,  6  Kan.  456;  7  Am.  Rep.  568;  Kooidz  v. 
Central  Nat.  Bank,  51  Mo.  275;  Third  Nd.  Bank  v.  Alle?i,  59  Mo.  310;  Ca7ial 
Bank  v.  Bank  of  Albany,  1  Hill,  287;  Bank  of  Commerce  v.  Union  Bank,  3 
N.  Y.  230;  Goddard  v.  Merchants'  Bank,  4  N.  Y.  147;  White  v.  Continental 
Nat.  Bank,  64  N.  Y.  316;  21  Am.  Rep.  612;  Corn  Ex.  Bank  v.  Nassatt  Bank, 
91  N.  Y.  74;  43  Am.  Rep.  655;  Ellis  v.  Ohio  L.  I.  <k  T.  Co.,  4  Oiiio  8t.  628. 
But  in  Weinstein  v.  National  Bank,  69  Tex.  38,  5  Am.  St.  Rep.  23,  it  was 
held  that  a  bank  is  not  liable  to  a  depositor  for  money  paid  on  forged  checks, 
where,  by  reason  of  the  depositor's  negligence  and  delay  in  examining  his 
account  and  reporting  the  forgeries,  the  bank  loses  the  opportunity  of  recov- 
ering the  money  which  it  would  have  had,  if  the  discovery  and  report  had 
been  made  in  a  reasonable  time. 


AMERICAN  STATE  REPORTS, 

Vol.    XVIII,   Pacrs  549-563. 
COTTRILL  V.   KRUM. 

[100  MissouRf,  :197.  | 

Actions  for  false  representations. 

Pages  5<)9-5':->. 

CRAIG  V.   VAN  BEP>BER. 

[100  MissoiKr,  .■)S4.] 

Contracts  of  infants. 


Pa(;es  874:-.8HS. 
ALSTON  V.   HAWKINS. 

[105  North  Carhiin.s..  8.] 

^resumption  of  payment  from  lapse  of  time. 


April,  1890.]  Cottrill  v.  Krum.  649 

made  by  the  probate  court  for  the  sale  of  the  land  at  pnblic 
vendue.  The  land  was  appraised  at  one  hundred  and  fifty 
dollars,  and  sold  for  ten  dollars  to  Wm.  H.  Long;  six  years 
thereafter  he  sold  by  warranty  deed  to  Andrew  Hendricks  for 
three  thousand  dollars.  In  April,  1884,  Hendricks  conveyed 
by  like  deed  for  same  consideration  to  defendant. 

By  stipulation  filed,  it  is  agreed  that  the  sole  question  to  be 
determined  is,  whether  the  curator's  deed  is  valid.  There  can 
be  no  hesitation  on  this  point;  it  is  a  plain  matter  of  statutory 
provision.  Sections  28,  29,  and  30,  page  469,  General  Statutes, 
1865,  control  this  case. 

The  last-named  section  declares:  "  No  real  estate  of  any 
minor,  sold  under  the  provisions  of  this  chapter,  shall  be  sold 
for  less  than  three  fourths  of  its  appraised  value,"  etc.  The 
probate  court  had  no  jurisdiction  to  approve  such  a  sale.  Its 
order  of  approval  was  therefore  coram  non  judice,  and  the 
deed  showing  the  facts  already  recited  was  void  on  its  face. 

We  reverse  the  judgment,  and  remand  the  cause,  with  direc- 
tions to  enter  a  judgment  for  plaintiff's,  after  having  taken  an 
account  of  rents  and  profits. 

JuKiSDicnoN  —  Statutory  Authoritt.  —  Where  a  statute  prescribes  the 
mode  of  acquiring  jurisdiction,  it  must  be  strictly  pursued,  or  all  the  pro- 
ceedings will  be  mere  nullities:  Note  to  Bloom  v.  Bur  dick,  37  Am.  Deo.  308, 
309. 


Cottrill  v.  Krum. 


1100  MISSOUEI,  397.] 

Mkaitino  ov  Ordinaby  Words  in  iNSTRuarioNS  need  not  bb  Explatnbd 
WHEN. —  It  is  not  necessary  that  the  meaning  of  ordinary  words  and 
phrases,  such  as  "diligent  inquiry,"  used  in  their  usual  and  conven- 
tional sense  in  instructions  to  the  jury,  should  be  defined  or  explained. 

False  Representations,  Diligent  Inquiry  not  Essential  to  Recovery 
IN  Action  for. —  In  an  action  for  false  representations,  it  is  error  to  in- 
struct the  jury  that  although  the  defendant  made  false  representations 
as  to  material  existent  facts,  calculated  to  affect  the  plaintiff's  estimate 
of  the  value  of  property,  for  the  purpose  of  inducing  him  to  trade  there- 
for, upon  which  the  plaintiff  relied,  and  by  which  he  was  induced  to 
make  the  trade,  yet  if  by  diligent  inquiry  he  might  have  discovered 
that  such  representations  were  false,  then  he  cannot  recover.  And  such 
an  instruction  is  especially  erroneous  in  a  case  where  the  evidence  makes 
it  apparent  that  the  means  of  knowledge  were  not  in  fact  equally  avail- 
able to  the  plaintiff  and  to  the  defendant. 

Waivkr  of  Right  to  Sue  for  False  Representations,  What  is  not. — 
A  plaintiff  does  not  waive  his  right  to  sue  for  damages  for  false  repre- 


550  CoTTBiLL  V.  Krum.  [Missouri, 

sentations  by  offering,  after  the  purchase  of  the  property,  to  sell  it  at 
the  price  which  the  defendant  represented  to  be  its  value,  nor  by  allow> 
ing  four  or  five  montlis  to  elapse  before  bringing  his  suit. 
Substantial  Misdirection  of  Jury,  Ground  for  New  Trial. —  The  su- 
preme court  cannot  say  that  a  judgment  is  for  the  right  party,  and  ought 
to  be  aflSrmed,  when  there  has  been  a  substantial  misdirection  of  the 
jury  upon  a  question  of  law  bearing  upon  the  issues  of  fact  to  be  tried 
by  the  jury,  but  for  which  they  might  have  reached  a  different  con- 
clusion. 

Action  to  recover  damages.    The  opinion  states  the  case. 
C.  H.  Krum,  for  the  appellant. 
John  C,  Orrick,  for  the  respondent. 

Brace,  J.  The  plaintifif  in  this  action  seeks  to  recover 
damages  for  false  representations  alleged  to  have  been  made 
by  the  defendant  in  a  trade  in  which  the  plaintiflF,  in  exchange 
for  fifty  shares  of  paid-up  stock  in  the  Globe  Panorama  Com- 
pany, sold  and  conveyed  to  the  defendant  a  certain  lot  of 
ground  in  the  city  of  St.  Louis.  The  verdict  was  for  the  de- 
fendant, and  from  the  judgment  thereon  in  his  favor  the 
plaintiff  appeals.  Many  grounds  are  assigned  in  the  motion 
for  a  new  trial,  but  the  only  one  urged  here  why  the  court 
should  have  granted  a  new  trial  is,  the  alleged  error  of  the 
court  in  giving  the  seventh  instruction  for  the  plaintiff,  which 
is  as  follows:  *'  7.  If  you  find,  from  the  evidence,  that  plain- 
tiff, by  diligent  inquiry,  might  have  ascertained  the  truth  or 
falsity  of  the  alleged  representation,  and  failed  to  make  such 
investigation,  then  the  court  instructs  you  that  he  cannot  re- 
cover in  this  action." 

1.  It  is  urged  against  this  instruction  that  it  is  merely  an 
abstract  proposition  of  law,  and  does  not  define  or  explain  to 
the  jury  what  meaning  the  law  gives  to  the  expression  "  dili- 
gent inquiry,"  and  is  therefore  erroneous;  and  in  support  of 
this  contention,  we  are  cited  to  many  cases  in  which  instruc- 
tions were  held  to  be  erroneous,  because  legal  propositions  and 
the  meaning  of  technical  legal  phrases  or  words  were  therein 
submitted  to  the  jury;  e.  g.,  Fugate  v.  Carter,  6  Mo.  267,  and 
Anderson  v.  McPike,  86  Mo.  293,  in  which  the  jury  were  called 
upon  to  determine  what  was  "a  material  averment";  Morgan 
V.  Durfee,  69  Mo.  469,  33  Am.  Rep.  508,  to  define  "malice"; 
Boogher  v.  Neece,  75  Mo.  383,  in  which  the  question  of  what 
was  "  adverse  possession  "  and  "  color  of  title  "  was  left  to  the 
jury;  Wiser  v.  Chesley,  53  Mo.  547,  what  was  "gross  negli- 
gence ";  and  Atteberry  v.  Powell,  29  Mo.  429,  77  Am.  Dec.  579, 


April,  1890.]  Cottrill  v.  Krum.  551 

in  which  it  was  left  to  the  jury  to  determine  the  meaning  to 
be  applied  to  the  words  "in  substance,"  in  an  action  of  slan- 
der. In  all  these  cases,  it  will  be  observed,  either  a  question 
of  law  or  the  meaning  of  certain  words  and  terms  to  which  a 
special  and  peculiar  meaning  had,  by  law,  been  applied,  was 
left  to  the  jury,  and  it  was  properly  held  that  this  was  error. 
It  is  possible  that  cases  might  arise  in  which  the  words  "dili- 
gent inquiry,"  might  become  the  proper  subject  of  judicial  in- 
terpretation, but  in  this  case  it  is  evident  they  were  used  by 
the  court  and  could  have  been  understood  by  the  jury  in  no 
other  than  in  their  usual,  ordinary,  and  conventional  sense, 
and  such  sense  is  presumed  to  be  as  well  comprehended  by 
the  jury  as  the  court,  and  needs  no  definition.  It  is  not  ne- 
cessary that  the  meaning  of  ordinary  words  and  phrases  used 
in  their  usual  and  conventional  sense  should  be  explained  in 
instructions. 

2.  It  is  further  argued  against  said  instruction,  that  it  as- 
serts an  incorrect  legal  proposition,  and  ignores  the  difference 
between  the  situations  of  the  parties  in  regard  to  the  property 
concerning  which  the  representations  are  alleged  to  have  been 
made.  The  facts  upon  which  the  court,  in  its  first  instruc- 
tion to  the  jury,  authorized  a  finding  for  the  plaintiff,  were: 
"Tliat  if,  at  the  time  when  the  defendant  traded  to  plaintiff 
the  panorama  stock  in  the  petition  described,  defendant  was, 
and  from  the  opening  of  the  enterprise  had  been,  business 
manager  of  the  Globe  Panorama  Company,  and  in  charge  of 
the  business  in  St.  Louis,  and  that,  with  a  view  to  the  trade 
of  the  stock  aforesaid  to  the  plaintiff,  and  as  an  inducement 
thereto,  he  stated  to  plaintiff,  in  substance,  tliat  the  intrinsic 
and  actual  value  of  said  panorama  stock  was  one  hundred 
dollars  per  share,  and  that  none  of  said  stock  had  been  sold 
or  could  be  bought  for  less  than  par,  or  one  hundred  dollars 
per  share,  and  if  he  further  stated,  at  the  time  and  with  the 
purpose  aforesaid,  that  the  actual  cost  price  of  the  panorama 
property  in  St.  Louis  was  seventy-five  to  eighty  thousand 
dollars,  and  that  from  the  opening  of  the  business  the  com- 
pany had  been,  and  was  still,  doing  a  profitable  business,  and 
that  from  the  time  the  business  opened,  the  company  had 
been  earning  and  paying  a  dividend  of  two  per  cent  or  two 
dollars  per  share  per  month;  and  if  you  further  find  that 
said  statements  were  untrue,  that  they  were  made  for  the 
purpose  of  deceiving  and  misleading  plaintiff  as  to  the  true 
character  or  value  of  said  stock;  and  if  you  find  that  plaintiff 


552  CoTTRiLL  V.  Krum.  [Missouri, 

traded  the  Pine  Street  lot  for  said  stock  on  the  faith  of  said 
representations,  and  that  he  would  not  have  made  the  trade 
but  for  those  statements  and  representations;  and  if  you 
further  find  that  the  defendant,  in  making  said  representa- 
tions, knew  they  were  untrue,  or  if  he  made  them  as  of  hia 
own  knowledge,  without  knowing  whether  they  were  true  or 
false,  and  with  the  intent  of  deceiving  and  misleading  the 
plaintiff, — then  the  court  instructs  the  jury  that  your  verdict 
must  be  for  the  plaintiff." 

The  other  instructions  given,  except  the  one  under  consid- 
eration, were  in  harmony  with  this  one.  There  was  evidence 
to  support  this  instruction,  and  with  the  legal  propositions,  it 
asserts  that  no  fault  has  been  found.  Nevertheless,  the  jury 
were  told  in  the  seventh  instruction  that  although  they  should 
find  all  these  facts  to  exist,  yet  if  the  plaintiff,  by  diligent  in- 
quiry, might  have  discovered  that  defendant's  said  represen- 
tations were  false,  then  he  could  not  recover.  In  other  words, 
the  jury  were  told  in  this  instruction  that  although  the  de- 
fendant made  false  representations  as  to  material,  existent 
facts,  calculated  to  affect  the  plaintiff's  estimate  of  the  value 
of  the  property,  for  the  purpose  of  inducing  him  to  trade 
therefor,  upon  which  the  plaintiff  relied,  and  by  which  he 
was  induced  to  make  the  trade,  yet  if,  by  diligent  inquiry,  he 
might  have  discovered  that  such  representations  were  false, 
then  he  could  not  recover. 

We  do  not  understand  this  to  be  the  law.  "  It  has  indeed 
been  laid  down  as  a  broad  proposition  of  law  that  if  the 
means  of  knowledge  be  at  hand  and  equally  available  to  both 
parties,  and  the  subject  of  the  transaction  be  open  to  the  in- 
spection of  both  alike,  the  injured  party  must  avail  himself 
of  such  means,  if  he  would  be  heard  to  say  that  he  was  de- 
ceived by  the  representation  of  the  other  party,  unless  there 
was  a  warranty  of  the  facts":  Bigelow  on  Fraud,  522. 
This  instruction  cannot  be  maintained  even  upon  the  broad 
terms  of  this  proposition;  for  by  it  the  plaintiff  is  precluded 
from  recovery  if  he  could  have  discovered  the  truth  by  dili- 
gent inquiry,  whether  the  means  of  knowledge  were  at  hand, 
or  whether  they  were  equally  available  to  him  as  to  the  de- 
fendant or  not. 

It  may  be  well,  however,  to  note  the  continuing  remarks  of 
Mr.  Bigelow  on  the  general  proposition.  He  says,  pages  523, 
et  seq.:  "But  there  is  serious  ground  for  doubting  the  cor- 
rectness of  this  proposition  in  its  broad  form.     It  will  be  seen 


A 


April,  1890.]  Cottrill  v.  Krum.  653 

upon  rejQection  that  the  situation  of  the  person  to  whom  the 
misrepresentation  was  made  is  quite  different  in  regard  to 
means  of  knowledge  from  that  of  the  person  who  made  it. 
The  latter  may  well  be  held  to  the  duty  to  know  the  facts; 
no  one  has  prevented  him  from  knowing  them.  The  former 
has  been  put  off  his  guard  and  misled  by  the  very  represen- 
tation which  has  been  made.  Indeed,  a  representation  may 
as  well  mislead,  even  where  the  means  of  knowledge  are 
directly  at  hand,  as  where  they  are  not.  The  supposed  rule 
in  regard  to  means  of  knowledge  came  to  be  applied  in  this 

country  before  this  distinction  had  been   pointed  out 

Recent  authority  has,  however,  gone  far  towards  setting  the 
matter  right  in  principle;  the  proposition  has  now  become  very 
widely  accepted,  at  law  as  well  as  in  equity,  at  least  as  general 
doctrine,  that  a  man  may  act  upon  a  positive  representation 
of  fact,  notwithstanding  the  fact  that  the  means  of  knowl- 
edge were  specially  open  to  him It  may  be  improbable 

that  a  man  w.th  the  truth  in  reach  should  accept  a  represen- 
tation in  regard  to  it;  but  the  improbability  can  be  no  more 
than  matter  of  fact.  If  the  representation  were  of  a  charac- 
ter to  induce  action,  and  did  induce  it,  that  is  enough.  It  mat- 
ters not,  it  has  been  well  declared,  that  a  person  misled  may  be 
said  in  some  loose  sense  to  have  been  negligent,  ....  for  it 
is  not  just  that  a  man  who  has  deceived  another  should  bi 
permitted  to  say  to  him,  '  You  ought  not  to  have  believed  or 
trusted  me,'  or,  '  You  were  yourself  guilty  of  negligence.'  " 
After  citing  many  cases  illustrative  of  the  principle  here 
stated,  the  learned  author  sums  up  thus,  page  528:  "The  re- 
sult appears  to  be,  not  only  in  principle,  but  by  the  weight  of 
authority,  that  the  party  to  whom  the  representation  is  made 
is  affected  by  means  of  knowledge  or  by  notice,  only  where  the 
language  or  conduct  was  not  of  a  kind  to  withdraw  his  atten- 
tion from  what  otherwise  he  would  be  bound  to  know;  i.  e., 
only  where  the  representation  was  not  calculated  to  put  him 
ofif  his  guard,  as  in  cases  of  representations  of  value  or  opin- 
ion." 

To  use  the  language  of  another  author:  "  The  doctrine  of 
notice  has  no  application  where  a  distinct  representation  has 
been  made.  A  man  to  whom  a  particular  and  distinct  repre- 
sentation has  been  made  is  entitled  to  rely  on  the  representa- 
tion, and  need  not  make  any  further  inquiry,  although  there 
are  circumstances  in  the  case  from  which  an  inference  incon- 
wstent  with  the  representation  might  be  drawn  ":   Kerr  on 


554  CoTTRiLL  V.  Krum.  [Missouri, 

Fraud,  80.  "No  man  can  complain  that  another  has  relied 
too  implicitly  on  the  truth  of  what  he  himself  stated  ":  Kerr 
on  Fraud,  81.  The  same  general  principle  has  been  ex- 
pressed by  this  court  in  the  following  terms:  "It  is  no 
excuse  for,  nor  does  it  lie  in  the  mouth  of,  the  defendant, 
to  aver  that  plaintiff  might  have  discovered  the  wrong  and 
prevented  its  accomplishment  had  he  exercised  watchfulness, 
because  this  is  but  equivalent  to  saying,  'You  trusted  me, 
therefore  I  had  the  right  to  betray  you '  ":  Pomeroy  v.  Benton, 
57  Mo.  531.  The  same  idea  is  expressed  in  another  opinion, 
thus:  "We  doubt  if  it  is  equity  to  allow  a  sharper  to  insist 
on  the  fulfillment  of  his  bargain  on  the  ground  that  his  vic- 
tim was  so  destitute  of  sagacity  as  to  make  no  further  in- 
quiries":  Wannell  v,  Kem,  57  Mo.  478. 

It  is  not  seen  how  instruction  No.  7  can  be  maintained 
without  doing  violence  to  the  just  and  equitable  principles 
announced  in  these  authorities,  even  concedisg  that  the  par- 
ties at  the  time  were  upon  an  equal  footing,  and  therefore 
to  be  treated  as  dealing  at  arm's-length;  but  when  it  is  con- 
sidered that  the  defendant  was  the  originator  and  promoter 
of  the  enterprise,  its  business  manager,  fully  conversant  with 
every  fact  of  its  past  history  and  present  condition,  having 
actual  knowledge  of  the  cost  of  the  plant,  the  amount  of  the 
stock,  and  the  dividend  it  was  actually  yielding,  and  that  the 
plaintiff  was  a  stranger  to  the  enterprise,  it  becomes  at  once 
apparent  that  the  means  of  knowledge  were  not  in  fact  equally 
available  to  the  plaintiff  as  to  the  defendant,  and  the  in- 
struction has  nothing  to  stand  upon;  for  "  where  the  parties  do 
not  stand  upon  equal  footing,  the  objection  to  a  plea  or  claim 
of  false  representations  that  the  party  to  whom  they  were 
made  was  'negligent'  in  not  making  inquiry  or  examination 
has  still  less  force,  and  would  nowhere  be  allowed":  Bigelow 
on  Fraud,  534;  Wannell  v.  Kem,  57  Mo.  478.  So  that  in  any 
view  of  the  case  this  instruction  must  be  condemned. 

3.  There  is  nothing  in  the  contention  that  the  plaintiff 
waived  his  right  to  sue  for  damages  for  false  representations 
by  reason  of  the  fact  that  after  the  purchase  of  the  stock,  and 
before  suit,  he  may  have  offered  the  stock  for  sale  at  par,  or 
that  four  or  five  months  elapsed  between  the  time  when  he 
acquired  the  stock  and  the  institution  of  his  suit.  Nor  is  it 
within  the  power  of  this  court  to  say  the  judgment  is  for  the 
right  party,  and  ought  to  be  affirmed,  when  there  has  been  a 
substantial  misdirection  of  the  jury  upon  a  question  of  law 


April,  1890.]  Cottrill  v.  Krum.  555 

bearing  upon  the  issues  of  fact  to  be  tried  by  the  jury,  but  for 
which  they  might  have  reached  a  different  conclusion.  For 
the  error  of  the  court  in  giving  the  seventh  instruction,  the 
judgment  is  reversed,  and  cause  remanded  for  new  trial. 

Action  TO  Recover  for  False  Representations. —  An  action  for  false 
representations,  called  also  an  action  of  or  for  deceit,  may  be  maintained 
against  a  party  who  makes  a  false  representation  of  a  fact  with  knowledge  of 
its  falsity,  to  one  who  is  ignorant  of  the  falsity,  with  intent  that  it  shall  be 
acted  upon,  where  the  person  to  whom  it  is  made  acts  upon  it,  and  by  so  doing 
suffers  injury:  Pasleyv.  Freeman,  3  Term  Rep.  51;  Taylor  v.  Ashton,  11  Mees. 
&  W.  401;  Ormrod  v.  HulJi,  14  Mees.  &  W.  651;  Peek  v.  Derry,  59  L.  T.,  N.  S., 
78;  Bigelow  on  Fraud,  466;  Marshall  v.  Buchanan,  35  Cal.  264;  95  Am. 
Dec.  95;  Williams  v.  McFadden,  23  Fla.  143;  11  Am.  St.  Rep,  345;  Menoinv. 
Arbuckle,  81  111.  501;  Miner  v.  Riclder,  51  111.  299;  Wheeler  v.  Randall,  48111. 
182;  Keith  v.  Qoldston,  22  111.  App.  457;  Stanhope  v.  Swnfford,  80  Iowa,  45; 
Rhoda  V.  Annis,  75  Me.  17;  46  Am.  Rep.  354;  Buschman  v.  Codd,  52  Md.  202; 
McAleer  v.  Horsey,  35  Md.  4.39;  Pendergast  v.  Reed,  29  Md.  398;  96  Am.  Dec. 
539;  LitcJiJield  v.  Hutchinson,  117  Mass.  195;  Medbury  v.  Watson,  6  Met. 
246;  39  Am.  Dec.  726;  Busterud  v.  Farrington,  36  Minn.  320;  Humj>hrey  v. 
Merriam,  32  Minn.  197;  Wilder  v.  De  Cou,  18  Minn.  470;  Cartwright  v.  Car- 
penter, 7  How.  (Miss.)  328;  40  Am.  Dec.  66;  Schwenk  v.  Naylor,  102  N.  Y. 
683;  Miller  v.  Barber,  66  N.  Y.  558;  Rice  v.  Manley,  66  N.  Y.  82;  23  Am. 
Rep.  30;  White  v.  Merritt,  7  N.  Y.  352;  57  Am.  Dec.  527;  Cidrer  v.  Avery,  7 
Wend.  380;  22  Am.  Dec.  586;  Benton  v.  Pratt,  2  Wend.  385;  20  Am.  Dec.  623; 
Ujpton  V.  Vail,  6  Johns.  181;  5  Am.  Dec.  210;  Lnm  v.  Shermer,  93  N.  C.  164; 
Hexter  v.  Bast,  125  Pa.  St.  52;  11  Am.  St.  Rep.  874;  Cox  v.  Highley,  100  Pa. 
St.  249;  Routh  v.  Caron,  64  Tex.  289;  Paddock  v.  Fletcher,  42  Vt.  389. 

In  such  an  action  the  motive  of  the  defendant  in  making  the  false  repre- 
sentation is  wholly  immaterial.  The  law  infers  an  improper  motive,  if  what 
he  says  is  false  within  his  own  knowledge,  and  occasions  damage  to  the 
plaintiff:  Keith  v.  Qoldston,  22  111.  App.  457;  Hinerv.  Richter,  51  111.  299. 

Benefit  to  Party  Making  False  Representation  not  Necessary  to 
Liability. —  It  is  not  necessary,  in  ortler  to  maintain  an  action  to  recover 
damages  for  a  false  representation,  to  show  that  the  defendant  was  in  any  way 
benefited  by  the  making  of  such  representation,  or  that  he  was  in  collusion 
with  some  one  else  who  was  benefited:  Pasley  v.  Freeman,  3  Term  Rep.  51; 
Hart  V.  Tallmadge,  2  Day,  381;  2  Am.  Dec.  105;  Endsley  v.  Johns,  120  111.  469; 
60  Am.  Rep.  572;  Fisher  v.  Mellen,  103  Mass.  503;  Patten  v.  Ourney,  17  Mass. 
182;  9  Am.  Dec.  141;  Am  York  L.  I.  Co.  v.  Chapman,  118  N.  Y.  288;  Rice  v. 
Manley,  66  N.  Y.  82;  23  Am.  Rep.  30;  Hubbard  v.  Briggs,  31  N.  Y.  518; 
White  V.  Merritt,  7  N.  Y.  352;  57  Am.  Dec.  527;  Upton  v.  Vail,  6  Johns.  181; 
6  Am.  Dec.  210. 

Representation  must  be  False  at  Time  It  is  Made. —  In  determining 
the  question  of  the  liability  of  the  person  making  a  representation,  its  truth 
or  falsity  must  be  ascertained  by  the  fact  as  it  was  at  the  time  when  th» 
representation  was  made.  Any  change  in  the  condition  of  affairs  that  takes 
place  after  the  time  when  the  representation  vas  made  cannot  affect  the 
question  of  the  liability  of  the  person  who  made  it:  Corbett  v.  Gilbert,  24  Ga. 
454;  Reeve  v.  Dennett,  145  Mass.  23. 

Falsk  Representations  may  be  by  Acts  as  well  as  Words. —  Such  a 
fraud  as  will  sustain  the  action  for  false  representations  may  grow  out  of 


556  CoTTRiLL  V.  Krum.  [Missouri, 

actions  as  well  as  words.  A  party  may  make  a  false  and  fraudulent  afifirmation 
or  representation  by  acts  as  well  as  by  language:  Jiizan  v.  Toulmin,  9  Ala. 
662;  44  Am.  Dec.  448;  Chisholm  v.  Gadsden,  1  SLrob.  220;  47  Am.  Dec.  550; 
Croyle  v.  Moses,  90  Pa.  St.  250;  35  Am.  Rep.  654;  Bigelow  on  Fraud,  467. 

Suppression  of  the  Truth  Equivalent  to  False  Representation. —  A 
false  representation  may  consist  in  the  suppression  of  the  truth  as  well  as  in 
the  assertion  of  a  falsehood,  and  an  action  lies  in  either  case  if  the  intention 
to  deceive  exists  and  is  the  cause  of  the  suppression  or  assertion:  Kidney  v. 
Stoddard,  7  Met.  252;  Allen  v.  Addingion,  7  Wend.  9;  Croyle  v.  Moses,  90 
Pa.  St.  250;  35  Am.  Rep.  654. 

Opinion,  whether  Constitutes  Legal  Representation.  —  As  a  general 
rule,  a  false  representation  for  which  a  party  is  liable  to  an  action  must  be  a 
representation  of  a  fact,  and  not  a  mere  expression  of  opinion.  Generally 
speaking,  an  opinion  does  not  constitute  a  legal  representation.  It  is,  perhaps, 
safe  to  say  that  a  mere  expression  of  an  opinion  is  not  sufficient  to  sustain  an 
action  for  false  representations:  Bigelow  on  Fraud,  473;  Gordon  v.  Butler, 
105  U.  S.  553;  Crown  v.  Carriger,  66  Ala.  590;  East  v.  Worthington,  88  Ala. 
537;  Nounnan  v.  Suiter  County  Land  Co.,  81  Cal.  1;  Williams  v.  McFadden,  23 
Fla.  143;  11  Am.  St.  Rep.  345;  Tuck  v.  Doivning,  76  111.  71;  Endsley  v.  Johns, 
120  111.  469;  60  Am.  Rep.  572;  Sieveking  v.  Litzler,  31  Ind.  13;  Buschman  v. 
Codd,  52  Md.  202;  Belcher  v.  Costello,  122  Mass.  189;  Haven  v.  Neal,  43  Minn. 
315;  Starr  v.  Bennett,  5  Hill,  303;  Simar  v.  Canaday,  53  N.  Y.  298;  13  Am. 
Rep.  523;  ^tna  Ins.  Co.  v.  Reed,  33  Ohio  St.  283;  Fulton  v.  Hood,  34  Pa.  St.  365; 
Lyon  V.  Briggs,  14  R.  I.  222;  51  Arft.  Rep.  372.  Bigelow,  in  his  work  on  the  law 
of  fraud,  page  473,  says:  "It  is  very  difficult,  however,  to  distinguish  opinion 
from  fact  in  cases  lying  along  the  border;  so  much  so,  that  the  courts  will  often 
be  found  in  conflict  with  each  other.  Sometimes  the  same  court  will  be  found 
in  conflict  with  itself."  In  the  confusion  which  exists  on  this  subject,  it  is 
difficult  to  formulate  a  rule  that  can  be  regarded  as  general.  The  proposition 
that  no  man  is  liable  for  the  expression  of  his  opinion  or  judgment  cannot  be 
accepted  without  qualification  as  universally  true.  It  is  true  only  when  the 
opinion  stands  by  itself,  and  is  intended  to  be  taken  as  distinct  from  anything 
else.  If  a  party  positively  affirms  an  opinion  upon  a  matter  of  fact  suscepti- 
ble of  actual  knowledge  in  such  a  manner  that  the  person  to  whom  he  makes 
the  statement,  instead  of  being  put  upon  inquiry  is  put  oflf  his  guard,  and 
the  latter,  relying  upon  such  statement,  is  injured,  an  action  will  lie: 
Bigelow  on  Fraud,  475;  Hickey  v.  Morrell,  102  N.  Y.  454;  55  Am.  Rep.  824. 
Danforth,  J.,  in  delivering  the  opinion  of  the  court  in  that  case,  said:  "So 
as  to  every  representation  concerning  a  matter  of  fact  by  which  one  man  is 
induced  to  change  his  position  to  his  injury  or  the  benefit  of  another.  It 
may  be  so  expressed  as  to  bind  the  person  making  it  to  its  truth,  whether  it 
take  the  form  of  an  opinion  or  not ":  See  Teachout  v.  Van  Hoesen,  76  Iowa,  113; 
14  Am.  St.  Rep.  206. 

Representations  by  Vendor  as  to  Value  of  Propertt. — Represen- 
tations as  to  the  value  of  property,  made  by  a  vendor  thereof  to  the  vendee, 
are  ordinarily  regarded  as  mere  statements  of  opinion,  and  the  party  to  whom 
they  are  made  is  not  generally  justified  in  relying  upon  them.  Such  repre- 
sentations, though  false,  are  not  usually  sufficient  to  sustain  an  action  for 
false  representations:  Endsley  v.  Johns,  120  111.  469;  60  Am.  Rep.  572;  Sieve- 
king  V.  Litzler,  31  Ind.  13;  Hunter  v.  McLaughlin,  43  Ind.  38;  McAleerv.  Horsey, 
35  Md.  459;  Medbury  v.  Watson,  6  Met.  259;  39  Am.  Dec.  726;  Kimball  v. 
Bangs,  144  Mass.  321;  Bristol  v.  Braidwood,  28  Mich.  191;  Haven  v.  Neal,  43 
Minn.  315;    Walker  v.  Mobile  etc.  R.  R.  Co.,  34  Miss.  245;  Anderson  v.  Mo 


April,  1890.]  Cottrill  v.  Krum.  557 

Pike,  86  Mo.  293;  Van  Epps  v.  Harrison,  5  Hill,  63;  40  Am.  Dec.  314;  Simar 
V.  Canaday,  53  N.  Y.  298;  13  Am.  Hep.  523;  Ellis  v.  Amlrew.i,  56  N.  Y.  83; 
15  Am.  Rep.  379;  Chrysler  v.  Canaday,  90  N.  Y.  272;  43  Am.  Rep.  166.  In  Ellis 
V.  Andrews,  56  N.  Y.  83,  15  Am.  Rep.  379,  Grover,  J.,  delivering  the  opin- 
ion of  the  court,  said:  '*  Upon  the  question  of  value,  the  purchaser  must  rely 
upon  his  own  judgment;  and  it  is  his  folly  to  rely  upon  the  representation  of 
the  vendor  in  that  respect."  In  Simar  v.  Canaday,  53  N.  Y.  298,  13  Am.  Rep. 
623,  it  was  held  that  the  question  whether  a  representation  as  to  value  is 
merely  the  expression  of  an  opinion  or  an  affirmation  of  fact  is  a  question  for 
the  jury.  And  in  Haven  v.  Neal,  43  Minn.  315,  it  was  held  that  such  repre- 
eentations  are  admissible  in  evidence  when  connected  with  and  serving  to 
characterize  other  material  statements.  But  if  the  buyer  is  induced  by  the 
seller  not  to  make  inquiries  as  to  the  value  in  regard  to  any  extrinsic  facts 
affecting  the  quality  or  value  of  the  property,  he  may  rely  upon  the  assur- 
ance of  the  seller;  and  if  he  does  so  rely,  and  such  assurances  are  fraudulently 
made  to  induce  him  to  buy,  he  may  have  an  action  for  the  injury  he  sustains: 
Hanijerv.  Ev'/ns,  38  Ark.  334;  Nyseivander  v.  Loivman,  124  Ind.  58i;  Parker 
V.  Moulton,  114  Mass.  99;  19  Am.  Rep.  315;  Bradbury  v.  Haines,  60  N.  H. 
123;  Stewart  v.  Stearns,  63  N.  H.  99;  56  Am.  Rep.  496;  Weidner  v,  Phillips, 
39  Ilun,  1;  Ellis  v.  Andreios,  56  N-  Y.  S3;  15  Am.  Rep.  379.   ' 

If  the  value  of  property  sold  can  be  known  only  to  an  expert,  and  the 
seller,  representing  himself  as  knowing  its  value,  makes  false  representations 
in  reference  thereto,  which  are  relied  on  and  acted  upon  by  the  buyer  to  his 
injury,  an  action  for  damages  will  lie:  Han'jer  v.  Evins,  38  Ark.  334;  Allen 
V.  IJart,  72  111.  104;  Teachout  v.  Van  Hoesen,  76  Iowa,  113;  14  Am.  St.  Rep. 
206;  McKee  v.  Eaton,  26  Kan.  226;  Picard  v.  McCormick,  11  Mich.  OS;  Kost 
V.  Bender,  25  Mich.  515. 

Some  authorities  hold  that  a  false  and  fraudulent  statement  as  to  the 
number  of  acres  in  a  tract  or  piece  of  land  sold  is  actionable:  Stark- 
weather  V.  Benjamin,  32  Mich.  305;  Coon  v.  Atwell,  46  N.  H.  510;  Wlutneyv. 
Allaire,  1  N.  Y.  305;  Bardsley  v.  Duntley,  69  N.  Y.  577;  Hill  v.  Brower,  76 
N.  C.  124.  But  see  contra,  Gordon  v.  Parinelee,  2  Allen,  212;  Mooney  v.  Mil- 
ler, 102  Mass.  217;  Credle  v.  Swindell,  63  N.  C.  305.  In  Lewis  v.  Jewell,  151 
Mass.  345,  however,  it  was  held  that  a  seller  of  certain  carpets  laid  upon 
various  floors,  halls,  and  stairs  of  a  large  dwelling-house  was  liable  to  the 
buyer  for  false  representations  as  to  the  number  of  yards,  and  that  the  latter 
was  not  bound  to  ascertain,  by  measurement  or  otherwise,  the  number  of 
yards  he  was  buying.  It  was  stated  in  that  case  that  the  rule  as  to  land 
adopted  in  that  state  did  not  extend  to  such  a  case.  In  Iowa,  it  is  held  that 
a  buyer  may  rely  upon  tha  representations  of  the  seller  as  to  ownership  of 
real  property,  its  location,  and  the  like;  and  in  order  to  recover  for  false 
representations  in  reference  to  such  matters,  it  is  not  necessary  for  the  plain- 
tiff to  show  that  he  instituted  inquiry  by  consulting  plats  or  records,  or  by 
employing  a  surveyor,  or  the  like:  McGibbons  v.  Wilder,  78  Iowa,  531;  Car- 
michael  v.  Vandfbnr,  50  Iowa,  651;  Hale  v.  Philbrick,  42  Iowa,  81.  And  the 
same  doctrine  seems  to  prevail  in  Indiana  also:  Ledbetter  v.  Davis,  121  Ind. 
119;    Westv.   Wrijht,  98  Ind.  335;  Campbell  v.  Franken,  65  Ind.  591. 

In  some  states  it  is  held  that  false  representations  'nade  by  a  vendor  of 
real  estate  as  to  the  price  which  he  paid  for  it  are  not  actionable:  Holhrook 
v.  Connor,  60  Me.  578;  11  Am.  Rep.  212;  Bishop  v.  Small,  63  Me.  12;  Med- 
bury  V.  Watson,  6  Met.  246;  Hemmer  v.  Cooper,  8  Allen,  334;  Mooney  v. 
Miller,  102  Mass.  217;  Cooper  v.  Layering,  106  Mass.  77.  But  in  other  states 
the  contrary  doctrine  is  held:  Ives  v.  Carter,  24  Conn.  392;  Green  v.  Bi-yaid, 


558  CoTTRiLL  V.  Kbum.  [Missouri, 

2  Ga.  66;  McA  leer  v.  Horsey,  35  Md.  439;  Van  Epps  v.  Harrison,  5  Hill,  63; 
Sandford  v.  Handy,  23  Wend.  260. 

In  the  case  of  Kenner  v.  Harding,  85  111.  264,  28  Am.  Rep.  615,  it  was 
proved  that  the  defendant  represented  to  the  plaintiff  that  he  had  been 
offered  a  certain  sum  for  the  land  he  was  selling  him,  and  fraudulently  in- 
duced the  person  who,  he  said,  had  made  him  the  offer  to  corroborate  hia 
statement.  The  plaintiff,  relying  on  the  statement  and  its  corroboration, 
bought  the  land,  paying  for  it  much  more  than  it  was  worth.  Judgment 
was  rendered  in  favor  of  the  plaintiff.  Scholfield,  J.,  who  delivered  tha 
opinion  of  the  court,  affirming  the  judgment  of  the  lower  court,  said:  "The 
general  rule  of  law  is,  that  the  mere  statements  of  the  vendor  as  to  the  value 
of  land,  or  what  he  has  been  offered  by  others  for  it,  are  not  of  themselves 
such  evidence  of  legal  fraud  as  will  authorize  a  recovery;  but  that  does  not 
apply  here,  where  the  statement  comes  from  a  third  party,  unknown  to  have 
any  interest  in  magnifying  the  value  of  the  land.  The  plaintiff,  being  him- 
self uninformed  as  to  the  value  of  the  land,  was  entitled  to  expect  that  he 
could  get  honest  information  from  others,  and  was  not  to  anticipate  they 
were  in  a  conspiracy  with  the  defendant  to  deceive  him.  By  this  conspiracy 
the  defendant  caused  a  source  of  information  to  which  the  plaintiff  had  a 
right  to  resort,  and  on  which  to  rely,  to  become  corrupted,  and  thereby  pre- 
vented his  obtaining  correct  information,  and  so  the  plaintiff  was  both 
morally  and  legally  defrauded."  It  is  well  settled  that  false  representations 
as  to  the  character  and  pecuniary  standing  of  a  third  person,  made  with 
knowledge  of  their  falsity,  and  with  intent  to  deceive,  to  one  who,  relying 
upon  them,  is  thereby  injured,  will  sustain  an  action.  This  subject  is  dis- 
cussed in  the  note  to  Lord  v.  Colley,  25  Am.  Dec.  447-451;  and  see  Bigelow 
on  Fraud,  481;  Endsl^y  v.  Johns,  120  111.  469;  60  Am.  Rep.  572.  In  the 
following  states,  however,  statutes  have  been  enacted  requiring  representa- 
tions concerning  the  credit  of  another  to  be  in  writing,  in  order  to  bind  the 
party  making  them:  Alabama,  California,  Idaho,  Indiana,  Kentucky,  Maine, 
Massachusetts,  Michigan,  Missouri,  Oregon,  South  Carolina,  Vermont,  Vir- 
ginia, West  Virginia,  and  Wyoming. 

On  the  question  whether  a  purchaser  of  property  is  liable  to  an  action  for 
deceit  for  misrepresenting  his  own  financial  ability,  the  authorities  are 
divided.  In  Vermont,  it  is  held  that  an  action  for  deceit  will  not  lie  against 
one  who  makes  a  false  representation  of  his  own  pecuniary  resources  in  order 
to  obtain,  and  thereby  obtains,  a  credit  for  goods  sold  him:  Fisher  v.  Broiun, 
1  Tyler,  387;  4  Am.  Dec.  726;  Dyer  v.  TiUon,  23  Vt.  313;  Jude  v.  Wood- 
burn,  27  Vt.  415;  Best  v.  Smith,  54  Vt.  617.  And  in  Lyon  v.  Brii/gs,  14  R.  I. 
222,  51  Am.  Rep.  372,  it  was  decided  that  the  action  will  not  lie  against 
one  obtaining  credit  by  fraudulently  representing  that  he  is  "a  person  safely 
to  be  trusted  and  given  credit  to."  Bigelow,  on  the  other  hand,  says:  "The 
matter  of  one's  own  solvency  is  a  fact  capable  of  actual  knowledge  and 
there  is  no  good  reason  for  holding  a  representation  concerning  it  to  be  of 
less  effect  than  a  representation  concerning  the  solvency  of  a  third  person." 
And  see  Cain  v.  Dickenson,  60  N.  H.  371. 

Promise  is  not  Representation.  —  It  is  well  settled  that  a  promise  to 
perform  an  act,  although  accompanied  at  the  time  with  an  intention  not  to 
perform  it,  is  not  such  a  representation  as  can  be  made  the  basis  of  an  action 
for  false  representations.  Strictly  speaking,  a  promise  is  not  a  representation: 
Lawrence  v.  Gayetly,  78  Cal.  126;  12  Am.  St.  Rep.  29;  Gage  v.  Lewis,  68  111. 
604;  People  v.  Mealy,  128  111.  9;  15  Am.  St.  Rep.  90;  Burt  v.  Bowks,  69  Ind. 
1;  Long  v.  Woodman,  58  Me.  49;  Dawe  v.  Morris,  149  Mass.  188;  14  Am.  St. 


I 


April,  1890.]  Cottrill  v.  Krum.  559 

Rep.  404;  Knowlton  v.  Keenan,  146  Mass.  86;  4  Am.  St.  Hep.  282;  Oallager 
V.  Brunei,  6  Cow.  347;  Lexon  v.  Julian,  21  Hun,  577;  Farrar  v.  Bridges,  3 
Humph.  566;  Fenwick  v.  Orimes,  5  Cranch  C.  C.  439. 

Misrepresentations  op  Law  not  Ground  of  Action.  —  Generally 
speaking,  a  misrepresentation  of  law  affords  no  basis  for  an  action  of 
deceit:  Bigelow  on  Fraud,  487;  Upton  v.  Tribilcock,  91  U.  S.  45;  Jordan  v. 
Pickett,  78  Ala.  331;  Lehman  y.  Shnckle/ord,  50  Ala.  437;  Benll  v.  McOehee,  57 
Ala.  438;  Towmend  v.  Cowles,  31  Ala.  428;  Fi-^h  v.  Clelnnd,  33  111.  243;  Burt 
V.  Bowles,  69  Ind.  1;  Russell  v.  Branham,  8  Blackf,  277;  Reed  v.  Sidener,  32 
Ind.  373;  Carter  v.  Harden,  78  Me.  528;  Thompson  v,  Phmiix  Ins.  Co.,  75 
Me.  55;  46  Am.  Rep.  357;  Grant  v.  Grant,  56  Me.  573;  Burns  v.  Lane,  188 
Mass.  350;  Jajge  v.  Winsloio,  30  Minn.  363;  Le.ron  v.  Julian,  21  Hun,  577; 
jEtna  Ins.  Co.  v.  Reed,  33  Ohio  St.  2S3;  Gormely  v.  Gymnastic  Ass'n,  55  Wis. 
350. 

Representation  must  be  of  Material  Fact.  —  A  false  representation, 
to  be  the  ground  of  an  action  for  deceit,  must  be  of  a  material  fact:  Bige- 
low on  Fraud,  497;  Jordan  v.  Pickett,  78  Ala.  331;  McGar  v.  Williams,  26 
Ala.  469;  62  Am.  Dec.  739;  Williams  v.  McFaddi-n,  23  Fla.  143;  11  Am.  St. 
Rep.  345;  Schfinthacker  v.  Riddle,  99  111.  343;  People  v.  Healey.  128  HI.  9;  15 
Am.  St.  Rep.  90;  Ward  v.  Ltuieen,  25  111.  App.  160;  Dawe  v.  Morrvi,  149 
Mass.  188;  14  Am.  St.  Rep.  404;  Hedden  v.  Griffin,  136  Mass.  229;  49  Am. 
Rep.  25;  Hall  v.  Johnson,  41  Mich.  286;  Lehhy  v.  Ahrens,  26  S.  C.  275.  la 
delivering  the  opinion  of  the  court  in  Hedden  v.  Griffin,  136  Mass.  229,  49 
Am.  Rep.  25,  Morton,  C.  J.,  said:  "In  order  to  maintain  an  action  of  torfc 
for  deceit,  it  is  necessary  for  the  plaintiff  to  show  that  the  false  representa- 
tions alleged  in  his  declarartion  are  representations  of  material  facts  calculated 
to  deceive  him  and  induce  him  to  act.  Representations  as  to  matters  which 
are  merely  collateral,  and  do  not  constitute  essential  elements  of  the  con- 
tract into  which  the  plaintiff  is  induced  to  enter,  are  not  sufficient." 

Not  Necessary  that  It  should  have  been  Sole  Inducement.  —  It  s 
not  necessary,  however,  that  the  false  representation  should  have  been  the 
sole  inducement  to  the  contract.  A  person  who  has  by  misrepresentation  in- 
duced another  to  enter  into  a  contract  will  not  generally  be  heard  to  deny 
the  materiality;  and  if  the  party  deceived  can  show  that  the  misrepresenta- 
tion had  a  substantial  effect  in  inducing  the  contract,  it  will  be  sufficient: 
Jordan  V.  Pickett,  78  Ala.  331;  Winter  v.  Bandcl,  30  Ark.  362;  Hale  v.  Phil- 
hick,  47  Iowa,  217;  Saffiord  v.  Grout,  120  Mass.  20;  Fishhack  v.  Miller,  15 
Nev.  428;  Addington  v.  Allen,  11  Wend.  374;  Lehby  v.  Ahrens,  26  S.  C.  275; 
James  v.  Hodsden,  47  Vt.  127. 

Representations  must  be  Made  with  Knowledge  of  their  Falsitt. 
—  To  make  a  party  liable  in  an  action  at  law  for  false  representations,  it  must 
be  shown  that  he  made  the  representations  with  actual  knowledge  of  their 
falsity,  or  without  knowing  whether  they  we're  true  or  false,  or  under  such 
circumstances  that  he  ought  to  have  known  that  they  were  false,  whether  he 
did  or  not:  Bigelow  on  Fraud,  509;  Joliffe  v.  Baker,  L.  R.  11  Q.  B.  D.  255; 
Reese  River  Mg.  Co.  v.  Snath,  L.  R.  4  H.  L.  64;  Bartholomew  v.  Buslmcll,  20 
Conn.  271;  52  Am.  Dec.  338;  Williams  v.  McFaddcn,  23  Fla.  143;  11  Am.  St. 
Rep.  345;  People  v.  Healy,  1-J8  111.  9;  15  Am.  St.  Rep.  90;  Schwahacker  v. 
Riddle,  99  III.  343;  Tone  v.  Wilson,  81  111.  529;  Walker  v.  Hough,  59  111.  375; 
Hiner  v.  Richter,  51  111.  299;  Mitchell  v.  Deeds,  49  111.  416;  Phelps  v.  Jame.% 
79  Iowa,  262;  Allison  v.  Jack,  76  Iowa,  205;  M<-Kown  v.  Furgason,  47  Iowa, 
636;  Campliell  v   Hillmaj^   15  B.  Mon.  505;   61  Am.  Dec.  195;   Kingsbury  v. 


660  CoTTRiLL  V.  Krum.  [Missouri, 

Taylor,  29  Me.  508;  50  Am.  Dec.  607;  Lamm  v.  Port  Deposit  Ass\  49  Md. 
23.3;  33  Am.  Rep.  246;  Boioker  v.  Belong,  141  Mass.  315;  Cole  v.  Cassidy,  138 
Mass.  437;  52  Am.  Rep.  284;  Emerson  v.  Brigham,  10  Mass.  197;  6  Am.  Dec. 
109;  Tryon  v.  Whitwarsh,  1  Met.  1;  35  Am.  Dec.  239;  Stone  v.  Denny,  4  Met. 
151;  Cowley  v.  Smyth,  46  N.  J.  L.  3cS0;  50  Am.  Rep.  432;  Wahnnnn  v.  Dalley, 
51  K  Y.  27;  10  Am.  Rep.  551;  Orlnvold  v.  Gehhle,  126  Pa.  St.  353;  12  Am. 
St.  Rep.  878;  Hexter  y.  Bast,  125  Pa.  St.  52;  11  Am.  St.  Rep.  874;  Erie  City 
Iron  Works  v.  Barber,  106  Pa.  St.  125;  51  Am.  Rep.  508;  Cox  v.  Highley,  100 
Pa.  St.  249;  Fulton  v.  Hood,  34  Pa.  St.  365;  75  Am.  Dec.  664;  Staines  v.  Shore, 
16  Pa.  St.  200;  55  Am.  Dec.  492;  Jackson  v.  Stockhridge,  29  Tex.  394;  94  Am. 
Dec.  290. 

The  law  raises  no  presumption  of  knowledge  on  the  part  of  the  party  mak- 
ing the  representation  from  the  mere  fact  that  the  representation  is  false.  If 
he  honestly  belipved  it  to  be  true  at  the  time  he  made  it,  he  cannot  be  held 
liable  in  this  form  of  action:  Lord  v.  Qoddard.  13  How.  198;  Schwabacker  v. 
Hiddle,  99  111.  343;  Holdom  v.  Ayer,  110  111.  448;  Avei-y  v.  Chapman,  62  Iowa, 
144;  Hartford  Ins.  Co.  v.  Matthews,  102  Mass.  221;  Sollvnd  v.  Johnson,  27 
Minn.  455;  Sims  v.  Eiland,  57  Miss.  83;  Cowley  v.  Smyth,  46  N.  J.  L.  388; 
50  Am.  Rep.  432;  Stitt  v.  Little,  63  N.  Y.  427;  Erie  City  Iron  Works  v.  Barber, 
106  Pa.  St.  125;  51  Am.  Rep.  508;  Crown  v.  Brown,  30  Vt.  707.  But  one  who 
makes  a  representation  without  knowing  whether  it  is  true  or  false  is,  in 
morals  and  in  law,  as  blamable  as  if  he  made  it  knowing  it  to  be  false.  If, 
therefore,  a  party  states  as  of  his  own  knowledge  material  facts  susceptible 
of  knowledge,  which  are  false,  he  is  guilty  of  a  fraud  which  renders  him  lia- 
ble to  the  person  who  relies  and  acts  upon  his  representations  as  true,  and 
it  is  no  defense  that  he  believed  the  representations  to  be  true:  Bigelow  on 
Fraud,  513;  Juzan  v.  Toulmin,  9  Ala.  662;  44  Am.  Dec.  448;  Munroe  v.  Prit- 
chett,  16  Ala.  785;  50  Am.  Dec.  203;  Einstein  v.  Marshall,  58  Ala.  153;  25 
Am.  Rep.  729;  Hanger  v.  Evins,  38  Ark.  334;  Mayer  v.  Salazar,  84  Cal.  646; 
Foard  v.  Mc.Comh,  12  Bush,  723;  Ingalls  v.  MUler,  121  Ind.  188;  Westw  Wright, 
98  Ind.  335;  Brown  v.  Blunt,  72  Me.  415;  McAleer  v.  Horsey,  35  Md.  439; 
Savage  V.  Stevens,  126  Mass.  207;  Tucker  v.  White,  125  Mass.  344;  Litchfield 
V.  Hutchinson,  117  Mass.  195;  Fisher  v.  Mellen,  103  Mass.  503;  Stone  v.  Denny, 
4  Met.  151;  Lobdell  v.  Baker,  1  Met.  193;  Sf  Am.  Dec.  358;  Stone  v.  Cavell, 
29  Mich.  359;  Beehe  v.  Knupp,  28  Mich.  53;  Bullitt  v.  Farrar,  42  Minn.  8; 
ante,  p.  485;  Busterud  v.  Farrington,  36  Minn.  320;  Humphrey  v.  Merriam, 
32  Minn.  197;  Merriam  v.  Pine  City  Lumber  Co.,  23  Minn.  314;  Wilder 
V.  De  Coil,  18  Minn.  470;  Sims  v.  Eiland,  57  Miss.  607;  Walsh  v.  Morse, 
80  Mo,  568;  Caldwell  v.  Heni-y,  76  Mo.  254;  Phillips  v.  Jones,  12  Neb.  213; 
Wakeman  v.  Dalley,  51  N.  Y.  27;  10  Am.  Rep.  551;  Oberlander  v.  Spiess, 
45  N.  Y.  175;  Meyer  v.  Amidon,  45  N.  Y.  169;  Lunn  v.  Shermer,  93  N.  C. 
164;  Mtna  Ins.  Co.  v.  Reed,  33  Ohio  St.  283;  Mitchell  v.  Zimmerman,  4  Tex. 
75;  51  Am.  Dec.  717;  Cabot  v.  Christie,  42  Vt.  121;  1  Am.  Rep.  313;  Peek  v. 
Derry,  59  L.  T.,  N.  S.,  78;  Brownlie  v.  Campbell,  L.  R.  5  App.  Cas,  925; 
Taylor  v.  Ashton,  11  Mees.  &  W.  401.  In  the  late  case  of  Peek  v.  Derry,  69 
L.  T.,  N.  S.,  78,  Sir  James  Hannen  said:  "If  a  man  takes  upon  himself  to 
assert  a  thing  to  be  true  which  he  does  no*  know  to  be  true,  and  has  no  rea- 
sonable ground  to  believe  to  be  true,  in  order  to  induce  another  to  act  upon 
the  assertion,  who  does  so  act,  and  ia  then  damnified,  the  person  so  dam 
nified  is  entitled  to  maintain  an  action  for  deceit."  So,  too,  if  a  party  in 
conscious  ignorance  of  the  fact,  recklessly  represents  that  a  thing  is  true,  es- 
pecially under  circumstances  where  he  ought  to  have  known  it  to  be  false, 
he  will  be  liable,  in  an  action  for  false  representations,  to  the  person  who. 


April,  1890.]  Cottrill  v.  Krum.  661 

relying  on  his  statements,  has  suffered  injury:  Derry  v.  Peelc,  L.  R.  14  App. 
Cas.  337;  Peek  v.  Derry,  59  L.  T.,  N.  S.,  78;  Orisioold  v.  Oehhie,  126  Pa.  St. 
353;  12  Am.  St.  Rep.  878;  Beehe  v.  Kna-pp,  28  Mich.  53;  ln<jalls  v.  Miller,  121 
Ind.  188;  Lunn  v,  Shermer,  93  N.  0.  164. 

Intent  to  Deceive  Essential  to  Maintain  Action.  —  In  order  to  main, 
tain  an  action  for  false  representations,  it  must  be  shown  that  the  represen* 
tations  were  fraudulently  made  with  intent  to  deceive  the  person  to  whom 
they  were  made,  and  to  induce  him  to  act  upon  them:  Terrd  v.  Benctt,  18 
Ga.  404;  Hohlom  v.  Ayer,  110  111.  448;  Schivahaclcer  v.  Riddle,  99  111.  343; 
Avery  v.  Chapman,  62  Iowa,  144;  Hartford  Ins.  Co  v.  Matthews,  102  Mass. 
221;  Tucker  v.  White,  125  Mass.  344;  Sims  v.  Eiland,  57  Miss.  83;  Gristoold 
V.  Sahin,  51  N.  H.  167;  12  Am.  Rep.  76;  Cowley  v.  Smyth,  46  N.  J.  L.  380; 
50  Am.  Rep.  432;  Marsh  v.  Falker,  40  N.  Y.  562;  Zahridie  v.  Smith,  13  N.  Y. 
322;  64  Am.  Dec.  551;  Yovmf  v.  Cored,  8  Johns.  23;  5  Am.  Dec.  316; 
J/ttber  V.  Wilson,  23  Pa.  St.  178;  Lebhy  v.  Ahrens,  26  S.  C.  275;  Crown  v. 
Brown,  30  Vt.  707;  Smith  v.  Mariner,  5  Wis.  551;  68  Am.  Dec.  73.  But  if  a 
false  representation  is  made  with  knowledge  of  its  falsity,  an  intent  to  de- 
ceive will  be  conclusively  presumed:  Judd  v.  Weber,  55  Conn.  267;  Enddey 
v.  Johns,  120  111.  469;  60  Am.  Rep.  572;  Chatham  Furnace  Co.  v.  Moffatt,  147 
Mass.  403;  9  Am.  St.  Rep.  727;  Hudnut  v.  Gardner,  59  Mich.  341;  Haven  v. 
Neal,  43  Minn.  315;  Coivley  v.  Smyth,  46  N.  J.  L.  380;  50  Am.  Rep.  432; 
Oriswold  V.  Oebbie,  126  Pa.  St.  353;  12  Am.  St.  Rep.  878;  Hine  v.  Campion, 
L.  R.  7  Ch.  D.  344.  Loom  is,  J.,  in  delivering  the  opinion  of  the  court  in 
Judd  V.  Weber,  55  Conn.  207,  said:  "  It  is  a  mistake  to  suppose  that  it  i.s 
essential  to  a  fraudulent  intent  that  it  should  reach  forward  and  actually 
contemplate  the  resulting  damage  to  the  other  party.  There  is  a  fraudulent 
intent,  if  one,  with  a  view  of  benefiting  himself  by  intentional  falsehood,  mis- 
leads another  in  a  course  of  action  which  may  be  injurious  to  him." 

Representations  must  have  been  Relied  upon. — In  an  action  to 
recover  damages  for  false  representations,  the  plaintiff  must  show  that  he 
relied  upon  the  representations  made  to  him  by  the  defendant,  and  that 
he  was  deceived  thereby:  Bennett  v.  Gibbons,  55  Conn.  450;  Merwin  v.  Ar- 
buckle,  81  111.  501;  Tuck  v.  Downing,  76  III.  71;  Hiner  v.  Kichter,  51  111.  299; 
Wheeler  v.  Rand(dl,  48  111.  182;  Bowman  v.  Carithers,  40  Ind.  90;  Haijee  v. 
Grossman,  31  Ind.  223;  Jenkins  v.  Long,  19  Ind.  28;  81  Am.  Dec.  374;  Proctor 
V.  AlcCoid,  60  Iowa,  153;  White  v.  Smith,  39  Kan.  752;  IVindram  v.  French, 
151  Mass.  547;  Inhdntants  of  Webster  v.  Lamed,  6  Met.  522;  Cobb  v.  WrijIU, 
43  Minn.  83;  Humphrey  v.  Merruim,  32  Minn.  197;  Priest  v.  White,  89  Mo, 
609;  Anderson  v.  McPike,  86  Mo.  293;  Dinm  v.  White,  63  Mo.  186;  Nelson 
V.  LuUng,  62  N.  Y.  645;  Ming  v.    Wool/olk,  116  U.  S.  599. 

Damage  must  be  Proved  to  Sustain  Action.  —  In  order  to  sustain  an 
action  for  false  representations,  the  plaintiff  nmst  prove  that  he  has  sustaiued 
damage  by  reason  of  his  reliance  upon  the  representations.  Fraud  without 
damage  is  no  ground  for  an  action:  Ming  v.  Woolfolk,  116  U.  S.  599;  Jordan 
V.  Pickett,  78  Ala.  331;  Holtonv.  Noble,  83Cal.  7;  Freeman  v.  Mc Daniel,  23  Ga. 
354;  Dan/orlh  v.  Gushing,  77  Me.  182;  Fuller  v.  /Iod;/don,  25  Me.  243;  Bynrd 
V.  Holmes,  34  N.  J.  L.  296;  Munro  v.  Gairdner,  3  Brev.  31;  6  Am.  Dec.  531; 
Nye  V.  Merriam,  35  Vt.  438. 

Damages  must  be  Proximate  Consequence. —  The  damages  recoverable 
in  an  action  for  false  representations  nuist  be  the  natural  and  proximate 
consequence  of  the  false  representations  made,  and  such  as  can  be  clearly  de- 
fined and  ascertained:  Dawe  v.  Morris,  149  Mass.  188;  14  Am.  St.  Rep.  404; 
Ah.  ST.  Kep.,  Vol.  X\ia.  —  36 


562  CoTTRiLL  V.  Krum.  [Missouri, 

Bradley  V.  Fuller,  118  Mass.  239;  Lamb  v.  Stone,  11  Pick.  527;  Thompson  v. 
Phoenix  Ins.  Co.,  75  Me.  55;  46  Am.  Rep.  357;  Jex  v.  Straus,  122  N.  Y.  293. 
Measure  of  Damages. —  In  an  action  for  false  representations  in  the  sale 
of  property,  the  measure  of  damages  is  the  difference  between  the  value  thereof 
as  sold  and  what  its  value  would  have  been  if  it  had  been  as  represented: 
Williams  V.  McFadden,  23  Fla.  143;  11  Am.  St.  Rep.  345;  Nn-^cwander  v. 
Lowman,  124  Ind.  584;  Page  v.  Wells,  37  Mich.  415;  Stiles  v.  While,  11  Met. 
356;  45  Am.  Dec.  214;  Vail  v.  Reynolds,  118  N.  Y.  297;  Lunn  v.  Shermer, 
93  N.  C.  164.  The  measure  of  damages  for  a  fraudulent  representation  that 
the  vendor's  title  to  slaves  was  absolute,  when  it  was  only  a  life  estate,  is  the 
difference  in  the  value  of  the  two  estates  at  the  time  of  the  sale:  Camfhell  v. 
Hillman,  15  B.  Mon.  508;  61  Am.  Dec.  195.  Where  stocks  are  sold  upon  a 
false  representation  of  their  value,  the  measure  of  damages  is  the  difference 
between  their  value  as  represented  and  as  it  was  in  fact  at  the  time  of  the 
sale:  Miller  v.  Barher,  66  N.  Y.  558;  Mallory  v.  Leach,  35  Vt.  156;  82  Am. 
Dec.  625.  In  an  action  for  false  representations  which  induced  the  plaintiff 
to  compromise  with  the  defendant,  the  measure  of  damages  is  the  difference 
between  what  he  received  and  what  he  would  have  received  if  no  fraudulent 
concealment  had  been  made:  Grahenheimerv.  Blum,  63  Tex.  369.  In  an  action 
for  a  false  representation  by  a  vendor  of  land,  that  a  certain  privilege  was  an- 
tt-xed  thereto,  the  measure  of  damages  is  the  difference  between  the  value 
«  the  land  as  it  was  and  what  its  value  would  have  been  with  the  privilege 
annexed:  Monell  v.  Colden,  13  Johns.  395;  7  Am.  Dec.  390.  On  the  question 
o!  damages,  Bigelow  says:  "The  true  rule  in  cases  of  fraud,  as  in  cases  of  neg- 
ligence, probably  is,  that  the  defendant  is  liable  for  all  loss  which  happens  in 
the  direct  and  natural  course  of  things  from  the  wrong":  Bigelow  on  Fraud, 
634. 

False  Representations  in  Prospectuses.  —  The  directors  of  a  company 
are  liable  to  an  action  for  damages  for  false  statements  contained  in  prospec- 
tuses issued  by  them,  where  they  knew  or  ought  to  have  known  their  falsity, 
and  the  plaintiff,  relying  on  such  statements,  has  acted  upon  them  to  his  hurt: 
Peek  v.  Der^-y,  59  L.  T.,  N.  S.,  78;  Terwilliger  v.  Great  Western  Tel.  Co.,  59  111. 
249;  Booth  v.  Wonderly,  36  N.  J.  L.  250;  Morgan  v.  Skiddy,  62  N.  Y.  319; 
Cross  V.  Sackett,  6  Abb.  Pr.  247;  Fenn  v.  Curtis,  23  Hun,  384;  Paddock  v. 
Fletcher,  42  Vt.  389. 

False  Representation  Intendeu  to  be  Commlnicated  to  Another. — 
Where  false  and  fraudulent  representations  are  made  to  one  person  with  the 
expectation  and  purpose  that  they  should  be  communicated  to  another,  and 
they  are  so  communicated  to  the  latter,  by  whom  they  are  acted  upon  to  his 
damage,  the  party  making  the  representations  will  be  liable:  C/mhbuck  v. 
Cleveland,  37  Minn.  466;  Faton  v.  Avery,  83  N.  Y.  31;  38  Am.  Rep.  389. 

But  where  the  fraudulent  representations  were  not  intended  to  be  acted 
upon  by  such  third  person,  no  action  will  lie  therefor:  Wells  v.  Cook,  16  Oh;<> 
St.  67;  88  Am.  Dec.  436,  and  note  442-445,  where  this  question  is  fully  con- 
sidered. 

Liability  of  Public  Officer  for  False  Representations.  —  A  public 
oflScer  making  false  and  fraudulent  representations  in  respect  to  property  sold 
by  him  is  liable  to  an  action  for  damages.  His  official  character  does  not 
protect  him:  Culver  v.  Avery,  7  Wend.  380;  22  Am.  Dec.  586;  Bigelow  on 
Fraud,  515.     But  see  Tucker  v.    White,  125  Mass.  344. 

Action  not  Barred  by  Retaining  Propekty. — The  fact  that  the  plain- 
tiff has  retained  the  property  recei\  ed  by  him  will  not  bar  his  right  to  aa 


April,  1890.]    Consumers'  Gas  Co.  v.  Gaslight  etc.  Co.     563 

action  for  damages  for  false  representations:  Nysewanderv.  Loioman,  124  Ind. 
584;  Johnson  v.  Cm/?w,  116  Ind.  278;  St.  John  v.  Hendrickson,  81  Ind.  350; 
Nauman  v.  Oherle,  90  Mo.  666;  Parker  v.  Marquis,  64  Mo.  38;  Grabenkeimer 
Blum,  63  Tex.  3G9.  Neither  will  the  fact  that  the  plaintiff  performed  hia 
part  of  an  executory  contract  after  learning  of  the  fraud:  Naumanv.  Oherle, 
90  Mo.  666;  Parker  v.  Marquis,  64  Mo.  38;  Grabenheimer  v.  Blum,  63  Tex. 
369. 

Waiver  of  Right.  — If  a  person  induced  by  false  representations  to  enter 
into  a  contract,  upon  afterwards  obtaining  full  knowledge  of  the  fraud  and 
of  all  the  material  facts,  declines  to  repudiate  it,  but  expressly  ratifies  it,  he 
cannot  maintain  an  action  for  damages:  Nounnan  v.  Sutter  County  Land 
Co.,  81  Cal.  I;  St.  John  v.  Hendrickson,  85  Ind.  350.  Or  if  he  discovered  the 
fraud  in  time  to  save  himself,  and  failed  to  do  so,  he  cannot  recover:  Whit- 
ing V.  Hill,  23  Mich.  399;  Vernol  v.  Vernal,  63  N.  Y.  45.  But  to  constitute  a 
waiver  of  a  right  to  sue  for  damage  resulting  from  a  contract  procured  by 
fraud,  tlie  party  who  sustained  the  loss  must  act  with  full  knowledge  of  liis 
rights  and  of  the  material  facts  in  the  case,  and  clearly  manifest  his  intention 
to  abide  by  the  contract  and  abandon  any  remedy  he  may  have:  Johnson  v. 
Culver,  116  Ind.  278.  A  waiver  is  not  shown  by  the  fact  that  the  plaintiff 
received  part  of  the  goods  under  the  contract:  Haven  v.  Neal,  43  Minn.  315; 
Malloi-y  V.  Leach,  35  Vt.  156;  82  Am.  Dec.  625.  Wliere  one  of  the  joint 
makers  of  a  note,  not  knowing  that  he  was  not  liable  on  it,  stated  to  a  per- 
Bon  about  to  purchase  it  that  it  was  a  good  note,  and  that  he  intended  to  pay 
it,  it  was  held  that  this  did  not  render  him  liable  for  false  representations: 
BUuk  V.  Miller,  75  Mich.  323. 


Consumers'    Gas    Company    op   Kansas    City  v. 
Kansas  City  Gaslight  and  Coke  Company. 

[100  Missouri,  601.] 
Equitt  Will  not  Enjoin  Claim  of  Exclusive  Franchise  when.  —  A 
court  of  equity  will  not  restrain,  by  injunction  or  otherwise,  a  person 
from  asserting  a  claim  of  exclusive  privilege  in  the  manufacture  and  sale 
of  a  commodity,  where  there  is  no  interference  with  the  property  of  the 
complainant,  further  than  by  making  the  claim  of  exclusive  privilege  or 
franchise. 

Petition  for  an  injunction.  The  facts  are  stated  in  the 
opinion. 

C.  0.  Tichenor,  and  Broadhead  and  Haeussler,  for  the  ap- 
peHant. 

Gage,  Ladd,  and  Small,  for  the  respondent. 

Barclay,  J.  Giving  to  the  petition  the  construction  most 
favorable  to  the  pleader,  it  yet  states  no  cause  of  action  for 
equitable  relief.  Plaintiff  claims  the  right  to  manufacture 
and  vend  gas  to  the  people  of  Kansas  City,  and  to  adopt  the 
needful  and  usual  measures  for  that  purpose.     It  asserts  that 


April,  1890.]  Craig  v.  Van  Bebbeb.  669 

Craig  v.  Yan  Bebbee. 

[100  Missouri,  5Sl.] 

DisAirrRMANCE  OF  Deed  of  Minor  after  Attaining  Majority.  —  Where 
a  minor  executes  a  deed  of  conveyance  of  land,  and  after  attaining  ma- 
jority, conveys  the  same  land  to  a  third  person,  the  second  deed  is  a 
disafBrmance  of  the  first.  Such  a  deed  may  also  be  avoided  by  a  suit  in 
ejectment,  and  in  such  suit  a  petition  which  is  in  the  ordinary  form  of 
an  action  of  ejectment  is  sufficient. 

Inpant  may  Repudiate  Contract  without  Returning  Consideration 
WHEN.  —  The  rule  that  requires  an  Infant  who,  upon  coming  of  age,  re- 
pudiates a  contract  executed  by  him  during  his  minority,  and  which  has 
been  in  whole  or  in  part  executed  by  the  adult  party  thereto,  to  return 
the  property  or  consideration  received,  applies  only  where  the  infant  has 
the  property  or  consideration  at  the  time  he  attains  full  age.  If  he  has 
wasted  or  squandered  it  during  infancy,  he  can  repudiate  the  contract 
without  making  a  tender  thereof. 

Unpaid  Purchase-money  not  Recoverable  by  Infant  Who  Repudiates 
HIS  Deed.  —  Where  an  infant,  upon  attaining  his  majority,  repudiates 
his  deed,  he  cannot  recover  the  unpaid  purchase-money. 

Ratification  of  Minor's  Deed,  Conditional  Offer  to  Convey  I3  not. 
—  An  offer  by  an  infant,  after  attaining  full  age,  to  make  a  deed  ratify- 
ing a  conveyance  made  by  him  during  his  minority,  upon  condition  that 
the  unpaid  purchase  price  is  paid  or  secured,  is  no  evidence  of  a  confir- 
mation. 

Deed  Disaffirmed  because  of  Minority  of  Wife  is  Avoided  as  to 
Husband,  who  joined  her  in  executing  it. 

Ejectment.     The  opinion  states  the  case. 

Silver  and  Brown,  and  W.  J.  Patterson,  for  the  appellants. 

H.  K.  West  and  A.  W.  Mullins,  for  the  respondents. 

Black,  J.  This  is  an  action  of  ejectment  for  one  hundred 
acres  of  land  commenced  by  Ella  Craig  and  her  husband, 
Daniel  Craig,  against  Van  Bebber,  Tully,  and  Sprankle.  The 
plaintiff  Ella  Craig  inherited  the  land  from  her  father,  and 
she  and  her  husband  conveyed  the  same  to  Henderson  Tabor 
by  a  deed  dated  the  28th  of  July,  1884,  for  the  consideration 
of  $1,463.  Of  this  amount  Tabor  paid  in  cash  $350,  and  exe- 
cuted to  them  his  four  notes  due  in  one,  two,  three,  and  four 
years  for  the  balance  of  the  purchase  price,  and  secured  the 
same  by  a  deed  of  trust  on  the  land.  The  sale  was  made 
through  an  agent,  and  the  agreement  was,  that  the  plaintiffs 
should  have  the  first  deed  of  trust.  It  seems,  however,  that 
Tabor  gave  a  deed  of  trust  on  the  land  to  secure  a  debt  of 
eight  hundred  dollars,  which  was,  by  some  manipulation, 
made  prior  in  point  of  time  to  the  one  given  the  plaintiflf's  for 
purchase-money.     This    prior   deed   of  trust   was   made   by 


570  Craiq  v.  Van  Bebbeb.  [Missouri, 

Tabor  to  one  J.  B.  Watkins  as  trustee.  By  virtue  of  author- 
ity set  out  in  the  deed  of  trust,  Watkins  constituted  W.  J. 
Patterson  his  attorney  in  fact  to  act  for  and  in  his  behalf. 
Patterson,  as  such  attorney  in  fact  for  Watkins,  advertised 
and  sold  the  property  to  defendant  Sprankle  on  the  8th  of 
October,  1886.  The  other  defendants  are  the  tenants  of 
Sprankle. 

The  plaintiff  Ella  Craig  was  a  minor  sixteen  years  of  age 
when  she  and  her  husband  executed  the  deed  to  Henderson 
Tabor.  The  notes  executed  by  Tabor  are  now  in  the  posses- 
sion of  the  plaintiffs,  and  have  not  been  paid.  Mrs.  Craig 
became  eighteen  years  of  age  on  the  eighteenth  day  of  March, 
1886,  and  this  suit  was  commenced  in  November,  1886,  to  dis- 
affirm the  deed  made  by  her  while  a  minor. 

Plaintiffs  did  not  offer  to  refund  the  $350.  The  evidence 
offered  to  show  a  ratification  is,  in  substance,  this:  As  soon 
as  the  plaintiffs  learned  that  their  deed  of  trust  was  a  second 
lien  instead  of  the  first,  they  demanded  a  first  deed  of  trust 
according  to  their  contract,  but  their  demand  was  refused. 
They  also  demanded  payment  of  the  notes,  which  was  refused. 
They  executed  a  new  deed  after  the  wife  became  of  age,  and 
ofiered  to  deliver  it  provided  the  notes  were  paid  or  secured 
by  a  first  deed  of  trust,  but  upon  no  other  condition.  The 
plaintiff  Daniel  Craig  being  asked  if  any  suit  had  been 
brought  for  the  collection  of  the  notes,  said:  "I  think  there 
has  been;  at  Linneus,  I  think."  It  does  not  appear  when  the 
suit  was  brought,  or  what  became  of  it.  The  notes,  it  is 
agreed,  are  in  the  possession  of  plaintiffs. 

1.  The  point  made  here,  and  by  a  refused  instruction,  that 
the  plaintiffs  should  have  in  terms  set  out  in  their  petition 
and  pleaded  disaffirmance  of  the  deed,  is  not  well  taken. 
Where  a  minor  executes  a  deed  of  conveyance  of  land,  and  after 
attaining  majority  conveys  the  same  land  to  a  third  person,  the 
second  deed  is  a  disaffirmance  of  the  first:  Peterson  v.  Laik,  24 
Mo.  541;  69  Am.  Dec.  441.  So,  too,  the  deed  executed  while  a 
minor  may  be  avoided  by  a  suit  in  ejectment  after  majority: 
1  Hare  and  Wallace's  Am.  Lead.  Cas.,  5th  ed.,  317;  Tiedeman 
on  Real  Property,  sec.  793.  A  petition  which  is  in  the  ordi- 
nary form  of  an  action  of  ejectment  is  sufficient. 

2.  Defendants  asked,  but  the  court  refused  to  give,  the  fol- 
lowing declaration  of  law:  "The  infancy  of  Ella  Craig  does 
not  entitle  plaintiffs  to  recover,  as  no  offer  or  tender  was  made 
by  them  to  return  to  Sprankle  funds  or  consideration  received 


i 


April,  1890.]  Craig  v.  Van  Berber.  571 

by  Ella  Craig,  arising  from  the  sale  and  conveyance  of  the  land 
by  her  to  Tabor." 

The  theory  of  this  instruction  is,  that  plaintiffs  were  bound 
to  make  a  tender  to  Sprankle  of  the  $350  paid  them  by  Hen- 
derson Tabor,  the  grantee  in  the  deed  which  the  plaintiffs 
seek  to  avoid.  Where  the  contract  has  been  executed  by 
the  infant,  and  has  been  in  whole  or  in  part  executed  by 
the  adult,  and  the  infant,  upon  coming  of  age,  repudiates  the 
transaction,  he  must  return  the  property  or  consideration  re- 
ceived. This  general  rule  has  often  been  stated  without  any 
qualification  whatever.  But  the  weight  of  authority  is,  that 
the  rule  can  only  apply  where  the  infant  has  the  property 
or  consideration  at  the  time  he  attains  full  age.  If  he  has 
wasted  or  squandered  the  consideration  or  property  during  in- 
fancy, then  he  can  repudiate  the  contract  without  making  a 
tender:  Tyler  on  Infancy,  2d  ed.,  sec.  37;  Green  v.  Green,  69 
N.Y.  553;  25  Am.  Rep.  233;  Chandler  \.  Simmons,  97  Mass.  508; 
93  Am.  Dec.  117;  Reynolds  v.  McCurry,  100  111.  356;  Brandon 
V.  Brown,  106  111.  519;  Price  v.  Furman,  27  Vt.  268;  65  Am. 
Dec.  194;  Walsh  v.  Young,  110  Mass.  396.  The  privilege  of 
repudiating  a  contract  is  accorded  an  infant,  because  of  the  in- 
discretion incident  to  his  immaturity;  and  if  he  were  required 
to  restore  an  equivalent,  where  he  has  wasted  or  squandered 
the  property  or  consideration  received,  the  privilege  would  be  of 
no  avail  when  most  needed.  Kerr  v.  Bell,  44  Mo.  120,  Highley 
V.  Barron,  49  Mo.  103,  and  Baker  y.Kennett,M  Mo.  82,  are  cited 
as  aflfirming  the  general  rule  before  stated,  without  any  excep- 
tion, and  some  expressions  used  would  seem  to  lead  to  that 
result;  but  a  careful  consideration  of  the  facts  of  these  cases 
will  show  that  there  was  no  occasion  for  considering  the  ex- 
ception. The  remarks  there  made  must  be  read  and  under- 
stood in  the  light  of  the  facts  before  the  court.  We  entertain 
no  doubt  but  the  rule,  with  the  qualification  before  stated,  is 
the  correct  one. 

The  instruction  is,  therefore,  faulty,  and  especially  so  in 
view  of  the  evidence  that  Mrs.  Craig  did  not  have  any  money 
or  property  save  the  land  in  question.  The  notes  are  in  the 
hands  of  the  plaintiffs,  and  the  fact  of  disaffirmance  will  dis- 
charge the  maker;  for  the  law  is  well  settled  that  the  infant, 
having  repudiated  his  or  her  deed,  cannot  recover  the  unpaid 
purchase  price. 

3.  The  evidence  fails  to  make  out  a  prima  facie  case  of  ratifi- 
cation.    There  is  no  evidence  that  either  Mrs.  Craig  or  her  bus- 


572  Craig  v.  Van  Bebber.  [Missouri, 

band  ever  received  any  part  of  the  purchase  price  after  she 
attained  her  majority.  She  and  her  husband  did  offer  to  exe- 
cute and  deliver  a  confirmatory  deed  upon  being  paid  the  bal- 
ance of  the  purchase  price,  namely,  $1,113,  or  upon  receiving 
a  first  deed  of  trust  upon  the  land  securing  that  amount;  but 
it  did  not  suit  the  purposes  of  Tabor,  or  any  other  of  the  inter- 
ested parties,  to  comply  with  that  condition. 

A  mere  acknowledgment  that  a  debt  exists  or  that  a  con- 
tract has  been  made  will  not  constitute  a  ratification:  Baker 
V.  Kennett,  54  Mo.  82.  There  must  be  an  intention  to  affirm 
the  deed.  A  deed  of  confirmation  is  not  necessary,  but  the 
act  relied  upon  must  be  of  such  a  nature  as  to  show  a  clear 
intention  to  confirm  the  deed.  An  ofier  to  make  a  deed  oi 
ratification  upon  the  condition  that  the  unpaid  purchase  price 
is  paid  or  secured  is  no  evidence  of  a  confirmation.  It  rather 
shows  a  disposition  to  disaffirm  should  the  proposed  condition 
not  be  performed. 

4.  This  suit  was  brought  for  the  very  purpose  of  disaffirm- 
ing the  deed  made  by  Mrs.  Craig,  and  she  was  a  proper  and 
a  necessary  party  plaintiff.  Her  husband  is  but  a  nominal 
party  to  the  suit.  But  it  is  insisted  that  the  wife  cannot  re- 
cover, because  the  husband  is  entitled  to  the  possession  of  her 
land,  and  that  he  cannot  recover,  because  by  joining  her  in 
the  deed  he  parted  with  his  possession  and  right  of  posses- 
sion. 

Mrs.  Craig  held  the  land  in  question  as  her  general  prop- 
erty under  section  8295  of  the  married  woman's  act.  That 
section  declares  that  a  conveyance  made  by  the  husband 
during  coverture  of  any  interest  in  such  real  estate  shall  be 
invalid,  unless  the  deed  is  executed  jointly  by  the  wife  and 
husband,  and  by  her  duly  acknowledged.  This  statute,  it  has 
been  held  again  and  again,  very  materially  modifies  the  com- 
mon-law marital  rights  of  the  husband  in  the  lands  belong- 
ing to  the  wife.  It  is,  so  far  as  he  is  concerned,  a  disabling 
statute;  so  that  he  is  utterly  powerless  to  charge  or  convey 
the  land,  or  the  rents,  issues,  or  products  thereof,  except  by 
a  deed  jointly  executed  by  himself  and  wife:  Mueller  v.  Knes.'i- 
mann,  84  Mo.  323;  Gitchell  v.  Messmer,  87  Mo.  131;  Gilliland 
V.  Gilliland,  96  Mo.  522;   Wilson  v.  Albert,  89  Mo.  537. 

If  the  deed  jointly  executed  by  husband  and  wife  is  invalid 
as  to  the  wife,  because  not  properly  acknowledged  by  her,  or 
because  her  signature  has  been  procured  by  fraud,  then  it  is 
ineffectual  to  convey  the  husband's  limited  marital  interest: 


April,  1890.]  Craig  v.  Van  Berber.  573 

Goffv.  Roberts,  72  Mo.  571 ;  Bartlett  v.  O'Donoghue,  72  Mo.  563; 
Hoskinson  v.  AdHns,  77  Mo.  538;  Ilord  v.  Tauhvian,  79  Mo. 
101.  These  authorities  show  that  a  conveyance  by  husband 
and  wife  of  the  lands  of  the  wife,  to  be  valid  as  against  the 
husband,  must  be  valid  as  against  the  wife.  Now,  it  is  true 
that  in  the  cases  cited  the  deeds  were  worthless  from  the  be- 
ginning, whilst  here  the  deed  is  voidable  only;  but  we  do  not 
see  that  this  makes  any  difiference.  When  the  deed  is  disaf- 
firmed because  of  the  minority  of  the  wife,  it  becomes  worth- 
less as  to  the  husband.  As  said  in  the  case  last  cited,  the 
title  can  only  be  transferred  by  an  indivisible  integer,  or  not 
at  all.  So,  too,  if  the  deed  be  avoided  as  to  the  wife,  it  is 
avoided  as  to  the  husband.  It  must  stand  or  fall  as  a  whole. 
The  law  of  this  case  is  with  the  plaintiffs,  and  the  judg- 
ment is  affirmed.  

Contracts  of  Infants.  — There  is,  perhaps,  no  subject  of  the  law  about 
which  there  has  been  more  apparent  as  well  as  real  conflict  of  opinion  than 
upon  the  efifect  to  be  given  to  the  contracts  of  infants.  It  is  true  that  there 
is  less  conflict  at  the  present  day  than  formerly,  and  that  some  of  the  erro- 
neous positions  previously  taken  have  been  abandoned,  but  there  is  yet 
much  confusion,  inconsistency,  and  difi'erence  of  opinion.  Some  sentimental 
notions  entertained  at  the  beginning  concerning  the  incapacity  of  infants,  and 
the  favor  with  which  the  persons  and  property  of  infants  should  be  regarded, 
are  no  doubt  responsible  for  much  of  the  uncertainty  and  error  which  time 
has  found  so  difficult  to  remove.  Experience  has  fully  demonstrated  that 
when  courts  permit  sound  sense  and  principles  of  justice  to  all  concerned  to 
be  overshadowed  with  the  idea  that  one  of  the  parties  must  be  favored,  the 
results  are  certain  to  be  unsatisfactory.  While  infants  should  be  protected 
from  the  consequences  of  their  inexperience  and  immaturity  of  judgment,  it 
should  not  be  forgotten  that  their  protection  does  not  require  the  situation  of 
persons  who  have  dealt  with  them  in  good  faith  to  be  entirely  overlooked. 

Infants,  the  law  says,  are  destitute  of  sulRcient  understanding  to  enter  into 
contracts  generally  which  shall  be  binding  upon  them.  *'  The  law,  there- 
fore," in  the  language  of  Chief  Justice  Parsons  in  Baker  v.  Lovett,  6  Mass. 
78,  80,  "  protects  their  weakness  and  imbecility  so  far  as  to  allow  them  to 
avoid  all  their  contracts  by  which  they  may  be  injured.  But  in  favor  of  in- 
fants, they  are  bound  by  all  reasonable  contracts  for  their  maintenance  and 
education,  and  also  by  all  acts  which  they  are  obliged  by  law  to  do."  Yet 
we  are  to  understand  by  this,  in  the  light  of  modern  authority,  as  will 
be  seen  hereafter,  that  in  the  exercise  of  their  right  to  avoid  their  general 
contracts,  they  are  the  exclusive  judges  of  the  fact  whether  or  not  they  may 
be  injured;  or  to  sxjeak  more  accurately,  they  may  avoid  their  contracts 
without  regard  to  the  question  whether  or  not  such  contracts  are  injurious  or 
are  beneficial  to  them. 

It  is  very  evident  that  this  incapacity  to  contract  could  not  be  practically 
determined  as  a  matter  of  fact  in  each  particular  case,  without  considerable 
or  even  great  difficulty,  and  that  it  would  be  better  to  adopt  an  arbitrary  age 
under  which  all  persons  are  incapable,  as  a  ma  tier  of  law,  of  entering  into 
biudmg  contracts  in  general.     This  age  the  common  law  has  fixed  at  twenty- 


574  Craig  v.  Van  Bebbeb.  [Missouri, 

one  years.  *'The  law,"  says  Parsons,  C.  J.,  "has  drawn  no  line  between  an 
infant  of  six  years  old  and  one  of  twenty  years  old;  for  all  infants  are  entitled 
to  equal  protection":  Baker  v.  Lovett,  6  Mass.  78,  81.  "A  minor  who  has 
nearly  attained  his  majority  may  be  as  able  to  protect  his  interests  in  a  con- 
tract as  a  person  who  has  passed  that  period.  But  the  law  must  necessarily 
fix  some  precise  age  at  which  persons  shall  be  held  siii  juris.  It  cannot 
measure  the  individual  capacity  in  each  case  as  it  arises.  It  must  hold  the 
youth  who  has  nearly  reached  his  majority  to  be  no  more  bound  by  his  con- 
tract than  a  child  of  tender  years  ":  McCarly  v.  Carter,  49  111.  53,  55;  95 
Am.  Dec.  572,  573,  per  Lawrence,  J. 

It  is  undoubtedly  competent,  however,  for  the  legislature  to  change  the 
age  at  which  a  person  shall  reach  his  majority,  and  have  an  unrestricted 
ability  to  contract,  from  twenty-one  years  to  any  other  age  it  may  see  tit. 
Thus  in  a  number  of  states  of  this  country,  females,  by  statute,  reach  their 
majority  at  eighteen.  Again,  the  legislature  may  fix  a  legal  age  for  persons 
to  enter  into  particular  kinds  of  contracts  only,  as,  for  instance,  in  the  vari- 
ous statutes  passed  by  Congress  rehiting  to  enlistments  into  the  army  and 
navy  of  the  United  States.  Indeed,  if  the  legislature  should  entirely  remove 
the  disability  of  age,  we  should  say  there  would  be  no  legal  objection.  In 
fact,  it  has  done  this  in  certain  cases,  in  which  statutes  are  made  to  apply 
without  special  regard  to  age;  although  a  somewhat  variable  age  of  maturity 
or  discretion  may  be  contemplated,  as  in  the  statutes  which  impose  upon  a 
father  the  obligation  of  supporting  his  bastard  child,  and  which  render  a 
contract  providing  for  such  support  binding. 

The  very  protection  afi'orded  by  the  law  to  infants,  by  which  they  are 
enabled  to  avoid  their  general  contracts,  requires  them,  as  will  be  more  fully 
Been  hereafter,  to  answer  for  the  reasonable  value  of  necessaries  with  which 
they  may  be  furnished.  An  infant  must  soinet-mes  himself  engage  for  main- 
tenance, clothing,  shelter,  and  the  like,  and  he  should,  consequently,  be  held 
bound  to  pay  what  they  are  justly  worth,  if  they  are  requisite  and  suitable 
for  him.  His  obligation  to  pay  for  the  reasonable  value  of  necessaries  con- 
stitutes, therefore,  a  common-law  exception  to  the  general  rule  that  an  infant 
is  not  bound  by  his  contracts. 

Another  exception,  which  is  sometimes  said  to  exist  to  the  general  rule,  is, 
that  if  an  infant  does  an  act  which  by  the  law  he  might  have  been  com- 
pelled to  do,  the  act  shall  be  binding  upon  him.  But  this,  aa  will  be  shown, 
has  really  very  little  to  do  with  the  subject  of  contracts. 

Aside  from  these  exceptional  cases,  the  rule  is  elementary,  as  has  been 
said,  that  infants  shall  not  be  bound  by  their  contracts.  The  difficulty  has 
been  as  to  whether  any  or  all  of  the  contracts  were  void  or  simply  voidable. 

Void  and  Voidable.  — There  have  been  some  expressions  of  opinion,  and 
even  adjudications,  to  the  efi'ect  that  the  general  contracts  of  infants  were 
void.  As  late  as  the  year  1810,  the  narrow-minded  Sir  James  Mansfield  is 
reported  as  saying  that  he  "never  could  understand  the  rule  of  law  tiiat 
an  infant's  contract  was  not  void,  but  voidable":  Gihhs  v.  Merrill,  3  Taunt. 
307,  313;  also  Burgess  v.  Merrill,  4  Taunt.  468,  469.  Three  classes  of  infants' 
contracts  have  been,  however,  more  usually  matle;  namely,  those  which  are 
binding,  those  which  are  void,  and  those  which  are  voidable.  The  class  of 
binding  contracts,  noticed  above,  is  pretty  well  defined;  but  it  has  not  been 
so  easy  for  the  courts  to  determine  which  contracts  were  void  and  which 
voidable.  Various  criterions  to  solve  the  problem  have  been  suggested, 
but  they  are  so  unsatisfactory  that  one  writer  remarks:  "  What  contracts 
of  an  infant  are  void,  and  what  are  merely  voidable,  nobody  knows." 


I 


April,  1890,]  Craig  v.  Van  Bebber,  675 

It  may  be  well  to  notice  here  the  meaning  of  the  words  "  void  "  and  "  void- 
able." A  "void"  contract,  if  we  may  use  the  expression,  is  a  mere  nullity, 
and  good  for  no  purpose  whatever.  It  is  binding  upon  neither  party,  and 
may  be  attacked  as  invalid  by  strangers.  It  does  not  require  any  disaffirm- 
ance to  avoid  it,  but  may  be  simply  disregarded,  and  it  cannot  be  ratified  and 
made  valid.  A  "  voidable  "  contract,  on  the  other  hand,  is  one  that  is  good, 
both  as  between  the  parties  to  it  and  as  to  third  persons,  until  it  is  avoided 
by  the  party  entitled  to  avoid  it.  It  is  valid  and  binding  until  thus  disaf- 
firmed, and  its  infirmity  may  be  completely  cured  by  a  ratification  by  the 
party  at  whose  instance  it  might  have  been  avoided.  It  is  important  to  note 
this  distinction  between  "void  "and  "voidable."  Much  of  this  confusion 
of  this  suljject  of  infants'  contracts  has  resulted  from  the  careless  use  of  the 
word  "void"  as  meaning  only  "voidable,"  and  an  examination  of  many 
cases  wliich  have  been  supposed  to  support  the  proposition  that  infants'  con- 
tracts were  "  void  "  will  show  that  nothing  more  was  intended  by  the  courts, 
or  at  least  was  necessary  for  the  decision,  than  to  hold  that  the  contracts 
were  merely  "voidable." 

The  test  by  which  to  ascertain  whether  an  infant's  general  contracts  were 
void  or  voidable,  as  laid  down  by  Perkins,  an  early  writer,  in  his  work  on 
conveyancing,  section  12,  is  as  follows:  "All  such  gifts,  grants,  or  deeds 
made  by  an  infant  as  do  not  take  effect  by  delivery  of  his  hand  are  void. 
But  all  gifts,  grants,  or  deeds  made  by  an  infant  by  matter  in  deed,  or  in 
writing,  which  take  effect  by  delivery  of  his  own  hand,  are  voidable  by  him- 
self and  his  heirs,  and  by  those  who  have  his  estate."  The  view  was  at  one 
time  entertained  that  Perkins,  in  this  passage,  referred  to  the  delivery  of  the 
thing  granted,  and  not  to  the  delivery  of  the  instrument;  and  therefore  a 
feoffment  with  livery  of  seisin  by  the  infant  in  person  was  always  voidable, 
and  not  void,  "not  only  because  he  is  allowed  to  contract  for  his  benefit,  but 
because  there  ouglit  to  be  some  act  of  notoriety  to  restore  the  possession  to 
him  equal  to  that  which  transferred  it  from  him":  Bac.  Abr.,  tit.  Infancy 
and  Age,  I.,  3.  But  in  the  leading  case  of  Zouch  v.  Parsons,  3  Burr.  1794, 
1804,  the  rule  of  Perkins  was  approved  by  Lord  Mansfield,  aud  interpreted 
to  mean  the  delivery  of  the  instrument.  Thus  he  says:  "The  words  'which 
do  take  effect'  are  an  essential  part  of  the  definition,  and  exclude  letters  of 
attorney,  or  deeds  which  delegate  a  mere  power  and  convey  no  interest. 
....  There  is  no  difference  in  this  respect  between  a  feoffment  and  deeds 
which  convey  an  interest.     The  reason  is  the  same." 

As  thus  interpreted  by  Lord  Mansfield,  Perkins's  rule  is  expressly  approved 
in  Allen  v.  ALcn,  2  Dru.  &  War.  307,  338,  and  in  a  number  of  cases,  mostly 
early  ones,  decided  in  this  country:  Conroe  v.  Birchall,  1  Johns.  Cas.  P27;  1 
Am.  Dec.  105;  Phillips  v.  Green,  3  A.  K.  Marsh.  7;  13  Am.  Dec.  124;  Brecken- 
richjcs  Heirs  v.  Ormshy,  1  J.  J.  Marsh.  "30,  243;  19  Am.  Dec.  71,  77;  Kline  v. 
Beeie,  6  Conn.  494,  504;  Dana  v.  Coombs,  0  Me.  89,  90;  19  Am.  Dec.  194,  195; 
Wainhole  v.  Foote,  2  Dak.  1.  This  criteriou,  comprehending,  as  it  does,  only 
gifts,  grants,  aud  deeds,  is  not  sufficiently  extensive  in  its  application,  and 
has  been  well  said  in  Cunmiinys  v.  Powell,  8  Tex.  80,  89,  to  have  "very  little 
foundation  in  reason,"  anil  to  "  affonl  but  a  very  flimsy  protection,  whicli  is 
the  object  of  the  rule." 

Another  test  is  that  given  by  Lord  Chief  Justice  Eyre  in  Kenne  v.  Boy- 
cott, 2  H.  Black.  511,  515,  as  follows:  "We  have  seen  tliat  some  contracts 
of  infants,  even  by  deed,  shall  bind  them.  Some  are  merely  void;  namely, 
such  as  the  court  can  pronounce  to  be  to  their  prejudice.  Others,  and  the 
most  numerous  class,  of  a  more  uncertain  nature  aa  to  benefit  or  prejudice, 


576  Craig  v.  Van  Bebbeb.  [Missouri, 

are  voidable  only,  and  it  is  in  the  election  of  the  infant  to  affirm  them  or 
not."  This  criterion  had  really  been  previously  announced  by  Lord  Hard- 
wicke  in  Harvey  v.  Ashley,  3  Atk.  607,  610;  and  by  Lord  Mansfield  in  Earl  of 
Buckinghamshire  v.  Drury,  2  Edtn,  72;  4  Bro.  C.  C.  507,  note  {sub  nom.  Drury 
V.  Drury);  in  Zouch  v.  Parsons,  3  Burr.  1794;  and  Grey  v.  Cooper,  3  Doug. 
65;  and  is  afterwards  approved  by  Lord  EUenborough  in  Baylis  v.  Dinely, 
3  Maule  &  S.  477.  In  Uiiited  States  v.  Bainhridge,  1  Mason,  71,  82,  Mr.  Jus- 
tice Story  says  that  the  distinctions  of  the  lord  chief  justice  "seem  founded 
in  solid  reason."  And  see  the  rule  further  expressly  approved  in  Turler  v. 
Moreland,  10  Pet.  5'J,  66;  1  Am.  Lead.  Cas.  *224,  *226;  Wheaton  v.  East,  5 
Yerg.  41,  61;  26  Am.  Dec.  251,  252;  McMinn  v.  Pdckmonds,  6  Yerg.  9,  18; 
McGan  v.  Marshall,  7  Humph.  121,  125;  Langford  v.  Frey,  8  Humph.  443; 
Swnfford  V.  Ferguson,  3  Lea,  292;  31  Am.  Rep.  639;  Lawson  v.  Lovejoy,  8  Me. 
405;  23  Am.  Dec.  526;  Robinson  v.  Weeks,  56  Me.  102,  106;  Fridge  v.  State, 
3  Gill  &  J.  103,  115;  20  Am.  Dec.  463,  468;  Levering  v.  Heighe,1  Md.  Ch. 
81,  83;  3  Md.  Ch.  365,  368;  Cronise  v.  Clark,  4  Md.  Ch.  403,  406;  Monumen- 
tal Building  A  ss'n  v.  Herman,  33  Md.  128,  132;  Pitcher  v.  Turin  Plank  Road 
Co.,  10  Barb.  436,  439;  Oreen  v.  Wilding,  59  Iowa,  679;  44  Am.  Rep.  696. 

Other  cases  adopt  this  latter  test  in  a  somewhat  qualified  form,  asserting 
that  no  contracts  of  an  infant  are  void,  unless  they  necessarily,  or  clearly  or 
certainly,  operate  to  his  prejudice:  Oliver  v.  Homllet,  13  Mass.  237.  239;  7 
Am.  Dec.  134,  135;  Vent  v.  Osgood,  19  Pick.  572,  573;  West  v.  Penny,  16 
Ala.  187,  189;  Hastings  v.  Dollarhide,  24  Cal.  195,  209;  and  see  Bradford  v. 
French,  110  Mass.  366,  per  Gray,  J.  Thus  in  Oliver  v.  Houdlet,  13  Mass.  237, 
239,  7  Am.  Dec.  134,  135,  Wilde,  J.,  says:  "It  would  be  more  correct  to 
say  that  those  acts  of  an  infant  are  void  which  not  only  apparently,  but 
necessarily,  operate  to  his  prejudice.  The  benefit  to  the  infant  is  the  great 
point  to  be  regarded,  the  object  of  the  law  being  to  protect  his  imbecility 
and  indiscretion  from  injury,  through  his  own  imprudence  or  by  the  craft 
of  others.  The  general  rule  is,  that  infancy  is  a  personal  privilege,  of  which 
no  one  can  take  advantage  but  the  infant  himself;  and,  therefore,  that  his 
contracts,  although  voidable  by  him,  shall  bind  the  person  of  full  age.  This 
rule  seems  to  require  that  all  contracts  of  infants  should  be  held  voidable, 
rather  than  void.  But  however  this  may  be,  all  the  books  agree  that  those 
which  are  henejicicd,  or  have  a  semblance  of  benefit,  to  the  infant,  are  only 
voidable."  In  Vent  v.  Osgood,  19  Pick.  572,  573,  Putnam,  J.,  says  that  if  the 
contract  ©f  an  infant  be  clearly  prejudicial  to  him,  it  is  void;  if  it  may  be  for 
his  benefit  or  to  his  damage,  it  is  voidable,  at  his  election;  and  if  it  be  clearly 
beneficial  to  him,  it  is  void;  yet  it  is  difficult  to  reconcile  this  statement  with 
his  expression  of  opinion,  in  the  same  case,  that  an  infant  is  not  bound  by  an 
account  stated. 

The  rule  of  Keanev.  Boycott,  2  H.  Black.  511,  515,  is  not  necessarily  incon- 
sistent with  that  of  Perkins.  In  fact,  the  two  have  been  frequently  applied 
together,  the  former  being  usually  regarded  as  the  more  general  rule,  and  the 
rule  of  Perkins  a  special  rule.  While  it  is  said  that  all  deeds  of  an  infant 
which  do  not  take  effect  by  delivery  of  his  hand  are  void,  yet  if  the  deeds 
do  take  efl^ect  by  delivery  of  his  hand,  and  are  not  upon  their  face  a  pre- 
judice to  hira,  or  in  other  words,  have  a  semblance  of  benefit,  by  purporting 
to  be  executed  for  a  valuable  consideration,  they  are  v^oidable  simply:  Bige- 
low  V.  Kinney,  3  Vt.  353,  358;  21  Am.  Dec.  589,  590;  Philips  v.  Oreen,  3  A.  K, 
Marsh.  7;  13  Am.  Dec.  124;  Breckenridge's  Heirs  v.  Ormsby,  1  J.  J.  Marsh. 
236,  243,  245;  19  Am.  Dec.  71,  77,  79;  Kline  v,  Beebe,  6  Conn.  494;  and  it 
would  be  in  strict  accordance  with  this  theory  to  hold  the  deed  of  an  infant. 


April,  1890.]  CRAia  v.  Van  Bebbeb.  577 

executed  without  consideration,  to  be  absolutely  void:  Swnfford  v.  Ferguson, 
3  Lea,  292;  31  Am.  Rep.  639.  In  one  case,  however,  it  was  said  that  acts  of 
an  infant  which  take  efifect  by  delivery  are  in  all  cases  voidable  only;  while 
with  respect  to  promises  which  do  not  take  effect  by  delivery,  the  distinction 
was  between  those  which  have  and  those  wliich  have  no  semblance  of  bene- 
fit to  the  infant,  the  latter  being  absolutely  void,  and  the  former  voidable 
only:  Cannon  v.  AMury,  1  A.  K.  Marsh.  76,  77;  10  Am.  Dec.  709,  710. 

The  courts  exhibitedastroug  inclination  at  an  early  day  to  break  away  from 
the  criterioiis  of  Perkins  and  Lord  Chief  Justice  Eyre.  In  some  of  the  cases  a 
trace  of  Perkins's  rule  only  was  retained  in  dicta  to  the  effect  that  tlie  only 
exception  to  the  rule  that  the  deeds  and  contracts  of  infants  were  voidable 
merely  was  to  be  found  in  their  deeds  delegating  a  naked  authority,  which 
•were  absolutely  voidt  Roof  v.  Stafford,  7  Cow.  179,  180;  Stafford  v.  Roof,  9 
Cow.  626,627;  Bool  v.  Mix,  17  Wend.  119;  31  Am.  Dec.  285;  Woodworth,  J., 
saying  in  the  first  of  these  cases  that  "  there  is  no  doubt  that  all  the  con- 
tracts which  an  infant  can  make,  with  a  very  few  exceptions,  are  at  least 
voidable,  without  regard  to  the  question  whether  they  are  beiielicial  to  him  or 
not."  While  in  other  cases,  among  which  are  those  which  purport  to  adopt 
Chief  Justice  Eyre's  rule  with  the  interpretation  as  intending  tliat  no  con- 
tracts of  an  infant  are  void  unless  they  are  necessarily  prejudicial  to  him, 
the  only  portion  of  either  rule  which  practically  remains  is  enough  of  the 
benefit  and  detriment  theory  to  warrant  the  expresion  of  opinion  tliat  an  in- 
fant's contract  of  suretyship  is  void:  Hastiiujsx.  Dollarhide,  24  Cal.  195,  209, 
per  Shafter,  J. ;  Wed  v.  Peiini/,  16  Ala.  187,  189,  per  Collier,  C.  J.;  compare 
Flexner  v.  Dickerson,  72  Ala.  318,  322.  In  Weaver  v.  Jones,  24  Ala.  420,  424, 
Chilton,  C,  J.,  says:  "The  better  opinion,  as  maintained  by  the  modern 
decisions,  is,  that  an  infant's  contracts  are  none  of  them  (with  perliaps  one 
exception)  absolutely  void  by  reason  of  nonage;  that  is  to  say,  the  infant 
may  ratify  them  after  he  arrives  at  the  age  of  legal  majority." 

Even  in  Breckenridije's  Heirs  v.  Orms/)i/,  1  J.  J.  Marsh.  236,  19  Am.  Dec. 
71,  which  approves  both  the  rules  of  Perkins  and  Chief  Justice  Eyre,  Robert- 
son, J.,  remarks:  "It  is  doubtful  whether  it  would  not  be  better  for  infants 
that  none  of  their  contracts  should  be  avoided  by  any  other  persons  than 
themselves,  and  consequently  whether  it  would  not  be  best  that  all  their 
contracts  should  be  only  voidable."  And  in  Wlntney  v.  Dutcli,  14  Mass.  457, 
461,  7  Am.  Dec.  229,  231,  Parker,  C.  J.,  says:  "The  books  are  not  very 
clear  upon  this  subject.  All  of  them  admit  a  distinction  between  void  and 
voidable  acts,  and  yet  disagree  with  respect  to  the  acts  to  be  classed  under 
either  of  those  heads.  One  result,  however,  in  which  they  all  appear  to 
agree,  is  stated  by  Lord  Mansfield  in  the  case  of  Zouch  v.  Parsons,  cited  in 
the  argument;  viz.,  that  whenever  the  act  done  may  be  for  the  benefit  of  the 
infant,  it  shall  not  be  considered  void,  but  that  he  shall  have  his  election, 
when  he  comes  of  age,  to  affirm  or  avoid  it;  and  this  is  the  only  clear  and 
definite  proposition  which  can  be  extracted  from  the  authorities.  The  appli- 
cation of  this  principle  is  not,  however,  free  from  difficulty;  for  when  a  note 
or  other  simple  contract  is  made  by  an  infant  himself,  it  may  be  made  good 
by  his  assent,  without  any  inquiry  whether  it  was  for  hii  benefit  or  to  his 
prejudice.  For  if  he  had  made  a  bad  bargain  in  a  purchase  of  goods,  and 
fiiven  his  promissory  note  for  the  price,  and  when  he  came  of  age  had  agreed 
to  pay  the  note,  he  would  be  bound  by  this  agreement,  although  lie  might 
have  been  ruined  bj'  tlie  purchase.  Perhaps  it  may  be  assumed  as  a  princi- 
ple that  all  simple  contracts  by  infants  wliich  are  not  founded  on  an  illegal 
consideration  are  strictly  not  void,  but  only  voidable,  and  may  be  made  good 
Am.  ST.  Kei-.,  Vol.  XVIII.— 37 


578  Cbaiq  v.  Van  Bebbeb.  [Missouri, 

by  ratification.  They  remain  a  legal  substratum  for  a  future  assent,  until 
avoided  by  the  infant;  and  if,  instead  of  avoiding,  he  confirm  them,  when  he 
has  a  legal  capacity  to  make  a  contract,  they  are,  in  all  respects,  like  contracts 
made  by  adults.  With  respect  to  contracts  under  seal,  also,  they  are  in  legal 
force  as  contracts,  until  they  are  avoided  by  plea.  Whether  they  can  in  all 
cases,  as  it  is  clear  they  can  in  some,  such  as  leases,  be  ratified,  so  as  to  pre- 
vent the  operation  of  a  plea  of  infancy,  except  by  deed,  need  not  now  be  de- 
cided." In  Beed  v.  Balchelder,  1  Met.  559,  Chief  Justice  Shaw  also  observes: 
"The  question,  what  acts  of  an  infant  are  voidable  and  what  void  is  not 
very  definitely  settled  by  the  authorities;  but,  in  general,  it  may  be  said  that 
the  tendency  of  modern  decisions  is  to  consider  them  as  voidable,  and  thus 
leave  the  infant  to  aifirra  or  disaffirm  them,  when  he  comes  of  age,  as  his  own 
views  of  his  interest  may  lead  him  to  elect." 

Finally,  it  may  now  be  considered  as  the  settled  rule  that  none  of  an  in- 
fant's contracts  are  void  because  of  his  nonage,  but  all  of  them  are  voidable 
merely,  with  the  exception  of  his  contracts  for  the  reasonable  value  of  neces- 
saries, and  his  contracts  made  in  pursuance  of  statutory  authority,  which  are 
binding.  The  distinction  that  his  contracts  which  cannot  be  for  his  benefit 
are  absolutely  void  has  become  to  be  recognized  as  unreasonable  and  absurd; 
for  the  object  of  the  law,  which  is  to  protect  the  infant  against  the  con.^e- 
quences  of  his  own  indiscretion  or  the  imposition  of  others,  is  completely 
secured  by  conferring  upon  him  the  power  of  disaffirming  his  contracts,  or 
of  ratifying  them,  after  reaching  proper  age,  at  his  pleasure.  Again,  tlere 
are  serious  difficulties  in  the  way  for  the  court  to  determine,  either  from  the 
face  of  the  transaction  or  from  a  collateral  inquiry,  whether  the  contract 
was  for  the  benefit  or  detriment  of  the  infant.  Every  argument,  therefore, 
is  in  favor  of  leaving  the  question  entirely  to  the  infant  to  say  whether  the 
contract  shall  or  shall  not  be  binding  upon  him:  Hypr  v.  Hyatt,  3  Cranch 
C.  C.  276,  277;  Cheshire  v.  Barrett,  4  McCord,  241,  244;  17  Am.  Dec.  7.35, 
738;  Cole  v.  Pennoyer,  14  111.  158,  160;  Cwnrnhvjs  v.  Poicell,  8  Tex.  80, 
85-90;  Mustard  v.  Wohlford's  Heirs,  15  Gratt.  329,  337;  76  Am.  Dec.  209, 
211;  Fetrow  v.  Wiseman,  40  Ind.  148,  151-155;  Harner  v.  Dipple,  31  Ohio 
St.  72,  77;  27  Am.  Rep.  496,  500. 

These  cases  are  among  the  leading  ones  upon  the  proposition.  The  courts, 
in  Cole  v.  Pennoyer,  14  111.  158,  160,  and  Fetrow  v.  Wiseman,  40  Ind.  148, 
151,  155,  nevertheless  repeat  the  error  that  an  infant's  power  of  attorney  or 
appointment  of  an  agent  is  void;  and  if  this  be  true,  a  contract  entered  into 
by  the  agent,  pursuant  to  his  authority,  is  also  void;  yet  there  is  no  more 
reason  for  so  holding  than  to  hold  that  any  other  contract  of  an  infant  is 
void;  and  this  is  the  view  that  is  at  present  taken,  as  will  be  shown  here- 
after. 

The  singular  doctrine  has  occasionally  been  advanced  that  the  executed  con- 
tracts of  infants  are  binding  until  avoided,  but  their  executory  contracts  are 
invalid  until  affirmed:  Ed-jerly  v.  Shaio,  25  N.  H.  514,  516;  57  Am.  Dec.  349, 
350;  State  v.  Planted,  43  N.  11.  413;  Minock  v.  Shortridge,  21  Mich.  304.  315; 
Morton  v.  Steioai-d,  5  111.  App.  533,  535.  Thus,  says  Gilchrist,  C.  J.,  in  Edijeriy 
v.  Shaw,  lb  N.  H.  514,  516,  57  Am.  Dec.  349,  350:  "The  executory  contracts 
of  an  infant  are  said  to  be  voidable;  but  this  word  is  used  in  a  sense  entirely 
different  from  that  in  which  it  is  applied  to  the  executed  contracts  of  an  infant. 
In  the  latter  case  the  contract  is  binding,  until  it  is  avoided  by  some  act  in- 
dicating that  the  party  refuses  longer  to  be  bound  by  it.  In  the  former  case 
it  is  meant  merely  that  the  contract  is  capable  of  being  confirmed  or  avoided,. 
though  it  is  invalid  until  it  has  been  ratified."     And  again,  in  Minock   v. 


April,  1890.]  Craig  v.  Van  Bebber.  579 

Shortridge,  21  Mich,  304,  315,  Graves,  J.,  remarks:  "The  execntory  contract 
of  an  infant,  such  as  a  promissory  note,  is  not  void  in  the  sense  of  heing  a 
nullity,  because  it  may  be  confirmed,  but  it  has  iko  binding  force  until  it  is 
confirmed.  Being  executory,  and  not  binding  until  confirmed,  it  is  said  to  be 
voidable;  but  as  thus  applied,  this  word  is  to  be  understood  in  a  sense  quite 
different  from  that  which  belongs  to  it  when  applied  to  the  executed  con- 
tract of  an  infant.  The  general  rule  is,  that  an  executed  contract  is  binding 
until  avoided  by  words  or  conduct  which  show  that  the  party  refuses  longer 
to  be  bound  by  it.  But  when  it  is  said  that  the  execntory  coutiact  of  an  in- 
fant is  voidable,  the  idea  represented  is,  that  the  contract  is  susceptible  of 
confirmation  or  avoidance  by  the  promisor,  thout,di  it  is  not  binding  until 
it  is  ratified."  This  is  a  senseless  and  erroneous  distiiKtion.  Executory 
contracts  of  infants  are  no  more  invalid  than  executed  contracts.  Both  are 
binding  until  disaffirmed.  No  one  would  contend  that  infants'  executory 
contracts  could  be  disregarded  as  nullities  by  the  adult  contracting  parties, 
or  by  third  persons,  until  they  had  been  ratified;  yet  this  is  precisely  what 
the  doctrine  leads  to.  It  may  be  that  a  ratification  will  result  from  less 
positive  acts  or  conduct  in  case  of  executed  contracts  than  in  case  of  execu- 
tory; but  this  does  not  prove  that  the  one  class  has  a  greater  binding  effect 
than  the  other. 

It  may  finally  be  observed  that  the  rules  concerning  the  binding  effect  of 
infants'  contracts  are,  in  general,  the  same  at  law  and  in  equity.  This  prop- 
osition is  well  expressed  by  Dorsey,  J.,  in  Brawner  v.  FninMin,  4  Gill,  46.3, 
468,  as  follows:  "It  is  a  general  rule  and  well-settled  principle,  as  well  at 
law  as  in  equity,  that  no  person  untler  the  age  of  twenty-one  years  is  compe- 
tent to  make  a  contract,  binding  upon  him,  unless  it  be  for  'necessaries.' 
No  executory  contract,  by  him  bona  fde  entered  into  during  his  minority, 
unless  confirmed  by  him  after  arriving  at  years  of  maturity,  can  be  de- 
creed to  be  specifically  performed  by  a  court  of  equity,  or  enforced  in  a  court 
of  law.  Nor,  iu  the  absence  of  such  confirmation,  when  pursuing  his  legal 
rights,  in  contravention  of  such  contract,  can  he  be  restrained  from  so  doing, 
by  a  court  of  equity  interposing  a  prohibition,  by  way  of  injunction."  It  is 
true  that  certain  special  rules,  diU'erent  from  those  at  law,  are  enforced  by 
courts  of  equity,  as,  for  example,  compelling  infants  to  repay  money  advanced 
to  them  to  procure  necessaries,  and,  perhaps,  imposing  conditions  upon  them 
when  they  seek  the  aid  of  equity  for  relief;  but  the  general  rule  still  remains, 
that  their  contracts  have  no  more  but  the  same  binding  force  in  courts  of 
equity  as  in  courts  of  law. 

Statctory  Regulation.  —  It  has  already  been  said  that  persons  under  the 
age  of  twenty-one  are  sometimes  permitted  by  statute  to  enter  into  contracts 
to  which  nonage  is  no  defense.  Special  statutes  have  also  been  passed  relat- 
ing to  the  disalBrmance  and  ratification  of  contracts  by  infants,  and  concerning 
some  other  matters.  These  statutes,  and  the  cases  decideil  under  them,  will 
be  found  discussed  under  their  appropriate  heads.  Tliere  are,  however,  some 
geueral  statutes  and  some  decisions  which  require  a  separate  notice. 

It  has  been  held  that  a  statute  conferring  capacity  upon  married  women  to 
contract  generally  does  not  therefjy  remove  the  disability  of  infancy:  Cum- 
mings  v.  Ecerett,  82  Me.  2C0;  nor  can  a  statute  giving  validity  to  the  marriage 
settlements  of  minors  be  held  to  further  remove  the  disabilities  of  married 
infants  to  enter  into  contracts:  Burr  V.  Wilson,  18  Tex.  3G7,  374;  Hemp- 
hill, O.  J.,  also  saying  (p.  376):  "The  general  power  of  making  contracts  is 
not  expressly  or  impliedly  included  in  any  of  the  laws  conferring  rights  on 
married  infants;  and  consequently  they  have  the  right  to  avail  themselves 


580  Craig  v.  Van  Bebber.  [Missouri, 

of  their  privilege,  when  any  such  contracts  are  attempted  to  be  enforced." 
Where  an  early  statute  of  Maryland  provided  that  the  orphans'  court  should 
have  the  power  to  appoint  guardians  to  infant  females  until  they  attained 
the  age  of  sixteen,  or  married,  when  the  guardianship  should  cease,  and  the 
property  delivered  up  to  the  wards  or  their  liu.-il>and.s,  it  is  held  that  the  dis- 
abilities of  infancy  are  not  thereby  removed,  with  the  exception  that  a  female 
infant  on  attaining  the  age  of  sixteen  has  capacity  to  receive  from  her  guar- 
dian her  real  and  personal  estate.  She  cannot,  therefore,  under  the  age  of 
twenty-one,  make  a  binding  disposition  of  her  personal  property:  Davis  v. 
Jacquin,  6  Har.  &  J.  100;  nor  is  she  even  bound  by  a  settlement  with  or 
release  to  her  guardian:  Bowers's  Adm'x  v.  Statp,  7  Har.  &  J.  .32;  Fridje  v.  State, 
3  Gill  &  J.  103;  20  Am.  Dec.  463.  Statutes  enabling  married  women  to  convey 
their  lands  and  release  their  claims  to  dower  in  the  lands  of  their  husbands, 
and  providing  the  manner  in  which  the  conveyances  shall  be  executed  like- 
wise, do  not  remove  the  disability  of  infancy:  See  post,  "  Deeds  of  Infant 
Femes  Covert." 

The  legislation  in  England  concerning  infants'  contracts  has  been  radical 
and  really  extraordinar,'  By  section  1  of  the  Infants'  Relief  Act,  1874,  37  and 
38  Victoria,  chapter  62,  it  is  enacted  that  "all  contracts,  whether  by  specialty 
or  by  simple  contract,  henceforth  entered  into  by  infants  for  the  repayment  of 
money  lent  or  to  be  lent,  or  for  goods  supplied  (other  than  contracts  for  neces- 
saries), and  all  accounts  stated  with  infants,  shall  be  absolutely  void;  provided 
always,  that  this  enactment  shall  not  invalidate  any  contract  into  which  an 
infant  may,  by  any  existing  or  future  statute,  or  by  the  rules  of  common  law 
or  equity,  enter,  except  such  as  now  by  law  are  voidable";  and  by  the  second 
section:  "No  action  shall  be  brought  whereby  to  charge  any  person  upon  any 
promise  made  after  full  age  to  pay  any  debt  contracted  during  infancy,  or 
upon  any  ratification  made  after  full  age  of  any  promise  or  contract  made 
during  infancy,  whether  there  shall  or  shall  not  be  any  new  consideration  for 
such  promise  or  ratification  after  full  age."  There  is  no  room  for  question 
that  all  contracts  of  infants  falling  within  the  provisions  of  this  statute  are 
mere  nullities,  and  good  for  no  purpose. 

The  Civil  Code  of  California  contains  several  sections  on  this  subject,  which, 
as  amended,  exhibit  a  minimum  acquaintance  with  the  general  law  and  a 
maximum  obscurity  of  thought.  The  sections  certainly  have  not  the  "pride 
of  ancestry,"  and  we  will  venture  to  predict  that  in  an  intelligent  commu- 
nity they  have  not  the  "  hope  of  posterity."  The  principal  sections  are  as  fol- 
lows: Sec.  33.  "A  minor  cannot  give  a  delegation  of  power,  nor,  under  the 
age  of  eighteen,  make  a  contract  relating  to  real  property,  or  any  interest 
therein,  or  relating  to  any  personal  property  not  in  his  immediate  possession 
or  control."  Sec.  34.  "A  minor  may  make  any  other  contract  than  as  above 
specified,  in  the  same  manner  as  an  adult,  subject  only  to  his  power  of  dis- 
affirmance under  the  provisions  of  this  title,  and  subject  to  the  provisions  of 
the  titles  on  marriage,  and  on  master  and  servant."  Sec.  35.  "In  all  casea 
other  than  those  specified  in  sections  36  and  37  [sections  concerning  contracts 
for  necessaries,  and  obligations  entered  into  undsi  the  express  authority  or 
direction  of  statutes],  the  contract  of  a  minor,  if  made  whilst  he  is  under 
the  age  of  eighteen,  may  be  disaffirmed  by  the  minor  himself,  either  before 
his  majority  or  within  a  reasonable  time  afterwards;  or  in  case  of  his  death 
within  that  period,  by  his  heirs  or  personal  representatives;  and  if  the  con- 
tract be  made  by  the  minor  whilst  he  is  over  the  age  of  eighteen,  it  may  be 
disaffirmed  in  like  manner  upon  restoring  the  consideration  to  the  party  rrom 
whom  it  was  received,  or  paying  its  equivalent."     Sections  15,  16,  and  17  of 


April,  1890.]  Craig  v.  Van  Bebbeb.  581 

the  Civil  Code  of  Dakota  are  the  same  in  language  as  the  foregoing  sections 
of  the  Civil  Code  of  California,  except  that  instead  of  the  words  "or  within 
a  reasonable  time  afterwards,"  in  section  35  of  the  California  code,  section 
17  of  the  Dakota  code  reads,  "or  within  one  year's  time  afterwards,"  and 
adds  to  the  section,  "with  interest."  It  should  be  remarked  that  both  in 
California  and  Dakota  males  attain  their  majority  at  twenty-one  years,  and 
females  at  eighteen  years. 

The  result  of  this  half-way  legislation  seems  to  be  that  any  appointment 
of  an  agent  by  a  minor  during  his  or  her  entire  minority  is  absolutely  void, 
and  consequently  any  contract  made  by  such  agent  in  pursuance  of  his  ap- 
pointment is  absolutely  void:  See  Wambolev.  Fooie,  2  Dak.  1.  Furthermore, 
leaving  out  of  consideration  such  contracts  as  are  expressly  made  binding, 
any  contract  wliatever  made  by  a  female  minor  during  her  whole  minority, 
and  by  a  male  minor  under  the  age  of  eighteen,  relating  to  real  property,  is 
absolutely  void.  All  purchases,  sales,  and  leases  of  real  property  by  and  to 
such  minors  are  consequently  void.  Again,  any  contract  made  ))y  such 
minors,  relating  to  any  personal  property  not  in  his  or  her  immediate  posses- 
sion or  control,  is  also  void.  It  seems  that  the  contract  of  a  male  minor 
above  the  age  of  eighteen,  relating  to  real  property,  is  simply  voidable; 
also,  that  the  contract  of  a  female  minor  or  of  a  malt  minor  under  the  age  of 
eighteen,  relating  to  personal  property  in  his  immediate  possession  or  con- 
trol, is  likewise  only  voidable;  also,  that  the  contract  of  a  male  minor 
above  the  age  of  eighteen,  relating  to  personal  property,  whether  in  his  im- 
mediate possession  or  control,  or  not,  is  voidable;  also,  all  other  contracts, 
not  relating  to  real  or  personal  property,  entered  into  by  male  or  female 
minors  of  any  age,  are  simply  voidable.  The  provision  concerning  disaffirm- 
ance will  be  noticed  hereafter,  under  the  appropriate  head.  These  distinc- 
tions made  by  the  codifiers  are  perfectly  senseless.  It  is  difficult  to 
appreciate  the  reason  why  it  should  be  provided  that  if  a  female  minor  or  a 
male  minor  under  the  age  of  eighteen  owns  personal  property,  she  or  he  may 
make  a  voidable  sale  of  it,  if  it  be  in  her  or  his  immediate  possession  or  con- 
trol, while  if  the  property  be  not  in  such  possession  or  control,  the  sale 
should  be  void;  or  why  the  purchase  by  such  minor  of  personal  property 
not  in  her  or  his  immediate  possession  or  control,  or  as  would  be  usually  the 
case,  in  the  possession  or  control  of  the  seller,  should  be  absolutely  void, 
while  if  such  minor  have  possession  of  the  property  as  a  bailee  for  any  pur- 
pose, the  purchase  be  merely  voidable. 

In  Georgia,  it  is  provided  that  "the  contracts  of  an  infant  under  twenty- 
one  years  of  age  are  void,  except  for  necessaries;  and  for  necessaries  they  are 
not  valid  unless  the  party  furnishing  them  proves  that  the  parent  or  guar- 
dian fails  or  refuses  to  supply  sufficient  necessaries  for  the  infant.  If,  how- 
ever, the  infant  receives  property  or  other  valuable  consideration,  and  after 
arrival  at  age,  retains  possession  of  such  property,  or  enjoys  the  proceeds  of 
such  valuable  consideration,  such  a  ratification  of  the  contract  shall  bind 
him  ":  Code  1S82,  sec.  2731.  It  is  plain,  both  from  this  section  in  itself,  and 
other  sections  connected  with  it,  that  although  the  legislature  has  used  the 
word  "void,"  what  it  really  meant  was  "voidable";  for  a  void  contract  is 
not  subject  to  ratification.     Compare  Shuford  v.  Alexander,  74  Ga.  293. 

An  early  statute  of  Connecticut  enacted  "that  no  person  under  the  gov- 
ernment of  a  parent,  guardian,  or  master  shall  be  capable  to  make  any  con- 
tract or  bargain  which  in  the  law  shall  be  accounted  valid,  unless  the  said 
person  be  authorized  or  allowed  so  to  contract  or  bargain  by  his  or  her 
parent,  guardian,  or  master,  in  which  case  such  parent,  guardian,  or  master 


582  Craig  v.  Van  Bebber.  [Missouri, 

shall  be  bound  thereby."  Under  this  statute  it  was  held  that  a  con- 
tract made  by  an  infant  who  was  xinder  the  care  of  a  parent  and  guardian 
was  absolutely  void,  and  consequently  could  not  be  made  valid  by  a  ratifi- 
cation by  the  infant  after  he  came  of  age:  Alsop  v.  Todd,  2  Root,  105, 
109.  In  other  cases,  however,  it  was  held  that  the  contracts  of  an  infant 
under  the  government  of  a  parent,  guardian,  or  master,  if  against  his  inter- 
est, were  void,  and  incapable  of  ratification,  whileh  is  contracts  with  a  sem- 
blance of  advantage  were  voidable  only:  Rogers  v.  Hurd,  4  Day,  57;  4  Am. 
Dec.  182;  Maples  v.  Wightman,  4  Conn.  376;  10  Am.  Dec,  149.  In  reaching 
these  conclusions,  no  stress  seems  to  be  placed  on  the  fact  whether  the  par- 
ent, guardian,  or  master  authorized  the  infant  to  contract,  except  for  the 
purpose  of  holding  the  parent,  etc.,  liable.  If  the  infant  be  not  under  the 
government  of  a  parent,  guardian,  or  master,  his  contracts,  at  least  those 
which  have  a  semblance  of  benefit,  are  voidable  only:  Larence  v.  Gardner, 
1  Root,  477;  Kline  v.  Beebe,  6  Conn.  494.  Furthermore,  it  is  held  that  an 
infant,  to  be  incapacitated  from  contracting  under  the  statute,  must  be  un- 
der the  legal  and  actual  government  of  his  parent,  guardian,  or  master: 
Kline  v,  Beebe,  6  Conn.  494. 

Particular  Contract.s  of  Infants.  —  The  application  of  the  foregoing 
general  principles  as  to  the  binding  effect  of  infants'  contracts  to  the  princi- 
pal kinds  of  contracts  will  now  be  considered.  It  might  be  observed  that 
while  many  of  the  cases  discussing  questions  of  disaffirmance  and  ratifica- 
tion of  their  contracts  by  infants  may  not  expressly  state  that  the  contracts 
are  voidable,  as  distinguished  from  void,  yet  the  proposition  is  necessarily 
assumed,  and  the  cases  are  really  authorities  to  that  efifect. 

Deeds  of  Conveyance.  —  An  infant's  deed  of  conveyance,  whether  it  be 
a  feoffment,  a  deed  operating  under  the  statute  of  uses,  or  a  statutory  grant, 
it  is  well  settled,  is  voidably  only,  and  not  void:    Wliittingharas  Case,  8  Coke, 

42  b;  Zouch  v.  Parsons,  3  Burr.  1794;  v.  Handcock,  17  Ves.  383;  Allen 

V.  Allen,  2  Dru.  &  War.  307,  338;  Tucker  v.  Moreland,  10  Pet.  59,  70,  71;  1 
Am.  Lead.  Cas.  *224,  *228,  *229;  Irvine  v.  Irvine,  9  Wall.  617;  Freeman  v. 
Bradford,  5  Port.  270;  Manning  v.  Johnson,  26  Ala.  446;  62  Am.  Dec.  732; 
Hastings  v.  Dollarhide,  24  Cal.  195;  Rogers  v.  Hurd,  4  Day,  57;  4  Am.  Dec. 
182;  Kline  v.  Beebe,  G  Conn.  494;  Wallaces  Lessee  v.  Lewis,  4  Harr.  (Del.)  75; 
Cole  V.  Pennoyer,  14  111.  158;  Doe  ex  dcm.  Moorex.  Abernathy,  7  Blackf.  442; 
Hartnmn  v,  Kendall,  4  Ind.  403,  404;  Pitcher  v.  Laycock,  7  Ind.  398;  Bahcock 
V.  Doe  ex  dem.  Bowman,  8  Ind.  110;  Johnson  v.  Rochoell,  12  Ind.  76;  Laiv  v. 
Long,  41  Ind.  580;  Scranton  v.  Stewart,  52  Ind.  OS;  Kiil  v.  Healey,  84  111.  104; 
25  Am.  Rep.  434;  Tunison  v.  Chainhlin,  88  111.  378;  Jenkins  v.  Jenkins,  12 
Iowa,  195;  Green  v.  Wilding,  59  Iowa,  679;  44  Am.  Rep.  696;  Philips  v. 
Green,  3  A.  K.  Marsh.  7;  13  Am.  Dec.  124;  5  T.  B.  Man.  344;  Breckenridgr's 
Heirs  v.  Ormshy,  1  J.  J.  Marsh.  236,  243;  19  Am.  Dec.  71,  77;  Vallandmg- 
ham  V.  Johnson,  85  Ky.  288;  Hofert  v.  Miller,  86  Ky.  572;  Webb  v.  Hall,  35 
Me.  336,  338;  Daiis  v.  Dudley,  70  Me.  2.36;  35  Am.  Rep.  318,  339;  Kry's 
Lessee  v.  Davis,  1  Md.  42;  Ridgeley  v.  Crandall,  4  Md.  435;  Kendall  v.  Law- 
rence, 22  Pick.  540;  Allen  v.  Poole,  54  Miss.  3'-'3,  330;  Ferguson  v.  BeiCs 
Adnvr,  17  Mo.  347,  351;  Youse  v.  I^'orcoms,  12  Ma.  549;  51  Am.  Dec.  175; 
Jackson' ex  dem.  Wallace  v.  Carpenter,  11  Johns.  539;  Bool  v.  Mix,  17  Wend. 
119;  31  Am.  Dec.  285;  Eagle  Fire  Co.  v.  Lent,  6  Paige,  635,  affirming  1 
Edw.  Ch.  301;  Gillett  v.  Stanley,  1  Hill,  121;  Van  Nostrand  v.  Wright,  Hill 
&  D.  Sup.  260;  Dominick  v.  Michael,  4  Sand.  374,  418;  Voorhies  v.  Voorhies,  24 
Barb.  150,  152;  Mclioaine  v.  Kadd,  30  How.  Pr.  193;  3  Rob.  (N.  Y.)  4'29;  Drake  a 
Lessee  v.  Ramsay,  5  Ohio,  251,  253;  Ihky  v.  Padgett,  27  S.  C.  300;    White  v. 


April,  1890.]  Craig  v.  Van  Bebber.  583 

Flora,  2  Over.  426,  431;  Wheaion  v.  East,  5  Yerg.  41;  26  Am.  Dec.  251; 
Scott  V.  Buchanan,  11  Humph.  468;  Cumndngs  v.  Poiuell,  8  Tex.  80;  Bigelow 
V.  Kinney,  3  Vt.  353,  358;  21  Am.  Dec.  589J  590;  Bedinger  v.  Wharton,  27 
Gratt.  857;  Wilson  v.  Branch,  11  Va.  65,  70;  46  Am.  Rep.  709,  712;  Birch  v, 
Linton,  78  Va.  584;  49  Am.  Rep.  381,  382;  Gillc-^piZ  v.  Bailey,  12  \V.  Va.  70; 
29  Am.  Rep.  445,  446.  He  may,  therefore,  ratify  or  disaffirm  the  deed  at 
his  majority,  at  his  pleasure.  This  is  so  by  statute  in  Georgia:  Code  1882, 
sec.  2694;  Nathans  v.  Arkwrighf,  66  Ga.  179. 

The  cases,  it  will  be  seen,  are  quite  unanimous  in  support  of  the  rule;  yet 
they  differ,  as  has  been  already  seen,  in  the  reasons  which  they  assign. 
Many  of  the  cases,  especially  the  older  ones,  apply  the  criterion  of  Perkins, 
that  the  particular  deed  under  consideration  took  effect  by  the  delivery  of 
the  infant's  own  hand;  and  others  apply  the  criterion  of  Lord  Chief  Justice 
Eyre,  that  the  deed  did  not  appear  to  be  to  the  prejudice  of  the  infant;  and 
in  still  others,  both  criterions  are  adopted.  The  result  might  have  been 
otherwise  if  the  deed  were  executed  by  an  agent  appointed  by  the  infant: 
See  Boe  ex  dem.  Thomas  v.  Roberts,  16  Mees.  &  W.  778,  781;  Philpot  v. 
Bingham,  55  Ala.  4.'^5;  Wambole.  v.  Foote,  2  Dak.  1;  Lawrence's  Lessee  v. 
McArter,  10  Ohio,  37;  but  see  Ciimmings  v.  Poivell,  8  Tex.  80,  88,  per  Hemp- 
hill, C.  J.;  Ferguson  v.  Houston  etc.  R'y,  73  Tex.  347;  and  see  -post,  "'Delega- 
tion of  Authority";  or  if  it  were  a  deed  of  gift:  Swafford  v.  Ferguson,  3  Lea, 
292;  31  Am.  Rep.  639;  but  see  Slaughter  v.  Cunningham,  24  Ala.  260;  60  Am, 
Dec.  463;  and  see  post,  "Gifts."  It  is  doubtful,  however,  whether  any  well- 
considered  case  at  the  present  day  would  adopt  these  distinctions;  but  that  all 
deeds  of  infants  would  be  held  to  be  voidable  only,  and  not  void,  without 
regard  to  the  question  whether  they  were  executed  by  the  grantors  person- 
ally or  by  their  agents,  or  wliether  they  were  executed  with  or  without  con- 
sideration. 

The  effect  of  the  deed  should  not  be  misunderstood.  B.'iiig  siuiply  void- 
able, the  deed  operates  to  transmit  the  title,  which  continues  in  the  grantee, 
or  those  who  claim  under  him,  unless  divested  by  some  act  of  the  grantor: 
Irvine  v.  Irvine,  9  Wall.  617;  Law  v.  Long,  41  Ind.  586;  Phillips  v.  Green,  5 
T.  B.  Mon.  344;  Van  Nostrand  v.  Wright,  Hill  &  D.  Sup.  260;  Drakes  Lessee  v. 
Ramsay,  5  Oliio,  251,  253;  Ihley  v.  Padgett,  27  S.  C.  300,  302;  White  v.  Flora, 
2  Over.  426,  431;  Matherson  v.  Davis,2  Cold.  443,  451.  And  hence  it  has  been 
held  that  the  grantee  who  takes  possession  of  the  premises  under  the  deed  does 
80  rightfully,  and  consequently  the  grantor  is  not  at  liberty  to  treat  him  as 
a  trespasser,  until,  by  avoiding  the  deed,  he  places  hiin  in  that  position;  and 
speaking  of  the  old  action  of  ejectment,  the  court  saying:  "The  action  of 
ejectment  necessarily  supposes  the  defendant  to  be  a  trespasser,  and  we  are 
of  the  opinion  that  it  cannot  be  maintained  in  a  case  like  the  present  without 
a  previous  act  on  the  part  of  tiie  plaintiff's  lessor,  avoiding  the  deed  made  by 
him  while  an  infant,  and  under  which  the  defendant  is  in  possession":  Wal- 
lace's Lessee  v.  Leivis,  4  Harr.  (Del.)  75;  but  see  post,  "  Disaffirmance  by  Suit." 
The  operation  of  the  deed  was  well  stated  by  Lane,  J.,  in  Drake's  Lessee  v.  Ram- 
say, 5  Ohio.  251,  253:  "To  us  it  appears  that  the  word  'voidable,'  ex  vi  ter- 
mini, shows  that  such  a  deed  transmits  the  title;  and  that  after  vesting,  it 
continues  in  the  grantee  until  divested  by  some  act  of  the  maker  of  the  deed  "; 
and  in  Ihley  v.  Padgett,  27  S.  C.  300,  302,  McGowan,  J.,  says:  "From  its  very 
nature,  a  thing  only  voidable  needs  no  positive  confirmation,  Init  stands  good 
until  impeached  by  a  proper  party.  In  the  tirst  instance,  confirmation  has 
no  proper  application  to  it;  but  when  there  is  an  effort  to  avoid  the  act,  it 
becomes  important  to  inquire  whether  there  has  been  confirmation;  for  if  so, 


584  Craig  v.  Van  Berber.  [Missouri, 

the  matter  has  passed  beyond  the  control  of  the  party,  and  is  no  longer 
voidable." 

Under  the  theory  that  the  appointment  of  an  agent  by  an  infant  is  void,  it 
has  been  asserted  that  a  deed  executed  on  behalf  of  an  infant,  pursuant  to  an 
authority  conferred  by  him  for  that  purpose  is  void,  and  not  merely  voidable: 
Lawrence's  Lenfiee  v.  McArter,  10  Ohio,  37;  PIdlpot  v.  Binrjham,  55  Ala.  435. 
But  the  better  view  is  to  the  contrary:  Cummiinjs  v.  Powell,  8  Tex.  80,  88; 
Ferfjusonv.  Houston  etc.  li'y,  73  Tex.  344,  347;  post,  "Delegation  of  Authority." 

It  may  be  here  observed  that  there  are  some  deeds  of  infanta  which  are  not 
even  voidable,  but  on  the  contrary,  cannot  be  attacked  for  nonage.  In  the 
language  of  the  supreme  court  of  the  United  States,  "They  are  those  in 
which  the  infant,  by  making  the  conveyance,  does  only  what  the  law  would 
have  compelled  him  to  do":  Irvine  v.  Irvine,  9  Wall.  617,  626.  In  fact,  Zouch 
V.  Parsons,  3  Burr.  1794,  was  really  such  a  case,  and  Lord  Mansfield  cites 
Co.  Lit.  172  a,  to  the  efifect  that,  "generally,  whatsoever  an  infant  is  bound 
to  do  by  law,  the  same  shall  bind  him,  albeit  he  doth  it  without  suit  of  law." 
This  proposition  is  fully  discussed  and  illustrated  post,  "  Acts  Which  Infant 
would  have  been  Compelled  by  Law  to  do." 

But  an  infant  is  not  estopped  from  disaffirming  his  deed,  and  maintaining 
an  action  to  recover  the  land  conveyed,  by  the  mere  fact  that  when  the  deed 
was  executed  he  appeared  and  was  believed  by  the  grantee  to  be  an  adult: 
Buchanan  v.  Hubbard,  96  Ind.  1.  Nor  even  would  he  be  estopped  at  law  by 
a  false  declaration  at  the  time  he  made  the  deed  or  a  recital  in  the  deed  that 
he  was  of  full  age:  See  Wieland  v.  Kobick,  1  JO  111.  16;  51  Am.  Rep.  676.  But 
it  might  be  otherwise  in  equity:  Ferguson  v.  Bobo,  54  Miss.  121;  Schmitheimer 
V.  Eiseman,  7  Busli,  298;  compare  Sims  v.  Ererhardt,  102  U.  S.  300;  Wtd>ion 
V.  Billings,  38  Ark.  278;  42  Am.  Rep.  1;  Vallandingham  v.  Johnson,  85  Ky. 
288.  See  further  on  this  question,  infra,  "  Infant's  Concealment  or  Misrepre- 
sentation as  to  Age." 

An  infant's  deed  to  secure  the  repayment  of  money  advanced  for  necessa- 
ries is  voidable:  Martin  v.  Gale,  L.  R.  4  Ch.  D.  428;  and  see  Askey  v,  Wil- 
liams, 74  Tex.  294;  but  compare  Cooper  v.  State,  37  Ark.  421. 

A  deed  takes  effect  from  delivery.  Therefore,  where  a  married  woman, 
while  an  infant,  signed  and  acknowledged,  with  her  husband,  a  deed  of  her 
lands,  and  authorized  him  to  deliver  it,  and  he  delivered  it  with  her  consent 
after  she  became  adult,  it  was  held  that  such  deed  could  not  be  avoided  by 
her  on  account  of  infancy:  Sims  v.  Smith,  99  Ind.  469;  50  Am.  Rep.  99. 

Deed3  of  Intant  Femes  Covert.  —  Where  a  married  woman,  who  is  also 
an  infant,  executes  a  deed  conveying  her  own  realty  or  relinquishing  her  right 
of  dower  in  the  lands  of  her  husband,  in  conformity  with  a  statute  which  pro- 
vides that  married  women  may  convey  their  lands  or  release  their  claims  to 
dower  by  deeds  executed  according  to  certain  formalities,  or  in  a  prescribed 
manner,  the  question  has  been,  not  so  much  whether  her  deed  is  void  because 
of  her  nonage,  but  whether  it  is  not  valid  under  the  statute,  notwithstanding 
her  infancy.  It  is  well  settled,  however,  that  marriage  does  not  emancipate 
a  person  under  age  from  the  condition  of  infancy,  and  that  the  statute  simply 
removes  the  disability  of  coverture.  Hence  a  deed  executed  by  an  infant 
Jeme  covert  pursuant  to  the  statutory  requirements  stands  on  precisely  the 
same  footing  as  a  deed  executed  by  an  infant  Jeme  sole.  In  other  words,  the 
deed  is  not  binding,  nor  is  it  void;  but  it  is  voidable:  Greenwood  v.  Coleman, 
84  Ala.  150;  Schaffer  v.  Lavretta,  57  Ala.  14;  Harrod  v.  Myers,  21  Ark.  592; 
76  Am.  Dec.  409;  Watson  v.  Billings,  38  Ark.  278;  42  Am.  Rep.  1;  Hartman 
V.  Kendall,  4  Ind.  403,  404;  Law  v.  Long,  41  Ind.  586;  Scranton  v.  Stewart,  52 


April,  1890.]  Craig  v.  Van  Berber.  685 

Ind.  6S;  Hoijt  v.  Sivar,  53  111.  134;  PhiUps  v.  Green,  3  A.  K.  Marsh.  7;  13 
Am.  Dec.  124;  Prewit  v.  Graves,  5  J.  J.  Marsh.  114,  120;  Oldhnm  v.  Sale,  I 
B.  Mon.  76,  77;  Wchhx.  Hall,  35  Me.  3.S6;  WaMi  v.  Young,  110  Mass.  39G; 
Sanford  v.  McLean,  3  Paige,  117;  23  Am.  Dec.  773;  Bool  v.  Mix,  17  Wend. 
119;  31  Am.  Dec.  285;  Cunnim/ham  v.  Knight,  1  Barb.  399;  Mcllcaine  v.  Kadel, 
30  How.  Pr.  193;  3  Rob.  (N.  Y.)  429;  Ep-ps  v.  Flowers,  101  N.  C.  158;  Hughes 
V.  Fateon,  10  Ohio,  127;  McMorris  v.  IFeM,  17  S.  C.  55S;  43  Am.  Rep.  629; 
Scott  V.  Buchanan,  11  Humph.  468;  Matherson  v.  Davis,  2  Cold.  443,  451; 
Burr  V.  Wilson,  18  Tex.  367,  375.  The  same  rule  applies  to  a  mortgage  of  her 
estate,  executed  by  an  infant  married  woman:  Magee  v.  Welsh,  18  Cal.  155; 
Dixon  V.  Merritt,  21  Minn.  196;  Losey  v.  Bond,  94  Ind.  67. 

"It  is  inconceivable,"  says  the  court  in  Greenioood  v.  Coleman,  34  Ala.  150, 
"  that  it  was  designed  to  confer  upon  her,  when  under  coverture,  an  author- 
ity to  contract  wliich  did  not  pertain  to  her  if  sole  and  unmarried,  and  to  dis- 
pense with  the  tli.sability  of  infancy."  In  Sanford  v.  McLean,  3  Paige,  117, 
121,  23  Am.  Dec.  773,  775,  Chancellor  Walworth  uses  the  following  language: 
"The  statute  which  makes  valid  the  deed  of  a.  feme  covert  when  executed  with 
her  husband,  and  acknowledged  by  her  on  a  private  examination,  was  never 
intended  to  sanction  or  validate  a  conveyance  by  an  infant  wife.  There  is  a 
plain  and  obvious  distinction  between  the  disability  of  coverture  and  that  of 
infancy.  The  first  arises  from  a  supposed  want  of  will,  on  account  of  the 
legal  power  and  coercion  which  the  husband  may  exercise  over  the  volition 
of  the  wife.  This  disability  is  removed  by  the  private  examination  of  the 
wife  in  the  absence  of  her  husband,  by  which  it  is  legally  ascertained  that 
such  power  and  coercion  have  not  been  exercised  in  that  particular  case.  Bui: 
the  disability  of  infancy  arises  from  the  supposed  want  of  capacity  and  judg- 
ment in  the  infant  to  contract  understandingly."  Again,  Buskirk,  C.  J., 
says,  in  Scranton  v.  Stewart,  52  Ind.  68,  91:  "The  infancy  of  the  plaintifiF 
presents  a  distinct  question  from  that  of  her  coverture.  Each  disability  must 
be  considered  by  itself,  and  neither  can  derive  any  additional  force  from  being 
coupled  with  the  other.  Under  our  statute,  a  feme  covert  cannot  convey  her 
lands  unless  her  husband  joins  with  her  in  the  deed,  and  unless  the  deed  is 
executed  in  the  mode  prescribed  by  the  statute;  and  when  a  deed  is  thus 
executed,  the  disability  of  coverture  is  removed,  and  that  of  infancy  alone 
remains.  The  deed  of  a  married  woman  is  void  when  the  statutory  require- 
ments are  not  complied  with.  The  deed  of  an  infant,  whether  married  or 
unmarried,  is  not  void,  but  voidable  merely." 

In  Sherman  v.  Garfield,  1  Denio,  329,  where  an  infant  feme  corert  joined 
with  her  husband  in  a  conveyance  of  his  lands,  purporting  to  release  her 
dower  therein,  it  was  held  that  her  conveyance  was  void,  she  having  no  estate 
in  the  lands,  and  that,  having  survived  her  husband,  she  could  maintain  an 
action  to  recover  her  dower,  notwithstanding  her  conveyance;  the  court  say- 
ing: "Here  the  land  belonged  to  the  plaintiff's  husband,  and  she  had  no 
estate  or  interest  in  it,  but  only  a  capacity  to  be  endowed  in  the  event  she 
should  survive  him.  There  was  nothing  upon  which  the  deed  could  operate. 
It  was  therefore  merely  void,  and  required  no  act  on  her  part  to  disaffirm  it." 
It  is  thus  plain  that  this  questionable  decision  was  made  to  rest  on  other 
grounds  than  nonage.  In  an  earlier  case  in  the  same  state,  also  involving  a 
release  of  dower  by  an  infant  feme  covert,  it  was  said  that  the  deed  was  void 
for  infancy;  but  what  the  chancellor  must  have  meant  was,  that  it  was  void- 
able; at  least  it  was  unnecessary  to  hold  that  it  was  anything  more  than 
voidable,  since  the  question  was  simply  as  to  the  right  of  the  infant  to  dis- 
affirm the  deed  and  recover  her  dower  in  the  lands:  Sanford  v.  McLean,  3 


586  Craig  v.  Van  Bebbeb.  [Missouri, 

Paige,  117;  23  Am.  Dec.  773.  In  Schrader  v.  Decker,  9  Pa.  St.  1 4,  49  Am.  Dec. 
638,  the  bad  report  of  a  case  shows  that  the  deed  of  a  feme  covert  executed 
and  acknowledged  by  her  while  an  infant,  but  dated  after  she  attained  full 
age,  is  "absolutely  void,"  that  is,  may  be  avoided  by  her.  It  is  impossible 
to  tell  whether  the  deed  was  post-dated  at  the  time  it  was  executed,  or  a 
blank  left  for  the  insertion  of  the  date,  which  was  afterwards  filled  in;  pre- 
sumably it  was  the  latter.     It  is,  of  course,  idle  to  comment  on  such  a  case. 

The  deed  of  an  infant  feme  covert  has  the  same  efifect,  when  executed  ac- 
cording to  the  requirements  of  the  statute,  as  the  deed  of  an  unmarried  in- 
fant. In  other  words,  it  operates  to  vest  the  title  in  her  grantee,  or  to 
relinquish  her  right  of  dower,  as  the  case  may  be,  subject  to  her  affirmance 
or  disaffirmance  on  arriving  at  full  age:  Mathcrson  v.  Davis,  2  Cold.  443,  451; 
Lawv.  LoriQ,  41  Ind.  586. 

In  Minnesota,  by  1  General  Statutes,  188S,  chapter 40,  section 2,  "a husband 
and  wife  may  convey  any  real  estate  by  their  duly  authorized  agent  or  attor- 
ney, and  may  by  their  joint  deed  convey  the  real  estate  of  the  wife  in  like  man- 
ner as  she  might  do  by  her  separate  deed  if  she  was  unmarried;  nor  shall  the 
minority  of  the  wife  in  any  case  affect  the  validity  of  such  deed."  In  1843,  1861, 
and  1866,  statutes  were  passed  in  Indiana  which  have  been  reproduced  in  2  Re- 
vised Statutes,  1888,  sections  2939,  2940,  2943,  providing  for  the  joinder  of 
married  women  under  the  age  of  twenty-one  years,  with  their  husbands,  in 
conveyances  of  the  real  estate  of  the  latter.  The  first  of  these  statutes  pro- 
vided that  "any  married  woman  over  the  age  of  eighteen  years  and  under  the 
age  of  twenty-one  years  may  release  and  relinquish  her  right  in  any  lands  of 
her  husband,  sold  and  conveyed  by  him,  by  executing  and  acknowledging 
the  execution  of  such  conveyance  as  provided  in  the  last  preceding  section, 
if  the  father  or  guardian  of  such  married  woman  shall  declare  before  the 
officer  taking  such  acknowledgment  that  he  believes  that  such  release  and 
relinquishment  of  dower  is  for  the  benefit  of  such  married  woman,  and  that 
it  would  be  prejudicial  to  her  and  her  husband  to  be  prevented  from  dis- 
posing of  the  lands  thus  conveyed."  Under  this  statute  it  was  held  that  a 
married  woman  under  the  age  of  eighteen  years  could  not,  either  with  or 
without  the  consent  of  her  father  or  guardian,  release  or  relinquish  her  dower 
in  the  lands  of  her  husband.  The  father  or  guardian  had  no  power  to  give 
his  consent,  unless  she  was  over  eighteen  and  under  twenty-one  years  of  age: 
Law  V.  LoiKj,  41  Ind.  586.  It  was  also  held,  in  a  suit  against  a  husband  and 
wife  to  foreclose  a  mortgage  executed  by  them  in  1872,  that  an  anbwei.  by 
the  wife  that  when  she  executed  the  mortgage  she  was  an  infant,  without 
alleging  that  the  land  was  her  separate  property,  or  that  her  husband  was  an 
infant,  was  bad  on  demurrer,  since  under  the  statute  of  1866  it  was  compe- 
tent for  an  infant  wife  of  an  adult  nusband  to  join  with  him  in  the  convey- 
ance of  his  real  estate:  Bakes  v.  Gilbert,  93  Ind.  70. 

Executory  Conteacts  to  Sell  Real  Property.  —  An  infant's  contract 
to  sell  and  convey  his  real  estate  is  not  void,  but  only  voidable,  and  is  there- 
fore subject  to  his  affirmance  or  disaffirmance:  Mu^^tard  v.  Wohlford's  Heirs, 
15  Gratt.  329;  76  Am.  Dec.  209.  The  infanf  may  repudiate  the  contract,  and 
recover  back  the  money  paid  thereunder;  and  in  such  an  action  the  vendor 
will  not  be  entitled  to  deduct  from  the  amount  of  the  deposit  sued  for  the 
expense  of  advertising  and  selling  tlie  property  again,  brought  about  by  the 
plaintiff's  rescission  of  the  contract:  Shurlleff  v.  Millard,  12  R.  I.  272;  34 
Am.  Rep.  640;  and  see  -post,  "Infant's  Right  to  Recover  back  Money  Paid  by 
Him  on  Disaffirmance  of  Contract."  If  his  vendee  is  in  possession  of  the  land 
contracted  to  be  conveyed,  he  may  maintain  ejectment,  it  ia  held,  without 


April,  1890.]  Ckaig  v.  Van  Bebbeb.  587 

giving  notice  of  his  disaffirmance  of  the  contract,  the  action  itself  being  a 
sutficient  disaffirmance:  Clark  v.  Tale,  7  Mont.  171.  Nor  will  a  court  of 
equity  restrain  his  proceedings  at  law  to  recover  the  lands  in  the  possession 
of  the  vendee,  his  contract  being  no  more  binding  on  him  in  equity  tnaa  at 
law:  Brawner  v.  Franklin,  4  Gill,  463.  Of  course,  infancy  is  a  good  defense 
to  an  action  against  a  vendor  to  recover  damages  for  his  failure  to  perform 
his  contract:  Yeager  v.  Knii/ht,  60  Miss.  730.  The  contract  to  sell  and  convey 
not  being  void,  but  voidable  only,  his  vendee  who  enters  into  possession  of 
the  land  under  the  contract  cannot  be  regarded  as  a  trespasser,  and  therefore, 
upon  the  disaffirmance  of  the  contract  by  the  infant  after  arriving  at  full 
age,  an  action  of  imhihilidns  assumpsit  for  use  and  occupation  may  be  main- 
tamed  against  the  vendee;  and  it  is  held,  the  action  being  equitable  in  its 
nature,  the  vendee  might  recoup  for  valuable  improvements  erected  by  him 
in  good  faith  upon  the  land:   Weaver  v.  Jones,  24  Ala.  420. 

The  contract  is  none  the  less  voidable  because  it  is  in  the  form  of  a  bond 
for  title  with  a  penalty:  Mustard  v.  WoldfonVs  Heirs,  15  Gratt.  329;  76  Am. 
Dec.  209;  Weaver  v.  Jones,  24  Ala.  420;  Dozcinan  v.  Broivning,  31  Ark.  364. 
According  to  the  theory  of  Keane  v.  BoycoU,  2  H.  Black.  511,  514,  such  a  con- 
tract would  be  necessarily  prejudicial  to  the  infant,  and  would  consequently 
be  void;  but  Moncure,  J.,  in  Mustard  v.  Wohl/ord's  Heirs,  15  Gratt.  329,  76 
Am.  Dec.  209,  says  that  "the  penalty  of  the  bond  is  a  mere  matter  of  form, 
the  substance  of  the  contract  being  the  condition  ";  and  Chilton,  C.  J.,  in 
Weaver  v.  Jones,  24  Ala.  420,  affirms  that  "the  better  opinion,  as  maintained 
by  the  modern  decisions,  is,  that  an  infant's  contracts  are  none  of  them  (with 
perhaps  one  exception)  absolutely  void  by  reason  of  nonage."  iSee  also,  post, 
"Bonds." 

Under  the  theory,  however,  that  the  appointment  of  an  agent  by  an  infant 
is  absolutely  void,  it  has  been  held  that  a  bond  for  title  executed  by  an 
agent  of  an  infant  was  void,  and  consequently  could  not  be  ratified  by  him 
after  attaining  majority:  Truehlood  v.  Truehlood,  8  Ind.  195;  65  Am.  Dec. 
756;  and  see  Pi/le  v.  Cravens,  4  Litt.  17;  but  see  the  view  that  an  infant's 
delegation  of  authority  is  void  criticised  post,  "  Delegation  of  Authority." 

Purchases  of  Real  Property. — An  infant's  contract  of  purchase  of  real 
property,  whether  executory  or  executed  by  a  conveyance  to  him,  is  also 
simply  voidable:  Lynde  v.  Budd,  2  Paige,  191;  21  Am.  Dec.  84;  Baker  v. 
Kenndt,  54  Mo.  82;  Wagner,  J.,  in  the  latter  case,  saying:  "The  old  dis- 
tinction between  the  void  and  voidable  contracts  of  infants  is  becoming  ex- 
ploded by  the  courts,  and  the  tendency  of  modern  decisions  is  in  favor  of 
the  reasonal)leness  and  policy  of  a  very  liberal  extension  of  the  rule  that  the 
acts  and  contracts  of  infants  shall  be  deemed  voidable  only,  and  subject  to 
their  election,  when  they  become  of  age,  either  to  affirm  or  disavow  them." 
If  the  deed  to  the  infant  reserves  a  lien  on  the  land  to  the  grantor  for  the 
purchase- money,  it  is  nevertheless  but  voidable,  and  may  be  affirmed  by 
the  infant  after  he  comes  of  age:  Hook  v.  Donaldson,  9  Lea,  56.  An  infant 
cannot  retain  the  land  purchased  by  him,  and  repudiate  his  agreement  to  pay 
the  price,  or  a  note  and  nuirtgage  executed  by  him  as  a  part  of  the  trans- 
action of  purchase  to  secure  the  price:  See  post,  "Disaffirmance  of  Part  of 
Transaction." 

Mortgages  of  Real  Property.  —  An  infant's  mortgage  of  his  real  estate, 
whether  under  the  theory  that  the  mortgage  o])erates  as  a  conveyance  of  the 
legal  title,  or  under  the  theory  that  it  operates  to  create  a  mere  lien  upon 
the  land,  is  likewise  merely  voidable,  at  the  election  of  the  infant:  /fubbard 
V.  Cummings,  1  Me.  11;  Monumental  Building  Ass  n  v.  Herman,  33  Md.  128, 


588  Craiq  v.  Van  Bebber.  [Missouri, 

132;  President  etc.  of  Boston  Banh  v.  Chamberlain,  15  Mass.  220;  Mansfield  v. 
Gordon,  144  Mass.  168;  Siwjer  Mfg.  Co.  v,  Lamh,  81  Mo.  221;  Roberta  v. 
Wiggin,  1  N.  H.  73;  8  Am.  Dec.  38;  Merchants'  Fire  Ins.  Co.  v.  Grant,  2 
Edw.  Ch.  544;  Palmer  v.  Miller,  25  Barb.  399;  McGan  v.  Marshall,  7  Humph. 
121.  So,  also,  if  an  infant  takes  a  conveyance  of  lanJ,  and  contracts  therein 
for  the  payment  of  the  purchase  price,  and  that  the  purchase-money  shall  be 
a  lien  on  the  land,  the  instrument  is  not  void,  but  voidable:  Hook  v.  Donald- 
son, 9  Lea,  56.  The  reasoning  by  which  most  of  these  cases  have  reached 
this  conclusion  has  been  along  the  same  lines  by  which  many  of  the  cases 
previously  cited  have  held  the  deeds  of  conveyance  of  infants  to  be  voidable 
simply;  namely,  that  the  instrument  in  the  particular  case  before  the  court 
took  effect  by  the  delivery  of  the  infant's  own  hand,  and  that  it  did  not  ap- 
pear to  be  to  the  prejudice  of  the  infant.  Thus  in  McGan  v.  Marshall,  7 
Humph.  121,  it  was  held  that  a  mortgage  executed  by  an  infant  to  secure 
payment  for  goods  to  be  purchased,  and  which  were  to  be  paid  for  in  two 
years,  was  not,  on  its  face,  prejudicial  to  the  infant,  and  was  consequently 
voidable,  and  not  void,  and  proof  of  the  subsequent  injudicious  application 
by  the  infant  of  the  consideration  received  could  not  render  it  void.  In 
Roberts  v.  Wiggin,  1  N.  H.  73,  8  Am.  Dec.  38,  Woodlmry,  J,,  says  that 
"courts  incline  to  construe  infants'  contracts  voidable  rather  than  void,  be- 
cause such  construction  oftener  promotes  public  justice,  and  operates  at  the 
same  time  more  beneficially  to  the  minor  himself,  for  whose  sole  advantage 
the  privilege  of  avoiding  a  contract  is  conferred.  As  contracts  which  take 
effect  by  manual  delivery  convey  usually  an  interest,  and  not  a  mere  power, 
such,  when  made  by  an  infant,  wliether  the  interest  pass  to  or  from  him,  are, 
in  general,  not  void,  but  voidable." 

In  accordance  with  the  rule  that  if  the  contract  be  such  as  the  court  can 
pronounce  prejudicial  to  the  infant  it  is  void,  it  has  been  said  that  a  mort- 
gage of  her  reversionary  interest  in  real  and  personal  estate,  executed  by  an 
infant /eme  covert  to  secure  a  debt  due  by  a  firm  of  which  her  husband  was  a 
member,  is  absolutely  void  and  incapable  of  confirmation:  Cronise  v.  Clark, 
4  Md.  Ch.  403;  the  court  using  the  following  language:  "It  ia  a  contract 
from  which  she  cannot  possibly  derive  a  benefit,  and  which  the  court  cannot 
fail  to  see  and  pronounce  to  be  to  her  prejudice.  It  must  therefore  be 
regarded  as  merely  void  and  incapable  of  confirmation."  The  facts  of  the 
case,  however,  simply  involved  an  inquiry  into  the  right  of  the  infant  to  avoid 
the  mortgage.  InChandler  v.  McKinncy,  6  Mich.  217,  74  Am.  Dec.  686,  the 
court  also  asserted  that  a  mortgage  given  by  an  infant  feme  covert  to  secure 
the  debt  of  her  husband  was  absolutely  void,  and  not  merely  voidable,  since 
it  could  not  be  beneficial  to  her;  but  here,  again,  the  case  only  involved  the 
right  of  the  infant  to  disregard  the  mortgage  and  the  proceedings  taken  under 
it.     See  further,  jjosi,  "Suretyship." 

This  reasoning  has  alreac[y  been  criticised.  Modern  cases  entitled  to  any 
respect  will  undoubtedly  reject  it,  and  adopt  the  simple  rule  that  it  is  more 
to  the  infant's  advantage,  and  his  rights  are  amply  protected,  if  all  his  gen- 
eral contracts  are  held  to  be  voidable  only,  without  regard  to  the  question 
whether  they  appear  to  be  to  his  benefit  or  to  his  prejudice,  or  whether  they 
take  effect  by  delivery  of  his  own  hand  or  are  executed  by  means  of  an  agent 
appointed  by  him.  According  to  the  old  theory,  if  a  mortgage  were  executed 
by  an  agent  of  the  infant  it  would  he  void,  because  an  infant  cannot  appoint 
an  agent;  but  it  has  been  held  that  a  power  of  sale  given  to  the  mortgagee, 
in  a  mortgage  made  by  an  infant,  was  voidable  only,  and  a  conveyance  there- 
under might  be  ratified  by  the  infant:  Askey  v.   Williams,  74  Tex.  294;  the 


April,  1890.]  Craig  v.  Van  Berber.  589 

court  saying:  "Tlie  great  weight  of  authority  .is  to  hold  an  infant's  naked 
pover  of  attorney  void;  but  the  rule  is  different  when  the  power  is  coupled 
with  an  interest."  The  court  is  mistaken  in  its  opinion  that  "the  great 
v\  eiglit  ot  authority  is  to  hold  an  infant's  naked  power  of  attorney  void." 
Tlie  truth  is,  "the  great  weight  of  authority,"  although  perhaps  not  the 
greater  number  of  cases,  is  to  hold  them  not  void,  but  voidable;  or  to  speak 
with  more  exactness,  to  hold  contracts  entered  into  under  them,  on  belialf 
of  the  infant,  to  be  voidable  instead  of  void:  See  post,  "Delegation  of 
Authority." 

The  mortgage  being  voidable,  the  defense  of  infancy  is,  of  course,  good  in 
a  suit  to  foreclose  it;  but  a  subsequent  liendiolder  cannot  join  in  the  defense: 
Baldwin  v.  Bosier,  1  McCrary,  384;  and  if  a  bond  and  mortgage  be  given  by 
an  infant,  it  is  held  that  equity  will,  in  a  suit  for  that  purpose  by  his  personal 
representatives,  order  the  same  to  be  delivered  up  and  canceled,  and  decree 
a  perpetual  injunction  against  all  proceedings  thereon  at  law:  Colcock  v.  Fer- 
ijuson,  3  Desaus.  Eq.  482.  If,  also,  an  infant  purchases  real  estate,  and 
agrees,  as  a  part  of  the  consideration,  to  pay  off  a  mortgage  thereon,  au 
action  cannot  be  maintained  on  the  agreement  to  pay  off  the  mortgage,  unless 
the  agreement  be  ratifietl  by  the  infant  after  he  attains  his  majority  Walsh 
v.  Powers,  43  N.  Y.  23,  26,  27;  3  Am.  Rep.  654,  655. 

The  mortgage  of  her  lands  executed  by  an  infant  feme  covert  pursuant  to 
statutes  wliich  confer  the  power  upon  married  women  to  convey  or  encum- 
ber their  real  estate,  as  has  already  been  said,  is  not  binding,  nor  is  it  void, 
but  it  is  voidalde:  Magee  v.  Welsh,  18  Cal.  155;  Dixon  v.  Merritt,  21  Minn. 
196;  Losey  v.  Bond,  94  Ind.  67;  see  ante,  "Deeds  of  Infant  Femes  Covert." 

The  deed  of  an  infant  to  secure  the  repayment  of  money  advanced  for 
necessaries  is  voidable:  Martin  v.  Yale,  L.  R.  4  Ch.  D.  428;  and  see  Ashey 
V.  Williams,  74  Tex.  294;  but  in  one  case  a  deed  of  trust  to  secure  indebted- 
ness, executed  by  a  minor,  was,  with  doubtful  correctness,  held  valid  and 
binding  to  the  extent  that  it  was  for  necessaries:  Cooper  v.  State,  37  Ark. 
421. 

An  infant's  mortgage,  like  his  deed  of  conveyance  or  other  contract,  is 
valid  until  disalhrnied  by  the  infant:  Palmer  v.  Miller,  25  Barb.  399;  Singer 
Mfg.  Co.  V.  Lamb,  81  Mo.  221.  "It  requires  no  affirmative  act  to  continue 
its  validity,"  says  Martin,  C,  in  the  last  case,  "but  only  an  absence  of  any 
disaffirming  acts.  It  remains  valid  in  all  respects,  like  the  deed  of  an  adult, 
until  it  has  been  disaffirnied  by  the  maker  after  reaching  his  majority." 

Leases  —  Li.\bility  for  Rent.  —  Tlie  question  as  to  the  binding  effect  of 
a  lease  to  which  an  infant  is  a  party  may  arise  where  he  is  the  lessor  and 
where  he  is  the  lessee.  It  is  a  little  singular  that  the  cases  discussing  the 
question  are  so  few  in  number;  and  it  may  be  remarked  that  what  there  are 
involving  tlie  validity  of  a  lease  to  him,  or  rather  his  liability  for  rent,  leave 
the  subject  in  quite  an  unsatisfactory  condition.  In  the  first  place,  it  is  held 
that  an  infant's  lease  of  his  lands,  reserving  rent,  is  not  void,  but  voidable 
only:  Slator  v.  Trimble,  14  Ir.  C.  L.  342  (1861);  and  notwithstanding  the 
rent  reserved  was  not  tiie  best  obtainable:  Slator  v.  Brady,  14  Ir.  C.  L.  61 
(1863);  Fitzgerald,  B.,  saying  in  the  latter  case:  "  Doubtless  some  acts  of  an 
infant  are  absolutely  void,  while  some  are  voidable  only.  According  to  some 
authorities,  the  criterion  of  the  distinction  is  this:  If  the  act  niay  be  for  the 
benefit  of  tlie  infant,  it  is  voidable  only;  if  it  cannot  be  for  his  benefit,  it  is 
void.  According  to  others,  it  is  said  to  be  this:  All  such  gifts,  grants,  or 
deeds  as  do  not  take  effect  by  the  delivery  of  the  infant's  hand  are  void;  but 
those  which  do  take  such  effect  are  voidable  only.     It  is  unnecessary  to  de- 


590  Craig  v.  Van  Bebber.  [Missouri, 

terinine  which  of  these  is  the  more  correct.  By  adopting  either,  it  seems  to 
iiie  the  result  ■will  be  that  the  act  in  question  here  is  voidable  only."  The 
learned  barou  reached  the  right  result;  but  he  should  have  said  that  neither 
criterion  was  correct.  It  has,  however,  been  said  that  "  if  an  infant  appoints 
a  person  to  make  a  lease,  it  does  not  bind  the  infant;  neitiier  does  his  ratifi- 
cation bind  him.  There  is  no  doubt  about  the  law;  the  lease  of  an  infant,  to 
be  good,  must  be  his  own  personal  act ":  Baron  Parke  in  Doe  ex  dem. 
Thomas  V.  Roherts,  16  Mees  &  W.  778,  781;  but  see  the  view  that  the  ap- 
pointment of  an  agent  bj'  an  infant  is  void  criticised  infra,  "Delegation  of 
Authority." 

In  regard  to  leases  made  '■o  infants,  it  has  been  held  in  this  country  that 
such  a  lease  was  not  void,  but  voidable  only,  and  therefore  a  third  person 
could  not  attack  it  on  the  ground  of  infancy,  in  an  action  in  which  the  lease 
was  drawn  into  question:  Griffith  v.  Sc hive nder man,  27  Mo.  412;  and  again, 
where  infants  gave  a  written  agreement  to  pay  rent,  a  plea  of  infancy  to  an 
action  thereon  was  good:  Flexner  v.  Dickcrson,  72  Ala.  318.  In  this  latter 
case,  the  action  was  commenced  before  the  infants  attained  their  majority, 
and  before  the  expiration  of  the  term.  In  Maddon  v.  White,  2  Term  Rep. 
159,  161,  Justice  Buller  is  reported  as  saying  that  "all  the  moilern  cases 
have  expressly  held  that  an  infant  cannot  avoid  a  lease  which  is  for  his  own 
benefit";  by  which  indefinite  remark  we  may  ixnderstand  eitlier  or  both  of 
two  things;  namely,  that  if  the  premises  leased  are  a  necessary,  the  lease  is 
binding  to  the  extent,  at  all  events,  that  he  must  pay  a  reasonable  rent  for 
their  use;  and  although  the  premises  are  not  a  necessary,  yet  if  the  rent 
be  no  more  or  less  than  the  use  of  the  premises  is  fairly  worth,  he  is  bound 
by  the  lease,  at  all  events  to  pay  for  the  rent  earned. 

Justice  BuUer's  dictum  was  probably  based  on  a  much-discussed  case,  vari- 
ously reported  as  Ketseys  Case,  Cio.  Jac.  320;  Ketleys  Case,  1  Brownl.  120; 
and  Kirton  v.  EUott,  2  Bulst.  69.  The  reports  of  the  case  differ  about  as 
much  as  its  name,  but  the  following  is  a  fair  statement  of  them  all:  On  de- 
murrer to  a  plea  of  infancy  in  debt  upon  a  lease,  it  was  held  that  the  lease 
was  voidable  only,  at  the  election  of  the  infant;  for  if  it  were  for  his  benefit, 
it  was  not  void,  but  the  infant,  at  his  election,  might  make  it  void,  by  refusing 
and  waiving  the  land  before  the  rent  day  came;  but  it  was  not  shown  that 
the  rent  was  of  greater  value  than  the  use  of  the  land,  and  the  defendant 
was  of  full  age  before  the  rent  day  came,  and  therei'ore  it  was  adjudged  for 
the  plaintiff. 

Four  interpretations  of  this  case  are  possible:  1.  Tliat  an  estate  vests  in 
the  infant  on  his  entry  under  the  contract  of  tenancy,  and  renders  him  liable 
to  the  obligation  to  pay  rent  untd  he  repudiates  the  estate,  which  he  might 
do  either  within  age,  and  after  as  well  as  before  the  rent  day  came,  or  on 
coming  of  age  before  the  arrival  of  the  rent  day;  2.  That  the  infant  who 
enters  into  the  possession  and  enjoyment  of  the  estate  may  repudiate  the 
letting  at  any  time  before  the  rent  day  came,  but  could  not  do  so  afterwards 
so  as  to  relieve  himself  from  the  obligation  to  pay  the  rent  due,  notwith- 
standing his  infancy;  3.  That  the  premises  were  a  necessary,  and  therefore 
the  infant  was  liable  for  the  rent,  which  did  not  appear  to  be  unreasonable; 
and  4.  That  the  infant  ratified  tlie  lease  by  his  acquiescence  and  retention 
of  possession  after  he  arrived  at  full  age,  and  before  the  rent  day  came.  We 
are  inclined  to  believe  that  the  case  was  decided  on  the  last  ground,  but  some 
authorities  claim  that  it  was  decided  on  the  first  or  second.  Thus  in  Leeds 
etc.  Ry  V.  Fearnlcy,  4  Ex.  26,  which  was  an  action  for  calls  on  railway 
shares,  to  which  the  defendant  pleaded  that  at  the  time  of  making  the  calls, 


April,  1890.]  Craig  v.  Van  Bebber.  591 

and  also  at  the  time  he  became  the  holder  of  the  shares,  he  was  an  infant, 
Baron  Parke  said:  "This  is  not  the  ordinary  case  of  a  contract  by  an  infant, 
but  a  purchase  of  shares,  by  which  he  acquired  a  property  in  the  possible 
profits  of  the  concern.  Now,  according  to  Ketscy's  Case,  Cro.  Jac.  'S20,  and 
wliat  is  more  distinctly  laid  down  by  Dodderidge,  J.,  in  Kirlonv.  ELioU,  2 
Bulst.  69,  he  would  be  liable,  unless  he  repudiated;  then  ouyht  not  the  j^lea 
to  aver  that  fact?"  In  Nortltwestvrn  R'y  v.  McMkhad,  5  Ex.  114,  126, 
Baron  Parke  again  gives  his  explanation  of  the  case:  "  We  collect  that  the 
principle  upon  wliich  the  court  decided  was,  that  every  purchase  being  pre- 
sumably for  the  benefit  of  the  infant,  his  purchase  vesteil  the  estate  in  him 
on  entry  and  taking  possession,  and  rendered  him  liable  to  the  obligations 
attached  to  it  until  he  tlisagreed  to  the  estate,  and  thereby  caused  the  con- 
veyance to  be  inoperative,  and  avoided  the  obligation  to  pay  rent.  In  refer- 
ring to  this  case,  the  passage  in  Bacon's  Abridgement,  title  Infancy,  I.,  8, 
treats  the  infant  as  being  bound  by  reason  of  acquiescence  after  full  age. 
How  that  could  be  collected  from  the  reports  of  the  case  is  not  clear;  and  so 
Lord  Elteiiborough,  in  Baylis  v.  Dindy,  3  Maule  &  S.  481,  intimates  an  opin- 
ion that  a  lease  is  equivocal,  whetlier  for  the  benefit  of  the  infant  or  not, 
and  that  if  he  continues  a  possessor  after  age,  he  adopts  it;  and  this  was  a 
part  of  the  argument  for  the  defendant  at  the  bar.  But  it  seems  to  us  to  be 
the  sounder  principle  tliat  as  the  estate  vests,  as  it  certainly  does,  the  bur- 
den upon  it  nmst  continue  to  be  obligatory  until  a  waiver  or  disagreement  by 
the  infant  takes  place,  whicii,  if  made  after  full  age,  avoids  the  estate  alto- 
gether, and  revests  it  in  the  party  from  whom  the  infant  purchased;  if  made 
within  age,  suspends  it  only,  l)ecause  such  disagreement  may  be  again 
recalled  when  the  infant  attains  his  majority." 

The  question  of  the  liability  of  the  infant  for  rent  was  actually  involved 
in  two  Irish  cases.  In  Kelly  v.  Coote,  5  Ir.  C  L.  469,  it  was  held  that 
where  an  estate  on  which  rent  was  reserved  was  cast  upon  an  infant  by 
operation  of  law,  and  he  had  not  disaffirmed,  he  became  liable  for  rent,  not- 
withstanding his  infancy.  "Nothing  is  clearer  tliau  this,"  it  was  said; 
"  that  where  an  infant  becomes  entitled  to  property  subject  to  a  certain 
burden,  the  obligation  to  discharge  that  burden  also  vests  in  him."  And  in 
Blake  V.  Concannon,  4  Ir.  Rep.  C.  L.  323,  it  was  decided  tiiat  an  infant  lessee 
who  enters  into  possession  and  enjoyment  of  the  land  is  liable  for  an  install- 
ment of  rent  coming  due  during  such  holding,  and  wliile  he  is  an  infant,  if  he 
fails  to  repudiate  the  contract  of  tenancy,  and  the  tenancy  under  it,  before 
the  installment  falls  due;  but,  on  the  other  hand,  he  is  not  liable  for  an 
installment  of  rent  falling  due  after  such  repudiation;  the  reason  being,  as 
expressed  by  Pigot,  C.  B. :  "He  is  not,  in  an  action  of  debt  for  the  rent, 
held  liable  upon  the  contract  of  tenancy  alone.  His  liability  arises  from  his 
occupation  and  enjoyment  of  the  land  under  the  tenancy  so  created.  If  his 
liability  arose  from  the  contract  alone,  the  repudiation  of  the  contract,  by 
anuuUing  it,  would  annul  its  obligations,  which  would  then  exist  only  by 
reason  of  the  contract.  But  the  infant,  though  he  can  repudiate  the  con- 
tract of  demise,  and  the  tenancy  under  it,  and  can  so  revest  the  land  in  the 
landlord,  cannot  repudiate  an  occupation  and  enjoyment  which  are  past,  or 
restore  to  the  landlord  what  he  has  lost  by  that  occupation  and  enjoyment 
of  the  infant."  Kctseys  Case,  Cro.  Jac.  320,  was  explained  as  intending 
that  an  occupation  and  enjoyment  of  the  infant  until  after  the  rent  became 
payable  would  render  the  infant  liable,  independently  of  the  fact  that  the 
defendant  was  of  full  age  before  the  rent  day  came;  and  the  dictum  of  Baron 
Parke    in   Northwestern   R'y  v.    McMichael,    5   Ex.    114,   126,  to   the   efifect 


692  Craig  v.  Van  Bebber.  [Missouri, 

that  the  avoidence  by  the  infant  could  take  place  after  the  rent  (calls)  be- 
came due,  was  disapproved. 

While  we  do  not  agree  with  Baron  Parke  as  to  the  ground  on  which  Ket- 
sey's  Case  was  decided,  yet  we  believe  that  his  views  as  to  the  liability  ot  aa 
infant  for  rent,  as  expressed  in  Northwestern  R'y  v.  McMichael,  5  Ex.  11 4, 
126,  are  nearer  correct  than  those  of  Chief  Baron  Pigot  in  Blake  v.  Concannon, 
4  Ir.  Rep.  C.  L.  323.  There  is  no  doubt  that  the  infant's  contract  of  tenancy  is 
good;  that  an  estate  vests  in  him  by  his  entry  under  the  contract;  and  that  the 
contract  and  estate  continue  until  avoided  by  him.  The  tenancy  may  be 
ratified  by  him  after  he  arrives  at  full  age,  when  it  would  no  longer  be  sub- 
ject to  his  disaffirmance;  and  it  may  be  ratified  by  his  continuing  in  posses- 
sion and  enjoyment  of  the  estate  after  he  cotnes  of  age.  He  could  not  hold 
the  estate,  and  repudiate  his  obligation  to  pay  rent.  In  the  event  of  such  a 
ratification  he  would  be  liaijle  for  rent  railing  due  thereafter;  and  since  the 
ratification  would  render  the  letting  valid  Iroiii  the  beginning,  he  would  also 
be  liable  for  rent  which  became  due  during  his  infancy.  But  we  fail  to  ap- 
preciate the  force  of  any  argument  winch  holds  the  infant  liable,  notwith- 
standing his  infancy,  for  rent  falling  due  during  his  infancy,  if  he  fails  to 
repudiate  the  tenancy  before  the  pay  day  arrives.  It  is  true  that  the  infant 
may  have  received  a  benefit  from  the  occupation  and  enjoyment  of  the  land, 
and  that  a  restoration  of  the  land  to  the  lessor  will  not  restore  to  him  what 
he  has  lost  by  the  occupation  and  enjoyment  of  the  infant,  yet  it  does  not 
follow,  according  to  the  best  authorities,  that  because  the  infant  has  received 
a  benefit  from  his  contract,  and  that  a  disatfirmance  will  not  restore  the  other 
party  to  his  original  position,  the  infant  is  bound  by  his  contract. 

In  Lemprih-e  v.  Lange,  L.  R.  12  Ch.  D.  675,  it  was  held  that  where  an  in- 
fant obtained  a  lease  of  a  furnished  house  on  an  implied  representation  that 
he  was  of  full  age,  the  lease  would  be  declared  void  and  canceled  at  the  suit 
of  the  lessor,  and  possession  of  the  house  ordered  to  be  given  up,  and  the  de- 
fendant restrained  by  injunction  from  parting  with  the  furniture;  but  that 
the  defendant  was  not  liable  for  use  and  occupation. 

An  infant  may  be  liable  for  use  and  occupation  of  a  dwelling,  if  it  be  a 
necessary:  See  Criyp  v.  Churchill,  cited  1  Bos.  &  P.  340;  Lowe  v.  Grijlth,  1  Scott, 
458;  1  Hodges,  30. 

It  was  held  in  an  old  case,  under  the  benefit  and  prejudice  theory,  that  the 
surrender  of  an  infant  lessee  by  the  acceptance  of  a  new  lease  was  void,  if  it  be 
without  increase  of  his  term  or  decrease  of  his  rent;  for  where  there  was  not 
an  apparent  benefit,  or  semblance  of  benefit,  his  acts  were  void:  Lloyd  v. 
Gregoiy,  Cro.  Car.  501. 

In  an  action  of  ejectment  against  an  infant,  the  defendant  is  not  estopped, 
by  his  contract  of  tenancy  with  the  plaintiffs,  from  showing  title  in  himself 
and  others,  and  out  of  the  plaintiffs:  McCoon  v.  Hinith,  3  Hill,  147;  38  Am. 
Dec.  623. 

Mechanics'  Liens.  — A  number  of  cases  have  decided  that  a  mechanic's  lien 
cannot  be  claimed  on  the  land  of  a  minor,  against  his  objection  of  infancy,  by  one 
who  has  done  work  and  furnished  materials  under  a  contract  with  him:  McCarty 
V.  Carter,  49  111.  53;  95  Am.  Dec.  572;  Hall^.  Acken,  47  N.  J.  L.  340;  Alvey  v. 
Reed,  115  lud.  148;  7  Am.  St.  Rep.  418;  Wornock  v.  Loar,  88  Ky.  000.  "A 
lien  implies  a  contract,  and  as  an  infant  cannot  make  a  valid  contract,  no  lien 
can  be  obtained  against  his  property  ":  Alvey  v.  Heed,  115  Ind.  148;  7  Am.  St. 
Rep.  418.  "The  lien  given  by  the  mechanic's  lien  law  is,  except  in  the  case 
of  the  land  of  married  women,  as  to  which  there  is  an  express  provision  fcr 
lien,  incident  only  to  a  legal  liability  to  pay  which  a  minor  is  not  competent 


April,  1890.]  Craig  v.  Van  Bebber.  693 

to  incur  for  building  upon  his  land":  Hall  v.  Acken,  47  N.  J.  L.  340.  "If 
the  contract  ceases  to  be  binding,  the  lien  necessarily  fails A  convey- 
ance or  mortgage  by  an  infant  of  his  real  estate  would  not  be  binding  upon 
him,  and  the  legislature  certainly  never  intended  to  allow  liiin  to  encumber 
his  property  indirectly  by  a  contract  for  its  improvement,  when  he  cannot 
do  the  same  thing  in  a  binding  mode  by  an  instrument  executed  expressly 

for  the  purpose The  mechanic  who  erects  a  building  must  take,  like 

all  other  persons,  the  responsibility  of  ascertaining  that  he  is  contracting  with 
a  person  who  has  reached  the  requisite  age  ":  McCarty  v.  Carier,  49  111.  53; 
95  Am.  Dec.  572.  These  cases,  therefore,  decided  that  the  particular  me- 
chanic's lien  laws  in  question  did  not  confer  a  lien  on  the  property  of  infants. 
It  would  undoubtedly  be  competent,  however,  for  the  legislature  to  provide 
that  the  lien  could  be  so  claimed. 

One  to  whom  land  has  been  conveyed,  against  which  a  mechanic's  lien  for 
materials  furnished  is  sought  to  be  enforced,  may,  after  tlie  grantor  lias  dis- 
affirmed the  contract  on  the  ground  of  infancy,  avail  himself  of  the  disaffirm- 
ance in  defense;  and  this,  it  is  held,  although  the  contract  was  disaffirmed  by 
the  grantor  by  a  plea  of  infancy  in  the  same  action:  Price  v.  Jennings,  62  lad. 
111. 

Marriage  Settlements.  —  There  was  at  one  time  considerable  dispute  in 
the  English  courts  as  to  whether  a  jointure  settled  on  an  infant  wife  before 
marriage  was  a  bar  of  dower.  It  was  finally  settled,  however,  that  the  infant 
was  bound  at  law  by  a  legal  jointure  under  the  statute  of  27  Henry  VIII., 
chapter  10,  and  that  an  equitable  jointure,  or  a  competent  and  certain  pro- 
vision for  the  wife,  in  lieu  of  dower,  if  assented  to  by  the  parent  or  guardian 
of  the  infant  before  marriage,  would,  in  analogy  to  the  statute,  constitute  an 
equitable  bar:  See  Harvey  v.  Ashley,  3  Atk.  007,  612,  per  Lord  Hardwicke; 
Earl  of  Buckini/hamshire  v.  Drury  {Drury  v.  Drury),  2  Eden,  60;  4  Bro.  C.  C. 
506,  note,  3  Bro.  P.  C.  492,  Wilm.  Op.  177;  Williams  v.  Williams,  1  Bro. 
C.  C.  152;  Caruthers  v.  Caruthers,  4  Bro.  0.  C.  500;  Simpson  v.  GuUeridge,  1 
Madd.  609;  Williams  v.  ChiUy,  3  Ves.  545;  Smith  v.  Smith,  5  Ves.  189;  Cor- 
bet V.  Corbet,  1  Sim.  &  S.  612;  5  Russ.  254;  McCartee  v.  Teller,  2  Paige,  511. 
The  leading  case  of  Earl  of  Buckinghamshire  v.  Drury,  2  Eden,  60,  4  Bro. 
C.  C.  506,  note,  3  Bro.  P.  C.  492,  Wilm.  Op.  177,  established  that  the  statute 
of  Henry  VIII.  applied  to  infants  as  well  as  adults,  and  that  a  jointure 
was  not  a  contract,  but  a  provision  made  by  the  husband  for  the  wife.  As 
before  remarked,  to  make  an  equitable  jointure  binding  on  the  infant  wife, 
the  provision  should  be  beneficial  to  her  and  certain,  and  not  precarious  and 
uncertain.  Furthermore,  she  will  not  be  bound  by  her  agreement  to  accept 
a  pecuniary  consideration,  instead  of  an  interest  in  land,  in  beu  of  dower: 
Shaw  V.  Boyd,  5  Serg.  &  R.  309;  Drew  v.  Drew,  40  N.  J.  Eq.  458.  "As  the 
feme  must  have  a  freehold,  there  is  no  reason  to  say  a  gross  sum,  which  was 
to  be  received  as  a  consideration  for  having  executed  a  bond,  shall  be  con- 
sidered as  a  provision  settled  on  the  feme  in  lieu  of  dower":  Shaw  v,  Boyd,  5 
Serg.  &  R.  309.  In  Michigan,  it  is  provided  that  "a  woman  may  also  be 
barred  of  her  dower  in  all  the  lands  of  her  husband,  by  a  jointure  settled  on 
her  with  her  assent  before  the  marriage,  provided  such  jointure  consists  of  a 
freehold  estate  in  lands  for  the  life  of  the  wife  at  least,  to  take  effect  in  pos- 
Bession  or  profit  immediately  on  the  death  of  her  husband,"  and  that  "such 
assent  shall  be  expressed,  if  the  woman  be  of  full  age,  by  her  becoming  a 
party  to  the  conveyance  by  which  it  is  settled,  and  if  she  be  under  age,  by 
her  joining  with  her  father  or  guardian  in  such  conveyance  ":  2  Howell's  Ann. 
Stats.  )8S2,  sees.  574(3,  5747.  A  similar  statute  exists  in  New  York:  4  R.  S., 
AM.  br.  Kei>.,  Vol.  XVllI.  —33 


594  Craig  v.  Van  Bebber.  [Missouri, 

Banks  &  Bros.'  8th  ed.,  2455,  sees.  9,  10;  and  perhaps  in  some  other  states 
where  dower  is  recognized.  In  some  states,  if  the  jointure  was  made  when 
the  wife  was  an  infant,  she  may,  after  her  husband's  death,  waive  her  joint- 
ure and  demand  her  dower:  New  Jersey  R.  S.  1877,  322,  sec.  10;  Ohio  R.  S. 
1890,  sec,  4189. 

With  respect  to  the  settlement  of  her  own  real  and  personal  estate  by  a 
female  infant  upon  her  marriage,  it  also  became  established,  after  some 
fluctuation  of  opinion,  that  she  was  bound  by  the  settlement  of  her  general 
personal  property,  because  such  personalty  became  by  the  marriage  the  prop- 
erty of  her  husband,  and  the  settlement  was  in  eflfect  his  settlement,  and  not 
hers;  but  as  to  her  real  estate  and  also  her  personal  property  settled  to  her 
separate  use,  she  was  not  bound,  although  the  settlement  was  made  with  the 
approbation  of  her  parents  or  guardian,  or  even  the  court  of  chancery:  See 
Harvey  v.  Ashley,  3  Atk.  607,  613,  per  Lord  Hardwioke;  Durnford  v.  Lane, 
1  Bro.  C.  C.  106,  115;  Clourjh  v.  Clonuh,  5  Ves.  710,  717;  Milnerv.  Lord  Hare- 
wood,  18  Ves.  259,  275;  Simson  v.  Jones,  2  Russ.  &  M.  365;  Johnson  v.  John- 
son, 1  Keen,  648;  Campbell  v.  Ingilby,  21  Beav.  567;  In  re  Waring,  21  L.  J. 
Ch.  784;  Field  v.  Moore,  25  L.  J.  Ch.  66;  Temple  v.  Hawley,  1  Sand.  Ch.  153; 
Wetmorev.  Kissam.SBosw.  321;  Mel  lvalue  v.  Kadel,  30  How.  Pr.  193;  3  Rob. 
(N.  Y.)  429;  Tabb  v.  Arclier,  3  Hen.  &  M.  398;  3  Am.  Dec.  657;  Hcaly  v. 
Bowan,  5  Gratt.  414;  52  Am.  Dec.  94;  Levering  v.  Heighe,  2  Md.  Ch.  81;  3 
Md.  Ch.  365;  Whichcote  v.  Lyles  Exrs,  28  Pa.  St.  73.  This  rule  is  nowhere 
better  expressed  than  in  Simson  v.  Jones,  2  Russ.  &  M.  365,  by  Sir  John 
Leach,  M.  R.,  who  says,  at  page  376:  "The  general  personal  estate  of  a 
female  infant  is  bound  by  a  settlement  made  on  her  marriage,  because  such 
personal  estate  becomes  by  the  marriage  the  absolute  property  of  the  hus- 
band, and  the  settlement  is,  in  effect,  his  settlement,  and  not  hers.  It  is  now 
established  that  the  real  estate  of  a  female  infant  is  not  bound  by  the  settle- 
ment on  her  marriage,  because  her  real  estate  does  not,  by  the  marriage,  be- 
come the  absolute  property  of  the  husband,  although  by  the  marriage  he 
takes  a  limited  interest  in  it";  and  again,  he  says,  page  377:  "Whatever 
doubts  may  have  been  entertained  on  the  subject  formerly,  I  take  it  to  be 
clear  that  the  real  estate  of  a  female  infant  would  not  be  bound  by  a  settle. 
ment  made  with  the  approbation  of  the  court;  and  it  appears  to  me  to  follow 
that  the  same  principle  is  applicable  to  personal  estate  settled  to  her  separate 
use."  If  she  is  not  a  party  to  the  marriage  articles,  but  they  are  entered  into 
between  her  guardian  and  her  intended  husband,  they  are  of  no  obligatory 
force  upon  her:  Healy  v.  Bowan,  5  Gratt.  414;  52  Am.  Dec.  94. 

It  may  be,  however,  that  she  will  not  be  permitted  to  disaffirm  her  voidable 
settlement  because  of  infancy,  during  coverture,  and  perhaps  not  after  issue 
born,  on  the  ground  that  it  might  interfere  with  the  rights  of  the  husl^and  and 
of  the  issue:  See  idilnerv.  Lord  Harewood,  18  Ves.  259,  275;  Temple  v.  Hawley, 
1  Sand.  Ch.  153,  168;  Wetmore  v.  Kissam,  3  Bosw.  321;  Mcllvaine  v.  Kadel,  .SO 
How.  Pr.  193;  3  Rob.  (N.  Y.)  429;  Tabb  v.  Archer,  3  Hen.  &  M.  398;  3  Am.  Deo. 
657.  But  she  may  affirm  the  settlement  daring  coverture,  after  she  becomes 
of  age:  Temple  v.  Hawley,  1  Sand.  Ch.  153,  168,  and  in  Durnford  v.  Lane,  1 
Bro.  C.  C.  106,  115,  the  lord  chancellor  remarks:  "  [f  she  had  a  settlement 
from  her  husband,  ami  after  his  death  she  had  taken  possession  of  it,  I  think 
she  would  be  bound  by  the  equity  arising  from  her  own  act";  that  is,  she 
would  thereby  affirm  her  settlement. 

A  male  infant  who  marries  an  adult  female,  and  unites  with  her  in  a  set- 
tlement by  which  she  covenanted  that  her  estate  should  be  settled  to  certain 
uses,  is  bound  by  her  covenant:  Slocombe  v.  Glubb,  2  Bro.  C.  C.  545;  the  lord 


April,  1890.]  Craig  v.  Van  Bebber.  595 

chancellor  saying:  "It  is  not  necessary  to  discuss  the  other  question,  how  far 
the  infant  husband  could  be  bound  by  his  own  contract;  for  I  go  upon  the 
covenant  of  the  wife,  who  was  adult.  And  the  husband's  covenant  operates 
no  more  than  to  show  his  concurrence,  and  to  take  away  every  imputation  of 
fraud  from  the  transaction."  But  a  settlement  of  his  property  executed  by 
a  male  infant  is  not  binding  upon  him;  and  notwithstanding  he  falsely  repre- 
sented to  the  solicitor,  before  executing  the  instrument,  that  he  was  of  age, 
it  appearing  that  the  intended  wife  knew  that  he  was  not  of  age,  and  there- 
fore was  not  deceived:  Heiion  v.  Stockei;  4  De  Gex  &  J.  458. 

An  objection  to  the  validity  of  a  marriage  settlement,  on  the  ground  that 
the  parties  to  it  were  infants,  can  only  be  made,  as  a  general  rule,  by  the 
parties  themselves,  the  instrument  being  merely  voidable,  and  not  void,  at 
their  election.  It  cannot  therefore  be  avoided  for  nonage  by  the  trustee 
acting  under  it,  especially  when  a  court  of  equity  is  asked  to  compel  him  to 
render  an  account:  Jones  v.  Butler,  30  Barb.  641;  nor  by  the  creditors  of  the 
infant's  son,  whom  the  infant  left  surviving  her:  Lester  v.  Frazer,  2  Hill  Eq. 
529;  Riley  Eq.  76;  but  it  may  be  avoided  by  the  infant's  privies  in  blood, 
after  her  death:  Levering  v.  Hehjhe.  2  Md.  Ch.  81 ;  3  Md.  Cli.  365.  See  further, 
as  to  who  may  avoid  an  infant's  contract,  post,  "Who  may  Take  Advantage 
of  Infancy." 

In  England,  the  Infants'  Settlements  Act,  1855,  IS  and  19  Victoria,  chapter 
43,  provides  that  an  infant  above  a  certain  age  may,  with  the  approbation  of 
the  court  of  chancery,  make  a  valid  settlement,  or  contract  for  a  settlement, 
of  his  or  her  property.  See,  as  interpreting  this  statute.  In  re  Dalton,  6  De 
Gex,  M.  &  G.  201;  In  re  Strong,  2  Jur.,  N.  S.,  1241;  Poivell  v.  Oalley,  34 
Beav.  575.  In  Georgia,  section  1784  of  the  code  (1882)  enacts:  "The  minor- 
ity of  either  party  to  marriage  articles,  or  a  marriage  contract,  shall  not  in- 
validate it;  provided  such  party  is  of  lawful  age  to  contract  marriage ";  and 
section  2734  reads:  "Marriage  contracts  and  settlements  made  by  infants, 
but  of  lawful  age  to  marry,  are  binding  as  if  made  by  adults."  In  Texas,  the 
statute  of  1840  giving  validity  to  the  marriage  settlements  of  minors  was 
held  not  to  further  retnove  tlie  disabilities  of  married  infants  to  enter  into 
contracts:  Burr  v.  IF/feow,  IS  Tex.  367,  374. 

SALE.S,    E.XCHANGES,    AND   ASSIGNMENTS   OF   PERSONAL   PROrERTY.  —  There 

can  be  no  doubt,  in  the  light  of  the  foregoing  discussion,  that  an  infant's  sale 
or  exchange  of  his  chattels,  or  his  assignment  of  a  thing  in  action,  is  not  void, 
but  voidable  only:  Holmes  v.  Rice,  45  Mich.  142;  Williams  v.  Brown,  34  Me. 
594;  Kingman  v.  Perkim,  105  Mass.  Ill;  and  see  pod,  "Bills  and  Notes,"  as 
to  his  transfer  of  commercial  paper.  And  as  in  the  case  of  an  infant's  deed 
of  conveyance,  or  any  other  contract,  as  heretofore  seen,  his  sale  of  goods  is 
valid  until  rescinded  by  him:  Badger  v.  Phinney,  15  M  iss.  359,  363;  S  Am. 
Dec.  105,  108.  In  an  English  nisi  prius  case  there  is,  however,  an  expression 
of  opinion  to  the  effect  that  the  contiact  of  a  sale  of  an  infant  is  absolutely 
void,  and  is  no  answer  to  an  action  of  trover  brought  by  the  infant  to  recover 
the  value  of  the  goods:  Latt  v.  Booth,  3  Car.  &  K.  292.  Tlie  report  does  not 
disclose  whether  there  was  a  demand  for  the  goods  before  the  action  was 
brought.  If  there  was,  it  was  unnecessary  to  hold  the  sale  to  be  void.  la 
some  early  New  York  cases  it  will  also  be  found  stated  that  a  sale  of  cliattels 
by  an  infant  vendor  is  absolutely  void,  if  the  infant  do  not  deliver  the  goods 
with  his  own  hand;  for  an  infant  could  not  appoint  an  agent  tc  make  delivery 
for  him:  Stafford  v.  Roof,  9  Cow.  626,  627;  Fonda  v.  Van  Home,  15  Wend. 
631;  30  Am.  Dec.  77;  but  see  po.si,  "Delegation  of  Authority." 

A  sale  not  being  void,  but  voidable  only,  at  the  election  of  the  infant,  it 


596  Craig  v.  Van  Bebber.  [Missouri, 

is  not  within  the  po  .ver  of  a  stranger,  certainly  not  of  a  wrong-doer,  to  set  up 
the  infant's  incapacity  to  contract  as  a  protection  to  himself:  Holmes  v.  Rice, 
45  Mich.  142.  Nor  can  an  assignment  of  a  debt  by  an  infant  be  avoided  by 
his  creditors  on  the  ground  of  nonage:  Kingman  v.  Perkins,  105  Mass.  111. 
See  further  on  this  question,  who  may  take  advantage  of  infancy,  post,  "Who 
may  Take  Advantage  of  Infancy." 

It  is  no  defense,  it  may  be  noticed,  to  an  action  by  an  infant  to  recover 
the  possession  of  property  exchanged  by  him,  or  damages  for  its  conversion, 
based  upon  his  rescission  of  the  contract,  that  the  property  received  by  him  in 
excliange  had  depreciated  in  value  while  in  liis  hands,  through  his  misuse  of 
it,  or  otherwise:  Price  v.  Furman,  27  Vt.  268;  65  Am.  Dec.  194;  White  v. 
Branch,  51  Ind.  210;  and  see  Carpenter  v.  Carpenter,  45  Ind.  142;  Wldttomh 
V.  Joslyn,  51  Vt.  79,  31  Am.  Rep.  678;  contra,  Bartholomew  v.  Finnemore, 
17  Barb.  428. 

An  infant's  contract  of  sale  or  exchange  is  not  rendered  binding  upon  him 
at  law  from  the  fact  that  he  fraudulently  represented  himself  to  be  of  full 
age  at  the  time  he  entered  into  the  contract,  and  the  other  party  relied  upon 
such  representation:  Norris  v,  Vance,  3  Rich.  L.  164;  Carpenter  v.  Carpen- 
ter,  45  Ind.  142.  See  post,  "Infant's  Concealment  or  Misrepresentation  as 
to  Age." 

Warranties  in  Sales  and  Exchanges  of  Personal  Property. — An 
infant's  contract  of  warranty  on  the  sale  of  a  chattel  by  him  is  also  undoubt- 
edly voidable.  Of  course,  no  action  on  the  warranty  can  be  maintained 
against  his  objection  of  infancy.  Therefore  infancy  is  a  good  defense  to  an 
action  on  a  warranty  of  soundness  of  a  horse:  Howlett  v.  Hasivell,  4  Camp. 
118.  And  it  is  well  settled  that  infancy  is  a  good  bar  even  to  an  action 
founded  on  a  false  and  fraudulent  warranty,  whether  the  action  is  in  form 
ex  delicto  or  ex  contractu:  Green  v.  Greenbank,  2  Marsh.  485;  West  v.  Moore, 
14  Vt.  447;  39  Am.  Dec.  235;  Morrill  v.  Ade?i,  19  Vt.  505;  Hewitt  v.  War- 
ren, 10  Hun,  560;  contra,  Word  v.  Vance,  1  Not't  &  McC.  197;  9  Am.  Dec. 
683;  and  see  post,  "Torts  of  Infants  Connected  with  Contracts." 

Chattel  Mortgages.  — The  chattel  mortgage  of  an  infant  is  likewise  only 
voidable,  and  not  void:  Cogley  v.  Cushman,  16  Minn.  397;  Hawjen  v.  Hack' 
meister,  17  Jones  &  S.  34.  Being  simply  voidable,  the  mortgage  is  good  un- 
til disaffirmed  by  him:  Cogley  v.  Cushman,  16  Minn.  397;  State  v.  Plaisted, 
43  N.  H.  413;  although  the  latter  case  gives  as  the  reason  why  it  is  binding 
until  it  is  avoided,  that  it  is  an  executed  contract;  the  court  saying:  "If  the 
mortgage  of  the  infant  were  to  be  regarded  as  an  executory  contract,  it  would 
be  invalid  until  it  was  ratified;  and  if  it  is  deemed  an  executed  contract,  it 
is  binding  until  it  is  avoided.  "  See  this  theory  criticised  supra,  "Void  and 
Voidable."  It  follows  that  all  acts  done  under  the  mortgage  by  the  mort- 
gagee, and  in  accordance  with  the  terms  of  the  mortgage,  are  lawful;  and 
therefore  it  is  held  the  taking  of  the  property  by  the  mortgagee,  as  provided 
by  the  mortgage,  on  default  made  in  its  conditions,  before  the  mortgage  is 
rescinded  by  the  mortgagor,  is  lawful,  and  to  maintain  an  action  against  the 
mortgagee  for  the  conversion  of  the  property,  it  is  necessary  to  allege  a  de- 
mand and  refusal:  Cogley  v.  Cushman,  16  Minn.  397.  So  where  the  plaintifif, 
while  an  infant,  procured  t'le  defendant  to  sign  a  note  for  him,  and  turned 
over  to  the  defendant  certain  property  as  security,  with  license  to  take  away 
the  property  when  he  pleased,  he  cannot  maintain  trespass  for  the  defend- 
ant's taking  it  away,  where  he  had  not  previously  avoided  the  contract  con- 
cerning it,  the  contract  being  voidable,  and  not  void:  Hoyt  v,  Chapin,  6  Vt. 
42.     But  in  Chapin  v.  Shafer,  49  N.  Y.  407,  it  v/as  held  that  where  an  infant 


April,  1890.]  Craig  v.  Van  Bebber.  597 

mortgaged  personal  property,  but  never  delivered  possession  to  the  mort- 
gagees, the  latter  would  be  trespassers  in  taking  the  property,  after  the 
mortgage  became  due,  from  one  to  whom  the  infant  subsequently,  and  before 
coming  of  age,  sold  the  property.  The  reasoning  in  this  case  ia  a  relic  of 
the  old  theory  that  unless  there  was  a  delivery  by  the  infant's  own  hand, 
a  sale,  or  other  similar  transaction,  was  absolutely  void.  We  think  the  case 
can  better  be  supported  because  of  the  fact  that  the  mortgage  had  been  dis- 
affirmed by  the  infant  by  his  sale,  before  the  mortgngees  had  taken  posses- 
sion, and  hence  after  disaffirmance  they  hail  no  right  to  take  the  property 
under  their  mortgage,  which  was  then  void. 

Assignments  for  Benkfit  of  Creditors. —  An  assignment  for  the  benefit 
of  creditors,  ma<le  by  an  infant,  is  also  at  most  merely  voidable,  at  the  election 
of  tlie  infant:  Yate>^  v.  Lyon,  61  N.  Y.  344;  Soper  v.  Fry,  37  Mich.  236.  It 
can  be  avoided  only  by  the  infant,  or  some  one  entitled  to  stand  upon  his 
rights.  Third  persons,  even  the  creditors,  cannot  disregard  it  or  claim  to 
avoid  it  on  acconnt  of  the  infancy:  Id.  Nor  is  an  assignment  made  by  copart- 
ners fraudulent  and  void  in  law  because  one  of  the  assignors  is  an  infant, 
under  the  rule  that  the  assignment  did  not  devote  tlie  property  of  tlie  debt- 
ors absolutely  to  the  benefit  of  the  creditors;  and  where  the  infant  has 
ratified  the  assignment  after  coming  of  age,  no  fraud  in  fact  can  be  claimed 
because  of  the  infancy:    Yates  v.  Lyon,  61  N.  Y.  344. 

Purchases  of  Personal  Property.  —  There  is  no  doubt  that  an  in- 
fant's purchase  of  personal  property,  not  a  necessary,  is  simply  voidable,  and 
not  void,  and  is  therefore  capable  of  ratificatiou  by  him:  Rice  v.  Doyer,  108 
Ind.  472;  58  Am.  Rep.  53,  54.  On  the  other  hand,  he  may  rescind  the  con- 
tract of  purchase,  and  recover  back  the  purchase-money  paid  by  him,  at 
least  where  he  restores,  or  ofifers  to  restore,  the  property  wiiich  he  has  re- 
ceived under  the  contract,  to  the  seller:  Riley  v.  Matlory,  33  Conn.  201; 
Robinson  v.  Weeks,  56  Me.  102;  Cooper  v.  Ailpont,  10  Daly,  352;  House  v. 
Alexander,  105  Ind.  109;  55  Am.  Rep.  189;  McCarlhy  v.  Henderson,  138 
Mass.  310.  And  in  such  an  action  the  vendor  will  not  be  entitled  to  recoup 
for  the  use  of  the  property  while  in  the  possession  of  the  minor:  McCarthy  v. 
Henderson,  138  Mass.  310;  and  the  infant's  right  of  recovery  will  not  be 
afifected  by  the  fact  that  the  property  sold  had  depreciated  in  value  while  in 
his.possession,  by  reason  of  use  or  otherwise:  Whitcomb  v.  Joslyn,  51  Vt.  79; 
31  Am.  Ilep.  678;  and  see  also,  in  case  of  exchanges.  Price  v.  Furnian,  27 
Vt.  268;  65  Am.  Dec.  194;  White  v.  Branch,  51  Ind.  210;  Carpenter  v.  Car- 
penter, 45  Ind.  142;  contra,  Bartholomew  v.  Finnemore,  17  Barb.  428;  but  see, 
on  the  proposition  that  the  money  paid  cannot  be  recovered  back  by  the  in- 
fant. Earl  of  Buckin<jhamshire  v.  Drury,  2  Eden,  60,  72,  per  Lord  Mansfield; 
Holmes  v.  Blo(jij,  8  Taunt.  508;  2  Moore,  552;  H  ilton  v,  Kearse,  Peake  Ad. 
Cas.  196;  Crummey  v.  Mills,  40  Hun,  370;  and  see  further  on  this  question, 
jKist,  "Infant's  Right  to  Recover  back  Money  Paid  by  Him  on  Disatfirmance 
of  Contract."  The  sale  vests  the  title  to  the  property  in  the  infant:  Crymes 
V.  Day,  1  Bail.  L.  320.  But  on  disaffirmance  by  the  infant  of  the  purchase,  tlie 
title  revests  in  the  vendor,  who  may  reclaim  the  goods  from  the  infant,  if  he 
etill  have  them:  Budi/er  v.  Pliinney,  15  Mass.  359;  8  Am.  Dec.  105;  Bm/ilen 
V.  Boyden,  9  Met.  519,  521;  Strain  v.  Wrijht,  7  Ga.  568;  Heath  v.  We>,t,  28 
N.  H.  101;  Skinner  v.  Maxwell,  66  N.  C.  45;  Carpent'-rv.  Carpenter,  45  Ind. 
142;  Shirk  v.  Shullz,  113  Ind.  571;  Kiehol  v.  Ste,ier,  2  Tenn.  Ch.  328.  affirmed 
in  6  Lea,  393;  see  post,  '*  Adult's  Right  to  Recover  back  Consideration  from 
Infant  on  Disaffirmance."  If  the  infant  claims  to  retain  the  property  pur- 
chased, he  should,  on  the  plainest  principles  of  justice,  be  compelled  to  pay 


598  Craiq  v.  Van  Bebber.  [Missouri, 

the  price,  or  answer  to  any  security  which  he  may  have  given  therefor:  See 
post,   "Disaffirmance  of  Part  of  Transaction." 

An  infant's  purchase  of  personal  property  is  not  rendered  binding  upon 
him,  either  at  law  or  in  equity,  from  the  fact  that  he  traded  as  an  adult  and 
the  vendor  dealt  with  him  on  that  supposition:  Carpenter  v.  Prkhjen,  40  Tex. 
3-2,  35;  Folds  v.  Allanlt,  35  Minn.  488,  489;  Stikcnian  v.  Dawson,  1  De  Gex  & 
S.  90.  Nor  will  he  be  estopped  from  avoiding  the  contract  at  law  because  of 
his  false  representations  concerning  his  age,  his  means  of  payment,  and  the 
like,  on  which  the  vendor  relied:  Bvovm  v.  MrCune,  5  Sand.  224;  StudweU 
v.  S/iaptn;  54  N.  Y.  249;  Viimn  v.  Lockard,  7  Bush,  458;  Carpenter  v.  Car- 
penter, 45  Ind.  142;  Whitcomb  v.  Jo^li/n,  51  Vt.  79;  31  Am.  Rep.  678;  Conrad 
V.  Lane,  26  Minn.  389;  37  Am.  Rep.  412;  see  further  on  this  question,  pat, 
"Infant's  Concealment  or  Alisrepresentation  as  to  Age." 

If  goods  sold  to  an  infant  are  delivered  to  a  carrier  by  the  vendor,  ad- 
dressed to  the  purchaser,  while  the  latter  is  still  under  age,  but  they  do  not 
reach  him  until  he  has  attained  full  age,  infancy  is  a  good  defense  to  an  ac- 
tion brought  against  him  for  the  price,  since  when  the  goods  were  delivered 
to  the  carrier  the  property  vested  in  the  infant:  Griffin  v,  Lancifieid,  S^Camp. 
254.  An  officer  selling  property  at  public  auction  is  not  bound  to  receive  the 
bid  of  an  infant,  since  the  infant  is  incapable  of  making  a  binding  contract. 
And  therefore,  wliere  an  infant  bid  a  certain  sum  for  the  property,  and  the 
officer,  without  regarding  his  bid,  struck  it  ofif  to  another  person  for  a  less 
sum,  the  officer  is  not  liable  for  the  difference  between  the  bids:  Kinney  v. 
Shotody,  1  Hill,  5-14. 

As  to  the  binding  effect  of  an  infant's  note  given  for  the  purchase  price  of 
personal  property,  see  post,  "Bills  and  Notes";  the  validity  of  a  chattel  mort- 
gage given  by  the  infant  on  the  property  purchased  to  secure  the  price,  see 
ante,  "Chattel  Mortgages";  an  infant's  liability  for  goods  supplied  him  for 
trading  purposes,  see  po-<t,  "Trading  Contracts  ";  and  as  to  his  obligation  to 
pay  for  necessaries  furnished  him,  see  post,  "Necessaries."  It  may  be  here 
noticed  that  in  an  action  for  goods  sold  and  delivered  to  an  infant,  it  is  not 
presumed  that  they  were  necessaries,  but  that  fact  must  be  specially  shown: 
Ive  V.  Chester,  Cro.  Jac,  560. 

Trading  Contracts  —  Bankruptcy  of  Infant.  —  The  question  has  been 
discussed  in  several  early  English  cases  as  to  whether  an  infant  could  incur 
any  liability  as  a  trader.  In  the  first  place,  it  has  been  held  that  he  cannot  be 
charged,  as  against  his  defense  of  infancy,  with  goods  purchased  by  him  to  trade 
with:  Whittin'jhaniv.  Hill,  Cro.  Jac.  494;  Whywall\.  Champion,  2 Strange,  1083; 
nor  for  work  and  labor  done  for  him  in  the  course  of  his  trading  business: 
Dilk  V.  Keiijhley,  2  Esp.  480;  although  he  thereby  gains  his  living:  Whitting' 
ham  V.  Hill,  Cro.  Jac.  494;  Dilk  v.  Keighley,  2  Esp.  450.  These  cases  do  not 
really  hold  an  infant's  trading  contracts  to  be  void,  yet  they  appear  to  have 
furnished  the  ground  for  the  opinion  entertained  in  Thornton  v.  Illingwortli,  2 
Barn.  &  C.  824,  4  Dowl.  &  R.  545,  in  wliich  Bayley,  J.,  is  reported  to  have 
said  (2  Barn.  &  C.  826):  "In  the  case  of  an  infant,  a  contract  made  for  goods 
for  the  purposes  of  trade  is  absolutely  void,  not  voidable  only.  The  law  con- 
siders it  against  good  policy  that  he  should  be  allowed  to  bind  himself  by  such 
contracts.  If  he  makes  a  promise  after  he  comes  of  age,  that  binds  hiin  on 
the  ground  of  his  taking  upon  himself  a  new  liability,  upon  a  moral  consider- 
ation existing  before;  it  does  not  make  a  legal  debt  from  the  time  of  making 
the  bargain."  There  is  notliing  peculiarly  vicious  about  such  a  contract;  and 
it  was  correctly  held  in  Warwick  v.  Bruce,  6  Taunt.  1 18,  affirming  2  Maulo  & 
S.  205,  that  the  contracts  of  an  infant  might  be  avoided  or  not,  at  his  option. 


April,  1890.]  Craig  v.  Van  Bebbeb.  599 

and  this  was  true  of  his  trading  contracts,  which  were  not  void;  and  there- 
fore the  infant  might  maintain  an  action  for  the  breach  of  such  a  contract. 
Of  course,  the  infant  would  be  liable,  in  any  view,  for  so  much  of  goods  sup- 
plied to  him  to  trade  with  as  were  consumed  as  necessaries  in  ids  own  family: 
Turberville  v.  W hitehouse,  1  Car.  &  P.  9J^,  affirmed  in  12  Price,  G93.  That  an 
infant  is  not  rendered  liable  on  his  contracts  at  law  from  the  mere  fact  that 
he  traded  as  an  adult,  see  MH'er  v,  Blankley,  SSL.  T.  527;  po^t,  "Infant's 
Concealment  or  Misrepresentation  as  to  Age." 

The  inquiry  is  presented  in  this  connection  as  to  whether  an  infant  may  be 
adjudicated  a  bankrupt  or  insolvent.  Since  an  infant  was  not  bound  by  hia 
general  contracts,  including  his  trade  debts,  it  was  settled  under  the  early 
English  bankrupt  acts  that  he  could  not,  as  a  rule,  be  declared  a  bankrupt 
with  respect  to  such  debts:  Rex  v.  Cole,  12  Mod.  24.>;  1  Ld.  Raym.  443;  Holt, 
360;  Ex  ■parte  Sydehotham,  1  Atk.  146;  Ex  parte  Henderson,  4  Ves.  163;  Ex 
parte  Layton,  6  Ves.  434;  Ex  parte  Bands,  6  Ves.  601;  Ex  parte  Adam,  1 
Ves.  &  B.  404;  O'Brien  v.  Currie,  3  Car.  &  P.  283;  Belton  v.  Hodtjes,  9  Bing. 
365.  But  while  a  commission  of  bankruptcy  could  not  be  supported  by  a 
mere  trading  during  infancy  (Ex  parte  Moule,  14  Ves.  602),  yet  it  mii,'ht  be 
otherwise  if  he  represented  himself  to  be  of  age:  Ex  parte  Watson,  16  Ves. 
205.  And  where  a  ba-ikrupt  applied  to  annul  the  fiat  on  the  ground  of  in- 
fancy, and  it  appeared  that  on  the  occasion  of  his  marriaire,  a  year  before  the 
fiat  issued,  he  had  made  affidavit  that  he  was  then  of  fnll  age,  the  petition 
was  dismissed,  with  costs:  Ex  parte  Bates,  2  Mont.  D.  &  D.  337;  the  court 
saying:  "Admitting  the  fact  that  the  bankrupt  was  really  not  of  a<;e  when 
the  fiat  issued,  the  afGdavit  that  he  made  when  he  married,  in  wliich  he 
swore  that  he  was  then  of  age,  operates  as  an  estoppel  to  the  present  appli- 
cation. Tills  is  a  stronger  case  than  that  of  Ex  parte  Watson,  16  Ves.  265, 
where  the  bankrupt  merely  represented  that  he  was  of  age";  and  in  In  re  Unity 
etc.  Banking  Ass'n,  3  De  Gex  &  J.  63,  where  an  infant  had  obtained  a  loan  on 
a  representation,  which  he  knew  to  be  false,  that  he  was  of  age,  it  was  held 
that  a  proof  for  the  loan  was  properly  admitted  in  bankruptcy. 

In  this  country,  it  seems  to  be  held  in  a  meagerly  reported  case  that  an 
infant  might  claim  the  benefit  of  the  bankrupt  law  of  1841,  since  an  infant 
was  bound  to  pay  certain  debts,  and  the  bankrupt  law  extended  its  benefits 
to  all  persons,  without  exception,  who  were  in  a  state  of  bankruptcy:  In  re 
Book,  3  McLean,  317;  but  this  case  was  doubted  in  In  re  Derby,  8  Nat.  Bank 
Reg.  106,  in  which  it  was  held  that  infants,  as  subjects  of  either  voluntary 
or  involuntary  bankruptcy,  were  not  embraced  within  tlie  provisions  of  the 
act  of  1867,  at  I'iast  in  respect  to  their  general  contracts;  Blatchford,  J.,  say- 
ing: "The  general  contracts  of  an  infant  having  no  force  if  disaffirmed  by 
him  after  attaining  his  majority,  it  is  idle  for  him  to  set  forth  in  a  voluntary 
case,  commenced  during  his  infancy,  a  schedule  of  his  creditors,  and  idle  for 
them  to  prove  their  debts  during  his  infancy;  for  the  whole  proceedings  nnist 
he  in  vain  if  the  debts  are  disaffirmed  by  him  after  he  attains  his  majority. 
....  So  in  an  involuntary  case,  the  property  of  the  infant  bankrupt  would 
be  taken  by  the  court,  injunctir.ns  woi'lu,  after  adjudication,  be  granted 
against  pending  suits,  a  schedule  of  his  creditors  would  be  furnished  by  the 
bankrupt,  and  their  debts  would  be  proved  to  no  purpose;  for  his  disafTinn- 
ance  of  the  debts  after  becoming  of  age  would  necessitate  the  restoration 
to  him  of  his  property,  without  any  relief  to  the  creditors.  '  The  court  tlien 
points  out  further  objections  arising  from  the  provisions  of  the  act. 

So  far  as  state  insolvont  laws  are  concerned,  it  was  decided  in  one  case  tliat 
Droceedlngs  in  insolvency,  in  iucituin,  aguiiist  an   i:if;iiit,  who  was  not  repre- 


600  CRAia  V.  Van  Bebber.  [Missouri, 

sented  by  a  guardian  ad  litem,  might  be  set  aside  on  a  bill  in  equity  brought 
by  a  creditor  who  had  an  attachment  upon  the  infant's  estate,  although  the 
creditor's  claim  was  one  which  might  be  avoided  by  the  infant  on  plea  and 
proof  of  his  infancy:  Farris  v.  Richardson,  6  Allen,  118.  The  court  said: 
"We  have  not  deemed  it  necessary  to  decide  in  the  present  case  whether  the 
provisions  of  our  insolvent  laws  are  at  all  applicable  to  infants;  that  is, 
whether  proceedings  by  or  against  them  can  be  maintained,  if  they  are  duly 
represented  by  a  prochein  ami  or  guardian  ad  litem.  In  England,  it  is  well 
settled  that  an  infant  cannot  be  a  bankrupt.  The  reason  for  the  rule  is,  that 
the  bankrupt  acts  are  intended  only  for  traders,  and  that  an  infant  cannot  be 
properly  deemed  a  trader,  or  be  declared  a  bankrupt  for  debts  he  is  not 
obliged  to  pay:  Ex  parte  SydebotJiam,  1  Atk.  146;  Bex  v.  Cole,  1  Ld.  Eaym. 
443;  Ex  parte  Henderson,  4  Ves.  163;  Ex  parte  Barwis,  6  Ves.  601.  There  is 
certainly  fair  reason  to  doubt  whether  the  legislature  intended  to  include  in- 
fants among  those  entitled  to  the  benefit  or  subject  to  the  duties  and  limita- 
tions created  by  the  insolvent  laws.  A  discharge  in  insolvency  would  not 
relieve  them  from  debts  incurred  for  necessaries;  and  from  all  other  debts 
they  can  be  relieved  by  plea  and  proof  of  infancy,"  Again,  in  Winchester  v. 
Thayer,  129  Mass.  1-29,  133,  Gray,  C.  J.,  says:  "It  ha^  not  been  decided  in 
this  commonwealth  whether  an  infant  is  subject  to  proceedings  under  the 
insolvent  laws.  But  when  in  such  pioceedings  instituted  by  a  creditor  of  a 
partnership  (of  which  he  is  a  member)  he  has  been  represented  by  a  guar- 
dian ad  litem,  and  after  coming  of  age  has  expressly  ratified  the  partnership 
and  the  proceedings,  it  is  difficult  to  see  how  he  could  afterwards  avoid  them. 
And  even  if  he  could  avoid  the  proceedings  so  far  as  he  is  concerned,  it  is 
quite  clear  that  his  copartners,  who  were  of  full  age  when  the  proceedings 
were  instituted,  cannot." 

Several  cases  have  been  decided  in  England  since  the  passage  of  the  In- 
fants' Relief  Act,  which,  as  has  been  seen,  provides  that  certain  general  con- 
tracts of  infants  theretofore  voidable  shall  be  void  without  possibility  of 
ratification.  In  Ex  parte  Kibhle,  L.  R.  10  Ch.  373,  an  infant,  before  the  pass- 
age of  the  act,  gave  a  bill  of  exchange,  payable  after  his  majority,  for  jewelry 
purchased.  After  his  majority,  and  after  the  act  came  into  operation,  the 
creditor  obtained  judgment  by  default  against  the  debtor,  in  an  action  on  the 
bill  of  exchange,  and  then  took  out  a  debtor's  summons,  and  on  his  failing  to 
comply  with  it,  filed  a  petition  for  adjudication  against  him.  It  was  held 
that  the  court  of  bankruptcy  would  look  into  the  consideration  of  the  judg- 
ment; and  that  if  the  conduct  of  the  debtor,  in  allowing  the  judgment  to  go 
by  default  against  him,  operated  as  a  ratification  of  the  bill,  such  ratification 
was  void  by  the  second  section  of  the  act,  and  the  petition  for  adjudication 
was  consequently  dismissed.  In  Begina  v.  Wilson,  L.  R.  5  Q.  B.  D.  28,  a 
person  was  convicted  under  the  debtors'  act  of  1S69,  because  he  had,  within 
four  months  before  the  presentation  of  a  bankruptcy  petition  against  him, 
upon  which  he  was  adjudged  bankrupt,  quitted  England,  taking  with  him, 
with  intent  to  defraud,  property  exceeding  twenty  pounds,  which  ought  by 
law  to  have  been  divided  amongst  his  creditors.  At  the  times  when  he  quitted 
England  and  when  he  was  adjudged  a  bankrupt,  he  was  an  infant,  and  the 
debts  proved  against  his  estate  in  bankruptcy  were  trade  debts,  contracted 
since  the  passage  of  the  Infants'  Relief  Act,  and  it  did  not  appear  that  any 
debts  for  necessaries  supplied  to  him  existed.  It  was  held  that  the  convic- 
tion could  not  be  supported.  Mdler,  J.,  in  In  re  Raineys,  3  L.  R.  Ir.  459,  was 
of  the  opinion  that  since  the  passage  of  the  Infants'  Relief  Act  the  founda- 
tion of  all  exceptions  to  the  general  rule  that  an  infant  could  not  be  made  a 


April,  1890.]  Craig  v.  Van  Bebber.  601 

bankrupt  were  swept  away  in  all  cases  falling  within  the  provisions  of  the 
act;  and  Bacon,  C.  J.,  went  to  the  opposite  extreme  in  Ex  parte  Lynch,  L.  R. 
2  Ch.  Div.  227,  in  holding  that  notwithstanding  the  provisions  of  the  act,  a 
debtor  who  had  simply  traded  while  under  age  could,  after  he  had  attained 
full  age,  be  adjudicateel  a  bankrupt  in  respect  of  a  trade  debt  contracted, 
and  upon  an  act  of  bankrujjtcy  committed  during  his  infancy;  but  this  latter 
case  was  overruled  in  ^a;  par^p  t/o/je.',  L.  R.  18  Ch.  Div.  109,  where  it  was 
held  that  an  infant  who  had  traded  could  not  be  adjudicated  a  bankrupt  on 
the  petition  of  a  person  who  had  supplied  him  with  goods  on  credit  for  trade 
purposes,  but  to  whom  he  had  made  no  express  representation  that  he  was 
of  full  age,  even  though  he  had  previously  filed  a  liquidation  petition,  tiie 
proceedings  under  which  had  become  abortive.  Whether,  if  the  infant  had 
expressly  represented  to  the  petitioning  creditor  that  he  was  of  full  age,  an 
adjudication  could  be  made,  was  not  decided,  but  there  is  an  expression  of 
opinion  in  the  affirmative. 

Finally,  it  may  be  observed  that  whether  an  infant  comes  within  the  scope 
of  bankrupt  or  insolvent  laws  is  plainly  a  question  of  legislative  intent. 

Partnership  Agreements  akd  Transactions.  —  The  question  as  to  the 
binding  effect  of  the  partnership  agreements  and  transactions  of  infants  is  one 
which  has  a  close  relation  to  the  subject,  just  considered,  of  infants'  trading 
contracts.  An  infant's  contract  of  partnership  is  voidable  only,  at  all  events 
to  the  extent  that  he,  and  he  alone,  at  his  option,  may,  subject  to  the  rules 
governing  the  matter  of  ratification  and  disaffirmance,  ratify  the  contract  and 
thereby  render  it  valid  and  binding  from  the  beginning,  or  disaffirm  it  and 
escape  any  personal  liability  on  account  of  the  partnership:  Goode  v.  Harrison^ 
5  Barn.  &  Aid.  147;  Penn  v.  IVhitehead,  17  Gratt.  503;  94  Am,  Dec.  478;  Dun- 
ton  v.  Brown,  31  Mich.  182;  Osburn  v.  Fan;  42  Mich.  134;  Adams  v.  Beall, 
67  Md.  53;  1  Am.  St.  Rep.  379;  Betls  v.  Carroll,  6  Mo.  App.  518;  Conklin  v. 
Oghorn,  7  Ind.  553.  The  contract  is  good  until  avoided.  Therefore  it  is 
held  that  if  an  infant  contributes  certain  property  to  the  capital  of  the  firm, 
his  copartner  acquires  an  interest  therein  which  is  subject  to  attachment, 
unless  the  contract  lias  been  avoided;  and  the  infant  by  claiming  the  prop- 
erty in  replevin  against  the  attaching  officer  does  not  signify  his  election 
to  avoid  the  contract,  but  there  must  be  some  act  of  avoidance  before  the 
institution  of  the  suit:  Belts  v.  Carroll,  6  Mo.  App.  518. 

If  the  infant,  after  he  arrives  at  full  age,  ratifies  the  contract  of  partnership, 
he  will  be  liable  as  a  partner  to  the  creditors  of  the  firm  for  its  obligations 
incurred  during  his  minority:  Penn  v.  Whitehead,  17  Gratt.  503;  and  will 
subject  himself  not  only  to  the  liabilities  of  the  firm  of  which  he  knew  when 
he  ratified  the  contract,  but  to  liabilities  about  which  he  may  have  been  en- 
tirely ignorant  at  the  time:  Miller  v.  Sims,  2  Hill  (S.  C.)  479.  "One  partner 
miglit  bind  the  other  by  a  contract  made  without  his  knowledge,  to  which  he 
never  assented,  and  by  which,  on  being  informed  of  it,  he  expressly  refused 
to  be  bound  ":  Miller  v.  Sims,  2  Hill  (8.  C.)  479;  compare  Crahtree  v.  May, 
1  B.  Mon.  289.  The  fact  that  the  infant,  by  the  contract  of  partnership, 
confers  an  authority  upon  his  copartner  to  act  as  his  agent  for  partnership 
purposes,  is  no  obstacle  to  a  ratification  by  the  infant  ol  a  partnersliip  con- 
tract made  by  the  copartner,  an  infant's  appointment  of  an  agent  not  being 
void,  but  voidable  only:  Whitney  v.  Dutch,  14  Mass.  457;  7  Am.  Dec.  229; 
and  see  post,  "  Delegation  of  Authority."  If  the  infant  ])artner,  after  attain- 
ing full  age,  transacts  the  business  of  the  firm,  receives  its  money  >  iud  pays 
its  debts,  these  acts,  unexplained,  will  amount  to  a  confirmation  of  the  part- 
nership: Miller  v.   Sims,  2  Hill  (S.  C.)  479.     It  is  held  that  if  an  infant  act* 


602  Craig  v.  Van  Bebber.  [Missouri, 

aa  a  partner  until  within  a  short  period  of  his  coming  of  age,  it  is  his  duty 
to  give  notice  of  the  termination  of  the  partnership  on  reaching  the  age  of 
twenty-one,  and  if  he  neglects  to  do  so,  he  is  responsible  to  persons  who 
thereafter  trust  his  former  partner  on  the  credit  of  the  partnership:  Goode  v. 
Harrison,  5  Barn.  &  Aid.  147.  As  in  other  cases,  if  a  party  seeks  to  hold 
an  infant  member  of  a  partnership,  against  the  defense  of  infancy,  on  an  obli- 
gation of  the  firm,  the  burden  of  proof  ia  upon  the  plaintiff  to  show  that 
after  the  infant  came  of  age  he  aifirmed  and  ratified  the  obligation:  Tohey  v. 
Wood,  123  Mass.  88;  25  Am.  Rep.  27,  28.  "Such  ratification  maybe  shown 
either  by  proof  of  an  express  promise  to  pay  the  debt,  made  by  the  infant 
after  he  came  of  age  (wliich  is  not  claimed  in  this  case),  or  by  proof  of  such 
acts  of  the  infant  after  he  became  of  age  as  fairly  and  justly  lead  to  the  in- 
ference that  he  intended  to  ratify  the  contract  and  pay  the  debt":  Tohey  v. 
Wood,  123  Mass.  88;  25  Am.  Rep.  27,  28.  The  ratification  will  not  be  in- 
ferred from  a  mere  acknowledgment  of  the  debt:  Coitkiin  v.  Ogborn,  7  Ind. 
553.     See  further  on  the  question  of  ratification  post. 

It  has  been  held  that  an  infant  could  not  disaffirm  his  contract  of  partner- 
ship during  his  infancy:  Dunton  v.  Brown,  31  Mich.  182;  but  this  is  not  cor- 
rect on  principle,  and  has  been  decided  to  the  contrary:  Adams  v.  Beall,  67 
Md.  53;  1  Am.  St.  Rep.  379.  The  infant  may  rescind  a  contract  entered 
into  by  the  firm,  as  to  him.'?elf,  and  maintain  a  suit  in  enforcement  of  the  dis- 
affirmance: Kerr  v.  Bell,  44  Mo.  120;  and  infancy  may  be  interposed  by  him 
as  a  bar  to  any  claim  of  personal  liability  in  an  action  upon  a  contract  made 
by  the  partnership:  Folds  v.  Allardt,  35  Minn.  488;  Mason  v.  Wright,  13  Met. 
306.  "The  goods  having  been  furnished  to  a  partnership  of  which  defendant 
was  known  to  be  a  member,  the  court  ruled  that  he  was  liable,  on  the  ground, 
substantially,  that  by  engaging  in  business  as  a  member  of  the  firm,  he  held 
himself  out  as  competent  to  bind  himself  by  contract,  and  hence  is  estopped 
to  set  up  his  infancy  as  a  sole  defense.  The  rule  is  not,  however,  changed 
by  the  fact  that  he  was  a  member  of  a  partnership.  His  contracts  are  void- 
able as  in  other  cases  ":  Folds  v.  Allardt,  35  Minn.  488.  So  infancy  is  a  good 
defense  to  an  action  against  an  infant,  as  a  secret  partner,  to  recover  the 
price  of  goods  purchased  ostensibly  by  his  co-defendant  on  the  false  repre- 
sentations of  the  infant  as  to  the  solvency  of  the  co-defendant,  in  order  that 
they  might  both  profit  by  obtaining  the  goods,  the  action  being  founded  on 
contract,  and  not  seeking  to  avoid  the  sale  and  reclaim  the  goods,  or  to  re- 
cover on  the  ground  of  fraud  practiced  by  the  infant:  Vinsen  v.  Lockard,  7 
Bush,  458.     See  the  subject  of  disaffirmance  fully  discussed,  post. 

It  was  held  in  an  early  case  that  if  a  firm  of  partners  accept  a  bill  of  ex- 
change, and  one  of  the  partners  is  an  infant,  the  contract  being  void  as  to 
the  infant,  the  holder  of  the  bill  might  declare  on  it  as  accepted  by  the  adult 
partner  only,  and  if  the  defendant  pleads  in  abatement  that  the  otlier  part- 
ner ought  also  to  be  sued,  the  plaintiff  might  reply  his  infancy:  Burgess  v. 
Merrill,  4  Taunt.  468;  and  see  Gibbs  v.  Merrill,  3  Taunt.  307,  313;  but  this 
ruling  is  certainly  not  now  law,  if  indeed  it  ever  was;  and  a  short  time  after- 
wards it  was  correctly  decided  in  this  country  tiiat  where  one  of  the  mem- 
bers of  a  partnership  which  executed  a  promissory  note  was  an  infant,  the 
plaintiff  could  not  treat  the  note  as  void  as  to  the  infant,  and  sue  the  adult 
partner  only:  iVamsley  v.  Lindenherger,  2  Raud.  478.  See  post,  "Bills  and 
Notes."  Where,  in  a  suit  against  two  partners  for  a  partnership  debt,  one  of 
them  pleads  infancy,  and  judgment  is  taken  against  the  adult  partner,  the 
judgment,  it  is  held,  was  nevertheless  for  a  partnership  debt,  and,  as  such, 
was  a  charge  on  the  partnership  property:  Gay  v.  Johnson,  32  N.  H.  167. 


April,  1890.]  Craig  v.  Van  Bebber.  603 

It  has  been  stated  above  that  an  infant  member  of  a  partnership  may  plead 
his  infancy  in  bar  to  any  claim  of  personal  liability  made  against  him  on  con- 
tracts of  the  firm.  This  proposition  cannot  be  doubted,  the  infant  not  hav- 
ing ratified  the  contract  of  partnership,  nor  the  particular  firm  contract  in 
question,  which  perhaps  he  might  have  ratified  without  ratifying  other  part- 
nership engagements.  And  even  according  to  the  case  of  Kerr  v.  Bell,  44 
Mo.  120,  where  a  partnership  of  which  one  member  was  an  infant  purchased 
real  estate,  the  infant  had  the  right  to  rescind  the  contract  as  to  himself, 
and  to  maintain  a  suit  in  enforcement  of  the  disaffirmance,  and  to  compel  a 
restoration  of  the  property  received  by  tlie  vendor,  the  vendor  having  been 
restored  to  the  land  sold.  It  is,  however,  a  question  of  considerable  diffi- 
culty to  determine  what  are  the  rights  of  an  infant  partner,  as  against  the 
firm  creditors,  with  respect  to  tlie  assets  of  the  firm,  and  his  rights,  as 
against  his  copartners,  with  respect  to  capital  contributed  by  him,  services 
he  may  have  rendered  the  firm,  and  money  paid  by  him  for  an  interest  in  the 
business.  It  has  been  held  that  where  an  infant  partner  renounces  and  dis- 
affirms his  contract  of  partnership,  and  tiles  !iis  petition  in  court  asking  the 
appointment  of  a  receiver,  he  will  be  deemed  to  have  thereby  consented  that 
the  court  shall  deal  with  the  assets  and  close  out  the  business  so  as  to  settle 
the  ultimate  riglits  of  the  parties  concerned,  and  in  such  case  the  court  will 
treat  the  assets  as  partnership  assets  as  in  any  other  case,  and  apply  them 
first  to  the  payment  of  the  firm  debts,  before  p  lying  the  infant  the  amount 
invested  by  him:  Shirk  v.  Shultz,  113  Ind.  571.  There  would  seem  to  be  no 
doubt  of  the  correctness  of  this  decision. 

In  Yates  v.  Lyon,  61  N.  Y.  344,  which  was  a  case  involving  the  validity  of 
an  assignment  for  the  benefit  of  creditors,  made  by  copartners,  of  whom  one 
was  an  infant,  Reynolds,  C,  said:  "It  cannot  be  doubted  but  that  the  law 
would  devote  the  assets  of  this  firm  to  the  discharge  of  the  partnership  obli- 
gations whenever  any  court  should  be  appealed  to  for  that  purpose,  and  I  do 
not  see  that  the  supposed  equity  of  an  infant  partner  should  in  such  a  case 
prevail  against  that  of  the  creditors  of  the  firm We  see  no  substan- 
tial difference  whether,  in  such  a  case,  the  property  of  the  firm  is  subjected 
to  the  payment  of  the  proper  debts  of  the  firm  by  the  process  of  the  law,  or 
by  the  voluntary  act  of  the  insolvent  debtors.  In  either  case  the  result  is  pre- 
cisely the  same,  and  the  infant  is  bound  if  he  simply  says  nothing It 

is  not  too  much  to  say  that  if  an  infant  goes  into  a  mercantile  adventure  which 
proves  unsuccessiul,  he  ought,  at  least,  to  be  held  so  far  that  the  assets  ac- 
quired by  the  firm  should  be  applied  to  the  payment  of  the  debts  of  the  con- 
cern. If  he  has  been  cajoled  into  any  waste  of  his  capital,  it  hardly  seems 
equitable  that  the  creditor  of  the  firm  should,  either  directly  or  indirectly, 
be  called  upon  for  reimbursement.  The  utmost  exemption  that  lie  ought  to 
claim  in  such  a  case  is,  that  he  should  not  be  made  personally  liable  for  debts 
beyond  what  the  assets  of  the  firm  are  able  to  pay;  and  even  then  the  infant 
should  claim  the  exemption."  Again,  in  Busk  v.  Lintlncum,  59  Md.  344,  it 
was  held  that  a  plea  of  infancy  was  no  bar  to  a  suit  for  the  dissolution  of  a 
partnership,  the  granting  of  an  injunction  restraining  the  defendant  from 
collecting  or  disposing  of  the  assets  or  contracting  debts  on  account  of  the 
firm,  and  the  appointment  of  a  receiver  to  tike  charge  of  the  assets  of  the 
firm  and  apply  the  same  to  the  payment  of  its  debts,  Irving,  J.,  saying: 
"Having  formed  this  partnership,  he  cannot  so  far  repudiate  it  drring 
minority  as  to  escape  such  consequences  of  partnership  as  do  not  involve 
personal  liability  for  claims  against  the  firm  or  costs  incident  to  the  legal 
settlement  of  its  afi"air3.     Such  partnership  must  be  dissolvable  as  any  other. 


604  Craig  v.  Van  Bebber.  [Missouri, 

and  the  partnership  assets  must  be  assignable  to  partnership  creditors."  The 
broad  views  expressed  by  these  two  latter  cases,  that  the  assets  of  a  partner- 
ship should  be  appropriated  to  the  satisfaction  of  firm  creditors  over  the 
claims  of  an  infant  partner,  appear  to  ns  to  be  a  departure  from  the  general 
principles  governing  the  liability  of  infants  on  their  contracts.  Why  the 
interest  of  the  infant  in  the  partnership  assets  should  be  subjected  by  im- 
plication of  law  to  the  claims  of  creditors  of  the  firm,  when  it  is  perfectly 
well  settled  that  an  infant  may  repudiate  any  security,  as  a  mortgage,  ex- 
pressly given  by  him,  is  not  clear.  Of  course,  if  an  infant  would  rescind 
a  contract  he  may  be  obliged  to  restore  the  consideration  he  may  have 
received,  provided  he  still  retains  it;  but  the  rule  as  stated  here  makes  no 
distinction  between  such  creditors  who  have  disposed  of  property  to  the  firm, 
which  it  still  retains,  and  those  creditors  who  are  not  in  that  condition.  If 
it  be  said  that  the  infant  must  restore  an  equivalent,  if  he  have  not  the 
original  consideration,  the  rule  should  not  have  stopped  with  the  firm  assets, 
but  should  at  least  make  the  infant  answerable  to  the  extent  of  any  property 
which  may  belong  to  him.     The  question  cannot  be  regarded  as  settled. 

In  the  celebrated  case  of  Ea7-l  of  Buckinghamshire  v.  Drury,  2  Eden,  60,  72, 
there  is  a  dictum  accredited  to  Lord  Mansfield,  to  the  effect,  that  "  if  an  infant 
pays  money  with  his  own  hand,  without  a  valuable  consideration  for  it,  he 
cannot  get  it  back  again."  This  dictum  was  approved  by  Gibbs,  C.  J.,  in 
Holmes  v,  Blogg,  8  Taunt.  511,  2  Moore,  560,  where  it  was  held  that  an  in- 
fant who  took  a  lease  of  a  house,  occupied  the  premises  for  a  time,  and  paid 
the  rent,  could  not  recover  back  the  rent  so  paid,  on  avoiding  the  lease  after 
he  came  of  age,  and  quitting  the  premises.  It  was  sought  to  apply  the  rule 
of  this  mischievous  case  to  the  case  of  an  infant  who  agreed  to  enter  into  a 
partnership  with  a  tradesman,  and  paid  a  deposit  towards  the  purchase  of  an 
interest  in  the  business,  which  was  to  be  forfeited  to  the  tradesman  if  the  in- 
fant failed  to  fulfill  the  agreement,  sought  to  rescind  the  agreement,  and  re- 
cover back  the  money  so  paid  by  him.  It  was  held  that  he  might  recover, 
the  court  distinguishing  Holmes  v.  Blogg,  8  Taunt.  511,  2  Moore,  560,  on  the 
ground  that  there  the  infant  had  received  something  of  value  for  the  money 
he  had  paid,  and  could  not  put  the  defendant  in  the  same  position  as  before, 
while  in  this  case  the  infant  had  derived  no  benefit  from  the  transaction,  and, 
besides,  was  subjected  to  a  penalty:  Corpe  v.  Overton,  10  Bing.  252;  3  Moore  & 
S.  738;  and  see  Everett  v.  Wilhim,  29  L.  T.  846.  In  Ex  parte  'Taylor,  8  De  Gex, 
M.  &  G.  254,  decided  more  than  twenty  years  after  Corpe  v.  Overton,  10  Bing. 
252,  3  Moore  &  S.  738,  an  infant  paid,  by  means  of  borrowed  money,  a  pre- 
mium upon  entering  into  a  partnership,  and  before  he  became  of  age  disaf- 
firmed the  contract  of  partnership.  It  was  held,  approving  Holmes  v.  Blogg, 
8  Taunt.  511,  2  Moore,  560,  that  the  infant  could  not  have  recovered  hack 
the  premium  had  his  partners  remained  solvent,  and  therefore  could  not 
prove  it  under  their  bankruptcy. 

In  this  country.  Holmes  v.  Blogg,  8  Taunt.  511,  2  Moore,  560,  has  been  the 
subject  of  much  adverse  criticism.  See  post,  "  Infant's  Right  to  Recover  back 
Money  Paid  by  Him  on  Disaffirmance  of  Contract."  Yet,  so  far  as  the  ques- 
tion under  consideration  is  concerned,  it  has  been  held  in  Page  v.  Morse,  128 
Mass.  99,  that  if  an  infant  becomes  a  partner  with  another  person,  puts  a 
sum  of  money  into  the  business,  and  does  work  for  the  partnership,  he  can- 
not.  afterwards,  by  rescinding  the  contract,  recover  of  his  partner  the  money 
so  paid,  or  the  labor  performed,  in  the  absence  of  an  express  promise  to  pay 
him  therefor.  The  court  cites  Moley  v.  Brine,  120  Mass.  324,  a  case  the  same 
in  principle.      The    members  of  a  partnership  contributed  to  the  common 


April,  1890.]  Craig  v.  Van  Berber.  605 

stock  in  unequal  proportions,  with  an  agreement  that  the  profits  should  be 
equally  divided  between  them.  Upon  the  dissolution  of  the  partnership,  the 
assets  were  insufBcient  to  pay  back  the  contributions  of  the  several  members 
in  full.  It  was  held,  on  a  bill  in  equity  to  close  up  the  partnership,  that  the 
assets  must  be  divided  in  the  proportions  of  the  contributions,  and  the  defi- 
ciency borne  by  the  partners  equally,  and  the  fact  that  one  of  the  members 
of  the  firm  was  a  minor  made  no  difference;  the  court  saying:  "The  assets 
remaining  at  the  time  of  the  dissolution  being  insufficient  to  pay  the  claims 
of  all  the  partners,  the  loss  of  capital  must  fall  upon  the  three  partners  in 
equal  proportions,  and  the  infant  cannot  throw  upon  his  copartners  the  obli- 
gation of  making  up  the  deficiency  ";  citing,  among  other  cases,  Holmes  v. 
Blogg,  8  Taunt.  511,  2  Moore,  560;  Ex  parte  Taylor,  8  De  Gex,  M.  &  G.  254; 
and  Breed  v.  Judd,  1  Gray,  455.  In  this  latter  case,  an  infant,  in  considera- 
tion of  an  outfit  to  enable  him  to  go  to  California,  agreed  to  give  the  party 
furnishing  the  outfit  one  third  of  all  the  avails  of  his  labor  during  his  absence, 
which  he  afterwards  sent  accordingly.  The  jury  having  found  that  the  agree- 
ment was  fairly  made,  and  for  a  reasonable  consideration,  and  beneficial  to 
the  infant,  it  was  held  that  he  could  not  rescind  the  agreement,  and  recover 
back  the  amount  so  sent,  deducting  tiie  amount  of  the  outfit  and  other  money 
expended  for  him  by  the  other  party  in  pursuance  of  the  agreement.  The 
court  said  the  contract,  in  substance  and  efifect,  was,  that  the  defendants 
should  furnish  the  outfit,  and  the  plaintifiF  his  labor  and  time,  and  that  the 
parties  should  divide  the  fruits  of  the  enterprise  in  a  certain  proportion. 
And  although  such  a  construction  made  the  contract  one  of  partnership,  and 
an  infant  could  not  be  bound  by  such  a  contract  so  long  as  it  remained  ex- 
ecutory, yet,  said  Thomas,  J.,  "we  know  of  no  ground  upon  which,  after 
arriving  at  full  age,  he  can  change  the  entire  character  of  a  contract  so  made 
and  executed,  treat  the  money  so  advanced  by  the  defendants  as  a  simple 
loan,  and  claim  for  himself  all  the  fruits  of  an  enterprise  in  which  their 
money  and  his  labor  were  the  common  stock,  and  this  when  the  contract  as 
originally  made  is  found  to  have  been  fair,  reasonable,  and  even  beneficial  to 
the  plaintiff."  The  court  went  on  to  discuss  the  contract  under  other  aspects, 
which  need  not  here  be  considered.  Again,  it  was  held  in  Adams  v.  Beall, 
67  Md.  53,  1  Am.  St.  Rep.  379,  citing  Holmes  v.  Blof/j,  8  Taunt.  511,  2  Moore, 
560,  that  where  money  is  paid  by  a  minor  in  consideration  of  being  admitted 
as  a  partner  in  a  business,  and  he  does  become  and  remain  a  partner  for  a 
time,  he  would  not  be  allowed,  on  voluntarily  withdrawing  from  the  partner- 
ship, to  recover  back  the  money  thus  paid,  unless  he  was  induced  by  fraudu- 
lent representations  to  enter  into  the  partnership.  But,  on  the  contrary,  it 
was  held,  with  more  correctness,  in  Spnrmnn  v.  Keim,  83  N.  Y.  245,  that  an 
infant  might  avoid  an  agreement  of  partnership,  and  recover  back  the  money 
which  he  was  induced  to  invest  in  the  business  on  restoring  the  benefits  re- 
ceived from  the  partnership. 

Lending  and  Borrowing  of  Monet.  —  There  can  be  no  question  that  an 
infant  wiio  makes  a  loan  of  money  may  disaffirm  his  contract  of  lending,  and 
recover  back  the  money.  It  is  even  held  that  if  an  infant  makes  a  usurious 
loan,  taking  the  borrower's  note,  he  may  avoid  the  contract  of  lending,  and 
recover  the  money  loaned  under  a  contract  for  money  had  and  received: 
Milkird  V.  Hewlett,  19  Wend.  301;  Nelson,  C.  J.,  saying:  "I  put  the  case  en- 
tirely upon  the  ground  that  the  illegal  contract  is  out  of  the  question,  unless 
we  say  that  infatits  shall  be  bound  by  illegal  c^ontracts,  though  they  are  not 
by  those  which  are  legal,  and  then  the  objecti(ui  of  usury  fails,  and  the  right 
to  recover  becomes  very  plain." 


606  Craig  v.  Van  Bebbeb.  [Missouri, 

Oa  the  other  hand,  an  infant's  contract  of  borrowing  can  be  no  more  than 
voidable.  It  may,  therefore,  be  ratified  by  the  infant  on  coming  of  age,  like 
any  other  voidable  promise:  Kennedy  v.  Doyle,  10  Allen,  161,  "  The  agree- 
ment stood  on  the  same  ground  as  any  other  contract  by  an  infant  for  any- 
thing but  necessaries.  It  was  voidable,  and  not  void,  and  if  affirmed  by  her 
after  coming  of  age,  was  binding  upon  her."  The  contract  may,  of  course, 
be  disaffirmed.  And,  certainly,  one  who  has  paid  off  a  mortgage  on  the  land 
of  infants,  at  the  request  of  their  guardian,  cannot  maintain  an  action 
against  them  for  money  had  and  received  or  money  lent;  for  the  payment 
was  voluntary,  and  not  upon  any  contract  with  the  defendants,  and  their 
guardian  had  no  authority  to  subject  tliem  to  the  payment  of  the  claim: 
Bkknell  v.  Bicknell,  111  Mass.  265.  It  may  also  be  here  noticed  that  infancy 
is  a  good  defense  to  an  action  for  money,  generally,  paid  over  to  the  defend- 
ant for  the  plaintiff:  Boot  v.  Stevenson  s  Adm'rs,  24  Ind.  115.  As  to  an  in- 
fant's liability  on  notes  and  bills,  see  post,  next  head,  "  Bills  and  Notes." 

A  number  of  cases  have  arisen  concerning  an  infant's  liability  for  money 
loaned  to  or  advanced  for  him  to  pay  for  necessaries.  It  seems  to  be  the 
rule  that  an  infant  is  not  liable  at  law  for  money  borrowed  by  him  for  neces- 
saries, although  actually  expended  by  him  for  that  purpose;  but,  on  the 
other  hand,  he  is  liable  for  money  directly  applied  by  the  lender  in  procur- 
ing necessaries  for  him:  Rearshy  and  differs  Case,  Godb.  219;  Darhy  v. 
Boucher,  1  Salk.  279;  Earle  v.  Peak,  10  Mod.  67;  1  Salk.  386;  Ellis  v.  Ellis,  12 
Mod.  197;  3  Salk.  197;  1  Ld.  Raym.  344;  Prohart  v.  Knouth,  2  Esp.  472,  note; 
Clarke  v.  Leslie,  5  Esp.  28;  Hedgeley  v.  HoU,  4  Car.  &  P.  104,  105;  Bateman  v. 
Kingston,  6  L.  R.  Ir.  328;  Stvi/t  v.  Bennett,  10  Cush.  436;  Randall  v.  Siveet, 
1  Denio,  460;  Smith  v.  Oliphant,  2  Sand.  306;  Price  v.  Sanders,  60  Ind.  310; 
Beeler  v.  Young,  1  Bibb,  519.  The  infant  is,  however,  liable  in  equity  for 
money  borrowed  and  actually  applied  by  him  for  the  payment  of  neces- 
saries: Marloio  v.  Pit/eild,  1  P.  Wms.  558;  Hickman  v.  Hall's  Adnirs,  5  Litt. 
338,  342;  Watson  v.  Cross,  2  Duvall,  147,  149;  Price  v.  Sanders,  60  Ind.  310. 
Several  cases  have  determined,  under  different  conditions  of  fact,  that  the 
particular  purposes  for  which  money  was  lent  to  or  expended  for  an  infant 
did  not  fall  under  the  head  of  necessaries:  See  Smith  v.  Gibson,  Peake  Add. 
Cas.  52;  Hedgeley  v.  Holt,  4  Car.  &  P.  104;  West  v.  Gregg's  Adm'r,  1  Grant 
Cas.  53;  Magee  v.  Welsh,  18  Cal.  155;  Dorrell  v.  Hastings,  28  Ind.  478,  479; 
McKanna  v.  Meri-y,  61  111.  177;  Decell  v.  Lewenthal,  57  Miss.  331;  34  Am. 
Rep.  449;  State  v.  Hounrd,  88  N.  C.  650,  651.  See  this  question  were  fully 
considered  post,  under  the  head  "  Liability  for  Money  Borrowed  or  Advanced 
for  Necessaries." 

Bills  and  Notes.  —  Some  early  cases  entertained  the  view  that  the  bills 
of  exchange  and  promissory  notes  of  infants  were  absolutely  void.  Thus  it 
was  held  by  Sir  James  Mansfield  that  if  a  firm  of  partners  accepted  a  bill  of 
exchange,  and  one  of  the  partners  was  an  infant,  the  contract  being  void  as 
to  the  infant,  the  holder  of  the  bill  might  declare  on  it  as  accepted  by  the 
adult  partner  only,  and  if  the  defendant  pleaded  in  abatement  that  the  other 
partner  ought  also  to  be  sued,  the  plaintiff  might  reply  his  infancy:  Burgess 
V.  Merrill,  4  Taunt.  468;  and  see  Gibbs  v.  Merrill,  3  Taunt.  307,  313.  The 
Fame  judge  had  previously  held  at  nisi  prius  that  infancy  was  a  good  defense 
to  an  action  on  a  bill  of  exchange  accepted  by  the  defendant  for  necessaries, 
remarking:  "  Did  any  one  ever  hear  of  an  infant  being  liable  as  acceptor  of  a 
bill  of  exchange  ?  The  replication  [of  necessaries  to  the  plea  of  infancy]  is 
nonsense,  and  ought  to  have  been  demurred  to ":  Williamson  v.  Waits,  1 
Camp.  552.     It  baa  also  been  said,  in  actions  on  promissory  notes  to  which 


April,  1890.]  Craig  v.  Van  Bebber.  607 

the  plea  of  infancy  has  been  interposed,  that  a  negotiable  note  giren  by  an 
infant,  even  for  necessaries,  is  absolutely  void,  and  not  merely  voidable: 
Swasey  v.  Vanderheydens  Adnir,  10  Johns.  33;  Bouchell  v.  Clary,  3  Brev. 
194;  McMinn  v.  Richmonds,  6  Yerg.  9;  for  the  reason,  in  the  language  of 
Swasey  y.  Vanderheydens  Adm'r,  10  Johns.  33,  "if  the  note  be  valid  in  the 
first  instance,  aa  a  negotiable  note,  the  consideration  cannot  be  inquired  into 
when  it  is  in  the  hands  of  a  bona  fide  holder,  and  the  infant  would  thereby 
be  precluded  from  questioning  the  consideration."  But  this  is  no  reason; 
for,  on  the  contrary,  a  party  to  the  negotiable  instrument  may  plead  his 
infancy  as  a  defense  to  an  action  brought  thereon  by  even  a  hona  fide  holder 
for  value  witiiout  notice,  and  before  maturity:  See  Tiedeman  on  Commercial 
Paper,  sec.  280.  It  will  be  further  noticed  that  the  facts  of  these  cases  did 
not  call  for  an  expression  of  opinion  that  the  paper  was  void. 

Other  cases,  for  a  similar  reason,  have  denied  the  right  of  the  holder  of  a 
promissory  note  given  for  necessaries  to  maintain  an  action  thereon  against 
the  defense  of  infancy.  In  other  words,  infancy  is  a  complete  defense  to  an 
action  on  a  promissory  note  given  for  necessaries,  but  without  any  particular 
regard  to  the  question  whether  the  note  is  void  or  voidable:  Fenton  v.  White, 
4  &.  J.  L.  100;  McCrillis  v.  How,  3  N.  H.  348.  In  Morton  v.  Steward,  5  111. 
App.  .'i33,  it  was  held  that  the  promissory  note  of  an  infant  given  for  neces- 
saries was  invalid  unless  ratified;  and  although,  perhaps,  the  payee  might 
maintain  an  action  thereon,  a  transferee  of  the  note  could  not  recover  upon 
it.  It  should  be  observed  that  while,  according  to  these  views,  no  action  can 
be  maintained  on  the  negotiable  instrument,  yet  the  infant  will  be  required 
to  pay  the  reasonable  value  of  the  necessaries:  McMinn  v.  Richmonds,  6  Yerg. 
9;  McCrillis  v.  How,  3  N.  H.  348. 

According  to  what  we  understand  to  be  the  better  authority,  however,  an 
infant  may  be  held  liable  on  his  express  contract  for  necessaries,  when  the 
contract  is  of  such  a  form  that  the  consideration  may  be  inquired  into,  and 
the  amount  agreed  to  be  paid  is  simply  the  reasonable  value  of  the  necessaries; 
and  should  the  stipulated  amount  exceed  the  reasonable  value,  the  recovery  on 
the  contract  is  simply  reduced  to  a  just  compensation.  Therefore  an  action 
may  be  maintained  against  an  infant  on  a  promissory  note,  whether  in  the 
hands  of  the  original  payee  or  not,  given  for  necessaries;  but  the  infant  may 
show  that  the  agreed  sum  is  in  excess  of  the  reasonable  value  of  the  neces- 
saries, and  thus  reduce  the  recovery  to  their  reasonable  value:  Bradley  v. 
Pratt,  23  Vt.  378;  Earle  v.  Reed,  10  Met.  387;  Duhose  v.  Wheddon,  4  McCord, 
221;  Aaron  v.  Harley,  6  Rich.  L.  26;  Askey  v.  Williams,  74  Tex.  294;  and 
see  Rainwater  v.  Durham,  2  Nott  &  McC.  524;  10  Am.  Dec.  637;  compare 
Howard  v.  Simpldns,  70  Ga.  322.  And  tliis  so  ruled  by  an  early  case  con- 
cerning a  single  bill:  Russel  v.  Lee,  1  Lev.  86;  compare  Beeler  v.  Young,  1 
Bibb,  519.  If  a  surety  signs  the  note,  and  afterwards  pays  it,  he  may  re- 
cover the  amount  so  paid  from  the  infant:  Conn  v.  Cohurn,  7  N.  H.  368;  26 
Am.  Dec.  746;  Haines  Adm'r  v.  Tarrant,  2  Hill  (S.  C.)  400;  but  see  Ayerav. 
Burna,  87  Ind.  245;  44  Am.  Rep.  759.  Several  cases  have  decided  that  un- 
der the  facts  presented  in  them  the  notes  were  not  executed  for  necessaries 
at  all,  and  consequently  the  defense  of  infancy  was  good:  Turner  v.  Oaither, 
83  N.  C.  357;  35  Am.  Rep.  574;  see  also  Bouchell  v.  Clary,  3  Brev.  194; 
Raimoater  v.  Durham,  2  Nott  &  McC.  524;  10  Am.  Dec.  637;  Howard  v. 
Siynpkins,  70  Ga.  322.  See  these  questions  concerning  necessaries  more  fully 
discussed  post,  under  the  head  "  Necessaries." 

If  a  note  be  executed  by  an  infant  pursuant  to  some  statute,  it  will  be 
binding.     Thus   if  a  statute  authorizes  an  infant  father  of  a  bastard  child 


608  Craig  v.  Van  Bebber.  [Missouri, 

to  settle  with  the  mother,  and  secure  to  her  compensation  for  keeping  the 
child,  it  impliedly  gives  him  the  power  to  execute  instruments  necessary  in 
making  such  settlement,  and,  therefore,  to  a  promissory  note  executed  under 
such  circumstances,  infancy  will  be  no  defense:  Gainn  v.  Burton,  8  lud.  69. 
^ee  post,  "Contracts  Entered  into  Pursuant  to  Statutes." 

With  regard  to  general  bills  and  notes  to  which  an  infant  becomes  a  party, 
there  is  no  doubt  that  his  infancy  is  a  good  defense  to  an  action  against  them 
thereon:  Williams  v.  Harrison,  Carth.  160;  Holt,  359;  Hussey  v.  Jewett,  9 
Mass.  100.  But  his  contract  is  voidable  only,  and  not  void.  Therefore  an 
infant's  acceptance  of  a  bill  of  exchange  is  merely  voidable,  and  is  subject 
to  confirmation  after  his  arrival  at  full  age:  Hyer  v.  Hyatt,  3  Cranch  C.  C 
276;  and  the  acceptance  of  a  bill  drawn  while  the  acceptor  was  an  infant, 
but  accepted  by  him  after  he  came  of  age,  is  not  even  voidable:  Stevens  v. 
Jackson,  4  Camp.  164;  and  see  Belfast  Banking  Co.  v.  Doherty,  4  L.  R.  Ir. 
124.  The  infant's  note,  whether  negotiable  or  not,  which  he  signs  as  a 
maker,  is  likewise  simply  voidable:  Young  v.  Bell,  1  Cranch.  C.  C.  342;  Je/- 
fwd's  Adm'r  v.  Ringgold,  6  Ala.  544,  548;  Fant  v.  Cathcari,  8  Ala.  725; 
Strain  v.  Wright,  7  Ga.  568;  Trustees  of  La  Grange  Collegiate  Institute  v.  An- 
derson, 63  Ind.  367;  30  Am.  Rep.  '.24;  Best  v.  Givens,  3  B.  Mon.  72;  Eeed'v. 
Batchelder,  1  Met.  559;  Minock  v.  Shortridge,  21  Mich.  304;  P/dlpot  v.  Sand- 
wich Mfg.  Co.,  18  Neb.  54;  Wright  v.  Steele,  2  N.  H.  51;  Aldrich  v.  Grimes, 
10  N.  H.  194;  Edgerly  v.  Shaw,  25  N.  H.  514;  57  Am.  Dec.  349;  Houston  v. 
Cooper,  3  N.  J.  L.  866;  Goodsell  v.  Myers,  3  Wend.  479;  Everson  v.  Carpen- 
ter, 17  Wend.  419;  Taft  v.  Sergeant,  18  Barb.  320,  321;  Cheshire  v.  Barrett,  4 
McCord,  241;  17  Am.  Dec.  755;  Wamsley  v.  Lindenberger,  2  Rand.  478.  It 
is  therefore  subject  to  his  ratification  or  disafHrmance.  If  he  ratifies  the 
paper  on  coming  of  age,  he  thereby  makes  it  a  good  negotiable  note  from 
the  time  it  was  made,  and  conseauently,  if  he  makes  a  new  promise  to  pay 
the  note  to  the  payee,  who  afterwards  transfers  the  note,  the  transferee 
takes  the  paper  as  a  valid  negotiable  instrument:  Reed  v.  Ba.tchelder,  1  Met. 
559;  see  also  Cheshire  v.  Barrett,  4  McCord,  241;  17  Am.  Dec.  735;  and  on  the 
other  hand,  if  he  disaffirms  the  note,  no  action  can  be  maintained  against 
him  either  by  the  payee  or  a  subsequent  transferee:  Hoyt  v.  Wilkinson,  57 
Vt.  404.  The  same  objection  has  been  urged  against  the  validity  of  an  in- 
fant's general  negotiable  note  as  against  the  validity  of  his  negotiable  note 
given  for  necessaries;  namely,  that  the  defense  of  infancy  would  not  avail 
against  a  bona  fide  holder  for  value  without  notice,  and  before  maturity,  and 
the  note  might  necessarily  operate  to  his  prejudice.  This,  however,  as  has 
been  said,  is  a  mistaken  notion;  for  infancy  may  be  set  up  as  a  defense  to  an 
action  on  the  note  by  such  a  holder.  There  is,  then,  no  more  reason  why 
the  negotiable  note  of  an  infant  should  be  void  than  his  non-negotiable  note; 
and  no  more  reason  why  his  non-negotiable  note  should  be  void  than  any 
other  contract  which  he  may  make.  The  same  remarks  apply  to  an  infant's 
bill  of  exchange,  or  other  negotiable  instrument. 

If  the  criterion  of  Lord  Chief  Justice  Eyre,  to  the  efifect  that  if  the  court 
can  pronounce  the  contract  of  an  infant  to  Ije  to  his  prejudice,  it  is  void, 
while  if  it  be  uncertain  whether  the  contract  be  to  his  benefit  or  prejudice,  it 
is  voidable,  be  adopted,  still,  an  infant's  general  commercial  paper,  whether 
it  be  negotiable  or  not,  would  be  simply  voidable.  But  as  shown  supra,  under 
the  head  "Void  and  Voidable,"  this  is  no  longer  a  test.  As  early  as  1827, 
Cranch,  J.,  said  in  Hyer  v,  Hyatt,  3  Cranch  C.  C.  276,  277,  in  holding  an 
infant's  acceptance  of  a  bill  of  exchange  to  be  voidable  only,  and  not  void: 
"I  am  inclined  to  think  that  no  contract  entered  into  by  an  infant  is  abso- 


April,  1890.]  Craig  v.  Van  Bebbeb.  609 

lutely  void,  although  all  contracts  by  infants,  except  for  necessaries,  are 
voidable.  There  are  some  dirtd  that  contracts  made  by  an  infant  to  his  pre- 
judice are  void,  not  voidable;  but  I  doubt  whether  in  law  there  be  any  difier- 
ence  as  to  validity  between  tliose  which  are  beneficial  and  those  which  are 
prejudicial  to  the  infant;  both  are  voidable,  but  neither  is  absolutely  void. 
There  is  no  case  in  which  it  has  been  decided  that  a  contract  between  an 
infant  and  an  adult  can  be  avoided  by  the  adult  upon  the  ground  of  the 
infancy  of  the  other  party.  If  the  contract  were  absolutely  void,  neither 
party  would  be  bound.  The  question  whether  the  contract  be  prejudicial  to 
the  infant  is  a  question  of  fact,  not  of  law,  and  is  too  uncertain  to  become 
the  test  of  the  validity  of  the  contract.  It  is  a  question  which  depends  upon 
many  circumstances,  and  cannot  always  be  ascertained  at  the  time  of  the 
contract." 

It  should  be  remembered,  however,  that  a  statute  may  make  an  infant's 
general  bills  and  notes,  as  well  as  his  other  contracts,  void:  See  supra, 
"Statutory  Regulation";  and  see,  under  a  former  statute  of  Connecticut 
noticed  under  that  head,  Alsopv.  Todd,  2  Root,  105,  109;  Lawrence  v.  Gard- 
ner, 1  Root,  477:  Maples  v.  Wiijldman,  4  Conn.  376;  10  Am.  Dec.  149,  — cases 
which  apply  the  statute  t.  promissory  notes^  A  statute  conferring  capacity 
upon  married  women  to  contract  generally  does  not  thereby  remove  the 
disability  of  infancy,  and  therefore  a  married  woman  may  plead  her  infancy 
to  an  action  on  a  promissory  note:    Cummings  v.  Ererett,  82  Me.  260. 

Tlie  doctrine  that  the  executed  contracts  of  infants  are  binding  until 
avoided,  but  their  executory  contracts  are  invalid  until  affirmed,  also  here 
deserves  a  passing  notice,  for,  according  to  it,  it  is  said  that  the  promissory 
note  of  an  infant  is  not  void,  because  it  may  be  confirmed,  but  that  it  is  in- 
valid until  it  is  confirmed:  Edgerly  v,  Shaw,  25  N.  H.  514,  516;  57  Am.  Dec, 
319,  350;  Minock  v.  Shortridije,  21  Mich.  304,  315;  Morton  v.  Steivard,  5  111. 
App.  533,  535;  and  see  also  State  v.  Plahted,  43  N.  H.  413.  This  notion, 
which  seems  to  be  founded  on  a  misconception  of  what  is  meant  by  "void- 
able," is,  happily,  not  widespread.  See  it  criticised  supra,  "Void  and 
Voidable." 

The  promissory  note  of  an  infant  has  been  held  to  be  equally  voidable  when 
given  in  settlement  of  his  torts  or  criminal  acts,  as  when  given  in  the  adjust- 
ment of  an  account  against  him;  although  if  the  note  be  avoided  by  the  plea 
of  infancy,  the  plaintiff  may  be  remitted  to  his  original  cause  of  action:  Shaw 
v.  Coffin,  58  Me.  254,  256;  4  Am.  Rep.  290;  see  also  Hanks  v.  Deal,  3  Mc- 
Cord,  257;  contra,  Ray  v.  Tuhbs,  50  Vt.  688;  28  Am.  Rep.  519.  In  an  action 
on  a  note  executed  by  the  defendant,  it  is  sufficient,  according  to  the  code 
practice,  for  the  defendant  to  allege  in  his  answer  that  at  tlie  time  of  the 
execution  of  the  note  he  was  an  infant.  It  is  not  necessary  to  allege  that  the 
note  was  voidable:  Stern  v.  Freeman,  4  Met.  (Ky.)  309.  The  burden  of  proof 
is  upon  the  plaintiff,  in  an  action  on  a  note  to  which  the  plea  of  infancy  is 
interposed,  to  show  that  the  note  was  either  given  for  necessaries  (or,  we 
may  add,  was  given  pursuant  to  some  statute),  or  that  the  defendant  ratified 
it  after  attaining  full  age:  Catlin  v.  Haddox,  49  Conn.  492;  44  Am.  Rep.  249, 
254. 

There  have  been  numerous  attempts  by  parties  to  bills  of  exchange  and 
promissory  notes  to  escape  liability  thereon  because  of  the  infancy  of  some 
other  party,  but  tliese  attempts  have  generally  been  failures.  A  guarantor 
or  surety  of  the  infant,  whether  he  is  or  is  not  really  a  party  to  the  paper, 
cannot  set  up  the  infancy  of  the  principal  party  as  a  defense  to  his  collateral 
obligation.  Thus  in  an  action  on  a  promise  to  pay  the  promissory  note  of 
Am.  St.  KjiP.,  Vol.  XVIII.  — 39 


610  Craig  v.  Van  Bebber.  [Missouri, 

another,  the  fact  that  the  note  was  voidable  in  consequence  of  the  infancy  cf 
the  maker  furnishes  no  defense  to  the  action:  Hesser  v.  Steiner,  5  Watts  &  S. 
476;  the  note  being  voidable,  and  not  void,  was,  with  an  agreement  to  forbear 
to  sue  it,  a  sufficient  consideration  for  the  promise  to  pay  it  by  the  third  per- 
son, and,  furthermore,  infancy  can  only  be  taken  advantage  of  by  the  infant 
himself,  or  some  one  who  represents  him.  But  while,  as  a  general  proposi- 
tion, infancy  will  not  protect  the  indorsers  or  sureties  of  an  infant,  or  those 
who  have  jointly  entered  into  his  voidable  undertakings,  yet  sureties  on  the 
promissory  note  of  an  infant,  given  for  the  price  of  land  purchased  by  him, 
are  not  liable  where  the  infant  disaffirms  the  contract  after  attaining  major- 
ity, and  restores  the  land  to  the  grantor,  the  consideration  of  the  note  being 
entirely  extinguished:  Baker  v.  Kennett,  54  Mo.  82.  Though  the  maker  of  a 
promissory  note  be  an  infant,  an  indorser,  very  plainly,  aside  from  the  propo- 
sition that  the  objection  of  infancy  is  personal,  will  be  bound  by  his  indorse- 
ment, for  he  warrants  tlie  capacity  of  the  maker:  Henderson  v.  Fox,  5  Ind. 
4S9;  and  for  like  reasons,  it  is  no  defense  to  an  action  by  the  indorsee  of  a 
bill  of  exchange  against  the  acceptor  that  the  drawers,  who  had  drawn  the 
bill  payable  to  themselves,  and  indorsed  it,  were  infants  when  the  bill  waa 
drawn:  See  Taylor  v.  Croker,  4  Esp.  187.  Furthermore,  since  the  indorse- 
ment of  a  bill  of  exchange  or  promissory  note  by  an  infant  transfers  the  title, 
and  is  simply  voidable,  and  since  the  privilege  of  infancy  is  personal,  the  in- 
fancy of  the  payee  of  a  bdl  or  note  is  no  defense  to  an  action  on  the  paper  by 
an  indorsee  against  the  acceptor,  drawer,  or  maker:  Orey  v.  Cooper,  3  Doug. 
65;  Jones  v.  Darch,  4  Price,  300;  Tayor  v.  Croker,  4  Esp.  187;  Nightingale  v. 
Wilhington,  15  Mass.  272;  8  Am.  Dec.  101;  Dulty  v.  Brownfeld,  1  Pa.  St.  497; 
Hardy  v.  Waters,  38  Me.  450;  Frazier  v.  Massey,  14  Ind.  382;  and  the  same 
rule  applies  where  the  paper  is  transferred  without  indorsement:  See  Garner 
V.  Cook,  30  Ind.  331;  and  where  a  non-negotiable  note  is  indorsed  by  an  infant 
payee:  Hastings  v.  DollarhiUe,  24  Cal.  195.  A  further  reason  is  suggested 
why  the  maker  of  a  note  or  drawer  of  a  bill  cannot  set  up  the  defense  of  the 
infancy  of  the  payee  to  an  action  by  the  transferee  of  the  paper;  namely, 
that  the  maker  or  drawer  by  making  a  negotiable  instrument  payable  to  a 
certain  person  asserts  to  the  world  the  competency  of  the  payee  to  negotiate 
the  paper:  See  Frazier  v.  Massey,  14  Ind.  382. 

There  is  no  doubt  that  if  an  infant  indorser  were  sued  on  his  contract  of  in- 
dorsement, infancy  would  be,  as  to  him,  a  complete  defense:  Nighfrngale  v. 
WUhington,  15  Mass.  272,  274;  8  Am.  Dec.  101,  102;  Dulty  v.  Brownjield,  1 
Pa.  St.  497.  As  before  remarked,  the  indorsement  transfers  the  title,  which, 
however,  the  infant  may  ratify  or  avoid.  Undoubtedly,  the  infant  may  dis- 
affirm the  indorsement,  and  intercept  payment  to  the  holder  of  the  paper,  at 
any  time  before  the  maker  or  other  party  who  is  called  upon  for  payment  has 
paid  it  to  the  holder;  and,  of  course,  in  that  case,  the  party  called  upon  to 
pay  could  set  up  the  disaffirmance  as  a  defense  to  an  action  against  him  by 
the  holder:  See  Hastings  v.  DollarJdde,  24  Cal.  195.  Whether  he  could  dis- 
affirm his  transfer  after  payment  made  to  the  holder  is  another  question.  In 
Welch  V.  Welch,  103  Mass.  5G2,  it  was  said  by  Colt,  J.,  citing  Nightingale  v. 
Wilhington,  15  Mass.  '272,  274,  8  Am.  Dec.  101,  102,  that  the  indorsement  by 
an  infant  payee  of  a  note  could  not  be  set  aside  by  him  as  void,  so  as  to  give 
him  a  right  to  recover  of  the  maker,  who  had  paid  the  indorsee  before  notice 
that  the  order  of  payment  had  been  countermanded,  for  the  reason  that 
the  transaction  had  become  executed  in  favor  of  the  appointee,  and  could 
not  be  opened  without  restating  the  maker.  We  regard  this  dictum  as 
entirely  unsound,  and  see  no  reason  on  principle  why  the  infant  may  not 


April,  1890.]  Craig  v.  Van  Bebber.  611 

repufliate  his  inrlorsement  after  as  well  as  before  payment  made  to  the 
holder  of  the  paper,  and  himself  claim  payment,  leaving  the  equities  be- 
tween the  parties  to  be  otherwise  adjusted.  This  was  the  view  taken  in 
Brigg.1  v.  McCahe,  27  Ind.  327,  89  Am.  Dec.  503,  50G,  where  there  is  an  ex- 
pression of  opinion  to  the  effect  that  the  infant  paj^ee  of  a  non-negotiable 
note  may  disaffirm  his  contract  of  assignment,  and  recover  of  the  maker,  not- 
withstanding the  maker  paid  the  paper  to  the  assignee  before  the  infant's  dis- 
affirmance of  the  assignment. 

It  may  here  be  noticed  that  an  infant  is  not  liable  at  law  or  in  equity  on 
his  promissory  note  from  the  fact  that  he  traded  as  an  adult,  and  his  infancy 
was  unknown  to  the  party  who  took  the  note.  He  is  not  thereby  estojiped 
from  pleading  his  infancy  as  a  defense:  Van  WhiHev.  Keicham,  3  Caines,  323; 
Hou.ston  V.  Cooper,  3  N.  J.  L.  866;  Baker  v.  Stone,  136  Mass.  405.  Nor  would 
he  even  be  liable  thereon  at  law  because  he  fraudulently  represented  himself 
to  be  of  full  age  at  the  time  he  executed,  and  the  payee  relied  upon  such 
representations:  Bateman  v.  Kingston,  6  L.  R.  Ir.  328;  Bu.iey  v.  Russell,  10 
N.  H.  184;  34  Am.  Dec.  146.  See  this  question  fully  considered  infra,  "In- 
fant's Concealment  or  Misrepresentation  as  to  Age. 

Finally,  it  may  be  observed  that  the  execution  or  indorsement  of  a  note, 
negotiable  or  non-negotiable,  by  means  of  an  agent  appointed  by  an  infant, 
is  not  void,  but  voidable:  Whitney  v.  Dutch,  14  Mass.  457;  7  Am.  Dec.  229; 
Hardy  V.  Waters,  38  Me.  450;  Hastings  v.  DoUarJiide,  24  Cal.  195.  Contra. 
Semplev.  Morrison,  7  T.  B.  Mon.  298;  and  see  post,  "Delegation  of  Authority." 

Bonds.  — An  infant's  bond,  by  which  we  are  to  understand  his  obligation 
under  seal,  with  a  penalty,  has  sometimes  been  considered  as  void,  as  being 
a  contract  clearly  to  his  prejudice.  In  Fisher  v.  Mowbray,  8  East,  330,  Lord 
Ellenborough  said  that  an  infant  could  not  bind  himself  in  a  bond  witli  a 
penalty,  conditioned  for  the  payment  of  interest  as  well  as  principal;  but  the 
only  question  really  involved  was  the  right  of  the  infant  to  avoid  the  bond 
by  a  plea  of  infancy.  A  few  years  later,  in  Buylis  v.  Dinely,  3  Maule  &  S. 
477,  in  debt  on  a  bond  with  a  penalty,  conditioned  for  the  payment  of  the 
principal  sum  with  interest,  a  replication  that  after  the  making  of  the  bond, 
and  before  the  commencement  of  the  action,  the  defendant  attained  full  age, 
and  ratified  and  confirmed  the  bond,  was  held  by  the  same  judge  to  be  ill  on 
demurrer;  for,  it  was  again  said,  an  infant  could  not  give  a  bond  with  a 
penalty,  and  for  the  payment  of  interest,  and  unless  the  infant  was  estopped 
by  some  act  at  full  age  of  as  high  authority  as  the  bond,  the  defense  of  in- 
fancy would  be  good.  The  case  involves  altogether  a  singular  confusion  of 
ideas;  and  perhaps  is  really  only  authority  on  the  proposition  that  the  bond 
of  an  infant  cannot  be  confirmed  by  parol.  This  question  will  be  noticed 
hereafter  under  the  head  of  ratification.  The  case  of  Hunter  v.  Agnew,  1 
Fox  &  S.  15,  holds  a  bond  with  a  penalty,  given  by  an  infant,  to  be  void, 
and  not  merely  voidable;  and  see  also  some  remarks  in  Waplea  v.  Hastings, 
3  Harr.  (Del.)  403. 

An  infant's  bond  with  a  penalty,  given  for  money  paid  out  for  necessaries, 
was  also  said  to  be  void,  in  Ayliff  v.  Archdale,  Cro.  Eliz.  920;  that  is,  no 
action  could  be  maintained  thereon  against  the  defense  of  infancj';  but  it 
was  remarked  that  if  the  plaintiff  had  taken  an  obligation  for  the  very  sura 
which  he  had  laid  out  for  the  defendant,  it  would  have  been  otherwise. 
According,  also,  to  the  case  of  BUj^s  v.  Perryman,  1  Scam.  484,  an  infant 
cannot  bind  himself  by  bond,  not  even,  it  seems,  for  necessaries;  and  it  is 
held,  when  the  plaintiff  relies  upon  a  new  promise  made  after  full  age,  he 
must  declare  upon  the  simple  contract  which  the  new  promise  was  meant  to 


612  Craig  v.  Van  Bebber.  [Missouri, 

establish;  and,  therefore,  in  an  action  on  a  bond,  to  which  infancy  was 
pleaded,  the  plaintiflF  could  give  evidence  of  a  new  promise  by  the  defendant 
after  coming  of  age;  and  see  Husseij  v.  Jeivett,  9  Mass.  100,  101.  But  "where 
the  instrument  given  for  necessaries  is  such  as  to  admit  of  inquiring  into  its 
consideration,  the  infant  is  liable  upon  the  instrument,  and  if  the  evidence 
be  such  as  not  to  warrant  a  recovery  for  the  amount,  judgment  may  be  ren- 
dered pro  tanto  for  that  part  due  on  the  instrument  for  which  a  minor  would 
be  legally  liable":  Guthrie  v.  Alorris,  22  Ark.  411.  Therefore  if,  by  statute, 
the  consideration  of  a  bond  may  be  inquired  into,  an  action  may  be  main- 
tained on  a  bond  given  by  an  infant  for  necessaries:  Guthrie  v.  Morris,  22 
Ark.  411.  "Being  liable  for  the  value  of  the  necessaries  upon  au  quantum 
valebant,  what  protection  could  there  be  in  permitting  him  to  defeat  an  ac- 
tion on  the  instrument  for  the  same  amount?  Protection  is  the  sole  end  of 
the  infant's  privilege,  and  the  latter  should  never  be  extended  further  than 
is  demanded  by  the  former":  Guthrie  v.  Morris,  22  Ark.  411.  This  opinion, 
in  our  judgment,  is  sound  sense  and  sound  law. 

In  Conroe  v.  BiriUall,  1  Johns.  Cas.  127,  1  Am.  Dec.  105,  the  court,  ap- 
proving the  rule  of  Perkins,  to  the  efifect  that  all  deeds  of  an  infant  which 
take  effect  by  delivery  of  his  hand  were  voidable  onl}',  held  the  bond  of  an 
infant  to  be  simply  voidable.  And,  as  has  been  seen,  a  number  of  cases 
have  established  that  an  infant's  bond  for  title  is  voidable  merely,  and  not 
void:  Mustard  v.  Wohl/ord's  Heirs,  15  Gratt.  329;  76  Am.  Dec.  209;  Weaver 
V.  Jones,  24  Ala.  420;  Bozeman  v.  Browniii;/,  31  Ark.  304;  see  ante,  "Execu- 
tory Contracts  to  Sell  Real  Property."  These  cases  are  strictly  in  accord 
with  the  modern  rule  that  all  general  contracts  of  infants  are  voidable,  and 
not  void.  It  has  also  been  held  that  an  administration  bond  given  by  an 
infant  is  not  void,  but  voidable,  and  may  be  affirmed,  or  not,  after  he  attains 
full  age:  Chambers  v.    Wherry,  1  Bail.  L.  28. 

If  the  bond  of  an  infant  be  executed  by  him  pursuant  to  the  requirements 
of  a  statute,  it  is  then  not  even  voidable,  but  so  far  as  infancy  is  concerned, 
absolutely  binding.  Thus  the  bond  or  recognizance  entered  into  by  a  minor 
for  his  personal  appearance  at  court,  to  answer  a  charge  against  him,  is  valid 
and  binding,  under  statutes  which  provide  for  the  taking  of  such  bonds  or 
recognizances  from  defendants  who  may  be  infants:  McCall  v.  Parker,  13 
Met.  372;  State  v.  Weatlierivax,  12  Kan.  4G3;  and  infancy  is  no  ilefense  to  an 
action  on  a  bond,  executed  pursuant  to  statute,  by  the  reputed  father  of  a 
bastard  child,  conditioned  to  indemnify  the  town  against  liability  for  the 
support  of  the  bastard:  People  v.  Moores,  4  Denio,  518;  47  Am.  Dec.  272; 
Inhabitants  of  Bordentown  v.  Wallace,  50  N.  J.  L.  13.  Bronson,  C.  J.,  saying 
in  the  first  of  these  cases:  "When  an  infant  is  under  a  legal  obligation  to  do 
an  act,  he  may  bind  himself  by  a  fair  and  reasonable  contract  made  for  the 
purpose  of  discharging  the  obligation."  The  greatest  question  of  difficulty 
in  this  connection  has  been.  Is  the  infant  included  within  the  provisions  of 
the  statute?     See  post,  "  Contracts  Entered  into  Pursuant  to  Statutes." 

It  may  here  be  noticed  that  although  an  infant,  at  the  time  of  making  a 
bond,  fraudulently  represented  that  he  was  of  full  age,  yet  the  bond  is  never- 
theless only  voidable,  at  his  election,  at  law,  though  it  might  be  otherwise  in 
equity:  Conroe  v.  Birdsall,  1  Johns.  Cas.  127;  1  Am.  Dec.  105;  and  &eQ  post, 
"Infant's  Concealment  or  Misrepresentation  as  to  Age." 

Sealed  Contracts,  Generally.  — The  general  contracts  of  an  infant  are 
none  the  less  voidable  because  they  are  under  seal,  even  according  to  the  old 
theory  that  contracts  prejudicial  to  an  infant  are  void:  Whitney  v.  Dutch,  14 
Mass.  457,  461;  7  Am.  Dec.  229,  232,  per  Parker,  C.  J.;    West  v.  Penny,  16 


April,  1890.]  Craig  v.  Van  Bebber.  613 

Ala.  187;  Siokcs  v.  Brown,  4  Chanel.  39;  3  Finn.  311;  Littir  v.  Duncan,  9  Rich. 
L.  55;  64  Am.  Dec.  760;  Vawjhan  v.  Parr,  20  Ark.  600.  "  From  a  careful 
review  of  the  authorities,"  says  Wliitney,  J.,  in  Little  v.  Duncan,  9  Rich.  L. 
55,  64  Am.  Dec.  760,  "I  do  not  perceive  that  the  question  in  any  way  turns 
on  the  fact  of  whether  the  contract  was  under  seal  or  not."  Such  a  contract 
is,  therefore,  capable  of  ratification  or  disaffirmance  l)y  the  infant;  and  it  may 
be  confirmed  by  the  infant,  after  reaching  full  age,  by  parol:  Vnwjltan  v. 
Parr,  20  Ark.  600;  and  see  Stohes  v.  Broivn,  4  Chand.  39;  3  Finn.  311;  Litth 
V.  Duncan,  9  Rich.  L.  55;  64  Am.  Dec.  760. 

Interest. — In  Fisher  v.  Moivbray,  8  East,  330,  and  Baylis  v.  Dinely,  3 
Maule  &  S.  477,  Lorti  EUenborough  expressad  himself  to  the  effect  that  an 
infant  could  not  give  a  security  for  interest;  at  least,  his  bond,  with  a  penalty, 
conditioned  for  the  paj'ment  of  a  principal  sum,  with  interest,  was  void,  as 
being  clearly  prejudicial.  In  Taft  v.  Pike,  14  Vt.  405,  30  Am.  Dec.  228,  it 
was  also  held,  citing  Fisher  v.  Moivhraij,  8  East,  330,  that  interest  would  not 
be  allowed  on  an  account  against  an  infant  for  necessaries;  but  this  ruling 
was  disapproved  in  Bradley  v.  Pratt,  23  Vt.  378,  in  which  it  was  held  that 
interest  might  be  recovered  on  a  promissory  note  given  by  an  infant  for  the 
reasonable  value  of  necessaries,  Redfitdd,  J.,  saying:  "It  seems  to  us,  upon 
principle,  if  the  infant  is  not  to  be  held  liable  for  interest,  the  price  should 
be  proportionately  increased,  which  is  the  same  thing.  It  is  incomprehen- 
sible how  if  one,  for  board,  deserves  to  have  $2.50  per  week  in  hand,  it  the 
payment  be  delayed  for  years,  the  same  sum  is  to  meet  tlie  obligation.  One 
might  as  well  hold  that  a  merchant  should  furnish  goods  to  infants  at  cost, 
without  freight  even.  The  rule  has  no  force  when  carried  to  that  absurd 
K-ngth."  It  is  impossible  to  escape  this  reasoning  with  respect  to  necessaries; 
and  in  regard  to  other  contracts  of  infants,  certainly  no  court  at  the  present 
day,  even  conceding  that  contracts  which  are  to  the  infant's  detriment,  are 
void,  would  feel  justified  in  declaring  them  to  be  void  because  they  included 
stipulations  for  interest. 

Accounts  Stated.  —  It  was  at  one  time  commonly  said  that  an  infant  could 
not  state  an  account  so  as  to  bind  himself:  Hahjeley  v.  Holt,  4  Car.  &  F.  104; 
Oliver  V.  Woodroffe,  4  Mees.  &  W.  650;  Bnrghart  v.  Hall,  4  Mees.  &  W.  727, 
732;  Ventv.  Osgood,  19  Pick.  572,  575,  per  Futnam,  J.  "An  infant  cannot 
be  liable  on  an  account  stated,"  says  Lord  Abinger  in  Burr/hart  v.  Hall,  4 
Mees.  &  W.  727,  732,  "and  the  reason  given  is,  that  he  cannot  calculate,  and 
is  therefore  incapable  of  stating  an  account."  This  may  mean  nothing  more 
than  that  infancy  may  be  a  good  defense  to  an  action  on  an  accourt  stated; 
but,  nevertheless,  these  cases  seem  to  have  been  regarded  as  holding  the 
account  stated  of  an  infant  to  be  absolutely  void.  It  has  also  been  very 
generally  held  that  an  infant  is  not  liable  on  an  account  stated  for  necessaries: 
Wood  V.  Witherick,  Latch,  169;  Pickering  v.  Gunning,  Falmer,  528;  W.Jones, 
182;  Ingledew  v.  Douglas,  2  Stark.  36;  Trueman  v.  Hurst,  1  Term  Rep.  40; 
Bartktt  V.  Emery,  1  Term  Rep.  42,  note;  Oliver  v.  Woodroffe,  4  Mees.  &  W. 
650.  It  is  difficult  to  understand  upon  what  theory  these  latter  cases  proceed, 
except  it  be  that  the  account  stated  is  void;  or,  more  probably,  and  it  seems 
to  us  correctly,  as  suggested  by  Baron  Parke  in  Williams  v.  Moor,  1 1  Mees.  & 
W.  256,  265,  and  Chief  Justice  Shaw  in  Stone  v.  Dennison,  13  Pick.  1,  6,  23 
Am.  Dec.  654,  657,  that  the  items  cannot  be  gone  into;  for  if  the  items  could 
be  inquired  into,  an<l  the  balance,  as  struck  and  agreed  to,  represented  simply 
the  reasonable  value  of  the  necessaries,  a  recovery,  according  to  the  weight  of 
authority,  might  be  had  upon  it:  Sccpost,  "Express  Contracts  for  Necessaries." 
However  this  may  be,  the  English  case  last  cited  settled  the  question  that 


614  Cratq  v.  Van  Bebbeb.  [Missouri, 

an  account  stated  by  an  infant  was  not  absolutely  void,  but  voidable  only, 
and  therefore  might  be  ratified  by  the  infant  after  attaining  full  age.  Baron 
Parke  said:  "We  can  see  no  sound  or  sensible  distinction  in  this  respect 
between  the  liability  of  an  infant  on  an  account  stated,  and  his  liability  for 
goods  sold  and  delivered,  or  any  other  contract.  The  contract  of  an  infant 
for  goods  sold  and  delivered  (not  being  necessaries)  is  as  completely  void  as 
his  contract  on  an  account  stated,  if  by  the  M-ord  'void'  is  meant  incapable 
of  being  enforced.  The  plea  of  infancy  will  be  a  bar  to  any  demand  on  the 
one  contract,  as  well  as  on  the  other.  But  if  by  the  word  '  void  '  is  meant 
incnpable  of  being  ratified,  then  we  can  discover  neither  principle  nor  author- 
ity for  the  distinction  relied  on It  was  indeed  argued  for  the  defend- 
ant that  on  an  acco'ant  stated  an  infant  derives  no  benefit;  tliat  he  does  not, 
as  on  a  purchase  of  goods,  get  anything  valuable;  that  he  has  no  quid  pro  quo. 
But  this  is  a  fallacy;  an  infant  stating  an  account  gets  precisely  the  same 
benefit  as  an  adult  gets  on  a  similar  transaction.  He  makes  certain  the  pre- 
viously uncertain  state  of  the  transactions  between  himself  and  the  person 
with  whom  he  is  stating  accounts,  and  he  gets  rid  of  the  necessity  of  preserv- 
ing vouchers." 

Suretyship.  —  Dicta  are  to  be  found  in  a  number  of  cases  to  the  effect  that 
an  infant's  contract  of  suretyship  is  necessarily  prejudicial  to  him,  and  is 
therefore  absolutely  void:  Whenton  v.  East,  5  Yerg.  41,  61;  26  Am.  Dec.  251, 
252;  West  v.  Penny,  16  Ala.  187,  189;  Hastings  v.  Dollarhide,  24  Cal.  195, 
209;  Rohinson  v.  Weeks,  56  Me.  102,  106.  In  fact,  the  contract  of  suretyship 
of  an  infant  is  the  usual  example  of  a  contract  that  is  void  because  manifestly 
to  his  prejudice.  In  Cronise  v.  Clark,  4  Md.  Ch.  403,  it  was  also  said  that  a 
mortgage  of  her  reversionary  interest  in  real  and  personal  property,  executed 
by  an  infant  feme  covert  to  secure  a  debt  due  by  a  firm  of  which  her  hus- 
band was  a  member,  was  absolutely  void,  as  necessarily  prejudicial,  and  in- 
capable of  confirmation;  but  the  facts  of  the  case  simply  involved  the  right 
of  the  infant  to  avoid  the  mortgage  for  her  infancy;  and  in  Chandler  v. 
McKinney,  6  Mich.  217,  74  Am.  Dec.  686,  it  was  likewise  said  that  a  mort- 
gage given  by  an  infant  feme  covert  to  secure  the  debt  of  her  husband  was 
absolutely  void,  and  not  merely  voidable,  since  it  could  not  be  beneficial  to 
her;  but  here,  also,  the  case  simply  involved  the  right  of  the  infant  to  disre- 
gard the  mortgage,  and  the  proceedings  had  under  it.  And  according  to  the 
early  statute  of  Connecticut,  quoted  ante,  under  the  head  "  Statutory  Regu- 
lation," it  was  decided  that  a  promissory  note  executed  by  an  infant  while 
under  the  government  of  a  guardian,  as  surety  of  another,  was  a  contract 
against  his  interest,  and  absolutely  void,  and  incapable  of  confirmation: 
Maples  V.  Wightman,  4  Conn.  376;  10  Am.  Dec.  149.  InCurtin  v.  Patton,  11 
Serg.  &  R.  305,  310,  311,  the  court  calls  an  infant's  contract  of  suretyship 
"absolutely  void,"  but  yet  it  recognizes  the  possibility  of  a  confirmation  by 
the  infant  when  of  full  age;  and  of  course  there  could  be  no  confirmation  if 
the  contract  were  absolutely  void. 

These  views  do  not  accord  with  principle  or  the  weight  of  authority.  It 
must  now  be  regarded  as  settled  that  the  contract  of  suretysliip  of  an  infant, 
like  his  other  general  contracts,  is  voidable  only,  and  not  void,  and  is  conse- 
quently capable  of  ratification  by  him  when  he  arrives  at  full  age:  Fetrow  v. 
Wiseman,  40Ind.  148;  Owenv.  Long,  112  Mass.  403;  Harnerv.  Dipple,  31  Ohio 
St.  72:  27  Am.  Rep.  496;  Williams  v.  Harrison,  11  S.  C.  412;  Jieed  v.  Lane, 
61  Vt.  481;  and  see  Hinely  v.  Margaritz,  3  Pa.  St.  4'28.  In  Harner  v.  Dipple, 
31  Ohio  St.  72,  27  Am.  Rep.  496,  Mcllvaine,  J.,  says:  "  The  privilege  of  infancy 
is  accorded  for  the  protection  of  the  infant  from  injury  resulting  from  impo- 


April,  1890.]  Craig  v.  Van  Bebber.  615 

sition  by  others  or  his  own  indiscretion.  That  object  is  fully  accomplished 
by  conferring  on  him  the  power  to  avoid  his  contracts,  or  in  other  words,  by 
giving  him  immunity  from  liability  until  such  contracts  are  ratified  by  him- 
self after  arriving  at  full  age.  And,  again,  that  an  adult  laboring  under  no 
disability  may  perform  his  unexecuted  contracts  of  infancy,  wliether  they 
be  beneficial  or  prejudicial  to  him,  and  that  he  will  be  bound  by  such  per- 
formance we  think  is  a  proposition  too  plain  to  be  doubted.  If,  therefore, 
with  full  knowledge  of  the  facts,  he  ratifies  and  affirms  them,  being  moved 
thereto  by  his  sense  of  right  and  duty,  he  should,  in  law,  as  in  morals,  be 
bound  to  their  performance."  And  in  Williams  v.  Harrisov,  11  S.  C.  412,  Wil- 
lard,  C.  J.,  remarks:  "Assuming  that  a  person,  being  of  full  age,  and,  as 
such,  chargeable  with  knowledge  of  his  legal  rights,  deliberately  determines 
that  his  interest  or  duty  demands  that  he  should  recoc^'nize  and  discharge  an 
obligation,  imperfect  through  the  fact  of  its  assumption  during  minority,  it 
would  be  difficult  to  find  any  sound  reason  why  the  courts  should  interfere 
to  deny  effect  to  such  an  act."  Even  in  a  state  where  the  benefit  and  detri- 
ment theory  seems  to  some  extent  to  be  still  adhered  to  it  is  said:  "It  can- 
not be  held  as  a  matter  of  law  that  to  sign  a  promissory  note  as  surety  is 
necessarily  not  beneficial  to  an  infant":  Gray,  C.  J.,  in  Given  v.  Long,  112 
Mass.  403.  Finally,  in  Patchin  v.  Cromach,  13  \t.  330,  it  was  held  that  the 
recognizance  of  an  infant  was  not  void,  but  voidable  only;  the  court  sa^'ing: 
"A  recognizance,  or  debt  of  record,  acknoMde<lged  by  an  infant  in  court,  or 
before  a  magistrate,  is,  in  no  case,  to  be  adjudged  void,  but  voidable  only." 

Insurance. — An  infant's  contract  of  insurance  by  which  he  is  insured 
against  fire  is  not  void,  but  voidable  only,  at  tlie  election  of  the  infant;  and 
the  defense  of  infancy  is  personal,  and  is  not  open  to  the  company,  in  an  ac- 
tion against  it  to  recover  for  the  loss:  Mona<jlian  v.  Agricultand  F.  Ins.  Co., 
53  Mich.  238.  Such  a  contract  cannot  be  a  contract  for  necessaries,  which 
will  bind  the  infant  absolutely:  New  Hamp.fhire  Mut.  F.  Ins.  Co.  v.  Noycs,  32 
N.  H.  345. 

Share- HOLDER  in  Corporations.  — There  is  no  doubt  that  if  an  infant 
purchase  of  a  corporation  shares  of  its  capital  stock,  he  may  avoid  tiie  con- 
tract of  purchase,  and  recover  back  the  money  paid:  Indianapolis  Chair  Mfg. 
Co.  V.  Wilcox,  59  Ind.  429. 

Concerning  the  liability  of  an  infant  share-holder  for  calls,  there  have  been  a 
number  of  adjudications  in  England.  In  the  first  of  these  cases,  that  of  Cork 
etc.  H'y  v.  Cazciiove,  10  Q.  B.  935,  to  a  declaration  in  debt  for  calls,  charging 
the  de  endant  as  the  holder  of  shares  under  a  railway  act  incorporated  with 
the  Companies'  Clauses  Cousolidation  Act,  8  and  9  Victoria,  chapter  IG,  it  was 
held  to  be  no  answer  that  defendant,  when  he  became  the  registered  holder 
of  the  shares,  and  when  he  became  indebted  for  the  calls,  was  an  infant,  and 
that  he  had  not,  since  he  attained  his  age,  been  registered  anew,  or  ratified  the 
original  registration;  for  (per  Denniau,  C.  J.,  and  Patteson,  J.)  an  infant  was 
liable  for  calls  by  the  express  wording  of  the  statute  of  Victoria;  at  all 
events  (per  Coleridge  and  Erie,  JJ. ),  he  was  liable  if  he  was  sued  after 
attaining  his  age,  and  still  held  the  shares;  for  such  holding  would  be  a 
ratification.  In  the  next  case,  Newry  etc.  IVy  v.  Coomhe,  3  Ex.  5G5,  the  de- 
fendant pleaded  to  a  similar  action  that  he  became  the  holder  of  the  shares 
by  having  contracted  and  subscribed  for  them,  and  that  at  the  time  of  his  so 
contracting  and  subscribing,  and  also  at  the  time  of  making  the  calls,  he  was 
an  infant,  and  while  an  infant  he  repudiated  the  contract  and  subscription. 
It  was  held  that  the  plea  was  a  good  prima  facie  bar,  and  that  if  the  de- 
fendant, after  he  became  of  age,  disaffirmed  his  repudiation,  or  if  he  became 


616  Craig  v.  Van  Bebber.  [Missouri, 

liable  by  enjoyment  of  the  profits,  those  facts  should  be  replied.  Baron  Parke, 
in  discussing  the  liability  of  an  infant  subscriber  under  the  Companies' Clauses 
Consolidation  Act,  said,  in  opposition  to  the  view  held  by  Chief  Justice  Den- 
man  and  Justice  Patteson  in  Cork  etc.  R'y  v.  Cazenove,  10  Q.  B.  935:  "The 
law  is  never  to  be  construed  so  as  to  affect  with  liability  to  a  contract  per- 
sons incapable  of  contracting;  therefore,  the  liability  imposed  by  this  stat- 
ute cannot  apply  to  such  of  the  subscribers  as  are  lunatics,  infants,  or  feme 
coverts.  It  is  true  that  the  statute  contemplates  the  case  of  infants  being 
share-holders,  and  no  doubt  they  may  acquire  shares  by  descent  or  marriage; 
but  the  question  here  is,  whether  when  an  infant  has  become  a  share-holder 
by  contract,  he  may  not  disaffirm  it.  I  am  of  the  opinion  that  this  is  the 
ordinary  case  of  a  contract  with  the  company  which  the  defendant  may  dis- 
affirm."    And  see  also  Northwi'stern  R'y  v.  McMkhael,  5  Ex.  114,  124. 

In  the  case  next  in  order,  Leeds  etc.  R'y  v.  Fearnley,  4  Ex.  26,  the  de- 
fendant pleaded  that  at  the  time  of  making  the  calls,  and  also  at  the  time 
he  became  the  holder  of  the  shares,  he  was  an  infant.  The  pleas  were  held 
bad,  it  not  appearing  that  the  defendant  had  become  a  share-holder  by 
original  contract  with  the  company,  or  that  he  had  repudiated  the  shares. 
Baron  Parke,  in  the  course  of  the  argument,  remarked:  "This  is  not 
the  ordinary  case  of  a  contract  by  an  infant,  but  a  purchase  of  shares, 
hy  which  he  acquired  a  property  in  the  possible  profits  of  the  concern. 
Now,  according  to  Kctsey's  Case,  Cro.  Jac.  320,  and  what  is  more  distinctly 
laid  down  by  Dodderidge,  J.,  in  Kirtoii  v.  Eliott,  2  Bulst.  69,  he  would 
be  liable,  unless  he  repudiated;  then  ought  not  the  plea  to  aver  that  fact?" 
and  Baron  Rolfe  said:  "There  is  no  averment  that  the  defendant  was  origi' 
nally  a  contractor  for  the  shares  with  the  company,  nor  that  he  avoided  the 
contract,  as  there  was  in  that  case  [Newry  etc.  R'y  v.  Coomhe,  3  Ex.  565], 
The  defendant  may  have  received  these  shares  by  will,  or  devolution  upon 
him  by  the  operation  of  law,  or  purchase  from  the  original  contractor,  and 
he  cannot  be  assumed  to  have  repudiated  them.  The  case  of  Cork  etc.  R'y 
V.  Cazenove,  10  Q.  B.  935,  decides  tliat,  under  these  circumstances,  an  infant 
is  bound."  In  the  case  following  of  Nortliivestern  R'y  v.  McMichnel,  5  Ex. 
114,  the  defendant  pleaded  that  he  became  the  original  holder  of  the  shares 
by  contract  with  the  company,  and  that  at  the  time  he  became  such  holder^ 
and  also  at  the  time  the  calls  were  made,  he  was  an  infant,  and  that  he  never 
ratified  the  contract, nor  had  he  ever  derived  any  profit,  benefit,  or  advantage 
from  the  proprietorship  of  the  shares.  It  was  held  that  the  plea  was  bad  for 
want  of  an  averment  that  the  defendant  had  repudiated  the  contract,  or,  at 
least,  that  he  continued  a  minor. 

Baron  Parke,  in  this  latter  case,  thus  explains  the  effect  of  an  infant's  be- 
coming a  share-holder:  "  If  the  effect  of  a  person  actually  becoming  a  share- 
holder in  a  railway  company  by  original  agreement  with  the  company  ought 
to  be  treated  as  a  mere  contract  with  those  to  whom  the  proposal  was  made 
for  a  future  partnership  with  the  persons  who  should  be  afterwards  fixed  upon 
by  them,  and  to  contribute  to  the  capital  for  carrying  on  the  undertakings  in 
a  certain  proportion,  such  a  contract  could  not  be  presumably  beneficial  to  an 
infant,  and  would  be,  as  all  mere  contracts,  except  for  necessaries,  are,  not 
binding  on  the  infant  at  all;  and  the  simple  fact  that  the  defendant  at  the 
time  he  made  the  contract  was  an  infant  would  be  an  answer  to  an  action 
upon  it.  The  same  may  be  said  of  an  executed  contract  for  the  purchase  of  a 
mere  personal  chattel.  But  in  the  cases  already  decided  upon  this  subject, 
infants  having  become  share-holders  in  railway  companies  have  been  held 
liable  to  pay  calls  made  whilst  they  were  infants.     They  have  been  treated, 


April,  1890.]  Craig  v.  Van  Bebber.  617 

therefore,  as  persons  in  a  different  situation  from  mere  contractors,  for  then 
they  would  have  been  exempt;  but,  in  truth,  they  are  purchasers  who  have 
acquired  an  interest,  not  in  a  mere  chattel,  but  in  a  subject  of  a  permanent 
nature,  either  by  contract  with  the  company,  or  purchase  or  devolution  from 
those  who  have  contracted,  and  with  certain  obligations  attached  to  it  which 
they  were  bound  to  discliarge,  and  have  been  thereby  placed  in  a  situation 
analagous  to  an  infant  purcliaser  of  real  estate  who  has  taken  possession,  and 
therehy  becomes  liable  to  all  the  obligations  attached  to  the  estate,  for  in- 
stance, to  pay  rent  in  the  case  of  a  lease  rendering  rent,  and  to  pay  a  fine 
due  on  the  admission  in  the  case  of  a  copyhold  to  which  an  infaiit  has  been 
admitted,  unless  they  have  elected  to  waive  or  disagree  to  the  purchase  alto- 
gether, either  during  infancy  or  after  full  age,  at  either  of  M'hich  times  it  is 
competent  for  an  infant  to  do  so:  Bac.  Abr.,  tit.  Infancy  and  Age,  I.,  5;  Co. 
Lit.  380.  After  commenting  upon  the  previous  cases,  and  again  disapprov- 
ing the  view  taken  in  Cork  etc.  R'y  v.  Cazenove,  10  Q.  B.  935,  that  an  infant 
was  liable  to  pay  calls  under  the  Companies'  Clauses  Consolidation  Act,  Baron 
Parke  continues:  "Under  the  statute,  therefore,  our  opinion  is,  that  the  in- 
fant is  not  absolutely  bound,  but  is  in  the  same  situation  as  an  infant 
acquiring  real  estate,  or  any  other  permanent  interest;  he  is  not  deprived  of 
the  right  which  the  law  gives  every  infant,  of  waiving  and  disagreeing  to  a 
purchase  which  he  has  made;  and  if  he  waives  it,  the  estate  acquired  by  the 
purchase  is  at  an  end,  and  with  it  his  liability  to  pay  calls,  thojigh  the  avoid- 
ance may  not  have  taken  place  till  the  calls  was  due When,  there- 
fore, there  is  nothing  but  the  simple  fact  of  infancy  pleaded  to  an  action  for 
calls  against  a  purchaser  who  has  been  registered,  and  thereby  become  a  share- 
holder in  a  subject  of  a  permanent  character,  the  interest  continuing  to  be 
vested  in  the  infant,  and  the  consequent  obligation  to  pay,  the  simple  plea  of 
infancy  is,  according  to  the  above  authorities,  insufficient."  Finally,  it  was 
held  in  Duhlin  etc.  IVy  v.  Black,  8  Ex.  181,  that  a  plea  of  infancy  to  an 
action  for  railway  calls  which  alleged  that  the  defendant  disaffirmed  and 
repudiated  his  contract  and  subscription  after  he  became  of  full  age  was  bad 
for  not  alleging  that  he  repudiated  within  a  reasonable  time  after  he  became 
of  age. 

It  seems  to  us  that  the  courts  in  the  foregoing  cases  might  have  delivered 
themselves  of  the  results  attained  with  much  less  lal)or,  and  certainly  with 
greater  clearness  of  thought.  While  we  concur  in  the  main  witli  the  views 
finally  expressed  in  them,  yet  we  do  not  agree  with  all  that  they  say.  We 
suggest  the  following  rule,  based  partly  upon  them  and  partly  on  the  general 
principles  of  disaffirmance  and  ratification  discussed  post:  That  if  an  infant 
enters  into  an  original  contract  of  subscription  for  or  purchase  of  shares  in 
a  corporation  with  the  company  itself,  the  contract,  in  the  absence  of  a  stat- 
ute to  the  contrary,  is  not  absolutely  binding  upon  him,  but  may  be  ratified 
or  disaffirmed  by  him.  If  the  contract  is  ratified,  he  is,  of  course,  liable  for 
future  calls;  and  since  the  ratification  makes  the  contract  good  ab  initio,  he 
will  be  liable  for  past  calls  as  well,  though  made  during  his  infancy.  If  the 
contract  is  disaffirmed,  the  shares  revert  to  the  corporation,  and  the  infant, 
of  course,  is  no  longer  a  share-holder,  nor  liable  for  future  calls;  and  since  the 
disaffirmance  avoids  the  contract  from  the  beginning,  he  will  not  be  liable  for 
past  calls.  He  may  disaffirm  the  contract  during  infancy,  and  whether  calls 
have  been  already  made  at  the  time  or  not;  and  he  must  disaffirm,  either  be- 
fore he  reaches  full  age  or  within  a  reasonable  time  thereafter,  or  he  will  be 
taken  to  have  ratified  the  contract  by  retaining  the  shares.  He  can  conclu- 
sively ratify  the  contract  only  after  full  age.     If  the  infant  has  acquired  the 


618  Ckaig  v.  Van  Bebber.  [Missouri, 

shares  by  purchase,  gift,  or  bequest  from  some  original  or  intermediate 
holder,  it  seems  to  us  that,  on  principle,  the  results  are  in  general  the  same. 
He  may  either  affirm  his  holding  or  repudiate  the  shares.  If  he  does  the 
former,  he  is,  of  course,  liable  for  calls;  if  the  latter,  he  is  not  liable,  and  the 
shares  revert  to  the  original  holder,  or  his  representatives,  who  are  liable. 
He  may  repudiate  the  shares  during  his  minority;  but  if  he  retains  them,  as 
an  owner,  after  coming  of  age,  he  ratifies  the  holding,  and  must  answer  the 
calls.  We  are  not  quite  sure  that  if  a  disaffirmance  may  be  made  by  the 
infant  at  the  time  suit  is  brought  against  him  for  the  calls,  it  is  necessary,  in 
either  case  of  acquisition,  to  allege  a  repudiation  of  the  shares,  but  that  the 
repudiation  may  be  sufficiently  shown  by  a  plea  of  infancy  merely. 

A  number  of  cases  have  been  decided  under  the  English  Companies'  Acts 
involving  the  liability  of  an  infant  share-holder  to  be  placed  on  the  list  of 
contributories  on  the  winding-up  of  the  company.  Thus  it  has  been  deter- 
mined that  an  infant  share-holder  who  becomes  adult  before  the  winding-up 
order  is  made  may  become  liable  as  a  contributor,  because  of  his  failure  to 
repudiate  the  shares  within  a  reasonable  time  after  his  arrival  at  full  age,  or 
because  of  his  failure  to  repudiate,  coupled  with  some  affirmative  acts  on 
his  part:  MitchelCs  Case,  L.  R.  9  Eq.  363;  Lumsdens  Case,  L.  R.  4  Ch.  31; 
Eblett's  Case,  L.  R.  5  ('h.  302;  and  the  same  may  be  the  result  where  he  be- 
comes adult  after  the  commencement  of  the  winding-up  of  the  company: 
HaH's  Case,  L.  R.  6  Eq.  512;  but  compare  Wilsons  Case,  L.  R.  8  Eq.  240; 
Castello's  Case,  L.  R.  8  Eq.  504;  SymoTis  Case,  L.  R.  5  Ch.  298. 

Releases  and  Compromises.  —  An  infant's  release  of  a  claim  on  account 
of  personal  injuries  sustained  by  him  by  reason  of  the  tort  of  the  releasee  is 
not  binding,  nor  is  it  void,  but  it  is  voidable  by  him,  at  his  election,  and  con- 
stitutes  no  bar  to  an  action  to  recover  damages  for  the  injuries:  Baker  v, 
Lovett,  6  Mass.  78;  St.  Louis  etc.  B'y  v.  Higuins,  44  Ark.  293;  and  the  bring- 
ing of  suit  upon  the  claim  is  an  unequivocal  act  of  disaffirmance:  St.  Louis 
etc.  R'y  V.  Higyins,  44  Ark.  293.  But  in  the  first  of  these  cases,  in  which  the 
release  was  given  by  the  infant  to  one  of  two  persons  who  had  committed 
an  assault  and  battery  upon  him,  and  the  action  was  afterwards  brought 
by  the  infant  against  the  other  wrong-doer,  Parsons,  C.  J.  said:  "If  the 
jury,  on  the  trial,  are  convinced  that  the  satisfaction  received  from  Dennis 
[the  releasee]  was  a  compensation  for  the  injury,  they  will  assess  for  the 
plaintiff  but  nominal  damages.  But  if  the  compensation  be  found  inade- 
quate, the  jury  will  give  such  further  sum  as,  with  the  money  received  from 
Dennis,  will  amount  to  a  reasonable  satisfaction."  The  release  by  an  infant 
of  a  claim  arising  from  contract  stands  on  the  same  footing  as  his  release  of 
a  claim  on  account  of  a  tort:  See  Commonwealth  ex  rel.  Strayer  v.  Hantz,  2 
Penr.  &  W.  333;  but  where,  by  statute,  females  of  the  age  of  eighteen  are 
competent  to  enter  into  marriage  contracts,  a  female  of  the  age  of  eighteen 
may  make  a  valid  and  binding  release  of  a  promise  to  marry:  Dcveliii  v. 
Ri(jijshee,  4  Ind.  464.  If,  also,  a  party  litigant  who  executes  a  release  to  a 
witness  to  extinguish  the  interest  of  the  witness  in  the  suit  be  an  infant,  he 
will  not  be  bound  by  the  release:  Walker  v.  Ferrin,  4  Vt.  523;  but  in  Lang- 
ford  v.  Frey,  8  Humpli.  443,  it  was  said,  rigidly  applying  the  rule  of  Keane 
V.  Boycott,  2  H.  Black.  511,  515,  discussed  supra,  that  a  release  by  an  infant 
of  his  legacy  or  distributive  share,  in  order  to  enable  him  to  become  a  wit- 
ness, was  void,  since  the  release  could  hardly  be  otherwise  than  injurious  to 
hiin;  and  see  Fridge  \.  State,  3  GUI  &  J.  103;  20  Am.  Dec.  463.  A  release 
may,  of  course,  be  binding  by  statute.  See,  however,  Bowers's  Adm'x  v.  State, 
7  Har.  &  J.  32;  Fridge  v.  State,  3  Gill  &  J.  103;  20  Am.  Dec.  463. 


April,  1890.]  Craig  v.  Van  Bebbeb.  619 

An  infant's  compromise  of  a  claim  is  likewise  not  binding  upon  him,  but 
is  subject  to  hia  avoidance:  Ware  v.  Cartledge,  24  Ala.  622;  60  Am.  Dec. 
489;  but  it  is  no  defense  to  an  action  on  an  agreement  of  compromise  of  a 
suit  that  the  plaintifif  was  an  infant,  and  the  agreement  was  made  on  his 
behalf  by  his  attorneys:  Chicajo  etc.  E.  R.  Co.  v.  Lamnieit,  19  111.  App.  135, 
140. 

Arbitration.  —  It  was  said  in  an  old  case  that  an  infant's  submission  to 
arbitration  was  void:  Rudston  and  Yates's  Case,  March,  111,  114.  Of  course 
the  submission  is  not  binding  as  against  the  objection  of  infancy:  See  Jones 
V.  Payne,  41  Ga.  23.  But  there  is  no  reason  why  tlie  submission  should  be 
anything  more  than  voidable,  and  why  it  may  not  be  ratified  by  the  infant 
after  attaining  full  age.  This  view  was  taken  in  Jones  v.  Plicenix  Bank,  8 
N.  Y.  228,  in  which  it  was  held  that  if  an  infant  submits  a  claim  to  arbitration, 
and  on  coming  of  age  receives  the  proceeds  of  the  award  from  his  guardian, 
he  thereby  ratifies  the  submission  and  the  award,  and  cannot  recover  on  his 
original  claim;  and  in  Barnahy  v.  Barnahi/,  1  Pick.  221,  in  which  it  was  de- 
cided that  an  infant,  after  coming  of  age,  ratifies  an  award  made  upon  a 
submission  by  his  guardian  that  the  ward  and  infant  heir  shall  pay  an  annu- 
ity to  the  widow  in  lieu  of  dower,  where  he  pays  part  of  the  money  then  due, 
promises  to  pay  the  rest  of  that  installment,  and  says  that  he  had  lodged 
property  in  his  brother's  hands  to  meet  an  annual  payment. 

Service.  —  It  has  not  been  so  much  the  question  whether  an  infant's  con- 
tracts of  service,  both  when  he  is  the  employer  and  when  the  employed,  are 
voidable,  rather  than  void,  but  whether  they  are  not  binding,  at  least  to 
some  extent,  upon  him.  There  should  be  no  doubt,  however,  that  an  infant 
employer  is  not  liable  for  wages  which  he  has  agreed  to  pay:  Hughes  v.  Oal- 
laiis,  10  Phila.  618;  but  see  Delavae  v.  Clare,  Latch,  156.  But,  plainly,  in- 
fancy is  no  answer  to  a  claim  for  wages  accruing  due  after  majority  has  been 
attained,  although  on  a  contract  of  hiring  orii^inally  made  under  age: 
Thomas  v.  Waldo,  1  Fost.  &  F.  173.  And,  of  course,  the  infant,  on  coming 
of  age,  may  ratify  the  contract  of  hiring. 

There  is  more  difficulty  where  an  infant  enters  into  a  contract  by  which  he 
agrees  to  serve  another.  In  R<x  v.  Inhabitants  of  ChillesJ'ord,  4  Barn.  &  C. 
94,  ICl,  Bayley,  J.,  said:  'An  infant  may  make  a  contract  for  his  own 
benefit;  he  may,  therefore,  make  a  contract  for  hiring  and  service,  for  that 
will  be  beneficial  to  him.  It  will  give  him  a  right  to  sue  for  wages.  If  he 
does  not  perform  his  contract,  although  no  action  will  lie  against  him,  he  will 
be  liable  to  the  statutory  regulations  applicalile  to  masters  and  servants." 
And  in  a  proceeding  under  4  George  IV.,  ciiapter  34,  against  a  servant  for  ab- 
senting himself  from  the  service,  it  was  said  in  Wood  v.  Fenwick,  10  Mees.  & 
W.  195,  that  a  contract  of  hiring  and  service  for  wages  was  a  contract  bene- 
ficial to  an  infant,  and  therefore  binding  upon  liim  [so  far  as  the  statute  was 
concerned],  though  the  contract  contained  clauses  for  referring  disputes  to 
arbitration,  and  for  the  imposition  of  forfeitures  in  case  of  neglect  of  duty,  to 
be  deducted  from  the  wages.  But  in  Rejina  v.  Lord,  12  Q.  B.  757,  which 
was  an  information  against  an  infant  servant,  under  the  same  statute,  Lord 
Denman  held  that  an  agreement  to  serve  for  wages  might  be  for  an  infant's 
benefit;  but  an  agreement  which  compelled  an  infant  to  serve  at  all  times 
during  a  certain  term,  but  left  the  master  free  to  stop  his  work  and  wages 
whenever  he  cliose  to  do  so,  could  not  be  considered  as  beneficial  to  tiie  ser- 
vant, and  was  wholly  void  [for  the  purposes  of  the  prosecution].  On  the  other 
hand,  under  the  Employees  and  Workmen  Act,  1875,  38  and  39  Victoria, 
chapter  90,  which  enables  a  dispute  between  employer  and  workmen  to  b« 


620  Craig  v.  Van  Bebber.  [Missouri, 

heard  and  determined  liy  a  court  of  siimmary  jurisdiction,  an  agreement  by 
which  an  infant  undertakes  to  serve  iron  ship-builders  and  boiler-makers  as 
plater  and  riveter  for  a  term  of  five  years,  at  weekly  wages,  with  a  proviso 
that  should  the  emploj'ers  cease  to  carry  on  their  business,  or  find  it  necessary 
to  reduce  the  operations  of  their  works,  either  temporarily  or  permanently, 
from  their  being  unable  to  obtain  materials,  or  in  consequence  of  any  acci- 
dent, or  in  consequence  of  strikes  or  combinations  of  workmen,  or  from  any 
cause  over  which  they  should  not  have  any  control,  they  should  have  power 
to  terminate  the  agreement,  and  discharge  the  infant  upon  giving  hiin  four- 
teen days'  notice,  was  held  not  to  be  void  on  the  face  of  it,  so  as  to  prevent 
it  from  being  enforced  against  him  according  to  the  act:  Leslie  v.  Fitzpat7-ick, 
L.  R.  3  Q.  B.  Div.  229,  the  court  saying:  "The  agreement  in  question  is 
not  open  to  the  objections  which  were  held  fatal  in  Recjina  v.  Lord,  12  Q.  B. 
757.  According  to  the  construction  put  upon  the  contract  in  that  case,  it 
bound  the  infant  not  to  engage  in  any  other  service  or  business  during  the 
whole  term,  while  it  reserved  to  the  master  the  right  to  stop  the  work  and 
the  wages  whenever  he  pleased.  Moreover,  it  rendered  the  infant  liable  to 
be  dismissed  for  any  misconduct  or  disobedience,  and  upon  dismissal,  to  for- 
feit all  his  wages  which  should  then  be  due  and  unpaid.  That  contract  was 
manifestly  void  on  the  face  of  it.  Either  stipulation  was  of  itself  sufficient 
to  invalidate  it.  The  first  was  inequitable;  the  second  violated  a  settled 
rule  of  law,  by  which  an  infant  is  incapable  of  contracting  himself  out  of 
his  acquired  rights,  or  subjecting  himself  to  a  penalty."  See  also  Birkin  v. 
Forth,\z  L.  T.  532. 

In  this  country,  an  infant's  contract  of  work  and  labor,  or  service,  for 
wages,  is  not  binding  upon  him,  but  is  subject  to  his  avoidance,  at  least 
before  the  contract  has  been  fully  executed  by  the  parties,  by  the  perform- 
ance of  the  service  and  the  payment  of  the  wages:  See  the  cases  referred  to 
in  the  following  paragraphs  of  this  head.  "Even  a  contract  of  apprentice- 
ehip,"  says  Parker,  C.  J.,  in  Moses  v.  Stevens,  2  Pick.  332,  335,  "by  means  of 
which  he  is  to  acquire  a  knowledge  of  some  mechanical  or  other  business,  is 
not  by  the  common  law  obligatory;  certainly  a  contract  by  which  he  disposes 
of  his  personal  labor  without  any  stipulation  for  instruction  is  less  deserv- 
ing of  legal  protection."  Infancy,  therefore,  is  a  good  defense  to  an  action 
against  him  for  a  breach  of  the  contract:  Francis  v.  Felmit,  4  Dev.  &  B.  498. 
And  when  an  infant  has  disaffirmed  the  contract,  a  person  who  afterwards 
employs  him  is  not  guilty  of  the  violation  of  a  statute  which  makes  it  a  penal 
oflFense  to  entice  away  or  employ  a  laborer  or  servant  who  has  contracted  in 
writing  to  serve  another  for  a  specified  time,  "such  contract  being  in  force, 
and  binding  on  the  parties  thereto":  Langhamy.  State,  55  Ala.  114;  over- 
ruling Murrell  v.  State,  44  Ala.  367.  The  contract,  of  course,  is  binding  until 
avoided  by  the  infant:  Nashdlle  etc.  R.  R.  v.  Elliott,  1  Cold.  611;  78  Am.  Dec. 
506.  In  Nickerson  v.  Easton,  12  Pick.  110,  a  contract  in  writing,  signed  by  a 
minor,  his  mother  and  step-father,  of  the  one  part,  and  by  the  defendant  of 
the  other  part,  which  recited  that  the  minor  had  been  living  with  the  defend- 
ant as  an  apprentice,  but  that  no  indenture  had  been  executed,  and  which 
stipulated  that  the  minor  should  go  on  a  whiling  voyage,  and  that  the 
defendant  should  furnish  him  outfits,  and  should  receive  all  his  earnings  on 
the  voyage,  and  that  should  the  ship  return  before  the  minor  reached  the  age 
of  twenty-one,  he  should  be  free  from  his  apprenticeship,  was  held  to  be  a 
contract  for  an  independent  service  and  purpose,  and  was  not  binding  upon 
the  minor,  and  therefore  he  was  entitled  to  recover  his  earnings  on  the  voy- 
age, which  had  been  received  by  the  defendant. 


April,  1890.]  Craig  v.  Van  Bebber.  621 

It  follows  that  if  an  iafant  makes  a  special  contract  to  labor  for  a  certaiu 
time  at  certain  wages,  he  may,  nevertheless,  avoid  the  contract  at  his  pleas- 
ure, and  recover  on  a  quantum  meruit  for  the  services  performed,  as  though  no 
special  contract  had  been  made:  Mo^es  ■v.  Stevens,  2  Pick.  332;  Vent  v.  Osyood, 
19  Pick.  572;  Gafneyv.  Hayden,  110  Mass.  137;  14  Am.  Rep.  580;  Thomaa 
V.  Dike,  11  Vt.  273;  34  Am.  Dec.  690;  Floxie  v.  Lincoln,  25  Vt.  206;  Medhury 
V.  [Vatrous;  7  Hill,  110;  Whitmarshv.  Hall,  3  Denio,  375;  Jndldns  v.  Walker, 
17  Me.  38;  35  Am.  Dec.  229;  Veliue  v.  Pi,d7,am,  60  Me.  142;  Lowev.  SinHear, 
27  Mo.  308;  Bay  v.  Haines,  52  111.  4S5;  Dallas  v.  HoUimjswoHh,  3  Ind.  537; 
Van  Peltv.  Corwine,  6  Ind.  363;  Danville  v.  Amo^heag  Mf<j.  Co.,  62  N.  H.  133. 
The  cases  of  McCoy  v.  Huffman,  8  Cow.  84,  and  Weeks  v.  Leijhlon,  5  N.  H.  343, 
to  the  contrary,  have  been  overruled  by  Medhury  v.  Watrous,  7  Hill,  110,  and 
Liifkin  V.  Mayall,  25  N.  H.  82,  respectively.  So  where  an  infant  agreed  to  accept 
in  part  payment  for  his  services  an  order  upon  a  third  person  for  cloth,  he  is 
not  bound  by  the  receipt  of  the  order,  but  may  avoid  the  contract,  and 
recover  on  a  quantum  meruit  for  the  value  of  his  services:  Ahell  v.  Warren, 
4  Vt.  149.  And  where  an  infant  agrees  to  work  at  a  certain  rate  of  wages, 
it  being  understood  that  she  could  leave  the  employment  at  any  time,  she 
may  likewise  avoid  the  express  contract,  and  recover  the  value  of  her  services 
rendered  upon  a  quantxun  meruit:  Lufkin  v.  Mayall,  25  N.  H.  82.  "The 
general  principle  undoubtedly  is,"  says  Bell,  J.,  in  this  last  case,  "that 
when  there  is  an  express  contract  between  parties,  the  law  will  not  raise  ary 
implied  contract;  but  we  doubt  if  this  has  any  application  to  the  case,  where 
the  law  itself  gives  to  one  of  the  parties  the  right  to  avoid  the  contract  by 
reason  of  an  original  and  intrinsic  defect."  There  can  be  no  doubt  of  the 
right  of  an  infant  to  recover  on  a  quantum  meruit  what  her  services  rendered 
are  reasonably  worth,  if  her  employer  has  violated  his  part  of  the  contract, 
and  she  leaves  the  service  at  his  request,  and  in  conformity  with  her  own 
wishes:  Meeker  v.  Ilurd,  31  Vt.  639.  And,  on  the  other  hand,  wliere  an 
infant  contracted  to  work  for  a  year,  but  left  before  the  expiration  of  that 
time,  but  about  a  month  after  he  had  become  of  age,  it  was  held  that  he  had 
ratified  the  contract  by  continuing  in  the  service  after  he  became  of  age,  and 
that  if  lie  then  left  without  sufficient  cause,  he  could  not  recover  for  the 
services  rendered:  Forsyth  v.  Bastings,  27  Vt.  646.  In  Aldrick  v.  Abrahams, 
Hill  &  D.  423,  it  was  held  that  an  infant  who  had  agreed  to  lease  and 
purchase  from  the  defendants  certain  premises,  and  to  pay  therefor  a  gross 
sum  and  an  annual  rent,  and  to  erect  buildings  on  the  premises  of  sufficient 
value  to  secure  the  payments,  could  not,  on  avoiding  the  agreement,  with- 
out having  paid  or  done  anything  for  the  defendants,  maintain  an  action 
against  them  to  recover  for  the  value  of  the  labor  done  and  materials  fur- 
nished by  him  in  the  erection  of  a  building  upon  the  premises,  pursuant  to 
the  agreement,  since  he  had  erected  the  budding  for  himself. 

There  has,  however,  been  considerable  dispute  as  to  whetlier  the  amount 
of  the  injury  occasioned  to  the  employer  by  the  infant's  abandoning  the 
special  contract  can  be  deducted  from  the  value  of  the  services  rendered  by 
the  infant,  so  that  the  latter  can  only  recover  the  difference,  if  any,  in  his 
favor.  A  dictum  by  Chief  Justice  Parker,  in  Moses  v,  Steveris,  2  Pick.  335, 
to  the  effect  that  such  a  deduction  might  be  made,  has  been  approved,  and 
aometinjes  actually  applied,  in  several  cases:   Thomas  v.  Dike,   11  Vt.  273; 

34  Am.  Dec.  690;  J/oxiev.  Lincoln,  25  Vt.  206;  Judkmsv.  Walker,  17  Me.  38; 

35  Am.  Dec.  229;  Lowe  v.  Sinklear,  27  Mo.  308.  In  Thomas  v.  Dike,  11  Vt. 
273,  .34  Am.  Dec.  690,  Williams,  C.  J.,  says.  "The  court  are  inclined  to 
adopt  this  rule  [of  Moses  v.   Stevens];   and  although    I   have   great   doubt 


G22  Craig  v.  Van  Bebber.  [Missouri, 

whether  it  is  not  infringing  the  general  rule  of  law  on  the  subject  of  coa- 
tracts  with  infants,  yet  I  more  reailily  yield  my  assent  to  this  course,  on  pria- 
ciplea  of  policy,  when  I  reflect  that  so  many  minors  are  emancipated  by  their 
parents  by  giving  them  their  time,  as  it  is  called, — a  practice  which,  though 
sanctioned  by  judicial  decisions,  I  regret  has  prevailed,  — and  become  adults 
for  the  purpose  of  making  contracts,  and  remain  infants  to  avoid  them.  It 
would  be  unsafe  for  the  community,  unless  some  such  principle  were  adopted. 
The  case  under  consideration  must  be  decided  on  tliis  ground." 

This  view  has  been  condemned,  and,  we  think,  properly  so;  and  the  cor- 
rect rule,  in  our  opinion,  is,  that  the  damages  sustained  by  the  employer  by 
reason  of  the  infant's  abandoning  the  service  under  the  special  contract,  or 
otherwise  failing  to  comply  with  the  terms  of  the  contract,  cannot  be  taken 
into  consideration  in  an  action  by  the  infant  on  quantum  meruit  to  recover  for 
the  services  rendered  by  him:  Whitmarsli  v.  Hall,  3  Denio,  375;  Derocher  v. 
Continental  Mills,  58  Me.  217;  4  Am.  Rep.  2SG;  Danville  v.  Amoskeag  Mfg. 
Co.,  62  N.  H,  133.  In  Derocher  v.  Continental  Mills,  58  Me.  217,  4  Am.  Rep. 
286,  Walton,  J.,  uses  the  following  language:  "To  compel  the  miaor  thus 
to  make  good  the  loss  occasioned  by  the  non-performance  of  his  contract  is 
virtually  to  enforce  tlie  contract;  and  thu.s  to  enforce  the  contract  is,  in 
efifect,  to  abrogate  the  rule  of  law  that  a  minor  is  not  bound  by  his  contract. 
We  presume  no  one  would  undertake  to  maintain  that  an  action  would  lie 
against  an  infant  to  recover  damages  for  the  breach  of  such  a  contract;  and 
yet  it  seems  to  us  that  there  can  be  no  difference  in  principle  between  de- 
ducting the  damages  from  the  amount  which  the  infant  would  otherwise  be 
entitled  to  recover  in  a  suit  brought  by  him,  and  recovering  the  same  in  a 
suit  brought  against  him."  The  court  criticises  a  number  of  cases,  among 
them  Moses  v.  Stevens,  2  Pick.  332;  but  does  not  refer  to  its  previous  case  of 
Judhins  v.  Walker,  17  Me.  38;  35  Am.  Dec.  229.  It  should  be  carefully 
noticed  that  the  foregoing  rule  only  excludes  damages  sustained  by  the  em- 
ployer by  reason  of  the  infant's  simple  violation  of  the  terms  of  his  contract. 
If  he  has  been  guilty  of  negligence  in  the  performance  of  his  services,  the 
negligence  should  plainly  be  taken  into  consideration  in  estimating  the  value 
of  the  services:  See  Vehue  v.  Pinkham,  60  Me.  142.  "  It  was  what  his  ser- 
vices were  reasonably  worth,  under  all  the  circumstances  of  the  case,  that  he 
was  entitled  to  recover.  If  by  his  negligence  or  disobedience  of  orders  he 
broke  his  employer's  tools  or  damaged  his  property,  his  services  were  mani- 
festly worth  just  so  much  less  ":  Vehue  v.  PinkJiam,  60  Me.  142.  And  plainly, 
also,  if  the  contract  was  broken  and  the  service  terminated  through  the  fault 
of  the  employer,  no  deduction  for  the  damage  he  Tnay  have  sustained  in  con- 
sequence of  the  infant  leaving  his  employment  should  be  made:  Meeker  v. 
Hurd,  31  Vt.  639. 

If  an  infant  has  been  fully  and  fairly  compensated  for  his  services,  he 
should  certainly  not  be  entitled  to  claim  conpensation  a  second  time,  and  a 
part  payment  should  also  be  a  discharge  to  the  employer  to  that  extent:  See 
Hohha  V.  Qodlove,  17  Ind.  359;  Waiiqh  v.  Emerson^  79  Ala.  295;  Syicer  v. 
Earl,  41  Mich.  191;  32  Am.  Rep.  152;  Hagerty  v.  Nashua  Lock  Co.,  62  N.  H. 
576;  Breed  v.  J  add,  1  Gray,  455,  459;  compare  Nickerson  v.  Easton,  12  Pick, 
no.  In  Spicer  v.  Earl,  41  Mich.  191,  32  Am.  Rep.  152,  where  an  infant 
agreed  to  work  at  a  certain  rate  of  wages,  and  to  have  his  board,  it  was  held 
he  could  not  repudiate  the  contract,  if  it  was  fair  and  reasonable,  and  re- 
cover on  a  quantum  meruit  for  the  services  rendered,  he  having  had  his  board 
for  the  period  for  which  he  worked,  and  some  payments  of  money.  Cooley, 
J.,  said:  "If  a  contract  for  service  is  apparently  fair  and  reasonable  under 


April,  1890.]  Craig  v.  Van  Bebber.  623 

the  circumstances,  the  infant  who  has  performed  it  should  be  held  to  its 
terms,  and  if  he  attempts  to  repudiate  it,  the  attention  of  the  jury  should  be 
directed  to  the  question  whether  or  not  an  unfair  advantage  has  been  taken 
of  him,  instead  of  their  being  required  to  find  a  subsequent  affirmance.  So 
long  as  the  employer  who  is  acting  in  good  faith  is  not  notified  of  any  dissent, 
he  has  a  right  to  understand  that  his  responsibility  is  measured  by  his  agree- 
ment. On  the  other  hand,  the  infant  may  abandon  the  service  when  he 
pleases,  or  stipulate  for  any  new  terms  he  may  see  fit  to  demand  and  can 
procure  assent  to.  He  is  bound  by  the  terms  of  the  contract  so  far  as  he  exe- 
cutes it  without  dissent,  but  no  further."  In  Breed  v.  J  add,  1  Gray,  455, 
459,  an  infant,  in  consideration  of  an  outfit  to  enable  him  to  go  to  California, 
agreed,  with  the  assent  of  his  father,  to  give  the  party  furnishing  the  outfit 
one  third  of  all  the  avails  of  his  labor  during  his  absence,  which  he  after- 
wards sent  accordingly.  The  jury  having  found  that  the  agreement  was 
fairly  made,  and  for  a  reasonable  consideration,  and  beneficial  to  the  infant, 
it  V7as  held  that  he  could  not  rescind  the  agreement  and  recover  back  the 
amount  so  sent,  deducting  the  amount  of  the  outfit  and  other  money  ex- 
pended for  him  by  the  other  party  in  pursuance  of  the  agreement.  The 
court,  after  discussing  the  partnership  feature  of  the  case  (see  ante,  title 
"Partnership"),  said  that,  viewing  the  contract  as  an  agreement  for  the  ser- 
vices of  the  plaintiff  for  a  limited  time,  to  be  repaid  by  the  advancement  and 
by  retaining  also  two  thirds  of  the  fruits  of  his  labor,  it  would,  if  fairly 
made  and  fully  executed,  be  within  the  principles,  if  not  within  the  direct 
authority,  of  Stone  v.  Dennlson,  13  Pick.  1;  23  Am.  Dec.  654.  The  court,  per 
Thomas,  J.,  continues:  "Indeed,  to  say  that  an  infant  could  make  no  con- 
tract for  his  labor,  however  reasonable  and  beneficial  to  himself,  by  wliich 
he  should  be  bound,  even  when  fully  executed  on  both  sides,  instead,of  serv- 
ing as  a  protection  to  the  infant,  would  have  the  effect  only  to  prevent  his 
being  employed.  Men  of  business  want  to  know  beforehand  what  they 
have  got  to  pay,  and  also  to  know  that  when  an  agreement  for  labor,  reason- 
able and  just,  has  been  justly  made  and  fully  executed,  and  the  price  paid, 
there  is  an  end  of  the  inatter. " 

While  we  agree  with  the  results  attained  by  these  latter  cases,  we  do  not 
concur  in  the  reasoning  by  which  those  results  were  reached.  We  do  not  be- 
lieve that  the  cases  can  be  supported  on  the  mere  theory  that  the  contracts, 
being  fully  executed,  could  not  be  avoided  by  the  infants.  If  this  were  so, 
an  iufant  could  not  avoid  any  executed  contract,  yet  it  must  be  conceded  that 
his  executed  conveyances  of  realty  and  sales  of  personalty  may  be  disaffirmed 
by  him,  and  the  land  or  the  chattels  recovered  back  again.  A  payment  once 
made  to  an  infant  employee  should  be  good  so  far  as  it  goes.  But  we  would 
suggest  as  the  reason  why  there  cannot  be  a  second  recovery  by  the  infant, 
that  the  infant,  Lo  disaffirm  the  previous  payment  and  recover  anew,  should 
restore  to  the  employer  what  he  has  received;  and  although  he  may  have 
parted  with  the  consideration,  and  would  not  be  obliged  to  restore  an  equiva- 
lent, or  even  if  he  retained  the  consideration,  niiglit  perhaps  not  be  compelled 
to  restore  it  as  a  condition  to  maiiitaining  the  action,  yet  what  he  would  now 
recover,  the  employer  would  be  entitled  to  recover  hack  again,  and  to  avoid 
circuity  of  action,  a  second  recovery  will  not  be  allowed.  Furthermore,  it 
seems  to  us  that  if  the  infant  were  able  to  show,  in  any  case,  that  his  services 
were  worth  more  than  wliat  he  had  receive  1  according  to  the  terms  of  his 
contract,  he  could,  i.'evertheless,  in  the  exercise  of  his  right  of  disaffirmance, 
recover  the  excess  in  value.  Of  course,  it  is  assumed  in  the  foregoing  discus- 
sion that  if  the  iufant  has  parents,  he  is  permitted  by  them  or  by  the  law  to 


624  Craig  v.  Van  Bebber.  [Missouri, 

receive  his  wages.  This  question  is  settled  in  Iowa  by  section  2240  of  the 
code,  which  enacts  that  "where  a  contract  for  the  personal  service  of  a 
minor  has  been  made  with  him  alone,  and  tho^e  services  are  afterwards  per- 
formed, payment  made  therefor  to  such  minor,  in  accordance  with  the  terms 
of  the  contract,  is  a  full  satisfaction  for  those  services,  and  the  parent  or 
guardian  cannot  recover  therefor  a  second  time  ";  under  which  it  is  held  that 
the  payment  is  a  full  satisfaction  to  the  minor  as  well,  who  cannot  recover  a 
second  time  for  the  services:  Murphy  v.  Jolinson,  45  Iowa,  57. 

There  is  still  another  line  of  cases,  which  has  an  intimate  connection  with 
the  one  last  mentioned,  differing  from  it  only  in  that  the  services  were  ren- 
dered in  consideration  of  board,  clothing,  education,  and  other  necessaries  fur- 
nished by  the  employer.  In  other  words,  an  infant  agrees  to  render  services 
in  consideration  of  his  support  and  education.  While  the  infant  might  decline 
to  perform  the  agreement,  and  would  incur  no  liability  by  so  doing,  yet  when 
the  agreement  is  fairly  made  and  fully  executed  on  both  sides,  the  infant 
cannot  avoid  the  agreement  and  recover  the  value  of  the  services  on  a  qunn- 
tivni  meruit.  The  contract  may  be  supported  on  the  ground  that  it  is  one  for 
necessaries,  or  it  may  be  upheld  on  the  theory  just  considered,  that  the 
services  have  been  fully  paid  for:  Stone  v.  Dennison,  13  Pick.  1;  23  Am.  Dec. 
654;  Wilhelm  v.  Hardmnn,  13  Md.  140;  Squkr  v.  Hydliff,  9  Mich.  274;  Har- 
ney V.  Oiven,  4  Blackf.  337;  30  Am.  Dec.  662.  The  case  of  Sficer  v.  Earl,  41 
Mich.  191,  32  Am.  Rep.  152,  might  have  been  decided  according  to  this 
theory;  and  perhaps,  also,  tlie  case  of  Breed  v.  Judd,  1  Gray,  455,  459,  in 
which,  indeed,  the  question  of  necessaries  is  somewhat  discussed.  The  con- 
tract having  been  fairly  made,  the  infant  cannot  recover  merely  by  showing 
that  it  turned  out  that  his  services  were  worth  more  than  the  agreed  com- 
pensation: Stone  V.  Dennison,  13  Pick.  1;  23  Am.  Dec.  654;  Wilhelm  v.  Hard- 
man,  13  Md.  140;  Harney  v.  Owen,  4  Blackf.  337;  30  Am.  Deo.  662.  Thus 
in  Wilhelm  v.  Hardman,  13  Md.  140,  Tuck,  J.,  says:  "It  was  urged  in  argu- 
ment that  the  services  might  be  worth  more  than  the  support  furnished,  and 
that  the  employer  would  thereby  obtain  an  advantage  over  the  infant.  This 
may  occur  in  some  cases;  but  we  must  remember  that  the  infant  may  leave 
the  employment  of  his  own  caprice,  or  whenever  he  can  procure  better 
returns  for  his  labor.  The  employer  is  subject  to  his  will.  If  this  reason 
did  not  apply,  we  think  it  more  in  accordance  with  the  policy  of  the  law,  in 
reference  to  infants,  that  they  should  be  held  bound  by  their  contracts  of 
this  kind,  as  far  as  performed,  than  to  offer  inducements  to  them  to  obtain 
employment  with  persons  acting  in  good  faith,  and  afterwards  suffer  compen- 
sation, not  contemplated  by  the  other  party  at  the  time  of  the  agreement." 
In  this  case  of  Wilhelm  v.  Hardman,  13  Md.  140,  the  infant  agreed  with  the 
defendant  to  work  and  labor  for  the  latter  on  his  farm,  for  seven  j^ears,  in 
consideration  that  the  defendant  should  provide  him  necessary  food,  lodging, 
and  clothing,  and  give  him  schooling  when  there  was  a  school  convenient, 
and  that  if  he  remained  and  worked  for  the  seven  years,  the  defendant 
would  give  him  a  horse,  saddle,  and  bridle  in  addition.  It  was  held  that  the 
item  in  regard  to  the  horse  and  equipments  was  something  over  and  above 
the  support,  and  the  infant  could  not  aver  it  to  avoid  the  contract  in  toto. 
See  also  Sincer  v.  Earl,  41  Mich.  191;  32  Am.  Rep.  152. 

The  case  of  Harney  v.  Owen,  4  Blackf.  337,  30  Am.  Dec.  662,  is  said  to 
have  been  overruled  by  Dallas  v.  HolUnijsworth,  3  Ind.  537,  and  by  subse- 
quent cases:  See  Wheatly  v.  Aliscal,  5  Ind.  143;  Van  Pelt  v.  Corwine,  6  Ind. 
364;  Oarner's  Adm'r  v.  Board,  27  Ind.  326;  but  while  some  of  the  reasoning 
in  Harney  v.  Owen,  4  Blackf.  337,  30  Am.  Dec.  662,  respecting  executed  con- 


J 


April,  1890.]  Craiq  v.  Van  Bebber.  625 

tracts  of  minors  is  to  be  condemned,  the  decision,  in  our  opinion,  is  correct, 
and  in  accordance  with  the  weight  of  authority.  We  think  that  the  case 
was  not  overrule  i  by  Dallas  v.  Hollingsworth,  3  Ind.  537,  but  that  the  latter 
case  has  been  entirely  misconstrued  by  the  Indiana  court.  Dallas  v.  Hoi- 
liugsioorth,  3  Ind.  537,  simply  involved  the  right  of  an  infant  to  abandon  hia 
special  contract,  and  recover  on  a  qunntum  meruit  for  the  services  performed, 
and  Harney  v.  Oioen,  4  Blackf.  337,  30  Am.  Dec.  662,  whicli  was  a  different 
case  entirely,  was  not  even  referred  to.  In  accordance  with  this  misconcep- 
tion of  the  effect  of  Dallas  v.  JJollingsivorih,  3  Ind.  537,  it  was  erroneously 
held  in  Wheatly  v.  Miscal,  5  Ind.  143,  that  where  an  infant  agreed  to  work 
for  a  certain  time,  in  consideration  of  which  his  employer  was  to  furnish  him 
with  board  and  clothing,  and  send  him  to  school,  and  at  the  end  of  the  time 
was  to  pay  him  a  certain  sum  of  money,  if  the  infant  quit  before  the  expi- 
ration of  the  agreed  time,  he  could  recover  for  the  value  of  the  services  up 
to  tlie  time  he  quit.  The  question  of  a  portion  of  the  consideration  for  the 
services  being  necessaries  was  not  even  noticed.  It  will  be  seen  that  the 
case  bears  a  very  close  resemblance  to  Wilhelm  v.  Haj-dman,  13  Md.  140, 
and  Squier  v.  Hydljf,  9  Mich.  274,  which  were  decided  to  the  contrary.  A 
similar  view,  in  part,  was  taken  in  Locke  v.  SniUli,  41  N.  H.  346,  in  which  it 
was  held  that  where  an  infant  renders  services  in  return  for  support  and 
education  given  him,  he  could  not,  after  coming  of  age,  repudiate  the  con- 
tract, so  as  to  recover  pay  for  his  labor,  without  allowing  anything  for  his 
support  and  education. 

In  Mountain  v.  Fisher,  22  Wis.  93,  the  court  held  that  an  infant  who  lives 
with  and  works  for  another  person  upon  a  mutual  understanding  that  hia 
services  were  rendered  in  consideration  of  receiving  a  home,  food,  clothing, 
care,  and  attention,  such  as  a  child  of  such  other  person  would  reasonably  be 
entitled  to,  and  who  was  in  fact  so  treated,  could  not  recover  for  his  ser- 
vices, but  placed  its  decision  upon  the  ground  that  the  services  were  not 
rendered  in  expectation  that  they  would  be  paid  for.  But,  on  the  other 
hand,  it  is  held,  in  Indiana,  that  the  rule  that  where  a  person  resides  with 
another  as  a  nie:r.ber  of  his  family,  being  supported  as  such,  and  rendering 
services  in  return,  there  is  no  implied  contract  to  pay  for  such  services, 
does  not  apply  where  the  person  is  an  infant;  for,  since  an  infant  can  avoid 
his  special  contract,  and  recover  the  reasonable  value  of  his  labor,  his  con- 
duct and  acts  could  not  create  an  implied  contract  whicli  would  operate 
against  him  to  bar  his  right  of  action;  but,  it  is  held,  the  reasonable  value 
of  necessaries  furnished  the  infant  during  the  perioil  of  such  service  may  be 
allowed  the  defendant:  Garner's  Admr  v.  Board,  27  Ind.  323;  Meredith  v. 
Crawford,  34  Ind.  .S99;  the  last  case,  however,  giving  as  the  reason  that 
"the  plaintiff,  having  been  an  infant  at  the  time,  was  not  bound  by  any 
special  contract  as  to  the  time  that  she  was  to  work,  or  the  amount  to  be 
paid  her  therefor."  It  may  be  said  of  these  cases  that  there  is  absolutely  no 
difference  in  principle,  whether  the  parties  have  expressly  agreed  that  the 
services  were  to  be  compensated  for  in  support,  or  whether  such  is  their  un- 
derstanding, implied  from  their  acts  and  conduct.  In  neitiier  case  should 
the  infant  be  permitted,  on  the  mere  ground  of  infancy,  to  disregard  the 
agreement  so  far  as  it  has  been  executed,  and  recover  for  his  services.  These 
Indiana  cases  are  nearly  as  erroneous  as  Wheatly  v.  Miscal,  5  Ind.  143,  which 
they  really  follow. 

Finally,  if  an  infant  has  been  furnished  with  necessaries,  while  working 
with  a  mechanic,  to  learn  his  trade,  upon  an  action  of  assumpsit  brought 
against  tl  e  infant  for  the  value  of  the  necessaries,  it  is  a  good  defense  under 
Am.  ct.  Kkp.,  Vol.  XVill.  —  40 


626  Craio  v.  Van  Bebber.  [Missouri, 

the  plea  of  non  assumpsit  that  the  defendant's  services  were  equal  to  or  ex- 
ceeded in  value  the  necessaries  furnished;    Francis  v.  Felmit,  4Dev.  &B.  498. 

Apprenticeship.  — It  has  been  said  that  an  infant  may  bind  himself  an 
apprentice,  because  such  a  contract  was  for  his  benefit:  See  note  to  Brotzman 
V.  Bunnell,  34  Am.  Dec.  538;  Rex  v.  Inhabitants  of  Arundel,  5  Maule  &  S.  257; 
Rex.  V.  Inhabitants  of  Great  Wigston,  3  Barn.  &  C.  484,  486;  5  Dowl.  &  R.  339. 
Yet  it  should  be  observed  that  whatever  binding  force  a  contract  of  appren- 
ticeship may  have  is  due  to  statute.  The  contract,  at  common  law,  is  voidable 
by  the  infant,  like  his  other  contracts:  Clark  v.  Goddard,  39  Ala.  164;  84 
Am.  Dec.  777;  Harney  v.  Owen,  4  Blackf.  337;  30  Am.  Dec.  662.  An  inden- 
ture by  which  an  infant,  with  the  consent  of  his  father,  bound  himself  ap- 
prentice to  a  tradesman,  "his  executors  and  administrators,  such  executors 
or  administiators  carrying  on  the  same  trade  or  business,  and  in  the  town  of 
Wolverliampton,"  for  the  term  of  seven  years,  and  the  master,  in  considera- 
tion of  the  service  of  the  apprentice,  covenanted  to  teach  and  instruct  him, 
or  cause  him  to  be  taught  and  instructed,  during  the  term,  was  held,  in  Eng- 
land, binding  upon  the  infant,  upon  the  death  of  the  master,  since  it  was  not 
for  the  infant's  disadvantage  to  remain  in  the  service  of  the  personal  repre- 
sentatives, and  for  unlawfully  absenting  himself  from  the  service  of  the 
executrix,  he  might  be  punished  under  the  act  4  George  IV.,  chapter  34:  Cooper 
V.  Simmons,  7  Hurl.  &  N.  707;  but  where  an  infant  was  apprenticed  by  a  deed 
containing  a  provision  that  the  master  should  not  be  liable  to  pay  wages  to 
the  apprentice  so  long  as  his  business  should  be  interrupted  or  impeded  by 
or  in  consequence  of  any  turn-out,  and  that  the  apprentice  might  during  any 
such  turn-out  employ  himself  in  any  other  manner  or  with  any  other  person 
for  his  own  benefit,  it  was  held  that  this  provision,  not  being  for  the  benefit 
of  the  infant,  the  apprentice  deed  could  not  be  enforced  against  the  infant 
under  the  Employees  and  Workmen  Act,  1875,  38  and  39  Victoria,  chapter 
90:  Meakin  v.  Morrl%  L.  R.  12  Q.  B.  D.  352, 

While  an  infant's  contract  of  apprenticeship  executed  according  to  statu- 
tory requirements  may  subject  the  infant  to  the  control  and  discipline  of 
the  master,  to  the  penalties  prescribed  by  statute  for  the  misconduct  of  ap- 
prentices, and  may  confer  a  settlement  on  the  infant  under  the  poor-laws, 
and  the  like,  yet,  unless  perhaps  the  statute  otherwise  provides,  no  action  can 
be  maintained  by  the  master,  against  the  infant,  for  damages  for  breach  of 
the  covenants  contained  in  the  indenture,  if  the  plea  of  infancy  is  interposed: 
Gylbert  v.  Fletcher,  Cro.  Car.  179;  Lylly's  Case,  7  Mod.  15;  McNijht  v.  Hogg, 
1  Const.  S.  C.  117;  and  see  Moses  v.  Stevens,  2  Pick.  332,  335.  The  contrary 
was  held  in  Woodruff  v.  Logan,  6  Ark.  276;  42  Am.  Dec.  695;  and  in  Horn  v. 
Chandler,  1  Mod.  271,  it  was  decided  that  an  infant,  unmarried,  and  above  the 
age  of  fourteen  years,  might  bind  himself  apprentice  to  a  freeman  of  London; 
and  by  the  custom  of  that  city,  the  master  might  have  the  same  remedies 
against  him  on  the  covenants  of  the  indenture  as  if  he  had  been  of  full  age; 
"  though  such  a  covenant  shall  not  bind  an  infant,  either  by  common  law, 
or  by  5  Elizabeth,  chapter  4,  yet  by  this  custom  it  shall":  Horn  v.  Chandler, 
1  Mod.  271. 

Infancy  is  certainly  a  good  defense  to  an  action  on  the  agreement  to  serve 
the  plaintiff  as  an  apprentice,  if  the  agreement  is  not  made  in  pursuance  to 
the  statute  relating  to  apprentices:  Frazier  v.  Roioan,  2  Brev.  47.  And,  on  the 
other  hand,  it  is  no  defense  to  an  action  to  recover  the  value  of  work  and 
labor  performed  by  the  plaintiif  while  an  infant,  for  the  defendant  to  show 
that  the  services  were  rendered  under  articles  of  indenture  purporting  to 
bind  the  plaintiff  to  the  defendant  as  an  apprentice,  if  the  articles  are  in- 


April,  1890.]  Craig  v.  Van  Bebbeb.  627 

valid  because  not  executed  in  conformity  with  the  statutory  requirements: 
Tague  v.  Hayward,  25  Ind.  427;  Hunsucker  v.  Elmore,  54  Ind.  209;  Kerwin  v. 
Myers,  71  lud.  359;  see  also  Harney  v.  Oxuen,  4  Blackf.  337;  30  Am.  Dec.  662; 
Davies  v.  Turton,  13  Wis.  185.  And  if  there  is  no  statute,  since  the  contract 
of  apprenticeship  is  not  binding  at  common  law,  and  since  the  statute  of 
6  Elizabeth,  chapter  4,  cannot  be  regarded  as  in  force  in  this  country,  it  being 
opposed  to  the  genius  and  spirit  of  our  institutions,  the  contract  may  be  ended 
at  the  pleasure  of  the  infant;  and,  therefore,  to  an  action  for  falsely  and  mali- 
ciously representing  to  certain  persons,  with  whom  the  plaintiff  was  employed, 
that  the  plaintiff  was  defendants'  apprentice,  by  means  whereof  the  plaintiff 
was  discharged  from  an  employment,  a  plea  of  justification  by  defendants 
st'tting  up  a  contract  of  apprenticeship  with  the  plaintiff,  who  was  a  :  linor, 
was  held  properly  sustained:  Clark  v.  Ooddard,  39  Ala.  164;  84  Am.  Dec. 
777. 

The  contract  of  apprenticeship  is  not  binding  if  the  infant  is  not  a  party 
thereto,  unless,  perhaps,  the  statute  should  provide  that  it  might  be  exe- 
cuted in  his  behalf  by  his  parents  or  guardian:  Commonwealth  ex  rel.  Murray 
V.  Moore,  1  Ashm.  123;  Pierce  v.  Massenhimj,  4  Leigh,  493;  26  Am.  Dec.  333; 
Stringfield  v.  Ileishell,  2  Yerg.  546;  Ivins  v.  Norcro^s,  3  N.  J.  L.  977; 
Matter  of  McDowlr,  8  Johns.  328;  Balch  v.  Smith,  12  N.  H.  437;  Rex  v.  In- 
halitants  of  Arneshy,  3  Barn.  &  AM.  584.  No  limitation  of  time  may  be  pre- 
scribed by  the  statute  within  which  an  infant  is  incapable  of  bimliug  him- 
self by  indenture  of  apprenticeship:  See  Brotzman  v.  Bunnell,  5  Whart.  128; 
34  Am.  Dec.  537. 

An  indenture  of  apprenticeship  of  an  infant,  it  is  held  in  England,  may  be 
put  an  end  to  when  it  is  for  the  benefit  of  both  parties,  because  of  the  mas- 
ter's running  away  and  leaving  the  apprentice:  Rex  v.  Inhabitants  of  Mount- 
son-el,  3  Maule  &  S.  497.  In  Rex  v.  Inhabitants  of  Great  Wigston,  3  Barn.  & 
C.  484,  486,  Abbott,  C.  J.,  said:  "It  is  a  general  rule  of  law  that  an  infant 
cannot  do  any  act  to  bind  himself  unless  it  be  manifestly  for  his  benefit. 
Binding  himself  an  apprentice  has  been  considered  such  an  act,  and  therefore 
it  has  been  held  that  an  infant  is  competent  to  make  such  a  contract.  If, 
then,  it  be  for  the  benefit  of  the  infant  to  bind  himself  an  apprentice,  it  ia 
impossible  to  say,  generally,  that  it  is  for  his  benefit  to  dissolve  such  connec- 
tion; such  a  position  involves  a  contradiction.  That  being  the  general  rule, 
we  must  inquire  whether  in  the  particular  instance  it  is  for  the  advantage  of 
the  infant  to  dissolve  his  apprenticeship."  In  this  case  it  was  held  tliat  no 
facts  being  stated  from  which  it  could  be  inferred  that  it  was  for  the  infant's 
benefit  to  put  an  end  to  the  apprenticeship,  it  could  not  be  considered  dis- 
Bolveil,  and  therefore  a  secoml  apprenticeship  was  invalid,  and  no  settlement 
could  be  gained  by  service  under  it. 

Finally,  it  may  be  observed  that  the  provisions  of  the  particular  statute 
in  question  must  be  examined,  in  order  to  ascertain  the  extent  of  the  bind- 
ing force  of  a  contract  of  apprenticeship  upon  an  infant. 

Contracts  to  Marry.  — While  an  infant  of  a  certain  age,  at  the  common 
law,  and  under  various  state  statutes,  is  capal)le  of  consenting  to  marriage, 
and  the  marriage  of  an  infant  of  proper  age  actually  contracted  and  solem- 
nized ia  valid  and  binding,  and  cannot  be  disagreed  to  or  avoided  on  the 
ground  of  infancy,  yet  the  mere  promise  to  marry  of  infant  is  not  binding 
upon  him,  and  hence  infancy  is  a  good  defense  to  an  action  against  him  for 
the  breach  of  the  promise  to  marry:  Hale  v.  Ruthrcn,  20  L.  T.  404;  Pool  v. 
Pratt,  1  Chip.  252;  Hunt  v.  Peake,  5  Cow.  475;  15  Am.  Dec.  475;  Warwick 
V.  Cooper,  5  Snced,  659;  Rush  v.   Wick,  31  Ohio  St.  521;  27  Am.  Rep.  523; 


628  Craig  v.  Van  Bebbeb.  [Missouri, 

Hamilton  v.  Lomax,  26  Barb.  615;  and  in  an  action  for  breach  of  promise  of 
marriage,  infancy,  it  is  held,  is  admissible  in  evidence  under  the  general  issue: 
Morris  v.  Graves,  2  Ind.  354.  In  Pool  v.  Pratt,  1  Chip.  252,  the  court  saya: 
"  A  contract  of  marriage  by  an  infant  and  his  contract  for  necessaries  are 
perfectly  analogous;  in  both  cases  the  contract  when  consummated  is  bind- 
ing, but  while  executory,  is  not  binding."  The  contract  is  not  void,  but  is 
simply  voidable  by  the  infant,  at  his  election.  Therefore,  the  adult  party  to 
the  contract  is  bound,  and  the  infancy  of  the  plaintiff  is  no  defense  to  an  ac- 
tion for  breach  of  promise  against  the  adult:  Holt  v.  Ward  Clarencieiix,  2 
Strange,  937;  Cannon  v.  Alsbury,  1  A.  K.  Marsh.  76;  10  Am.  Dec.  709;  Wil- 
lard  V.  Stone,  7  Cow.  22;  17  Am.  Dec.  496;  and  see  also  Hunt  v.  Peake,  5 
Cow.  475;  15  Am,  Dec.  475.  This  would  be  true  under  any  view  of  the  na- 
nature  of  an  infant's  general  contracts. 

It  is  held  that  the  second  section  of  the  Infants'  Relief  Act,  passed  by  the 
English  Parliament  in  1874,  noticed  ante,  under  the  head  "Statutory  Regula- 
tion," concerning  the  ratification  of  infants'  contracts,  applies  to  promises  of 
marriage.  And  therefore,  where  the  defendant,  during  his  infancy,  prom- 
ised to  marry  the  plaintiff,  and  after  coming  of  age,  recognized,  without 
expressly  repeating,  the  promise,  and  eventually  broke  it,  it  was  held  that 
the  plaintiff  was  properly  nonsuited  in  an  action  for  breach  of  promise;  for 
assuming  that  there  was  a  ratification  of  the  promise  subsequent  to  his  major- 
ity, the  right  of  action  was  taken  away  by  the  above  section,  and  there  was 
no  evidence  of  any  fresh  promise  made  after  the  defendant  came  of  age:  CoX' 
head  V.  Mnllis,  L.  R.  3  C.  P.  D.  439.  But  in  Nortlicote  v.  Doughty,  L.  R. 
4  C.  P.  D.  385,  the  defendant,  during  his  infancy,  made  an  offer  of  marriage 
to  the  plaintiff,  which  she  accepted  subject  to  the  approval  of  his  parents. 
He  afterwards  gave  her  an  engagement  ring,  which  she  wore,  and  two  days 
before  he  attained  his  majority,  he  went  into  the  country  to  visit  his  father, 
and  on  his  return,  the  day  after  he  came  of  age,  he  saw  the  plaintiff  and  told 
her  that  he  had  explained  all  to  his  father,  and  that  he  assented  to  the  en- 
gagement, the  defendant  adding  that  now  he  might  and  would  marry  the 
plaintiff  as  soon  as  he  could.  It  was  held  that  it  was  properly  left  to  the 
jury  to  say  whether  this  was  a  fresh  absolute  promise  to  m  irry,  or  merely  a 
ratification  of  the  original  promise  made  during  infancy,  so  as  to  be  avoided 
by  the  operation  of  the  second  section  of  the  above  act.  It  was  also  held,  ia 
Ditcham  v.  Worrall,  L.  R.  5  C.  P.  D.  410,  that  a  fresh  promise  of  marriage, 
made  after  the  defendant  came  of  age,  was  binding;  but  that  a  mere  ratifi- 
cation of  the  original  promise,  made  after  coming  of  age,  was  not  binding 
under  section  2  of  the  act. 

In  Develin  v.  JUgysbee,  4  Ind.  464,  it  was  held  that  where,  by  statute, 
females  of  the  age  of  eighteen  were  competent  to  contract  marriage,  a  female 
of  the  age  of  eighteen  might,  as  incident  to  such  capacity,  make  a  valid  and 
binding  release  of  a  party  from  a  contract  to  marry  her. 

Gifts.  —  A  transfer  of  his  property  by  an  infant  by  way  of  gift  is,  of 
course,  not  a  contract,  but  its  validity  may  properly  be  noticed  in  connection 
with  this  subject  of  contracts  of  infants.  If  an  infant  may  avoid  his  contract 
whereby  his  property,  real  or  personal,  has  been  transferred,  he,  or  his  per- 
sonal representatives  in  case  of  his  death,  should  plainly  have  the  right  to 
avoid  his  gift  of  such  property  on  the  ground  of  his  infancy:  Person  v.  Chase, 
Zl  Vt.  647;  88  Am.  Dec.  030;  Holt  v.  Holt,  59  Me.  464.  And  in  Swnfford  v. 
Ferguson,  3  Lea,  292,  31  Am.  Rep.  639,  it  was  held,  approving  the  criterion 
of  Lord  Chief  Justice  Eyre,  that  a  deed  executed  by  infants  without  con- 
sideration, being  necessarily  to  their  prejudice,  was  void,  and  being  void,  and 


April,  1890.]  Craig  v.  Van  Bebbeb.  629 

not  voidable,  they  could  consequently  maintain  a  bill  during  their  infancy, 
by  their  next  friend,  to  set  the  deed  aside.  But  it  was  held,  with  better 
reason,  that  a  deed  of  gift  of  a  slave,  executed  by  an  infant  in  trust  for  hi8 
children,  was  not  void,  but  voidable  only:  Slamjhter  v.  Cun)ninjham,  24  Ala. 
260;  60  Am.  Dec.  463.  An  infaut  who  executes,  without  consideration,  and 
as  a  gift,  a  deed,  in  which,  by  mistake,  the  land  was  incorrectly  described, 
cannot,  very  plainly,  be  compelled,  after  attaining  his  majority,  to  execute 
a  deed  for  the  land  intended  to  be  conveyed,  although  after  arriving  at  age  he 
promised  to  do  so,  the  promise  being  without  consideration:  Oxley  v.  Ti~yon, 
25  Iowa,  95. 

Delegation  of  Authority.  — In  a  number  of  early  cases,  both  in  Eng- 
land and  in  this  country,  it  has  been  said  that  an  infant's  warrant  of  attorney 
to  confess  a  judgment  was  absolutely  void:  Sanderson  v.  Marr,  1  H.  Black. 
75;  Wood  V.  Heath,  1  Chit.  708,  note;  Ashlin  v.  Lnngton,  4  Moore  &  S.  719; 
Bennett  v.  Davis,  6  Cow.  393;  Wajtles  v.  Hastin,js,  3  Harr.  (Del.)  403;  Carnu' 
han  V.  Allderdke,  4  Harr.  (Del.)  99;  Knox  v.  Flack,  22  Pa.  St.  337;  but  it 
eeems,  at  least  so  far  as  these  cases  show  anything  at  all,  that  this  statement 
means  nothing  more  than  that  the  court  would  set  the  judgment  aside  at  the 
instance  of  the  infant.  In  other  words,  the  infaut  might  avoid  the  warrant 
of  attorney  and  the  judgment  founded  thereon;  but  we  do  not  understand 
these  cases  as  holding  that  the  judgment  is  good  for  no  purpose  an<l  at  no 
time  at  all,  which,  of  course,  would  be  the  condition  of  affairs  if  it  were  abso. 
lutely  void.  In  Oliver  v.  Woodroffe,  4  Mees.  &  W.  650,  a  cognovit  given  by  an 
infant,  authorizing  an  attorney  to  appear  for  him,  and  confess  an  action 
brought  against  him  for  the  precise  sum  for  necessaries  provided  him  by  the 
plaintiff,  with  an  undertaking  "not  to  bring  any  writ  of  error,  nor  do  any 
act  to  prevent  the  plaintiff  from  entering  up  judgment  or  suing  out  execu- 
tion," was  held  by  Lord  Abinger  to  be  void,  for  three  reasons:  "1.  It  is 
bad  because  it  falls  within  the  principle  which  prevents  an  infant  from 
appointing  and  appearing  in  court  by  attorney;  he  can  appear  by  guardian 
only.  2.  By  this  means  the  minor  is  made  to  state  an  account,  which  the 
law  will  not  allow  him  to  do,  so  as  to  bind  himself;  if  an  action  be  brought 
against  him,  the  jury  are  to  determine  the  reasonableness  of  the  demand 
made.  3.  The  general  principle  of  law  is,  that  a  minor  is  not  to  be  allowed 
to  do  anything  to  prejudice  himself  or  his  rights";  but  here,  again,  the 
question  was  simply  as  to  the  right  of  the  infaut  to  have  the  proceedings 
taken  under  the  cognovit  set  aside.  The  reason  why  an  infant  cannot  be  ab- 
solutely held  on  an  account  stated  for  necessaries  has  already  been  noticed: 
See  supra,  "  Account  Stated." 

With  respect  to  an  infant's  formal  power  of  attorney,  or  any  mere  and  less 
technical  appointment  of  an  agent,  for  other  purposes,  it  has  been  actually 
decided  in  some  cases,  but  more  frequently  asserted  by  way  of  dictum,  that 
the  delegation  of  authority  is  not  simply  voidable,  but  absolutely  void:  Doe 
ex  dem.  Tlimnns  v.  Roberts,  16  Mees.  &  \V.  778,  781;  Dexter  v.  Hall,  15  Wall. 
9,  25;  Phil'pot  V.  BiiKjh'im,  55  Ala.  4.35;  Flexner  v.  Dickerxon,  72  Ala.  318,  322; 
Vole  V.  Pennoyer,  14  111.  158;  Hicstnnd  v.  Kuns,  8  Blackf.  345;  46  Am.  Dec. 
481;  Taiiley  v.  McGee,  6  Ind.  56;  Truehlood  v.  Truehlood,  8  Ind.  195;  65  Am. 
Dec.  756;  Pickler  v.  State,  18  Ind.  266;  Fetroio  v.  Wiseman,  40  Ind.  148,  155; 
Pyle  v.  Crarens,  4  Litt.  17;  Semple  v.  Morrison,  7  T.  B.  Mon.  298;  Dana  v. 
Coombs,  6  Me.  89,  90;  19  Am.  Dec.  194,  195;  Wainwriyhl  v.  Wilkinson,  62  Md. 
146;  Armitage  v.  W^doe,  36  Mich.  124,  129;  Poof  v.  Stafford,  7  Cow.  179,  ISO; 
Stafford  V.  Roof,  9  Cow.  626,  627;  Fonda  v.  Van  Home,  15  Wend.  631;  30 
Am.  Dec.  77;  Bool  v.  Mix,  17  Wend.  119;  31  Am.  Dec.  285;  Bobbins  v.  Mount, 


632  Craig  v.  Van  Bebbeb.  [Missouri, 

entered  into  by  means  of  an  agent:  See  Cole  v.  Pennoyer,  14  III.  158;  Fetrow 
V.  Wisemav,  40  Ind.  148,  155;  also  Roof  v.  Stafford,  7  Cow.  179,  ISO;  Stafford 
V.  Roof,  9  Cow.  626,  627;  Bool  v.  Mix,  17  Weud.  119;  31  Am.  Dec.  285.  In 
Fetrow  v.  Wiseman,  40  Ind.  148,  155,  the  court  contents  itself  with  saying 
that  the  proposition  "may  not  be  founded  in  soli<l  reason,  but  is  so  held  by 
all  the  authorities." 

Whenever  the  question  has  been  at  all  examined,  the  courts  have  usually 
reached  the  conclusion  that  an  infant's  appointment  of  an  agent,  and  a  con- 
tract made  under  it,  are  not  void,  but  that  the  contract  stands  on  exactly  the 
same  footing  as  a  contract  entered  into  by  the  infant  personally.  Thus  Chief 
Justice  Parker  held  at  an  early  day,  in  Whitney  v.  Dutch,  14  Mass.  457,  7  Am. 
Dec.  229,  that  an  infant  may  authorize  a  person  to  execute  a  promissory  note 
on  his  behalf,  the  delegation  of  authority  not  being  void,  and  therefore  the  note 
might  be  ratified  by  the  infant  after  coming  of  age.  P'urthermore,  this  au- 
thorization need  not  be  express,  but  might  result  from  a  partnership  relation 
existing  between  the  infant  and  another  person,  who  executed  the  note  in  the 
name  of  the  firm  for  a  firm  debt.  We  cannot  do  better  than  to  quote  from 
the  able  opinion  of  the  learned  chief  justice.  He  says:  "  Upon  principle, 
what  difference  can  there  be  between  the  ratification  of  a  contract  made  by 
the  infant  himself,  and  one  made  by  another  acting  under  a  parol  authority 
from  him  ?  And  why  may  not  the  ratification  apply  to  the  authority  as  well 
as  to  the  contract  made  under  it  ?  It  may  be  said  that  minors  may  be  ex- 
posed if  they  may  delegate  power  over  their  property  or  credit  to  another;  but 
they  will  be  as  much  exposed  by  the  power  to  make  such  contracts  themselves, 
and  more  for  the  person  delegated  will  generally  have  more  experience  in 
business  than  the  minor.  And  it  is  a  sufficient  security  against  the  danger 
from  both  these  sources  that  infants  cannot  be  prejudiced;  for  the  contracts  are 
in  neither  case  binding,  unless,  when  arrived  at  legal  competency,  they  volun- 
tarily and  deliberately  give  effect  to  the  contract  so  made.  And  in  such  case 
justice  requires  that  they  should  be  compelled  to  perform  them."  Tiie  learned 
justice,  however,  with  more  care  than  necessary,  avoids  the  question  whether 
an  infant  can  confer  an  authorization  to  do  an  act  under  seal,  saying:  "  Per- 
haps it  cannot  be  contended,  against  the  current  of  authorities,  that  an  act 
done  by  another  for  an  infant,  which  act  must  necessarily  be  done  by  letter 
of  attorney  under  seal,  is  not  absolutely  void,  although  no  satisfactory  reason 
can  be  assigned  for  such  a  position."  We  might  here  observe  that  several 
cases  noticed  supra,  under  the  head  "Partnership  Agreements  and  Transac- 
tions," which  hold  that  an  infant  may  ratify  a  partnership  contract  so  as  to 
be  liable  thereon,  must  necessarily  assume,  even  if  they  do  not  decide,  that 
an  infant's  appointment  of  an  agent  is  not  void:  See  particularly  Miller  v. 
Sims,  2  Hill  (S.  C.)  479. 

In  conformity  with  this  case  of  Whitney  v.  Dutch,  14  Mass.  457,  7  Am. 
Dec.  229,  it  has  been  held  that  if  an  infant  payee  of  a  promissory  note 
authorizes  a  person  to  indorse  and  transfer  the  note  for  him,  the  transfer 
so  made  is  not  void,  but  is  valid  until  avoided,  the  authorization  not 
being  void,  but  voidablv3  only:  Hardy  v.  Waters,  88  Me.  450;  and  that 
the  same  rule  applies  to  a  non-negotiable  note:  Hastings  v.  Dolkirhide, 
24  Cal.  195.  Again,  it  is  held  that  the  fact  that  an  infant  notified  his 
vendee  of  personal  property  of  his  election  to  rescind  the  contract  of  sale, 
ofifered  to  return  the  consideration,  and  demanded  a  restoration  of  the  prop- 
erty, through  an  agent,  was  no  defense  to  an  action  of  trover  by  the  infant 
against  the  vendee  to  recover  back  the  property,  the  acts  of  the  agent  not 
being  void,  but,  at  most,  voidable,  at  the  election  of  the  infant:  Towle  v. 


April,  1890.]  Craig  v.  Van  Bebber.  631 

right  to  disaffirm  the  coatract  and  recover  back  the  money  which  his  father 
had  paid  under  it,  on  the  ground  that  he  had  assented  to  the  contract,  on 
being  informed  of  it.  It  was  held  that  he  could  not  adopt  the  contract  and 
recover;  for,  says  Cooley,  C.  J.,  '"had  the  infant,  in  the  first  place,  under- 
taken to  make  another  his  agent  to  enter  into  the  contract  for  him,  the 
appointment  would  not  have  been  valid.  On  the  autiiorities,  no  rule  ia 
clearer  than  that  an  infant  cannot  empower  an  agent  or  attorney  to  act  for 
him.  But  if  he  cannot  appoint  an  agent  or  attorney,  it  is  clear  he  cannot  affirm 
what  one  has  assumed  to  do  in  his  name  as  such.  He  cannot  affirm  what  he 
could  not  authorize."  It  seems  to  us  that  this  language,  as  applied  to  the 
facts  of  the  case,  was  wholly  unnecessary.  It  does  not  appear  that  the  infant 
assented  to  the  contract  made  in  his  name,  so  far  as  to  return,  or  promist  to 
return,  to  his  fatlier  the  money  advanced  by  the  latter;  and  as  he  did  not, 
any  rights  asserted  by  him  under  the  contract  were  really  claimed  by  him  as 
a  gift  from  His  father.  If  he  had  returned  the  money  to  his  father,  or  even 
agreed  to  return  it,  and  thus  have  fully  adopted  the  contract,  we  do  not  see 
why  he  could  not  have  afterwards  repudiated  the  contract,  and  recovered  the 
money  paid  to  the- defendant.  The  court  went  on  to  hokl,  with  more  cor- 
rectness, that,  treating  the  act  of  the  father  as  a  gift  to  the  son,  the  son  was 
not  entitled  to  recover  back  the  money  paid;  for  the  contract  was  valid  in 
the  father's  hands,  and  could  not  be  repudiated  by  him,  and  he  could  not 
empower  another  to  do  what  he  could  not  do  himself. 

In  California  and  Dakota,  as  alreadj'  seen,  an  infant's  "  delegation  of 
power"  is  made  by  statute  absolutely  void:  Cal.  Civ.  Code,  sec.  33;  Dak. 
Civ.  Code,  sec.  15;  ante,  "Statutory  Regulation";  Wambole  v.  Foote,  2  Dak. 
1,  the  court  in  this  case  saying:  "This  particular  disability,  after  all,  works 
no  hardship,  but  rather  a  benefit;  for  the  disposition  of  the  infant's  property 
is  perhaps  better  secured  through  a  guardian,  under  the  control  of  a  court,"  — 
a  nonsensical  apology  for  the  rule,  and  the  legislation  which,  the  court  says, 
"preserves"  it;  for  the  same  remark  would  apply  to  contracts  of  an  infant, 
rendering  them  equally  void. 

It  is  thus  seen,  from  an  analysis  of  the  decisions,  that,  independently  of 
statute,  there  is  in  truth  but  very  little  real  authority  in  support  of  the 
proposition  that  an  infant's  delegation  of  authority,  and  contracts  made  in 
pursuance  of  it,  are  void;  and  among  all  the  cases  which  exist  in  favor  of  the 
rule,  not  one  is  sustained  by  any  reasoning  whatever.  The  notion  that  an 
infant's  appointment  of  an  agent  is  void  seems  to  have  originated  with  Per- 
kins's senseless  criterion:  "All  such  gifts,  grants,  or  deeds  made  by  an  infant 
as  do  not  take  efifect  by  delivery  of  his  hand  are  void.  But  all  gifts,  gratits, 
or  deeds  made  by  an  infant  by  matter  in  deed,  or  in  writing,  which  take  effect 
by  delivery  of  his  own  hand,  are  voidable":  Perkins  on  Conveyancing,  sec. 
12;  see  supra,  "  Void  and  Voidable  ";  or  perhaps  we  should  say  that  the  notion 
originated  in  the  interpretation  put  upon  this  passage  by  Lord  Mansfield  in 
Zouch  V.  Parsons,  3  Burr.  1794,  1804,  who  says  that  "the  words  'which  do 
take  efi"ect'  are  an  essential  part  of  the  definition,  and  exclude  letters  of  at- 
torney, or  deeds  which  delegate  a  mere  power  and  convey  no  interest."  From 
"letters  of  attorney  "  the  transition  to  all  delegations  of  authority  was  an 
easy  one;  and  we  find  case  after  case  repeating  the  dictum  that  an  infant's 
power  of  attorney  or  appointment  of  an  agent  is  void,  without  stopping  to 
inquire  the  reason  why.  Even  cases  which  have  otherwise  correctly  an- 
nounced that  none  of  an  infant's  general  contracts  were  void  by  reason  of  his 
nonage  have  sometimes  carelessly  said  that  an  infant's  appointment  of  an 
agent  was  void,  and  have  thus  made  an  exception  where  the  contract  was 


630  Craig  v.  Van  Bebber.  [Missouri, 

4  Rob.  (N.Y.)  553;  Brown  v.  Town  of  Canton,  4  Lans.  409;  Latm-ence's  Lessee 
V.  McArter,  10  Ohio,  37;  Turner  v.  Bondalier,  31  Mo.  App.  582. 

If,  then,  according  to  these  authorities,  an  agent  be  appointed  by  an  infant 
for  the  purpose  of  making  a  contract  in  his  behalf,  the  appointment  being 
void,  the  contract  entered  into  pursuant  to  it  must  necessarily  also  be  voki. 
The  result  is,  that  the  contract  would  be  good  for  no  purpose  whatever,  and 
would  be  incapable  of  ratification  by  the  infant  after  coming  of  age.  And 
this  has  been  so  decided.  Thus  in  Doe  ex  clem.  Thomas  v.  Roberts,  16  Mees. 
&  W.  778,  781,  Baron  Parke  says:  "An  agreement  by  an  agent  cannot  bind 
an  infant.  If  an  infant  appoints  a  person  to  make  a  lease,  it  does  not  bind 
the  infant,  neither  does  his  ratification  bind  him.  There  is  no  doubt  about 
the  law;  the  lease  of  an  infant,  to  be  good,  must  be  his  own  personal  act." 
So  it  is  held  that  a  bond  for  title,  executed  by  the  agent  of  an  infant,  cannot 
be  ratified  by  him  after  attaining  majority:  Truehlood  v.  Trvehlood,  8  Ind. 
195;  65  Am.  Dec.  756;  see  also  Wainivrljlit  v.  Wilkinson,  62  Md.  146.  In 
Pldlpot  V.  Bingham,  55  Ala.  435,  and  Lawrence's  Lessee  v.  McArter,  10  Ohio, 
37,  it  was  said  that  an  infant's  power  of  attorney  to  sell  lands,  under  which 
the  lands  were  sold  and  conveyed,  was  absolutely  void,  and  consequently  no 
title  passed  under  the  conveyance;  but  this  was  only  a  dictum  in  either  case; 
for  in  Philpot  v.  Bingham,  55  Ala.  435,  the  infant  had  brought  an  action  to 
recover  possession  of  the  land,  and  the  question  involved  was  simply  his  right 
to  disaffirm  the  deed;  and  in  Lawrences  Lessee  v.  McArter,  10  Ohio,  37,  the 
action  was  ejectment,  the  defendant  claiming  title  under  the  conveyance  ex- 
ecuted in  pursuance  of  the  power  of  attorney,  and  the  plaintiS"  under  a  deed 
executed  to  him  by  the  infant  after  coming  of  age,  which,  of  course,  had  dis- 
affirmed the  prior  deed.  And  in  Pyle  v.  Cravens,  4  Litt.  17,  it  was  also  said 
that  if  an  infant  son  executes  a  power  of  attorney  to  his  father,  authorizing 
the  latter  to  dispose  of  the  son's  claim  in  certain  land,  the  power  of  attorney 
was  absolutely  void,  and  could  not  be  enforced  against  the  son.  Of  course, 
it  could  not  be  enforced  against  the  son's  defense  of  infancy.  In  Semple  v. 
Morrison,  7  T.  B.  Mon.  298,  the  assignment  of  a  note  belonging  to  an  infant, 
by  an  agent,  was  held  to  be  void,  the  court  saying:  "It  is  true,  the  assign- 
ment to  Semple  appears  not  to  have  been  made  under  any  written  warrant 
[power]  of  attorney;  but  if,  as  the  doctrine  of  the  law  seems  to  be,  acts  done 
under  warrants  of  attorney  are  void  because  infants  are  disabled  from  ap- 
pointing an  attorney,  the  result  must  be  the  same,  whether  the  attorney  be 
appointed  by  warrant  of  attorney,  strictly  so  called,  or  by  parol."  And  in 
Fonda  v.  Van  Home,  15  Wend.  631,  30  Am.  Dec.  77,  a  sale  of  chattels  made 
by  the  agent  of  an  infant  was  likewise  held  void;  see  also  Stafford  v.  Roof, 
9  Cow.  626,  627,  per  Jones,  Chancellor. 

In  Brown  v.  Town  of  Canton,  4  Lans.  409,  a  direction  by  an  infant  to  town 
authorities  to  deliver  certain  town-bounty  certificates,  to  which  he  was  en- 
titled on  enlisting  as  a  soldier,  to  his  father,  and  when  due  to  pay  them  to 
the  latter,  was  also  asserted  to  be  void;  and  although  the  town  paid  the 
amount  of  the  certificates  to  the  assignee  of  the  fathei,  it  was  held  that  the 
infant  was  to  be  regarded  as  still  owning  the  certificates,  and  entitled  to  re- 
cover upon  them  from  the  town.  It  is  plain  that  the  case  simply  involved 
the  right  of  the  infant  to  disaffirm  the  transaction.  For  a  case  in  which  the 
opposite  result  was  reached,  on  a  somewhat  similar  state  of  facts,  on  the 
ground  that  the  agency  had  been  executed  before  a  revocation  was  attempted 
by  the  infant,  see  W<'lch  v.  Welch,  103  Mass.  562.  In  Armitage  v.  Widoe,  36 
Mich.  124,  a  father  made  a  contract  for  the  purchase  of  lands  in  the  name  of 
his  infant  son,  without  the  knowledge  of  the  latter.     The  son  claimed  the 


April,  1890.]  Craig  v.  Van  Bebber.  633 

Dresser,  73  Me.  252.  In  Slifv.  Keith,  14.3  Mass.  224,  it  was  held  that  a  con- 
tract of  bailment  made  by  the  bailee  with  the  agent  of  an  undisclosed  prin- 
cipal, who  was  a  minor,  could  not  be  rescinded  by  the  bailee  on  the  ground 
of  the  principal's  minority,  which,  of  course,  might  have  been  done  had  the 
agency  been  void.  And  so  far  as  real  property  is  concerned,  Hemphill,  C.  J., 
remarks,  in  Cummings  v.  Powell,  8  Tex.  SO,  88,  in  commenting  upon  the  opin- 
ion in  Whitney  v.  Dutch,  14  Mass.  457,  7  Am.  Dec.  229:  "The  justness 
of  the  views  presented  in  this  opinion  is  very  striking,  and  they  apply 
with  special  force  to  the  condition  of  property  in  this  state.  The 
lands  of  individuals  are  frequently  situate  in  counties  remote  from 
each  other  and  from  the  residence  of  the  owner.  It  is  a  matter 
of  great  convenience,  if  not  absolute  necessity,  that  sales  should  be 
effected  by  agents,  and  it  seems  quite  preposterous  that  a  sale  by  a 
minor,  which  must  necessarily  or  may  conveniently  be  made  through 
the  intervention  of  an  attorney  in  fact,  should  be  void,  but  if  made  by  hini- 
himself  would  be  only  voidable.  His  infancy,  instead  of  operating  benefi- 
cially, would,  under  such  circumstances,  be  perverted  to  his  injury.  If  the  act 
be  voir\  it  is  not  binding  on  others;  and  if  the  property  depreciate  after  the 
sale,  it  might  be  thrown  back  upon  his  hands,  and  his  infancy  would  then  be 
turned  against  him,  and  instead  of  shielding  himself,  would  protect  others." 
!See  also  Ferguson  v. Houston  etc.  li'y  Co.,  To  Tex.  344,  347;  but  see  Voglesang 
V.  Null,  67  Tex.  465;  A.ilcey  v.   Williavis,  74  Tex.  29-*. 

It  seems  to  us,  furthermore,  contrary  to  the  opinion  expressed  by  Cooley, 
C.  J.,  in  Armiiage  V.  IVidoe,  36  Mich.  124,  that  an  infant  may  adopt  a  con- 
tract made  in  his  name  by  one  who  acted  without  previous  authority.  There 
is  no  difference  in  principle  whether  the  authority  is  previously  expressly 
conferred  or  is  subsequently  ratified.  In  Ward  v.  Steamboat  Little  lied,  8 
Mo.  358,  it  was  said  that  "an  infant  can  become  a  party  to  a  contract  made 
without  authority  from  him,  by  his  subsequent  adoption  of  it,  as  well  as  by 
his  previous  express  consent";  and  in  Alexander  v.  Heriot,  Bail.  Eq.  223,  it 
was  held  that  if  one  makes  a  purchase  for  an  infant,  avowedly  as  agent, 
if  the  infant  affirm  the  contract  after  attaining  full  age,  he  will  be  directly 
liable  to  the  vendor.  It  must  be  said,  however,  that  the  question  under  con- 
sideration does  not  seem  to  have  been  distinctly  raised  in  either  of  these  cases. 

An  infant,  of  course,  may  be  an  agent,  and,  as  such,  bind  his  principal:  TaU 
hot  V.  Bowen,  1  A.  K.  Marsh.  43G;  10  Am.  Dec.  747. 

Infant's  Concealment  or  Misrepresentation  as  to  Age,  etc.  —  The 
question  next  presents  itself  as  to  what  effect,  if  any,  is  produced  upon  the 
general  contracts  of  an  infant  by  the  fact  that  he  has  dealt  as  an  adult,  or 
made  false  representations  as  to  his  age  or  other  matters,  whereby  the  other 
party  was  induced  to  enter  into  the  contract.  In  the  first  place,  it  is  per- 
fectly well  settled  at  law  that  the  general  contract  of  an  infant,  otherwise 
voidable,  cannot  be  enforced  against  him  because  he  dealt  or  traded  as  an 
adult.  He  is  not  thereby  estopped  from  pleading  his  infancy'  as  a  defense: 
Miller  v.  Blanldeij,  38  L.  T.  527;  Van  Winkle  v.  Ketcham,  3  Caines,  323; 
Houston  V.  Cooper,  3  N.  J.  L.  866;  Curtin  v.  Pa/ton,  11  Serg.  &  R.  305,309; 
Oliver  v.  McClellan,  21  Ala.  675;  Carpenter  v.  Pridgen,  40  Tex.  32,  35;  Folds 
V.  Allardt,  35  Minn.  488,  489;  nor  is  he  estopped  from  disaffirming  his  deed, 
and  maintaining  an  action  to  recover  the  land  conveyed,  by  the  fact  that 
when  the  deed  was  executed  he  appeared  and  was  believed  by  the  grantee  to 
be  an  adult:  Buchanans.  Hubbnrd,  96  Ind.  1.  Nor  even  is  his  contract  ren- 
dered binding  at  law,  so  that  a  recovery  can  be  had  against  him  thereon,  from 
the  fact  that  he  falsely  represented  himself  to  be  of  full  age  at  the  time  the  con- 


634  Cbaig  v.  Van  Bebber.  [Missouri, 

tract  was  made,  and  the  other  party  relied  upon  such  representation  in  enter- 
ing into  the  contract:  Bartlett  v.  Wells,  1  Best  &  S.  838;  De  Roo  v.  Foster,  12 
Com.  B.,  N.  S.,  272;  Baleman  v.  Kingston,  6  L.  R.  Ir.  328;  Conroe  v.  Birdsall, 
1  Johns.  Cas.  127;  1  Am.  Dec.  105;  Brown  v.  McCiine,  5  Sand.  224;  Burley 
V.  Bussell,  10  N.  H.  184;  34  Am.  Dec.  146;  Merriam  v.  Cunnhvjlmm,  11 
Cush.  40;  Carpenter  v.  Carpenter,  45  Iiid.  142;  Conrad  v.  Lane,  26  Minn.  389; 
37  Am.  Rep.  412.  *' A  contrary  doctrine,"  says  Sandford,  J.,  in  Brown  v. 
McCune,  5  Sand.  224,  "would  overturn  the  whole  law  relative  to  the  con- 
tracts of  infants.  From  holding  that  an  infant  was  estopped  by  a  falsehood 
as  to  his  age,  the  next  step  would  be  to  hold  him  estopped  by  a  suppression 
of  the  fact  that  he  was  under  age,  when  he  was  silent  on  that  point,  while  he 
knew  that  the  party  with  whom  he  was  contracting  supposed  him  to  be  of 
age.  There  is  no  difference  between  the  direct  and  the  inferential  falsehood; 
the  one  is  as  fraudulent  as  the  other." 

For  the  same  reason,  a  grantor  is  not  estopped  from  disaffirming  her  deed 
on  the  ground  of  infancy,  and  maintaining  an  action  to  recover  the  land,  by  a 
false  recital  in  the  deed  that  she  was  "  unmarried  and  of  age  ":  Wieland  v. 
Kobi'k,  110  111.  16:  51  Am.  Rep.  676.  So,  also,  an  infant  who  fraudulently 
represented  himself  to  be  of  age  may  nevertheless  disaffirm  his  contract  of 
sale  of  goods,  and  maintain  trover  against  the  purchaser  for  their  conversion: 
Norrisv.  Vance,  3  Rich.  L.  164.  "An  infant  is  liable  for  his  torts,"  says  the 
court;  "but  his  tort  neither  makes  valid  his  void  contract,  nor  takes  away 
his  right  of  disaffirming  a  voidable  one  ";  nor  where  an  infant  makes  a  pur- 
chase of  personal  property  is  his  right  to  disaffirm  the  contract  and  recover 
back  the  purchase  price  affected  by  the  fact  that  at  the  time  he  made  the 
purchase  he  falsely  represented  to  the  vendor  that  he  was  of  full  age:  Whit- 
comb  V,  Joslyn,  51  Vt.  79;  31  Am.  Rep.  678.  "To  hold  that  he  is  estopped 
by  such  representations  from  avoiding  the  contract  by  asserting  his  infancy 
would  be  an  exception  to  the  law  governing  this  class  of  cases.  Such  repre- 
sentations cannot  be  of  any  greater  force  to  bind  the  plaintiff  than  the  con- 
tract itself":  Whitcomb  v.  Joslyn,  51  Vt.  79;  31  Am.  Rep.  678.  And, 
likewise,  a  minor's  fraudulent  representation  to  a  shipping  commissioner 
for  a  vessel,  that  he  was  of  age,  will  not  estop  him  from  avoiding  his  written 
contract  for  compensation,  and  recovering  pay  on  a  quantum  meruit:  Burdett 
V.   Williams,  30  Fed.  Rep.  697. 

Again,  for  like  reasons,  an  action  to  recover  the  purchase  price  of  goods  can- 
not be  sustained  against  an  infant  on  the  ground  of  the  infant's  false  represen- 
tations as  to  his  means  of  payment  and  prosperous  condition  of  his  business, 
made  to  induce  the  sale  and  to  give  him  credit,  on  which  the  vendors  relied: 
StudweU  v.  Shapter,  54  N.  Y.  249;  and  infancy  is  a  good  defense  to  an  action 
against  a  person  as  a  secret  partner,  to  recover  the  price  of  goods,  purchased 
ostensibly  by  his  co-defendant  on  the  false  representations  of  the  infant  as  to 
the  solvency  of  the  co-defendant,  in  order  that  the  two  might  both  profit  by 
obtaining  the  goods:  Vinsen  v.  Lockard,  7  Bush,  458;  and  where  an  infant 
perpetrated  a  fraud,  in  representing  that  certain  bonds,  deposited  by  him  as 
a  margin  upon  a  stock  transaction,  belonged  to  himself,  it  was  said:  "An 
infant  is  liable  for  his  willful  torts,  and  for  damages  for  frauds  committed  by 
him;  but  no  fraudulent  representation  made  by  an  infant  can  give  validity 
to  any  contract  entered  into  by  him  which  would  otherwise  be  voidable  for 
his  infancy.  The  action  must,  in  all  cases,  arise  solely  upon  the  tort  or  wrong 
committed  by  him":  Heath  v.  Mahoney,  7  Hun,  100.  It  will  be  noticed  that 
the  actions  in  the  foregoing  cases  were  not  brought  to  recover  damages  re- 
sulting from  the  fraudulent  representations,  or  to  reclaim  the  goods  sold,  but 


I 


April,  1890.]  Craig  v.  Van  Bebbeb.  635 

sought  to  enforce  the  contracts  which  had  been  made.  In  Stool/oos  v.  Jen- 
kins, 12  Serg.  &  R.  399,  a  release  of  her  interest  in  land  executed  by  an 
infant  in  collusion  with  her  guardian,  having  first  chosen  him  guardian  for 
the  purpose  of  cheating  the  releasees,  and  then  deceived  them  by  persuading 
them  that  their  title  would  be  confirmed  by  the  release,  and  thus  prevailed 
upon  them  to  pay  her  a  certain  sum  of  money  as  her  share  of  the  land,  was 
held  not  to  constitute  such  fraud  as  would  prevent  the  infant  from  avoiding 
the  release  and  recovering  the  land;  for,  it  was  said,  the  infant  did  not  pre- 
tend to  be  of  full  age,  and  the  probability  was,  that,  acting  under  her  guar- 
dian's influence,  she  was  ignorant  of  the  law,  and  really  supposed  that  the 
release  would  confirm  the  title  of  the  defendants.  And,  very  plainly,  neither 
the  conduct  of  an  infant's  mother  in  inducing  certain  persons  to  enter  into  a 
contract  of  apprenticeship  with  the  infant,  nor  the  act  of  her  agent  in  inten- 
tionally drawing,  with  her  knowledge  and  acquiescence,  the  contract  so  as 
to  be  insufficient,  can  estop  the  infant  from  avoiding  the  contract:  Clark  v. 
Goddard,  39  Ala.  1G4;  84  Am.  Dec.  777. 

In  equity,  also,  it  is  equally  well  settled  as  at  law  that  an  infant  is  not 
estopped  from  avoiding  his  contract  from  tlie  mere  fact  that  he  did  not 
disclose  his  minority  at  the  time  he  entered  into  the  contract,  and  the  other 
party  believed  him  to  be  adult,  and  dealt  with  him  on  that  supposition: 
Stikeman  v.  Dawson,  1  De  Gex  &  S.  90;  Baker  v.  Stone,  136  Mass.  405;  Brant- 
ley V.  Wolf,  60  Miss.  420;  and  see  Davidson  v.  Young,  38  111.  145;  Pijle  v. 
Cravens,  4  Litt.  17;  Price  w.  Jennings,  62  Ind.  Ill;  A  hey  v.  Reed,  115  Ind. 
148;  7  Am.  St.  Rep.  418.  "We  think  these  facts,"  says  the  court  in  Baker 
V.  Stone,  136  Mass.  405,  "would  not  estop  her  from  avoiding  the  mortgage 
and  the  note.  They  do  not  present  the  question  whether  a  minor  who  has 
induced  a  person  to  accept  a  conveyance  of  land  by  false  and  fraudulent 
representations  that  he  is  of  full  age  may  be  estopped  to  disaffirm  the  con- 
veyance when  of  age."  "In  one  sense,"  says  Chalmers,  J.,  in  Brantley  v. 
Wolf,  60  Miss.  420,  "it  is  always  a  wrong  and  an  injury  for  a  person  labor- 
ing under  a  disability  to  enter  into  a  contract  and  enjoy  its  fruits,  and  there- 
after to  repudiate  it  to  the  prejudice  of  the  other  party;  but  legal  fraud 
cannot  be  predicated  of  such  conduct  by  a  minor,  where  it  has  been  un- 
marked with  any  element  of  deceit  or  intentional  wrong,  because  the  right 
of  disafiirmance  is  the  privilege  which  the  law  attaches  to  the  condition  of 
disability;  and  of  this  right  all  men  are  bound  to  take  notice."  Again, 
Bays  Dargan,  C,  in  Rivers  v.  Gregg,  5  Rich.  Eq.  274,  279,  "he  who  deals 
with  an  infant  is  presumed  to  know  of  his  infancy.  He  is  bound,  at  his 
peril,  to  make  the  inquiry.  It  makes  no  difference  whether  the  inquiries  re- 
sult in  correct  information,  or  the  reverse.  It  is  no  excuse  if  he  honestly 
supposed,  from  his  appearance  or  other  circumstances,  that  the  infant  was  an 
adult."  See  further,  on  the  question  that  it  is  not  a  fraud,  either  at  law  or 
in  equity,  for  an  infant  to  disaffirm  his  contract.  Tucker  v.  Moreland,  10 
Pet.  59,  77;  1  Am.  Lead.  Cas.  *224.  *234,  per  Story.  J.;  Glamorgan  v.  Lane, 
9  Mo.  442,  471;  Bnrm  v.  Hill,  19  Ga.  22;  Seahrook  v.  Gregg,  2  S.  C.  68. 

If,  however,  an  infant  is  guilty  of  something  more  than  a  mere  failure  to 
disclose  his  infancy  at  the  time  the  contract  is  entered  into,  and  fraudulently 
represents  that  he  is  of  full  age,  or  actively  conceals  his  minority,  whereby 
the  other  party  is  induced  to  enter  into  the  contract,  then  it  is  held  the  in- 
fant will  be  estopped  in  equity  by  his  fraud  from  avoiding  the  contrc  t  on 
the  ground  of  infancy,  to  the  prejudice  of  the  other  contracting  party: 
Ferguson  v.  Boho,  54  Miss.  121;  and  see  Davidson  v.  Young,  38  111.  145;  Con- 
roe  v.  Birdsall,  1  Johns.  Cas.    127;  1  Am.  Dec.  105;  but  see  Geer  v.  Hovy,  1 


636  Craig  v.  Van  Bebber.  [Missouri, 

Root,  179;  Sims  v.  Everhardi,  102  U.  S.  300.  In  Ferguson  v.  Bobo,  54  Miss. 
121,  Chalmers,  J.,  says:  "It  maybe  stated  as  a  general  proposition,  fully 
borne  out  by  the  authorities,  that  whenever  an  infant  who  has  arrived  at 
years  of  discretion,  by  direct  participation,  or  by  silence  when  he  was  called 
upon  to  speak,  has  entrapped  a  party,  ignoi-ant  of  his  title  or  of  his  minority, 
into  purchasing  his  property  from  another,  he  will  be  estopped,  in  a  court  of 
chancery,  from  setting  up  such  title  ";  and  therefore,  where  an  infant  nine- 
teen years  of  age,  knowing  her  rights,  conveyed  land  to  her  father  for  the  pur- 
pose of  enabling  him  to  borrow  money  by  giving  a  mortgage  thereon  to  one 
who  was  ignorant  of  her  minority,  and  subsequently  the  father  conveyed  the 
land  to  the  mortgagee  to  pay  the  debt,  the  mortgagee  being  still  ignorant  of 
the  daughter's  minority,  it  was  held  that  a  court  of  equity  would  restrain 
her  from  asserting  a  claim  to  the  land  in  au  action  of  ejectment  after  her  ar- 
rival at  full  age.  In  Lempritre  v.  Lanje,  L.  R.  12  Ch.  D.  675,  it  was  also 
held  that  where  an  infant  obtained  a  lease  of  a  furnished  house  on  an  implied 
representation  that  he  was  of  full  age,  the  lease  would  be  declared  void  and 
canceled  at  the  suit  of  the  lessor,  and  possession  of  the  house  ordered  to  be 
given  up,  and  the  defendant  restrained  by  injunction  from  parting  with  the 
furniture,  but  that  the  defendant  would  not  be  liable  for  use  and  occupation. 
If  equity  will  thus  aid  a  party  with  whom  the  infant  has  contracted,  it  cer- 
tainly should  not  assist  an  infant  feme  covert  to  set  aside  a  deed  made  by 
her  of  her  lands,  against  an  innocent  purchaser,  who  was  induced  to  part 
with  his  money  on  the  faith  of  an  oath  made  by  herself  and  husband  before 
a  notary  that,  to  the  best  of  their  knowledge  and  information,  she  was  then 
more  than  twenty-one  years  of  age:  Sclunitheimer  v.  Eiseinan,  7  Bush,  298. 

The  party  contracting  with  the  infant  must,  of  course,  be  deceived  by  the 
fraud  of  the  infant,  in  order  that  the  rule  may  operate.  Therefore  a  settle- 
ment executed  by  an  infant  in  contemplation  of  marriage  was  held  not  bind- 
ing upon  him,  because  he  had  falsely  represented  to  the  solicitor,  before 
executing  the  instrument,  that  he  was  of  age,  it  appearing  that  the  intended 
wife  knew  that  he  was  not  of  age,  and  was  consequently  not  deceived:  Nel- 
son V.  Stocker,  4  De  Gex  &  J.  458;  and  so  where  an  infant  feme  covert  relin- 
quished her  dower,  she  is  not  estopped  from  disaffirming  her  deed  by  the  fact 
that  she  declared  herself  to  be  of  age  to  the  officer  who  took  her  acknowl- 
edgment, there  being  no  proof  that  such  declaration  was  communicated  to 
the  party  to  be  affected,  and  formed  the  inducement  to  the  contract,  or  misled 
him  to  enter  freely  upon  it:  Watson  v.  Billings,  38  Ark.  278;  42  Am.  Rep.  1. 
And  in  determining  whether  a  person  was  deceived,  or  was  justified  in  rely- 
ing upon  the  representations,  the  appearance  of  the  infant  is,  of  course,  a 
very  material  matter.  For,  says  Sir  George  Jessel,  M.  R.,  in  Ejc  parte  Jones, 
L.  R.  18  Ch.  Div.  109,  120,  "  if  the  representation  were  made  by  a  boy  of  ten 
years  old,  it  would  be  impossible  that  the  person  to  whom  it  was  made  could 
have  relied  on  it.  But  if  a  man  who  is  apparently  of  full  age  represents  that 
he  is  of  full  age,  the  person  to  whom  he  makes  the  representation  may  well 
be  deceived  by  it.  An  infant  is  capable  of  committing  a  fraud  in  equity  just 
as  he  is  capable  of  committing  a  crime,  and  may  be  made  liable  for  it.  But 
the  authorities  show  that  there  must  be  an  express  representation,  and  one 
which  would  naturally  deceive  the  person  to  whom  it  is  made."  It  is  held, 
furthermore,  that  the  fact  that  an  infant  induced  a  person  to  purchase  his 
land  on  the  faith  of  his  representation  that  he  was  of  full  age  could  not 
avail  such  purchaser  in  a  contest  between  him  and  an  innocent  purchaser  to 
whom  the  infant  conveyed  the  land  after  coming  of  age:  Vallandinyham  v. 
Johnson,  85  Ky.  288. 


April,  1890.]  CRAia  v.  Van  Bebber.  637 

It  has  also  been  shown,  supra,  "Trading  Contracts,"  that  an  infant  might 
be  declared  a  bankrupt  with  respect  to  debts  contracted  on  the  faith  of  repre- 
sentations or  a  holding  out  that  he  was  of  full  age,  such  debts  being  binding 
upon  the  infant  in  a  court  of  bankruptcy,  which  acts  iipon  equitable  prin- 
ciples: Ex  parte  IVatson,  16  Ves.  265;  Ex  parte  Bates,  2  Mont.  D.  &  D.  337; 
In  re  Unity  etc.  Banking  Ass'n,  3  De  Gex  &  J.  63;  compare  In  re  Raineys, 
3  L.  R.  Ir.  459;  but,  on  the  other  hand,  a  debtor  who  had  simply  traded 
during  infancy  could  not,  for  that  reason,  be  adjudicated  a  bankrupt:  Ex 
parte  Moule,  14  Ves.  602;  Ex  parte  Jones,  L.  R.  18  Ch.  Div.  109,  overruling 
Ex  parte  Lynch,  L.  R.  2  Ch.  Div.  227. 

In  Georgia,  it  is  provided  by  section  2733  of , the  code  (1882),  that  "if  an 
infant,  by  permission  of  his  parent  or  guardian,  or  by  permission  of  law, 
practices  any  profession  or  trade,  or  engages  in  any  biisiness  as  an  adult,  he 
shall  be  bound  for  all  contracts  connected  with  such  profession,  trade,  or 
business":  Code  1882,  sec.  2733;  McKamy  v.  Cooper,  81  Ga.  679;  but  it  ia 
held  that  a  minor,  who  is  a  mere  clerk,  is  not  engaged  in  a  business,  within 
the  meaning  of  this  section,  so  as  to  make  him  responsible  for  his  contracts; 
and  even  if  this  were  not  so,  he  would  not  be  liable  for  the  price  of  a  buggy 
purchased  by  him,  in  the  absence  of  evidence  that  he  used  the  buggy  or 
bought  it  to  use  in  the  business  of  clerking:  Howard  v.  Simpkins,  70  Ga.  322. 
In  Indiana,  it  is  provided  by  a  statute  passed  in  1881  (2  R.  S.  1888,  sec. 
2945):  "In  all  sales  of  real  estate  by  an  infant,  he  or  she  shall  not  be  per- 
mitted to  disaffirm  said  sale  without  first  restoring  to  the  person  owning 
the  property  sold  the  consideration  received  in  said  sale,  if  said  infant  falsely 
represented  himself  or  herself  to  said  purchaser  to  be  over  the  age  of  twenty- 
one  years,  and  the  party  buying  from  said  infant  acted  in  good  faith,  and 
relied  upon  said  representations  in  such  sale,  and  had  good  cause  to  believe 
said  infant  of  full  age."  In  Iowa  and  Kansas,  it  is  enacted  that  "no 
contract  can  be  thus  disaffirmed  in  cases  where,  on  account  of  the  minor's 
own  misrepresentations  as  to  his  majority,  or  from  his  having  engaged  in 
business  as  an  adult,  the  other  party  had  good  reason  to  believe  the  minor 
capable  of  contracting ":  Iowa  Code,  sec.  2239;  Kan.  Comp.  Laws  1885, 
sec.  3478;  Oswald  v.  Broderkk,  1  Iowa,  380;  Prouty  v.  Edgar,  6  Iowa,  353; 
Dillon  V.  Burnham,  43  Kan.  77.  This  provision  is  not  to  be  limited,  in  its 
efifects,  to  the  particular  business  in  which  the  minor  may  be  engaged,  but 
applies  to  any  contracts  he  may  make:  Jaques  v.  Sax,  39  Iowa,  367.  To 
render  the  infant  who  engages  in  business  as  an  adult  liable,  his  infancy  must 
have  been  unknown  to  the  party  contracting  with  him:  Be.ller  v.  Marchant, 
30  Iowa,  350:  and  the  language  "capable  of  contracting"  means  "legally 
capable  of  contracting,"  and  not  that  the  minor  is  mentally  and  physically 
capable  of  contracting:  Bimjett  v.  Barrick,  25  Kan.  526. 

As  to  an  infant's  liability  for  his  frauds  and  other  torts  connected  with  his 
contracts,  see  po«<,  "Torts  of  Infants  Connected  with  Contracts." 

E.MANCIPATION.  — The  fact  that  an  infant  is  emancipated  by  his  parent,  or 
allowed  to  shift  for  himself,  does  not  impart  any  additional  validity  to  his 
general  contracts;  or  in  other  words,  render  his  contracts,  otherwise  void- 
able, absolutely  binding  upon  him.  He  may  still  take  advantage  of  his  in- 
fancy, as  before.  The  eifect  of  the  emancipation  is  simply  to  release  him 
from  the  parent's  control,  and  to  give  him  the  right  to  his  own  earnings: 
Mason  v.  Wright,  13  Met.  306;  Tyler  v.  Estate  of  Gallop,  68  Mich.  185;  13 
Am.  St.  Rep.  336;  Tandy  v.  Masterson's  Adm'r.  1  Bibb,  330.  The  same  ia 
true  with  reference  to  his  gifts:  Person  v.  C/uuse,  37  Vt.  647;  88  Am.  Dec.  630. 


638  Cratq  v.  Van  Bebber.  [Missouri, 

Marriage. — The  marriage  of  a  male  infant,  while  it  may  remove  him 
from  his  parents'  control,  and  give  him  the  right  to  his  earnings,  does  not  re- 
move the  disability  of  infanc}',  and  render  his  general  contracts  any  the  more 
binding;  nor  is  the  condition  of  infancy  removed  from  a  female  intant  by  her 
marriage,  by  reason  of  statutes  which  confer  capacity  upon  married  women 
either  to  contract  generally  or  to  convey  their  real  estate  or  relinquish  their 
claims  to  dower  in  the  lamls  of  their  husbands:  Inhabitants  of  Taunton  v.  In- 
hahitants  of  Plymouth.  15  Mass.  203,  204;  Davis  v.  Caldwell,  12  Cush.  512,  513; 
Walsh  V.  Young,  110  Mass.  396;  Hartmanv.  Kendall,  4  Ind.  403,  404;  Harrod 
V.  Myers,  21  Ark.  592;  76  Am.  Dec.  409;  Watson  v.  Billings,  38  Ark.  278;  42 
Am.  Rep.  1;  Cummingsv.  Everett,  82  Me.  260;  supra,  "Deeds  of  In.ant  Femes 
Covert."  The  capacity  of  an  infant  to  contract  for  necessaries  is,  however, 
enlarged  by  his  marriage;  for  he  is  bound  for  the  reasonable  value  of  neces- 
saries furnished  his  family  as  well  as  himself:  Chapman  v.  Hughes,  61  Miss. 
339;  and  see  infra,  "Necessaries."  And  an  infant  husband  is  liable  at  com- 
mon law  for  his  wife's  debts  contracted  by  her  before  marriage:  Roach  v. 
Quick,  9  Wend.  238;  Butler  v.  Breck,  7  Met.  164;  39  Am.  Dec.  768;  Cole  v. 
Seeley,  25  Vt.  220;  Nicholson  v.  Wilhorn,  13  Ga.  467;  Anderson  v.  Smith,  33 
Md.  465;  see  j)ost,  "Liability  of  Infant  Husband  for  Wife's  Antenuptial 
Debts." 

Contracts  Entered  into  Pursuant  to  Statutes. — If  a  contract  of  a 
minor  be  entered  into  under  the  authority  or  direction  of  a  statute,  it  is 
binding  upon  him,  so  far  as  tha  question  of  infancy  is  concerned,  and  cannot 
be  disaffirmed.  This  is  so  expressly  enacted  in  California  and  Dakota:  Cal. 
Civ.  Code,  sec.  37;  Dak.  Comp.  Laws  1887,  sec.  2518;  Civ.  Code,  sec,  19. 
Whether  infants  are  contemplated,  when  not  expressly  mentioned,  by  stat- 
utes which  provide  for  the  execution  of  contracts  under  peculiar  circum- 
stances, is,  of  course,  entirely  a  question  of  legislative  intent.  Where  the 
statute  is  general  in  its  terms,  and  sucli  that  it  may  apply  to  infants  as  well 
as  adults,  infants  will  be  included,  unless  a  contrary  intent  appears.  "Where 
the  words  of  law,  in  their  common  and  ordinary  signification,  are  sufficient 
to  include  infants,"  says  Chief  Justice  Wilmot,  "the  virtual  exception  must 
be  drawn  from  the  intention  of  the  legislature,  manifested  by  other  parts  of 
the  law;  from  the  general  purpose  and  design  of  the  law;  and  from  the 
subject-matter  of  it":  Earl  of  Buckinghamshire  v.  Drury, V^ilm.  Op.  194.  If, 
then,  an  infant  is  imprisoned  on  execution  in  a  civil  suit  for  an  assault  and 
battery,  he  is  entitled  to  a  discharge  from  imprisonment  on  assigning  his 
property  as  provided  for  by  a  statute  general  in  its  terms,  and  the  assign- 
ment is  valid,  notwithstanding  his  infancy:  People  ex  rel.  Smith  v.  MulUn,  25 
Wend.  698.  Again,  a  recognizance  entered  into  by  a  minor  for  his  personal 
appearance  at  court,  to  answer  a  charge  of  committing  a  criminal  offense,  is 
binding  upon  him  under  statutes  authorizing  recognizances  to  be  taken,  and 
defendants  to  be  discharged  thereon,  and  making  no  distinction  between 
minor  defendants  who  may  commit  crimes  and  be  arrested  and  imprisoned, 
and  other  persons:  State  v.  Weatherivax,  12  Kan.  463;  and  see  Dial  v.  Wood, 
9  Baxt.  296.  And  where,  by  statute,  a  person  who  is  accused  of  being  the 
father  of  a  bastard  child  may  be  required  to  give  bond  to  answer  to  a  com- 
plaint made  by  the  mother  to  a  justice,  and  to  abide  the  order  of  the  court 
thereon,  his  infancy  is  no  defense  to  an  action  on  the  boad,  either  for  him  or 
his  sureties:  McCall  v.  Parker,  13  Met.  372.  Infancy,  furthermore,  is  no 
defense  to  an  action  on  a  bond,  executed  pursuant  to  statute,  by  the  reputed 
father  of  a  bastard  child,  conditioned  to  indemnify  the  town  against  liability 
for  the  support  of  the  bastard:  People  v.  Moores,  4  Denio,  518;  47  Am.  Dec. 


April,  1890.]  Craig  v.  Van  Bebber.  639 

272;  Inhahitants  of  Bordentown  v.  Wallace,  50  N.  J.  L.  13.  So  if  a  statute 
authorizes  the  infant  father  of  a  bastard  child  to  settle  with  the  mother,  and 
secure  to  her  compensation  for  keeping  the  child,  it  impliedly  gives  him  the 
power  to  execute  instruments  necessary  in  making  such  settlement,  and 
hence  to  a  promissory  note  executed  under  such  circumstances,  infancy  will 
be  no  defense:  Gavin  v.  Burton,  8  Ind.  69;  and  a  statute  which  imposes  upon 
the  father  of  a  bastard  child  the  obligation  of  supporting  it,  and  provides  a 
means  of  compelling  him  to  do  so,  is  applicable  to  infants,  although  it  does 
not  speak  of  them;  and  an  infant  accused  by  the  mother  of  a  bastard  child 
of  being  its  father  may  admit  his  liability  and  bind  himself  by  a  contract  to 
support  the  child:  Slower s  v.  Hollis,  83  Ky.  544. 

Enlistment.  —  The  subject  of  an  infant's  contracts  of  enlistment  in  the 
military  service  is  a  branch  of  the  one  just  considered.  It  has  been  said 
that,  "by  the  general  policy  of  the  law  of  England,  the  parental  authority 
continues  until  the  child  attains  the  age  of  twenty-one  years;  but  the  same 
policy  also  requires  that  a  minor  shall  be  at  liberty  to  contract  an  engage- 
ment to  serve  the  state.  When  such  an  engagement  is  contracted,  it  becomes 
inconsistent  with  the  duty  which  he  owes  to  the  public  that  the  parental 
authority  should  continue.  The  parental  authority,  however,  is  suspended, 
but  not  destroyed.  When  the  reason  for  its  suspension  ceases,  the  parental 
authority  returns":  Best,  J.,  in  Rex  v.  Inhabitants  of  Rotherjield  Greys,  1 
Barn.  &  C.  345,  349.  In  this  country,  there  is  no  doubt,  under  the  provision 
of  the  constitution  of  the  United  States  giving  Congress  the  power  "to 
raise  and  support  armies,"  and  "  to  provide  and  maintain  a  navy,"  that  Con- 
gress has  the  constitutional  power  to  enlist  minors  into  the  army  and  navy 
of  the  United  States;  this  it  may  do  without  the  consent  of  the  parents, 
guardians,  or  masters;  for  the  right  of  a  parent,  guardian,  or  master  to  the 
service  and  control  of  the  person  of  a  minor  child,  ward,  or  apprentice  is 
held  in  subordination  to  the  sovereign  right  and  power  of  the  state  to  call 
upon  its  citizens  to  maintain  and  protect  its  existence.  If  the  state  recruits 
its  army  and  navy  by  means  of  contracts  of  enlistment,  such  contracts 
■nay  be  made  binding  upon  minors  as  well  as  adults:  United  States  v.  Bain,' 
'irid(je,  1  Mason,  71;  Com/notmvealth  v.  Murray,  4  Binn.  487;  5  Am.  Dec.  412; 
Cotnmonwenltk  v.  Barker,  5  Binn.  423,  428,  429;  Commonwealtk  v.  Downca,  24 
Pick.  227,  229;  United  States  v.  Blakeney,  3  Gratt.  405;  Phelaus  Case,  9  Abb. 
Pr.  286,  287;  In  re  Grecj^j,  15  Wis.  479. 

In  Unit'd  States  v.  Bainhridrje,  1  Mason,  71,  Story,  J.,  says:  "Whenever 
any  disability,  enacted  by  the  common  law,  is  removed  by  the  enactment  of 
a  statute,  the  competency  of  the  infant  to  do  all  acts  within  the  purview  of 
such  statute  is  as  complete  as  that  of  a  person  of  full  age.  And  whenever 
a  statute  has  authorized  a  contract  for  the  public  service,  which  from  its 
nature  or  objects  is  manifestly  intended  to  be  performed  by  infants,  such 
a  contract  must,  in  point  of  law,  be  deemed  to  be  for  their  benefit  and  for 
the  public  benefit,  so  that  when  bona  fide  made,  it  is  neither  void  nor  void- 
able, but  is  strictly  obligatory  upon  them."  It  maybe  remarked  that  the 
learned  justice  attempts,  in  this  passage,  to  uphold  contracts  of  infants 
made  valid  and  binding  by  statute  on  Lord  Chief  Justice  Eyre's  rule  in 
Keane  v.  Boycott,  2  H.  Black.  51 1,  as  to  void,  voidable,  and  binding  contracts  of 
infants  at  common  law.  There  is  no  necessity  for  the  effort;  it  is  enough 
that  the  statute  makes  the  contract  binding.  In  United  Slates  v.  Blakeney, 
3  Gratt.  405,  it  is  said  by  Bablwin,  J.:  "It  seems  to  me  to  be  obvious  that 
the  enlistment  of  a  minor  capable  of  bearing  arms  does  not  fall  within  the 
general  rule  of  the  municipal  law  in  regard  to  the  capacity  of  infants  under 


640  Craig  v.  Van  Bebber.  [Missouri, 

the  age  of  twenty-one  years  to  bind  themselves  by  contract.  Nor  am  I 
disposed  to  regard  the  eulistmsnt  as  an  exception  to  that  rule.  The  rule,  I 
think,  has  no  application  to  the  subject.  The  capacity  of  all  citizens  or  sub- 
jects able  to  bear  arms  to  bind  themselves  to  do  so  by  voluntary  enlistment 
is  in  itself  a  high  rule  of  the  public  law,  to  which  the  artificial  and  arbitrary 
rule  of  the  municipal  law  forms  no  exception.  The  rule  of  the  public  law  is 
subject  to  but  two  con<litions:  the  ability  of  the  party  to  carry  arms,  and 
his  consent  to  do  so;  and  these  conditions  may  exist  in  as  full  force  at  the 
age  of  eighteen  as  at  the  age  of  twenty-oue.  The  party  is  subject  to  no  in- 
capacity by  any  arbitrary  rule  in  regard  to  discretion;  and  there  is  but 
little  room  for  discretion  when  he  is  in  the  line  of  his  allegiance  and 
public  duty."  Again,  it  is  said  in  Lannhan  v.  Birge,  30  Conn.  438,  443: 
"It  is  a  fundamental  principle  of  national  law,  essential  to  national  life,  that 
every  citizen,  whether  of  age  to  make  contracts  generally  or  not,  is  under 
obligation  to  serve  and  defend  the  constituted  authorities  of  the  state  and 
nation,  and  for  that  purpose  to  bear  arms,  when  of  sufficient  age  and  capa- 
city to  do  so,  and  when  such  service  is  lawfully  required  of  him.  The  power 
to  enforce  tliat  obligation,  so  far  as  the  necessities  of  the  state  may  require, 
is  an  incident  to  state  sovereignty,*  and  the  subject  of  state  constitutional 
and  statutory  regulation Enlistment  is  but  another  and  less  objec- 
tionable method  of  securing  the  military  service  required  by  the  state  and 
due  from  the  citizen;  and  the  same  essential  principles  of  public  policy  and 
necessity  which  impose  the  ol>ligation  to  serve,  and  confer  tlie  power  to  en- 
force that  obligation,  require  that  the  minor  who  is  subject  to  military  draft 
should  be  at  liberty  to  enlist  when  called  upon  in  that  form  to  render  the 
military  service  which  the  state  requires.  It  may  indeed  be  for  his  interest 
to  do  so,  rather  than  be  subject  to  draft,  as  it  certainly  is  sound  policy  in  the 
government  that  he  should.  But  however  that  may  be,  the  obligation  to 
serve,  and  the  right  to  require  the  service,  exist,  and  are  paramount.  What 
a  minor  can  be  compelled  to  do  he  may  contract  to  do,  or  do  voluntarily; 
and  if  he  is  lawfully  subject  to  military  duty,  and  is  lawfully  called  upon  to 
enlist,  his  contract  of  enlistment  is  as  valid  and  binding  as  that  of  an  adult. 
....  Although  it  is  the  policy  of  the  law  to  give  to  a  parent  a  right  to  the 
service  and  control  of  the  person  of  a  minor  child  until  he  has  attained  the 
age  which  the  law  has  fixed  for  his  emancipation,  yet  that  right  and  author- 
ity are  holden  in  subordination  to  those  paramount  rights  and  powers  of  the 
state  whicli  are  essential  to  the  maintenance  of  civil  society  and  civil  gov- 
ernment. " 

The  chief  question  of  difficulty  is,  whether  Congress,  under  the  statutes 
which  have  been  passed  from  time  to  time,  has  authorized  the  enlistment  of 
minors;  or,  more  particularly,  whether  the  enlistment  of  minors  below  cer- 
tain ages  is  binding  upon  them,  especially  when  made  without  the  consent  of 
the  minor's  parents,  guardian,  or  master.  This  question  has  been  discussed 
in  a  number  of  cases,  but  with  some  little  conflict  as  to  results,  caused  prin- 
cipally from  a  careless  overlooking  of  some  of  the  statutes:  See  United  States 
V.  Bainhridge,  1  Mason,  71;  United  States  v.  Anderson,  Cooke,  143;  Brunner's 
Col.  Cas.  202;  Matter  of  Keeler,  Hemp.  306;  In  re  McDonald,  1  Low.  100; 
Commonwealth  v.  Murray,  4  Binn.  487;  5  Am.  Dec.  412;  Commonwealth  v. 
Barker,  5  Binn.  423;  Commonwealth  v.  Callan,  6  Binn.  255;  Commomvealth  v. 
Gamble,  11  Serg.  &  R.  93;  Commonwealth  v.  Fox,  7  Pa.  St.  336;  United  States 
V.  Wright,  5  Phila.  296,  297;  Commonwealth  v.  Cushing,  11  Mass.  67;  6  Am. 
Dec.  156;  Commonwealth  v.  Downes,  24  Pick.  227;  State  v,  Brearly,  5  N.  J.  L. 
555,  563;    Matter  of  Carlton,  7  Cow.  471;    Phelans  Case,  9   Abb.  Pr.   286; 


April,  1890.]  Craig  v.  Van  Bebber.  641 

Matter  of  Dohbs,  21  How.  Pr.  G8;  State  v,  Dmdch,  12  N.  H.  194;  37  Am. 
Dec.  197;  United  States  v.  Blakeney,  3  Gratt.  405;  United  States  v.  Lipscomb, 
4  Gratt.  41;  In  re  Greijg,  15  Wis.  479;  In  re  Uiijyins,  16  Wis.  351;  In  re  Tar- 
hie,  25  Wis.  390;  and  see,  under  state  statutes,  Grace  v.  Wilber,  10  Johns. 
453,  reversed  in  Wilbur  v.  Grace,  12  Johns.  68;  Lanahan  v.  Birge,  30  Conn. 
438;  and  under  confederate  laws,  Dies  v.  Hurtel,  34  Ga.  109.  It  would 
serve  no  useful  purpose  to  examine  these  cases,  and  the  statutes  upon  which 
they  are  based,  in  detail.  The  reader  will  find  a  careful  and  exhaustive  re- 
view of  the  question  by  Lowell,  J.,  in  the  case  of  In  re  McDonald,  1  Low. 
100;  and  by  Brewer,  J.,  in  In  re  Morrisscy,  137  U.  S.  157. 

Act  Which  Infant  would  have  been  Compelled  by  Law  to  do. — 
The  rule  that  if  an  infant  does  an  act  which  the  law  would  have  compelled 
him  to  do,  he  will  be  bound  thereby,  has  a  connection  with  the  subject  of  his 
contracts,  and  may  therefore  be  here  noticed  and  illustrated.  The  rule 
fiuds  a  somewhat  frequent  illustration  in  the  case  of  his  conveyances  ex- 
ecuted under  such  circumstances  that  the  law  would  have  compelled  their 
execution,  although  it  need  not  be  confined  in  its  application  to  such  a  case. 
The  rule  was  thus  announced  by  Lord  Mansfield  in  Zouch  v.  Parsons,  3  Burr. 
1794,  1801,  as  follows:  "If  an  infant  does  a  right  act  which  he  ought  to  do, 
which  he  was  compellable  to  do,  it  shall  bind  him;  as  if  he  makes  equal  parti- 
tion; if  he  pays  rent;  if  he  admits  a  copyholder,  upon  a  surrender.  But  there 
is  no  occasion  to  enumerate  instances;  the  authorities  are  express,  and  the 
reason  decisive.  'Generally,  whatsoever  an  infant  is  bound  to  do  by  law, 
the  same  shall  bind  him,  albeit  he  doth  it  without  suit  of  law '";  citing  Co.  Litt. 
172  a.  In  fact,  the  point  really  decided  in  Zouch  v.  Parsons,  3  Burr.  1794, 
1801,  was,  that  a  deed  of  lease  and  release  executed  by  the  infant  heir  of  a  mort- 
gagee, upon  payment  to  him  of  the  mortgage  debt,  was  binding,  and  could 
not  be  avoided  by  him,  for  on  payment  of  the  debt  the  infant  was  compellable 
by  law  to  execute  the  conveyance.  "There  can  be  but  little  doubt,"  says 
Story,  J.,  in  Tucker  v.  Moreland,  10  Pet.  59,  67,  1  Am.  Lead.  Cas.  *224,  *226, 
"  that  the  decision  in  Zouch  v.  Parsons,  was  perfectly  correct;  for  it  was  the  case 
of  an  infant  mortgagee,  releasing  by  a  lease  and  release  his  title  to  the  prem- 
ises, upon  the  payment  of  the  mortgage  money  by  a  second  mortgagee,  with 
the  consent  of  the  mortgagor.  It  was  precisely  such  an  act  as  the  infant 
was  bound  to  do,  and  could  have  been  compelled  to  do  by  a  court  of  equity, 
as  a  trustee  of  the  mortgagor.  And  certainly  it  was  for  his  interest  to  do 
wliata  court  of  equity  Would  by  a  suit  have  compelled  him  to  do."  In  Irvine 
V.  Irvine,  9  Wall.  617,  62G,  there  is  a  dictum,  based  on  Zouch  v.  Parsons,  to 
the  effect  that  there  were  some  cases  in  whicli  the  deed  of  an  infant  was  not 
even  voidable.  "They  are  those  in  which  tliu  infant,  by  making  the  convey- 
ance, does  only  what -the  law  would  have  compelled  him  to  do."  And  in 
BariiKjton  V.  Clarke,  2  Penr.  &  W.  115,  21  Am.  Dec.  432,  it  was  held,  citing 
Zouch  v.  Parsons,  that  "  where  any  person,  e\  en  an  infant,  does  that  which 
by  law  he  is  compellable  to  do,  that  is,  makes  equal  partition,  he  is  bound." 

The  rule  is  well  illustrated  by  the  following  cases.  In  Elliott  v.  Horn,  10 
Ala.  348,  44  Am.  Dec.  4S8,  a  father,  upon  purchasing  land,  took  the  title  in 
the  name  of  his  infant  son  for  the  purpose  of  defrauding  his  creditors,  and 
afterwards  sold  the  land,  the  son  executing  the  deed  to  the  purchaser,  at  his 
father's  direction,  during  his  infancy.  It  was  held  that  as  the  infant's  con- 
veyance of  the  naked  legal  title  was  only  that  which  a  court  of  equity  would 
have  compelled  iiim  to  make,  he  could  not  disaffirm  it  on  attaining  majority. 
In  Starr  v.  Wriijht,  20  Ohio  St.  97,  which  was  a  similar  case,  a  father  made  a 
Voluntary  conveyance  of  his  land  to  his  minor  son,  to  defraud  his  creditors. 
Ail.  St.  Kkp,.  Vol.  XVllI.  — -ii 


642  Craig  v.  Van  Bebber.  [Missouri, 

The  son,  during  his  infancy,  reconveyed  the  land  to  his  lather,  to  sell  for  the 
purpose  of  paying  the  father's  debts,  charged  on  the  land,  and  the  father 
sold  the  land  to  a  third  person,  who  paid  full  value  therefor,  and  out  of  the 
purchase-money  paid  the  liens  on  the  land.  It  was  decided  that  as  the  son 
held  the  land  in  trust  for  the  father  and  holders  of  the  liens  thereon,  and  as 
he  might  have  been  compelled  by  law  to  submit  to  a  sale  thereof  for  their 
benefit,  and  having  voluntarily  conveyed  the  land  during  his  minority  to 
discharge  the  trust,  he  could  not,  as  against  a  bona  fide  purchaser,  for  that  pur- 
pose, be  permitted  to  disaffirm  the  conveyance  after  attaining  his  majority. 
So  in  Bridges  v,  Bidwell,  20  Neb.  185,  where  a  father,  on  purchasing  certain 
real  estate,  had  the  conveyance  made  to  his  son,  and  took  a  note  secured  by 
mortgage  of  the  land  from  the  son,  and  assigned  the  note  and  mortgage  as 
collateral  securit}'  for  a  debt,  the  son,  it  was  held,  could  not  plead  his  minor- 
ity to  defeat  the  mortgage  in  the  hands  of  the  assignees;  the  court  saying: 
"  Otto  Bidwell,  being  a  mere  trustee  of  the  legal  title  to  the  property  in 
question,  could  convey  the  same  in  execution  of  the  trust,  and  having  done 
so,  neither  he  nor  his  father  can  plead  his  infancy  to  invalidate  tlie  deed." 
In  Trader  v.  Jarvis,  23  W.  Va.  100,  also,  a  father  made  an  assignment  of  a 
title  bond  to  his  sons  to  indemnify  them  against  any  loss  they  might  sustain 
by  reason  of  their  being  sureties  on  the  father's  note.  Afterwards  the  father 
and  sons  assigned  the  title  bond  to  a  third  person,  who  agreed  to  pay,  and 
did  pay,  the  note,  tliereby  releasing  the  sons  from  liability  thereon  as  sureties. 
It  was  held  that  the  conditions  upon  which  the  bond  had  been  assigned  to 
the  sons  having  been  upon  performed,  they  had  no  further  interest  in  it,  and 
one  of  the  sons  could  not  avoid  his  assignment  to  the  third  person  on  the 
ground  of  his  minority. 

Again,  in  Proitty  v.  Edgar,  6  Iowa,  353,  it  was  decided  that  where  a  son 
held  the  legal  title  to  real  estate  in  trust  for  his  father,  who  executed  a  bond 
for  the  conveyance  of  the  same,  and  received  the  purchase-money,  the  son, 
who  conveyed  the  land  in  accordance  with  the  requirements  of  the  bond, 
could  not  set  aside  the  deed  on  the  ground  tiiat  he  was  a  minor  when  it  was 
executed.  "  Holding  the  title,  as  he  did,  for  the  benefit  of  his  fatlier,  who 
had  sold  the  land  to  the  defendant,  and  received  the  purchase-money,  we  do 
not  see  how,  even  if  his  infancy  was  conclusively  established,  he  could  have 
resisted  the  claim  of  defendant  for  the  conveyance  of  the  legal  title.  He 
would  have  been  required  in  equity  to  convey."  So  where  an  infant  pur- 
chases land  at  an  administrator's  sale  for  the  administrator,  and  immediately 
conveys  to  him,  he  cannot  disafiBrm  such  conveyance  on  arriving  at  full  age 
as  though  the  lands  belonged  to  him:  Sheldon  s  Lessee  v.  Newton,  3  Ohio  St. 
494. 

In  Watson  v.  Cross,  2  Duvall,  147,  148,  the  court  expressed  the  opinion  that 
an  innkeeper  could  recover  for  entertainment  furnished  an  infant,  on  the 
theory  that  he  was  legally  bound  to  receive  and  entertain  all  guests  appar- 
ently responsible  and  of  good  conduct  who  might  come  to  his  house,  and 
the  contract  was  therefore  compulsory  on  his  part,  and  hence  the  law  would 
not  permit  it  to  be  avoided  on  the  other  side  for  infancy.  This  reasoning  is 
simply  absurd.  An  innkeeper  may  demand  his  reasonable  compensation  in 
advance.  If  he  suspects  a  person  who  applies  to  him  for  entertainment  to  be 
an  infant,  he  should  exercise  this  privilege;  and  if  he  fails  to  do  so  from  the 
fact  that  he  believed  the  proffered  guest  to  be  an  adult,  or  from  any  other 
cause,  and  the  plea  of  infancy  is  set  up  as  a  defense  to  his  charges,  he  is  in  no 
worse  a  position  than  any  one  else  who  happens  to  trust  an  infant,  and  there 
is  no  more  reason  why  he  should  be  protected. 


April,  1890.]  Craig  v.  Van  Bebber.  643 

Liability  of  Infant  Husband  for  Wife's  Antenuptial  Debts.  —  An 
infant  husband  is  liable  at  common  law  for  such  debts  of  his  wife  contracted 
before  marriage  as  she  would  have  been  legally  liable  to  pay  had  she  remained 
sole.  Therefore  the  infant  husband  is  liable  for  all  the  antenuptial  debts  of  tha 
wife  if  she  were  adult  when  she  contracted  them,  and  for  her  debts  for  neces- 
saries if  she  were  an  infant.  The  liability  of  the  husband  is,  of  course,  not  due 
to  any  idea  of  contract  on  his  part,  but  is  a  coinmon-law  incident  to  the  mar- 
riage; and  the  fact  that  the  liusban;!  is  an  infant  furnishes  no  excuse:  Roach 
V-.  Quick,  9  Wend.  2.'i8;  Butler  v.  Breck,  7  Met.  164;  39  Am.  Dec.  768;  Cole 
V.  Sveley,  25  Vt.  220;  Nicholson  v.  Wilborn,  13  Ga.  467;  Anderson  v.  S7nith,  33 
Md.  465.  This  rule,  it  will  be  observed,  has  a  connection  with  the  one  just 
considered. 

Necessaries  —  The  General  Rule. — It  has  already  been  seen  that  an 
infant  is  liable  for  the  reasonable  value  of  necessaries  which  may  have  been 
furnished  him.  To  the  general  rule  that  an  infant  is  incapable  of  binding 
himself  by  his  contracts,  this  constitutes  an  exception.  The  exception  is  not 
introduced  for  the  benefit  of  those  who  may  deal  with  the  infant,  but  for  the 
benefit  of  the  infant  himself.  It  is  to  protect  the  infant  that  the  law  enables 
him  to  avoid  his  general  contracts;  and  for  the  same  reason  the  law  compels 
him  to  answer  for  the  reasonable  value  of  necessaries.  Were  the  rule  other- 
wise, the  infant  miglit  not  be  able  to  procure  suitable  food,  clothing,  shelter, 
and  education,  though  certain  to  possess  means  for  payment  iii  the  future: 
See  Ryder  v.  Womhwdl,  L.  R.  4  Ex.  32,  38,  per  Willes,  J.  Lord  Coke  thus  ex- 
presses the  rule:  "An  infant  may  bind  himself  to  pay  for  his  necessary  meat, 
drinke,  apparell,  necessary  physicke,  and  such  other  necessaries,  and  likewise 
for  his  good  teaching  or  instruction,  whereby  he  may  profit  himselfe  after- 
wards": Co.  Lit.  172  a.  The  obligation  to  pay  for  necessaries  is  a  legal 
one,  for  which  the  law  gives  an  adequate  remedy,  and  therefore  a  resort  can- 
not be  had  to  equity:  Oliver  v.  McDiiffie,  28  Ga.  522. 

The  rule  is  expressly  preserved  in  some  states  by  statute.  Thus  in  Cali- 
fornia and  Dakota,  it  is  provided  that  "a  minor  cannot  disaffirm  a  contract, 
otherwise  valid,  to  pay  the  reasonable  value  of  things  necessary  for  his  sup- 
port, or  that  of  his  family,  entered  into  by  him  when  not  under  the  care  of  a 
parent  or  guardian  able  to  provide  for  him  or  them  ":  Cal.  Civ.  Code,  sec. 
36;  Dak.  Conip.  Laws  1887,  sec.  2517;  Civ.  Code,  sec.  18;  and  in  Georgia  it 
is  enacted  that  "the  contracts  of  an  infant  under  twenty-one  years  of  age 
are  void  [voidable],  except  for  neces-aries;  and  for  necessaries  they  are  not 
valid,  unless  the  party  furnishing  them  proves  that  the  parent  or  guardian 
fails  or  refuses  to  supply  sufficient  necessaries  for  the  infant." 

Express  Contracts  for  Nkckssaries.  —  Whether  an  infant  is  ever  bound 
by  his  express  contract  with  reference  to  tlie  price  or  value  of  necessaries 
furnished  him  has  been  disputed.  It  is  agreed,  however,  that  he  cannot  be 
held  for  more  than  their  reasonable  value.  Or,  as  said  in  Locke  v.  t>mit/t,  41 
N.  H.  346,  an  infant  may  bind  himself  to  pay  for  necessaries  he  obtains,  so 
much  as  they  are  reasonably  worth,  but  not  what  he  may  foolishly  have 
agreed  to  pay  for  them;  and  in  Trainer  v.  Triimf,ull,  141  Mass.  527,  530,  it 
was  observed  tiiat  the  question  whether  or  not  an  infant  matle  an  express 
promise  to  pay  for  necessaries  was  not  important.  "  He  is  held  on  a  promise 
implied  by  law,  and  not,  strictly  speaking,  on  his  actual  promise.  The  law 
implies  the  promise  to  pay  from  the  necessity  of  his  situation,  just  as  in  the 
case  of  a  lunatic.  In  other  words,  he  is  liable  to  pay  only  what  the  neces- 
saries were  reasonably  worth,  and  not  what  he  may  improvidently  have 
agreed  to  pay  for  them." 


644  Craig  v.  Van  Bebber.  [Missouri, 

It  has  been  held  that  no  action  could  be  maintained  against  an  infant  on 
his  express  contract  for  necessaries,  and  even  that  his  express  contract  was 
void;  yet  we  doubt  that  an  action  would  be  dismissed  by  any  court  at  the 
present  day  because  brought  upon  the  express  contract,  if  the  contract  were 
of  such  a  form  that  its  consideration  could  be  inquired  into,  so  that  it  might 
be  ascertained  whether  the  amount  agreed  to  be  paid  was  what  the  necessa- 
ries were  reasonably  worth.  If  the  agreed  amount  exceeded  the  reasonable 
value  of  the  necessaries,  we  do  not  see  why  the  action  upon  the  express  con- 
tract should  not  still  be  maintained,  and  a  recovery  had  for  the  difference; 
and  if  the  amount  stipulated  to  be  paid  was  no  more  than  the  necessaries  were 
justly  worth,  we  do  not  see  why  the  express  contract  should  not  be  said  to  be 
binding  upon  him  to  the  fullest  extent.  We  think  these  views  are  sustained 
by  the  weight  of  authority.  For  instance,  it  has  been  seen,  supra,  under  the 
title  "Service,"  that  if  services  are  rendered  by  an  infant,  pursuant  to  an 
agreement,  in  consideration  of  board,  clothing,  education,  and  other  neces- 
saries, and  the  agreement  is  fairly  made  and  fully  executed  on  both  sides, 
the  infant  cannot  avoid  the  agreement  and  recover  the  value  of  tlie  services 
on  a  quantum  meruit  merely  because  the  services  eventually  proved  to  be 
worth  somewhat  more  than  the  necessaries  furnished.  In  other  words,  such 
an  executed  agreement  for  necessaries  is  completely  binding,  so  far  as  it  is 
executed:  Stone  v.  Dennison,  13  Pick.  1;  23  Am.  Dec.  654;  WiUielm  v.  Hard- 
man,  13  Md.  140;  Squier  v.  Hydliff,  9  Mich.  274;  Harney  v.  Owen,  4  Blackf. 
337;  30  Am.  Dec.  662;  and  see  Spicer  v.  Earl,  41  Mich.  191;  32  Am.  Rep.  152; 
Breed  v.  Judd,  1  Gray,  455,  458;  but  see  Wheatly  v.  Alixcal,  5  Ind.  142;  and 
compare  Locke  v.  Smith,  41  N.  H.  346;  Mountain  v.  Fisher,  22  Wis.  93.  We 
do  not  see  why  this  rule  cannot  be  generalized;  and  we  should  accordingly 
say  that  an  infant's  contract  for  necessaries,  when  fairly  made  and  fully  exe- 
cuted on  both  sides,  by  the  furnishing  of  the  necessaries  on  the  one  side  and 
the  payment  on  the  other,  is  binding;  and  that  he  cannot  disaffirm  the  con- 
tract on  afterwards  discovering  that  he  has  paid  more  for  the  necessaries 
than  what  they  might  have  been  obtained  for,  and  recover  back  at  least  such 
excess. 

Again,  it  has  also  been  seen,  supra,  title  "Bills  and  Notes,"  that  a  plea  of 
infancy  has  sometimes  been  sustained  to  an  action  on  a  bill  of  exchange  ac- 
cepted or  a  promissory  note  made  for  necessaries,  and  that  the  expression 
has  sometimes  been  used  that  an  infant's  negotiable  paper  was  always  void, 
for  the  reason  that  the  infant  would  be  precluded  from  questioning  the  con- 
sideration if  the  paper  came  into  the  hands  of  a  bona  fide  holder  for  value 
without  notice,  and  before  maturity:  WilUamsonv.  Watts,  1  Camp.  552;  Stvasey 
V.  Vanderheydens  Adnir,  10  Johns.  33;  Boiichell  v.  Clary,  3  Brev.  194;  Mc- 
Minn  V.  Richmonds,  6  Yerg.  9;  Fcnton  v.  Wliite,  4  N.  J.  L.  100;  McCrillis  v. 
How,  3  N.  H.  348;  Morton  v.  Steivard,  5  111.  App.  533;  yet  even  under  this 
view  the  payee  of  the  note  might  recover  on  a  count  for  necessaries:  McCrillis 
V.  How,  3  N.  H.  348;  and  if  the  infant  went  into  a  court  of  equity  to  have  the 
note  canceled,  he  would  be  required  to  do  equity  by  paying  the  reasonable 
value  of  the  necessaries:  McMinn  v.  Richmonds,  6  Yerg.  9.  These  cases, 
founded,  as  they  are,  upon  the  mistaken  notion  that  infancy  is  not  a  defense 
to  an  action  on  negotiable  paper  by  a  bona  fide  holder,  are  obviously  en- 
titled to  very  little  respect.  Furthermore,  even  conceding  the  basis  of  their 
ruling  to  be  correct,  it  would  furnish  no  reason  why  the  payee  of  the  paper 
given  for  necessaries  should  not  be  entitled  to  maintain  an  action  upon  it, 
unless  the  most  extreme  view  of  Lord  Chief  Justice  Eyre's  rule  be  taken, 
that  the  paper  should  be  declared  absolutely  void  because  the  infant  might 


April,  1890.]  Craig  v.  Van  Bebber.  645 

possibly  be  prejudiced  by  the  paper  coining  into  the  hands  of  a  hona  fide 
holder:  See  Jfortonv.  Steward,  5  111.  App.  533;  Duhosev.  Wheddon,  4  McCord, 
221;  Aaj-on  v.  Harley,  6  Rich.  L.  26.  Again,  attention  should  be  called  to  the 
fact  that  the  cases  simply  involved  the  right  of  the  infant  to  set  up  his  dia- 
ability  in  an  action  against  him,  and  that  it  was  really  unnecessary  for  the 
court  to  assert  that  the  paper  was  void.  It  might  be  held  that  infancy  would 
be  a  good  defense;  but  we  do  not  understand  the  cases  as  going  to  the  length 
of  holding  that  the  paper  could  not  be  ratified  by  the  infant  after  reaching 
majority. 

We  consider  it  by  all  means  the  sounder  and  better  doctrine  that  an  action 
can  be  maintained  against  an  infant  upon  his  negotiable  paper  given  for  neces- 
saries, either  by  the  original  payee  or  by  any  subsequent  holder,  and  that 
the  plaintiff  may  recover  the  full  face  of  the  paper,  or  so  much  thereof  as 
represents  the  reasonable  value  of  the  necessaries;  for  infancy  can  be  shown, 
and  the  consideration,  therefore,  of  the  paper  be  inquired  into,  no  matter 
who  may  be  plaintifiF:  Bradley  v.  Pratt,  23  Vt.  378;  Earle  v.  Reed,  10  Met. 
387;  Dubosev.  Wheddon,  4 McCord,  221;  Aaronv.  Harley,  6  Rich.  L.  26;  Askey 
V.  Williams,  74  Tex.  294;  and  see  Rainwater  v,  Durham,  2  Nott  &  McC.  524; 
10  Am.  Dec.  637.  In  Bradley  v.  Pratt,  23  Vt.  378,  Redtield,  J.,  said:  "I  do 
not  well  comprehend  why,  upon  principle,  any  express  contract  may  not  be 
said  to  be  binding  upon  liim,  when  it  is  shown  to  have  been  given  for  neces- 
saries, and  the  price  to  have  been  reasonable,  if  it  be  one  where  the  considera- 
tion may  be  inquired  into And  as  confessedly  the  infant  may  prima 

facie  avoid  his  note  or  bill  by  merely  showing  the  fact  of  his  infancy  at  the 
time  of  making  the  contract,  what  is  the  impropriety  in  allowing  the  plaintiff 
to  recover  in  all  such  cases  by  showing  the  consideration  to  be  for  necessa- 
ries?" And  in  Askey  v.  Williams,  74  Tex.  294,  it  was  well  remarked:  "We 
apprehend  the  better  doctrine  to  be  that  an  infant  may  make  an  express 
written  contract  for  necessaries  upon  'which  he  may  be  sued,  but  tliat  by 
showing  the  price  agreed  to  be  paid  was  unreasonable,  he  can  reduce  the 
recovery  to  a  just  compensation  for  the  necessaries  received  by  him.  It  is  to 
his  benefit  to  hold  the  express  contract  not  void,  but  voidable;  for  if  it  be 
voidable  merely,  he  can  secure  the  advantage  of  a  good  bargain,  and  may 
relieve  himself  of  it  if  it  be  a  bad  one,  while,  on  the  other  hand,  to  hold  it 
void  would  deprive  him  of  the  benefit  of  an  advantageous  contract." 

The  much-discussed  case  of  Russel  v.  Lee,  1  Lev.  86,  over  which  judges  and 
writers  have  become  con.siderably  exercised  in  their  attempts  to  reconcile  it 
with  other  decisions,  to  *he  efifcct  that  an  infant's  single  bill  for  necessaries 
was  good,  we  think  is  capable  of  an  easy  and  satisfactory  explanation  on  the 
foregoing  grounds,  it  being  possible  to  inquire  into  the  consideration  of  the 
instrument.     Compare  Beeter  v.  Young,  1  Bibb,  519. 

If  the  form  of  the  instrument  given  for  necessaries  be  such  as  to  preclude 
an  inquiry  into  the  consideration,  it  could  very  well  be  held  that  no  action 
could  be  maintained  thereon  against  the  defense  of  infancy.  Therefore  it 
would  seem  that  no  action  et)uld  be  maintained  at  common  law  against  an 
infant  on  a  bond  or  other  sealed  instrument  executed  by  him  for  necessaries. 
And  in  case  of  a  bond  there  would  be  a  further  objection  on  account  of  the 
penalty:  See  Ayliff  v.  Arrhdale,  Cro.  Eliz.  920;  Bliss  v.  Perry  man,  1  Scam. 
484;  Hussey  v.  Jewetl,  9  Mass.  100,  101.  These  cases,  however,  are  not  very 
satisfactory.  In  Ayliffw.  Airhdale,  Cro.  Eliz.  920,  it  was  held  that  an  obli- 
gation in  double  the  sum  for  money  paid  by  the  plaintiff  for  the  necessary 
meat  and  drink  of  the  defendant  was  void,  but  it  was  said  that  had  the  plain- 
tiff taken  an  obligation  for  the  very  sum  which  he  had  laid  out,  it  would  have 


646  Craig  v.  Van  Berber.  [Missouri, 

beea  otherwise.  The  case  is  opea  to  criticism  in  saying  that  the  bond  with 
the  penalty  was  void,  for  that  wouUl  mean  that  it  could  not  be  ratified;  and 
we  do  not  think  that  the  court,  as  we  understand  its  meaning,  is  correct  in 
its  dictum  that  an  obligation  under  seal  for  even  the  very  sum  expended  for 
necessaries  could  be  sustained  against  a  jjlea  of  infancy.  la  Blias  v.  Perry' 
man,  1  Scam.  484,  the  court  expressed  itself  to  the  effect  that  all  bonds  of 
infants,  even  for  necessaries,  were  void,  and  incapable  of  ratification  so  that 
actions  could  be  maintained  upon  them;  and  see  Hussey  v.  Jewett,  9  Mass. 
100,  ]01.  We  think  that  Guthrie  v.  Morris,  22  Ark.  411,  gives  the  true  rule 
in  holding  that  where,  by  statute,  the  consideration  of  a  bond  may  be  in- 
quired into,  an  action  may  be  maintained  on  a  bond  given  by  an  infant  for 
necessaries.     See  quotations  from  tiiis  case  ante,  title  "Bonds." 

It  is  for  the  reason  last  given  that  the  cases  whicli  hold  that  an  infant  is 
not  liable  on  an  account  stated  for  necessaries  can  be  sustained,  altliough  the 
cases  themselves  give  no  reason.  The  items,  or  in  other  words,  the  consider- 
ation of  an  account  stated,  cannot  be  inquired  into:  Wood  v.  Wilherich,  Latch, 
169;  Pickering  v.  Gunning,  Palmer,  528;  W.  Jones,  182;  Ligkdew  v.  Douglas,  2 
Stark.  36;  Trueman  v.  Hnrst,  1  Term  Rep.  40;  Bartlett  v.  E,nery,  1  Term  Rep. 
42,  note;  Oliver  v.  Woodroffe,  4  Mees.  &  W.  650;  and  see  William-'i  v.  Alooi; 
11  Mees.  &  W.  256,  265,  per  Baron  Parke;  and  supra,  title  "Accounts 
Stated." 

So  far  as  the  question  of  an  infant's  liability  on  his  agreement  to  pay  inter- 
est contained  in  his  express  contract  for  necessaries  is  concerned,  it  was  held 
in  Ta/t  v.  Pike,  14  Vt.  405,  39  Am.  Dec.  228,  that  interest  would  not  be  al- 
lowed; but  this  case  was  overruled,  and  we  think  correctly  so,  in  Bradley  v. 
Pratt,  23  Vt.  378.  See  the  quotation  from  the  opinion  of  Redfield,  J.,  in  this 
latter  case,  supra,  title  "Interest." 

The  deed  of  an  infant  to  secure  an  indebtedness  for  necessaries  was  held  to 
be  voidable  in  Martin  v.  Gale,  L.  R,  4  Ch.  Div.  428,  and  to  be  valid  and 
binding,  to  the  extent  of  the  value  of  the  necessaries,  in  Cooper  v.  State,  37 
Ark.  421.  In  our  opinion,  the  first  of  these  rulings  is  correct.  The  note,  or 
other  instrument  of  indebtedness,  may  be  valid,  but  we  cannot  see  why  the 
security  should  be  equally  binding.  In  Askey  v.  Williams,  74  Tex.  294,  it 
was  held  that  a  power  of  sale  given  to  the  mortgagee,  in  a  mortgage  executed 
by  an  infant  to  secure  the  price  of  necessaries,  was  not  void,  but  voidable 
only,  and  a  conveyance  thereunder  was  ratified  by  the  failure  of  the  infant  to 
tender  the  reasonable  value  of  the  necessaries  within  a  reasonable  time  after 
reaching  majority. 

Finally,  it  should  be  carefully  remembered  that  an  infant  is  liable  for  neces- 
saries only  when  they  have  been  actually  furnished  to  him.  He  is  not  liable 
for  breach  of  his  contract  to  take  and  pay  for  them.  Thus,  says  Chipiiian, 
C.  J.,  in  Pool  V.  Pratt,  1  Chip.  252,  254:  "An  infant  is  bound  by  his  contract 
for  necessaries,  but  it  must  be  a  contract  executed  by  an  actual  delivery  and 
receipt  of  the  necessaries  to  his  use;  and  if  he  contract  to  purchase  articles 
ever  so  necessary,  he  is  not  holden  by  his  contract  to  receive  and  pay  for  the 
articles." 

Implied  Contracts  for  Necessaries.  —  An  infant  need  not  have  expressly 
promised  to  pay  for  necessaries,  in  order  to  reader  him  liable  therefor.  It  is 
sufficient  if  they  be  furnished  him  under  such  circumstances  that  a  promise 
to  pay  for  them  can  be  implied:  Duncomb  v.  Tickridge,  Aleyn,  94;  Guy  v. 
Ballou,  4  Wend.  403;  21  Am.  Dec.  US;'  Ilyman  v,  Cain,  3  Jones,  111.  In- 
deed,  it  has  been  seen  under  the  last  head  that  there  is  a  theory  that  even  if 
he  makes  an  express  contract,  he  cannot  be  held  liable  thereon,  but  only  on  a 


April,  1890.]  Craig  v.  Van  Bebbeb.  647 

promise  implied  by  the  law  to  pay  what  the  necessaries  are  reasonably  worth. 
The  necessaries  must  be  furnished  under  such  circumstances  that  the  law  will 
imply  a  promise  to  pay  for  them  on  the  part  of  the  infant.  Hence  if  the  in- 
fant lives  witli  a  stranger  as  a  member  of  his  family,  rendering  sucli  services 
as  might  be  expected  of  him,  and  receiving  in  return  a  home,  clc)thing,  and 
care,  such  as  a  child  of  the  stranger  would  receive,  it  seems  evident  to  us 
that  the  law  will  allow  him  nothing  for  his  services  over  and  above  what  he 
has  received.  But  see  Garner's  Adm'r  v.  Board,  27  Ind.  323;  Meredith  v. 
Craioford,  M  Ind.  399;  compare  Mountain  v.  Fisher,  22  Wis.  93;  and  see 
ante,  title  "  Service,"  where  this  question  is  considered  more  at  length.  For 
this  reason,  there  is  no  implied  obligation  on  the  part  of  an  infant  to  pay  for 
his  support,  as  necessaries,  furnished  by  his  step-father,  with  whom  he  lived 
as  one  of  the  family:  Hussey  v.  Rotmdtree,  Busb.  L.  110. 

Necessaries  must  havk  been  Procured  at  Instance  of  Infant,  and 
Credit  Given  to  Him.  —  As  said  in  the  old  case  of  Duncomb  v.  Tichkhje, 
Aleyn,  94:  "  If  an  infant  comes  to  a  stranger  and  boards  with  him,  there  is  a 
contract,  in  law,  implied  that  he  should  pay  for  his  board  as  much  as  it  is 
worth;  but  if  another  undertakes  to  pay  for  his  boarding,  this  express  agree- 
ment takes  away  the  implied  contract,"  and  there  can  be  no  recovery  agaiust 
the  infant.  It  is  plain  that  an  infant  is  not  liable  for  necessaries  supplied 
solely  on  the  credit  of  her  guardian,  and  charged  to  him,  although  the  credit 
given  to  the  guardian  was  induced  by  the  fact  that  the  ward  had  an  estate  of 
her  own  from  which  the  payment  was  expected  to  come:  Simms  v.  Norris,  5 
Ala.  42.  And  a  guardian,  as  such,  has  no  riyht  to  enter  into  contracts  for 
necessaries  which  shall  bind  the  infant  ward:  Phelps  v.  IVorcester,  11  N.  H.  51; 
WalUs  V.  Bardwell,  126  Mass.  36G. 

Circumstance  of  Infant's  being  Already  Supplied  with  Necessaries 
—  Presumption. — If  an  infant  is  already  properly  supplied  with  necessa- 
ries, whether  by  his  parents,  guardian,  friends,  tradesmen,  or,  in  short,  from 
any  source  whatever,  it  is  well  settled  that  his  contracts  for  additional  arti- 
cles, or  in  reference  to  other  matters  which  would  otherwise  be  necessaries, 
are  not  binding  upon  him  as  contracts  for  necessaries:  Bainhridge  v.  Pirker- 
ing,  2  W.  Black.  1325;  Ford  v.  Fothergill,  Peake  N.  P.,  '229;  1  Esp.  211; 
Cook  V.  Deaton,  3  Car.  &  P.  114;  IStory  v.  Pery,  4  Car.  &  P.  526;  Burgliart  v. 
Angerstein,  6  Car.  &  P.  690;  Mortara  v.  Hall,  6  Sim.  465,  466;  Braijslinw  v. 
Eaton,  7  Scott,  183;  5  Bing.  N.  C.  231;  Steedman  v.  Hose,  Car.  &  M.  422; 
Foster  V.  Redgrave,  L.  R.  4  Ex.  35,  note;  Barnes  v.  Toye,  L.  R.  13  Q.  B.  D. 
410;  John-stone  v.  Marh-i,  L.  R.  19  Q.  B.  D.  509;  Wailing  v.  Toll,  9  Johns.  141; 
Kline  v.  UAmourcux,  2  Paige,  419;  22  Am.  Dec.  6.52;  Angel  v.  McLillan,  16 
Mass.  28,  31;  8  Am.  Dec.  118,  120;  .b'»v//!  v.  Bennett,  10  Cush.  436,  437;  Davis 
Caldwell,  12  Cush.  512,  513;  Hoyt  v.  Casey,  114  Mass.  397;  19  Am.  Rep.  371; 
Trainer  V.  Trumhiill,  141  Mass.  527,  530;  Assignees  of  Null  v.  Connolly,  3  Mc- 
Cord,  6;  15  Am.  Dec.  612;  Edwards  v.  Higgins,  2  McCord  Ch.  16;  Kraker 
V.  Byrvm,  13  Rich.  L.  163;  Guthrie  v.  Mnrphy,  4  Watts,  80;  28  Am.  Dec.  6S1; 
Johnson  v.  Lines,  6  Watts  &  S.  80;  40  Am.  Dec.  512;  Smith  v.  Young,  2  Dev.  & 
B.  26;  Hu'^sey  v.  Roundtree,  Busb.  L.  110;  Perrin  v.  Wilson,  10  Mo.  451;  Nich- 
olson V.  Spencer,  11  Ga.  607;  Nicholson  v.  Wilhorn,  13  Ga.  467;  Elrod  v.  Myers, 
2  Head,  33;  Nichol  v.  Sfeger,  2  Tenn.  Ch.  328,  affirmed  in  6  Lea,  393;  Mc- 
Kannav.  Merry,  61  111.  177,  ISO;  J)ecell  v.  Lewenthal,  57  Miss.  331;  34  Am. 
Rep.  449.  An  oversupply  of  an  infant's  wants,  though  the  articles  might  in 
other  respects  be  ranked  as  necessaries,  gives  a  <lemand  against  the  infant 
only  for  so  much  as  was  actually  needed:  Johnson  v.  Lines,  6  Watts  &  S.  80; 
40  Am.  Dec.  542.     But  a  minor,  it  is  held,  although  he  have  an  income  sutii- 


648  Craig  v.  Van  Bebber.  [Missouri. 

cient  to  provide  him  with  necessaries  suitable  to  his  condition,  may,  never- 
theless, contract  for  necessaries  on  credit:  Burjhart  v.  Hall,  4  Mees.  &  W. 
727;  but  see  Rivers  v.  Gregg,  5  Rich.  Eq.  274;  Nicholson  v.  Wilborn,  13  Ga.  467. 

A  tradesman,  therefore,  who  trusts  an  infant  does  so  at  his  peril,  and  can- 
not recover  for  the  price  of  articles  furnished  the  infant  on  credit,  as  neces- 
saries, if  he  was  already  sufSciently  supplied:  Story  v.  Pery,  4  Car.  &  P.  526; 
Barnes  v.  Toye,  L.  R.  13  Q.  B.  D.  410;  Perrin  v.  Wilson,  10  Mo.  451;  Nichol- 
son V.  Spencer,  11  Ga.  607.  It  is  consequently  incumbent  upon  the  trades- 
man, before  he  gives  credit  to  the  infant,  to  make  inquiries  as  to  whether 
the  infant  was  not  at  the  time  suitably  provided  with  the  articles:  Ford  v. 
Fothergill,  Peake  N.  P.  229;  1  Esp.  211;  Cook  v.  Beaton,  3  Car.  &  P.  114; 
Barghart  v.  Angerstein,  6  Car.  &  P.  090;  Mortara  v.  Hall,  6  fciim.  465,  466;  Steed- 
man  V.  Rose,  Car.  &  M.  422;  Kline  v.  L'Amoureux,  2  Paige,  419;  22  Am.  Dec. 
652;  Johnson  v.  Lines,  6  Watts  &  S.  80;  40  Am.  Dec.  542.  "  But,"  says  Tm- 
dal,  C.  J.,  in  Dalton  v.  Gib,  7  Scott,  117,  also  reported  in  5  Bing.  N.  C.  198, 
"a  party  may,  by  his  conduct  and  appearance,  render  inquiry  unnecessary  "; 
and  hence  where  an  infant  lived  with  her  mother  at  a  fashionable  hotel,  and 
drove  to  the  tradesman's  shop  in  a  carriage  with  her  mother,  who  waited  in  the 
carriage  while  the  daughter  purchased  the  goods,  some  of  which  were  taken 
away  in  tlie  carriage,  and  others  sent  to  the  hotel,  it  was  held  that  the  jury 
might  fairly  assume  that  the  goods  were  subjected  to  the  mother's  inspec- 
tion, and  that  there  was  no  necessity  of  making  inquiry  as  to  whether  they 
were  necessary  or  not;  and  where  the  friends  of  a  minor,  who  was  an  orphan, 
had  twice  previously  taken  him  to  a  dentist  for  like  services,  and  the  bills 
had  been  made  out  against  the  miaor,  and  paid,  the  guardian  furnishing  the 
money,  without  notice,  to  the  dentist,  of  any  objection,  it  was  held  that  "  these 
acts  on  the  part  of  the  defendant  and  his  guardian  rendered  it  unnecessary 
that  the  plaintifif  should  have  instituted  an  inquiry  as  to  a  guardianship  over 
the  defendant,  before  performing  these  last  services,  as  a  prerequisite  for  a 
recovery  in  this  suit,  the  work  being  necessary  to  meet  an  unsupplied  want ": 
Strong  v.  Foote,  42  .Conn.  203.  Compare,  however,  the  cases  in  the  next 
paragraph. 

But  the  duty  of  the  tradesman  to  inquire  as  to  whether  or  not  the  infant 
is  already  supplied  with  similar  articles  before  he  trusts  him  is  not  a  rule  of 
law  which  will  protect  the  tradesman,  if,  notwithstanding  a  diligent  inquiry 
without  ascertaining  that  the  infant  has  been  supplied,  it  turns  out  after  he 
furnishes  the  articles  applied  for  that  the  infant  was  sufficiently  provided. 
If  the  infant  was  already  supplied  as  a  fact,  the  tradesman  cannot  recover 
for  other  goods  supplied  as  necessaries,  whether  the  latter  knew  of  the  fact 
or  not,  at  the  time  he  gave  credit  to  the  infant:  Brayshaw  v.  Eaton,  7  Scott, 
183;  5  Bing.  N.  C.  2.31;  Foster  v.  Redgrave,  L.  R.  4  Ex.  35,  note;  Barnes  v. 
Toye,  L.  R.  13  Q.  B.  D.  410;  Trainer  v.  Trumbull,  141  Mass.  527,  530;  Nichol 
V.  Steger,  2  Tenn.  Ch.  328,  affirmed  in  6  Lea,  39.3;  and  see  Ryder  v.  Womb- 
well,  L.  R.  4  Ex.  32.  There  is  no  inflexible  rule  of  law,  according  to  the 
case  of  Brayshaw  v.  Eaton,  7  Scott,  183,  5  Bing.  N.  C.  231,  making  it  incum- 
bent on  a  tradesman  to  institute  inquiries  as  to  the  situation  and  resources  of 
an  infant  before  he  gives  him  credit  for  necessaries.  "  No  doubt,"  says  Tin- 
dal,  C.  J.,  in  the  report  of  the  case  in  7  Scott,  "a  prudent  tradesman  would 
make  such  inquiry;  and  the  total  absence  of  inquiry  would  afford  matter  of 
strong  observation  to  the  jury.  But  whether  inquiry  were  made  or  not,  the 
question  for  the  jury  would  still  be  the  same;  and  their  verdict  must  depend, 
not  upon  the  degree  of  knowledge  acquired  by  the  tradesman  as  to  the  infant's 
circumstances,  but  upon  whether  the  goods  were  necessaries  or  not. "    "  In 


April,  1890.]  Craig  v.  Van  Bebber.  649 

my  view,"  says  Lopes,  J.,  in  Barnes  v.  Toye,  L.  R.  13  Q.  B.  D.  410,  "it  is 
immaterial  whetlier  the  plaiiitifiFs  did  or  did  not  know  of  the  existing  sup- 
ply, just  at  it  is  immaterial  whether  they  did  or  did  not  know  that  the  de- 
fendant was  a  minor." 

It  is  sometimes  stated  as  the  reason  for  the  rule  that  an  infant  is  not  liable 
as  for  necessaries,  when  he  is  already  sufficiently  supplied,  applicable  to  the 
condition  of  circumstances,  where  he  resides  with  and  is  supported  by  his 
parents,  or  is  under  the  care  of  a  guardian,  that  it  is  a  matter  for  the  parents 
or  guardian  to  decide  what  shall  be  suitable  and  proper  for  the  maintenance 
of  the  child  or  ward,  and  third  persons  have  no  right  to  interfere  with  the 
exercise  of  that  discretion.  Thus  in  Bainhrklge  v.  Pickering,  2  W.  Black.  1 325, 
it  is  said  that  "  no  man  shall  take  upon  him  to  dictate  to  a  parent  what  cloth- 
ing the  child  shall  wear,  at  what  time  tiiey  shall  be  purchased,  or  of  whom. 
All  that  must  be  left  to  the  discretion  of  the  father  or  mother."  And  in 
Hoyt  V.  Casey,  114  Mass.  397,  19  Am.  Rep.  371,  this  notion  was  carried  to 
the  extent  of  holding  that  a  case  could  not  be  excepted  from  the  operation 
of  the  principle  because  the  father  was  a  poor  man,  and  unable  to  pay  for  the 
necessaries,  —  in  this  case  medical  attendance,  — there  being  no  refusal  or  ne- 
glect on  his  part  to  perform  the  duty  of  supporting  and  caring  for  his  son. 
It  may  be  very  true  that  when  a  child  is  under  the  care  and  control  of  his 
parents  or  guardian,  they  have  the  right  to  deterunne  the  character  of  his 
support;  but  we  do  not  think  that  this  afifords  a  reason  for  the  rule  under 
consideration  even  under  that  state  of  facts,  and  certainly  it  is  no  reason 
when  the  infant  either  has  no  parents  or  guardian,  or  is  not  under  their 
control.  We  think  the  liability  of  the  parent  for  necessaries  furnished  his 
child  under  certain  circumstances  has  been  confused  by  these  cases  with 
the  liability  of  the  child  himself.  We  think  that  the  reason  of  the  rule  is 
simply  that  when  the  infant  is  amply  supplied  with  necessaries,  nothing  else 
is  necessary,  and  hence  he  cannot  be  further  bound  as  for  necessaries. 

We  should  say  it  is  certainl}'  true  that  the  mere  fact  that  an  infant  had  a 
father,  motlier,  and  guardian,  neither  of  whom  did  anything  towards  his  care  or 
support,  does  not  prevent  his  being  bound  to  pay  for  that  which  was  actually 
necessary  for  him  when  furnished:  Trainer  v.  Trumbull,  141  Mass.  527;  and 
hence  a  person  who  takes  from  an  almshouse  a  minor  whose  father  was  an 
inmate  of  a  soldier's  home,  and  whose  mother  was  committed  to  a  reforma- 
tory institution,  who  has  a  guardian,  and  who  will  inherit  property  on  the 
death  of  his  father,  may  maintain  an  action  against  the  minor,  after  his 
father's  death,  for  support  and  education  furnished  to  him  on  the  credit  of. 
his  expectations  of  jjroperty:  Trainer  v.  Trumbull,  141  Mass.  527.  Further- 
more, it  is  held  that  the  mere  fact  that  an  infant  lived  with  her  mother 
did  not  necessarily  render  her  incapable  of  binding  herself  for  necessaries: 
Atchison  v.  B,uf,   50  Barb.   381. 

But  when  it  appears  that  an  infant  lives  with  his  father,  or  even  his  mother, 
who  may  not  be  under  the  same  obligation  to  support  him  as  the  father,  or  is 
under  the  care  of  a  guardian,  it  is  a  very  natural  and  reasonable  presump- 
tion that  he  is  properly  supplied  with  necessaries,  and  he  is  therefore  not 
liable  for  anything  furthti,  in  the  absence  of  evidence  to  the  contrary: 
Assignees  of  Hull  v.  Connolly,  3  McCord,  (3;  15  Am.  Dec.  612;  Jones  v.  Colvln, 
1  McMull.  L,  14;  Perrin  v.  Wilson,  10  Mo.  451;  State  v.  Cook,  12Ired.  L.  67; 
Freeman  v.  Bridger,  4  Jones  L.  1;  67  Am.  Dec.  258;  compare  Parsons  v. 
Keys,  43  Tex.  557.  And  if  it  appears  that  a  parent  or  guardian  has 
furnished  the  infant  with  such  articles  as  he  regartled  ample  for  the  sup- 
port  of  the  infant,  according  to   his  age   and  condition,    or  even  that  the 


650  t7RAiG  V.  Van  Bebbeb.  [Missouri, 

infant  has  been  furnished  with  money  by  his  parent  or  guardian,  or  by  an 
allowance  from  the  court,  sufficient  to  supply  him  with  necessaries,  the 
presumption  is,  that  he  has  been  adequately  and  properly  supplied,  and  a 
tradesman  who  seeks  to  charge  the  infant  as  for  necessaries  in  addition 
has  the  burden  of  proving  that  such  is  not  the  fact:  Nicholson  v.  Spencer, 
11  Ga.  607;  Nicholson  v.  Wilhorn,  13  Ga.  467;  Bimn  v.  Gregg,  5  Rich.  Eq. 
274.  In  Rivers  v.  Gregg,  Dargan,  C,  says:  "When  it  is  shown  that 
an  infant  is  supplied  with  necessaries  by  hie  parent  or  guardian,  or  with 
funds  amply  sufficient  to  procure  them,  the  presumption  of  law  and  reason 
must  be  that  he  does  not  stand  in  need  of  credit  to  obtain  what  is  necessary 
tor  him.  And  after  this  "prima  facie  showing,  he  who  alleges  that,  notwith- 
standing this,  the  infant  was  in  a  state  of  destitution,  must  take  upon  himself 
the  burden  of  proving  the  allegation.  If  he  does  this  in  a  satisfactory  maa- 
ner,  liis  claim  should  be  allowed.  But  even  then  it  should  be  limited  to 
bare  necessaries,  and  should  not  be  allowed  to  embrace  articles  of  luxury 
which  would  otherwise  be  suitable  to  the  infant's  fortune  and  condition  in 
life."  Again,  he  says:  "It  is  a  fallacy  to  suppose  that  a  distinction  can  be 
drawn  between  the  case  where  an  infant  is  actually  supplied  with  the  neces- 
saries themselves,  and  that  where  he  receives  an  allowance  under  an  order  of 
the  court,  which  he  is  to  disburse  himself  in  their  purchase.  If  it  be  urged 
that  the  infant  may  waste  or  misapply  his  allowance,  and  thus  be  reduced  to 
a  state  of  destitution  that  would  require  his  necessary  wants  to  be  otherwise 
supplied,  it  is  obvious  that  the  argument  applies  with  equal  force  to  the  case 
where  the  infant  is  supplied  with  the  necessary  articles  for  his  use  and  con- 
sumption. These  he  may  sell,  give  away,  or  waste,  so  that  it  may  become 
necessary  that  he  should  have  more,  to  save  him  from  nakedness  and  starva- 
vation."  If  these  special  circumstances  do  not  appear,  however,  and  the 
infant  relies  as  a  defense  to  an  action  for  necessaries  on  the  fact  that  he  was 
at  the  time  properly  supplied  with  necessaries,  it  would  seem  that  the  bur- 
den of  proving  the  fact  rests  upon  him:  See  Johnatone.  v.  Marks,  L.  R.  19 
Q.  B.  D.  509;  also  Parsons  v.  Keys,  43  Tex.  557,  in  which  case,  however,  it 
appeared  that  the  defendant  had  a  guardian. 

It  has  been  determined  that  a  stranger  cannot  recover  the  price  of  goods 
sold  to  an  infant,  as  for  necessaries,  against  the  injunctions  of  his  guardian: 
Bredin  v.  Deven,  2  Watts,  95;  but,  in  our  opinion,  this  ruling  is  altogether 
too  broad.  No  doubt,  if  the  guardian  forbade  the  furnishing  of  the  articles 
to  the  infant,  this  would  be  a  circumstance  to  show  that  the  infant  was 
already  properly  supplied  with  necessaries;  but  we  think  the  infant's  lia- 
bility depends,  after  all,  upon  the  question  whether  he  was  so  supplied. 
And  in  other  cases  it  has  been  held  that  an  infant  may  bind  himself  for 
necessaries  purchased  with  the  consent  of  his  guardian:  Bundelv,  Keeler,  7 
Watts,  237;  Watson  v.  Hensel,  7  Watts,  344;  but  it  was  more  correctly  held 
in  Johnson  v.  Lines,  6  Watts  &  S.  80,  40  Am.  Dec.  542,  that  the  permission 
of  a  guardian  to  tradesmen  to  deal  with  his  infant  ward  might,  in  a  doubtful 
case,  justify  a  bona  jide  supply  to  the  infant  beyond  the  limits  of  strict 
necessity,  for  which  the  infant  would  be  liable;  but  the  connivance  of  the 
guardian  at  an  improper  supply  would  not  subject  the  ward  to  pay  for  it. 
Again,  we  should  say  that  the  infant's  liability  depends,  except  in  a  doubt- 
ful case,  not  on  the  fact  that  the  guardian  assented  to  the  furnishing  of  the 
articles,  but  upon  the  question  whether  the  infant  was  really  properly  sup- 
plied at  the  time. 

Test  as  to  What  are  Necessaries  —  Station  and  Circumstances  of 
Imfant  —  Articles  for  Mere  Ornament  ok  Pleasure.  —  It  is  obvious 


April,  1890.]  Craig  v.  Van  Bebber.  651 

that  the  question  what  are  necessaries  depends  upon  the  infant's  sta- 
tion and  condition  in  life.  The  term  is  entirely  a  relative  one.  What 
would  be  necessaries  in  one  case  might  not  be  in  another:  Ford  v.  Fother<jill, 
V.  1  Esp.  211;  Peake  N,  P.  229;  Hands  v.  Slaney,  8  Term  Rep.  578;  Banjhart 
Anijerstein,  6  Car.  &  P.  690;  Mortara  v.  Hall,  6  Sim.  46.'),  467;  Lowe  v.  Grif- 
Jith,  1  Scott,  458,  400;  1  Hodges,  30,  31;  Bray.shaw  v.  Eaton,  7  Scott,  183, 
187;  5  Bing.  N.  C.  231,  234;  Steedman  v.  Rose,  Car.  &  M.  422;  StnitJi-peters 
V.  GrifuiS  Adnir,  10  B.  Mon.  259,  260;  Breed  v.  Judd,  1  Gray,  455,  458; 
Price  V.  Sanders,  60  Ind.  310,  314,  "What  are  necessaries,"  says  Camp- 
bell, J.,  in  Epperson  v.  Nugent,  57  Miss.  45,  47,  34  Am.  Rep.  434,  "cannot 
be  determined  by  any  arbitrary  and  inflexible  rule.  It  depends  on  circum- 
stances, and  each  case  must  be  governed  by  its  own."  And,  says  Dargan, 
Chancellor,  in  Rivers  v.  Gregg,  5  Rich.  Eq.  274,  278,  "necessaries,  when 
the  term  is  applied  to  an  inUnt,  are  those  things  that  are  conducive  and 
fairly  proper  for  his  comfortable  support  and  education,  according  to  his 
fortune  and  rank.  So  that  what  would  be  considered  necessary  in  one  case 
would  not  be  so  regarded  in  another.  Tlie  rule  is  entirely  relative  in  its 
operation." 

It  is  not  to  be  understood  that  the  term  "necessaries  "  is  to  be  confined  to 
those  things  required  merely  to  sustain  life;  but  it  includes  what  may  be 
suitable  and  proper  for  the  particular  person  according  to  his  station  and 
circumstances:  Peters  v.  Fleming,  6  Mees.  &  W.  42;  Davis  v.  Caldwell,  12 
Cush.  512,  513;  Nicholsonv.  Spencer,  11  Ga.  607,  610;  Jordan  v.  Coffield,  70  N.  C. 
1 10;  Strong  v.  Foote,  42  Conn.  203.  Articles  of  mere  luxury  or  of  pure  orna- 
ment would  be  excluded,  unless,  perhaps,  in  very  extraordinary  cases;  but 
"luxurious  articles  of  utility"  miglit  be  included.  Thus  in  Peters  v.  Flem- 
ing, 6  Mees.  &  W.  42,  Baron  Parke  said:  "It  is  perfectly  clear  that  from 
the  earliest  time  down  to  the  present  the  word  '  necessaries '  was  not  con- 
fined, in  its  strict  sense,  to  such  articles  as  were  necessary  to  the  support  of 
life,  but  extended  to  articles  fit  to  maintain  the  particular  person  in  the  state, 
station,  and  degree  in  life  in  which  he  is;  and  therefore  we  must  not  take 
the  word  '  necessaries' in  its  unqualified  sense,  but  with  the  qualification 
above  pointed  out."  Again,  he  says:  "The  true  rule  I  take  to  be  this:  that 
all  such  articles  as  are  purely  ornamental  are  not  necessai-y,  and  are  to  be 
rejected,  because  they  cannot  be  requisite  for  any  one;  and  for  such  matters, 
therefore,  an  infant  cannot  be  made  responsible.  But  if  they  are  not  strictly 
of  this  description,  then  the  question  arises,  whether  they  were  bought  for 
the  necessary  use  of  the  party,  in  order  to  support  himself  properly  in  the 
degree,  state,  and  station  of  life  in  which  he  moved;  if  they  were  for  such 
articles,  the  infant  may  be  responsible."  Baron  Aldorson,  who  also  gave  his 
views  to  the  same  effect,  again  remarked,  several  years  afterward:  "Articles 
of  mere  luxury  are  always  excluded,  though  luxurious  articles  of  utility  are 
in  some  cases  allowed  ":  Chappie  v.  Cooper,  13  Mees.  &  W.  252.  Perhaps 
the  same  thing  was  intended  wlien  it  was  said  in  Wharton  v.  Mackenzie,  5 
Q.  B.  606,  that  articles  of  comfort  and  convenience  merely,  in  a  particular 
case,  can  never  be  included  under  the  term  "  necessaries."  See  also  McKanna 
v.  Merry,  61  111.  177,  179.  But  in  Ryder  v.  Womhwell,  L.  R.  4  Ex.  32,  41, 
Willes,  J.,  observes:  "  Possibly  there  may  be  exceptional  cases  in  which 
things  purely  ornamental  may  be  necessary.  In  such  a  state  of  things  as 
we  believe  existed  at  the  close  of  the  last  century,  it  might  have  been  a 
question  for  a  jury  whether  it  was  not  necessary,  for  the  purpose  ot  main- 
taining his  station,  for  a  young  gentleman  moving  in  society  to  purchase 
wigs  and  hair-powder;  but,  as  a  general  rule,  and  in  the  absence  of  Bome 


652  Craig  v.  Van  Berber.  [Missouri, 

evidence  to  show  that  the  usages  of  society  required  the  use  of  such  things, 
we  think  the  rule  laid  down  in  Peters  v.  Fleiniwj,  6  Mees.  &  W.  42,  is  cor- 
rect." 

On  the  other  hand,  the  mere  fact  that  articles  furnished  or  services  ren- 
dered were  beneficial  or  desirable  to  the  infant  does  not  make  him  liable 
therefor  aa  necessaries:  Tapper  v.  Cadwell,  12  Met.  559,  563;  46  Am.  Dec  704; 
705;  Phelps  v.  Worcester,  11  N.  H.  51;  Middkhury  College  v.  Chandler,  16  Vt. 
683,  686;  42  Am.  Dec.  537,  538;  Turner  v.  Gaither,  83  N.  C.  357,  362;  35 
Am.  Kep.  574,  576;  and  see  other  cases  cited  as  to  materials  or  money 
supplied  and  services  performed  for  the  benefit  of  his  estate,  post,  title 
"Illustrations  of  What  maybe  Necessaries."  And  we  may  here  observe, 
also,  that  it  is  laid  down  as  a  general  principle  that  necessaries  concern  the 
person  and  not  the  estate  of  the  infant:  New  Hampshire  Mat.  F.  Ins.  Co.  v. 
Noyes,  32  N.  H.  345;  Decell  v.  Lewenthal,  57  Miss.  331;  34  Am,  Rep.  449;  but 
see  Epperson  v.  Nugent,  57  Miss.  45;  34  Am.  Rep.  434. 

Question  of  Necessaries,  whether  of  Fact  or  Law.  —  The  province  of 
the  court  and  of  the  jury  in  solving  the  question  of  necessaries  involves  a 
proposition  of  considerable  nicety,  and  one  which  is  not  always  as  clearly 
and  definitely  stated  as  it  might  be.  The  rule,  having  regard  particularly  to 
the  latest  cases,  seems  to  be  this:  It  is  for  the  court  to  determine,  as  a  mat- 
ter of  law,  in  the  first  place,  whether  the  things  supplied  may  fall  within  the 
general  classes  of  necessaries,  and  if  so,  whether  there  is  sufficient  evidence 
to  warrant  the  jury  in  finding  that  they  were  necessary.  If  either  of  these 
preliminary  inquiries  be  decided  in  the  negative,  it  is  the  duty  of  the  court 
to  nonsuit  the  plaizitifi'  who  seeks  to  recover  from  the  infant.  If  they  be  de- 
cided in  the  affirmative,  it  is  then  for  the  jury  to  determine  whether,  under  all 
the  circumstances,  the  things  furnished  were  actually  necessary  to  the  posi- 
tion and  condition  of  the  infant,  as  well  as  their  reasonable  value,  and  whether 
the  infant  was  already  sufficiently  supplied:  Rainsford  v.  Femoick,  Cart. 
216;  Harrison  v.  Fane,  1  Scott  N.  R.  287,  289;  1  Man.  &  G.  550,  553;  Peters 
V.  Fleming,  6  Mees.  &  W.  42;  Brooher  v.  Scott,  1 1  Mees.  &  W.  67;  Wharton  v.  Mac- 
kenzie, 5  Q.  B.  606;  Bryant  v.  Richardson,  L.  R.  3  Ex.  93,  note;  Ryder  v.  Womb- 
well,  L.  R.  4  Ex.  32;  Skrine  v.  Gordon,  9  Ir.  Rep.  C.  L.  479;  Htll  v.  Arhon,  34 
L.  T.  125;  Beeler  v.  Young,  1  Bibb,  519;  Saunders  v.  Ott,  1  McCord,  572; 
Smith  V.  Young,  2  Dev.  &  B.  26;  Tupper  v.  Cadioell,  12  Met.  559,  563;  46 
Am.  Dec.  704,  705;  Merriam  v.  Cunningham,  11  Cush.  40;  Davis  v.  Caldwell, 
12  Cush.  512,  513;  Grace  v.  Hale,  2  Humph.  27;  36  Am.  Dec.  296;  Jordan  v.  Co/- 
field,  70  N.  C.  110,  113;  Henderson  v.  Fox,  5  Ind.  489,  491;  Garr  v.  Haskett, 
86  Ind.  373;  McKanna  v.  Merry,  61  111.  177;  Decell  v.  Lewenthal,  bl  Mis.s. 
331;  34  Am.  Rep.  449;  compare  the  following  cases:  Maddox  v.  Miller,  1 
Maule  &  S.  738;  Brayshaw  v.  Eaton,  7  Scott,  183,  188;  5  Bing.  N.  C.  231, 
235;  Hart  v.  Prater,  1  Jur.  623;  Jenner  v.  Walker,  19  L.  T.  398;  Johnson  v. 
Lines,  6  Watts  &  S.  80;  40  Am.  Dec.  542;  Mohney  v.  Eoans,  51  Pa.  St.  80; 
Swift  V.  Bennett,  10  Cush.  436,  437. 

Burden  of  Proof  as  to  Necessaries.  —  It  has  been  seen,  supra,  title 
"  Circumstance  of  Infant's  being  Already  Supplied  with  Necessaries,"  that 
where  it  appears  that  an  infant  lives  with  his  parents,  or  is  under  tlie  care 
of  a  guardian,  a  presumption  exists  that  he  is  properly  supplied  with  neces- 
saries. Thereforp  one  who  seeks  to  charge  the  infant  further  for  articles 
otherwise  conceded  to  be  necessaries  has  the  burden  of  showing  that  he  was 
not  so  supplied.  But  it  seems  that  if  the  infant  does  not  live  with  his  pa- 
rents, nor  is  under  the  care  of  a  guardian,  but  defends  on  the  ground  that  lie 
was  already  sufficiently  provided,  the  burden  is  upon  him  to  show  the  fact. 


April,  1890.]  Craig  v.  Van  Bebber.  653 

Aside  from  these  cases,  one  claiming  to  recover  from  an  infant  on  the  ground  of 
neccBsaries  is  obliged  to  plead  and  prove  the  fact  that  having  regard  to  the 
condition  and  circumstances  of  the  infant,  the  things  supplied  the  infant 
were  such:  Ive  v.  Chester,  Cro.  Jac.  560;  Mortara  v.  Hall,  6  Sim.  4(35,  467; 
Johnson  V.  Lines,  6  Watts  &  S.  SO;  40  Am.  Dec.  542;  Thrall  v.  Wrbjht,  38 
Vt.  494;  Wood  v.  Losey,  50  Mich.  475;  and  where  the  defendant  pleaded  in- 
fancy to  an  action  on  a  promissory  note,  it  was  held  that  a  reply  that  the 
note  was  given  for  necessaries  furnished  the  defendant  at  her  request,  with- 
out specifying  in  what  the  necessaries  consisted,  was  demurrable  on  account 
of  its  vagueness:  Burr  v.   Wilson,  IS  Tex.  367. 

Illustrations  of  What  may  be  Necessaries.  — According  to  the  lan- 
guage of  Lord  Coke,  heretofore  quoted,  "An  infant  may  bind  himself  to  j)ay 
for  his  necessary  meat,  drinke,  apparell,  necessary  physicke,  and  such  other 
necessaries,  and  likewise  for  his  good  teaching  or  instruction,  whereby  he 
may  profit  himselfe  afterwards  ":  Co.  Lit.  172  a.  Subject  to  the  foregoing 
general  rules,  there,  of  course,  can  be  no  doubt  that  food  is  included  in  the 
term  "necessaries"  for  which  an  infant  may  bind  himself:  See  Saunders  v. 
0«,  1  McCord,  572;  Bivers  v.  Gregg,  5  Rich.  Eq.  274,  278;  Price  v.  Sanders, 
60  Ind.  310,  314;  Barnes  v,  Barnes,  50  Conn.  572.  Entertainment  furnished 
by  an  innkeeper  may  be  classed  under  the  head  of  necessaries,  for  which  an 
infant  is  liable,  and  for  which,  it  is  held,  the  innkeeper  has  a  lieu  on  the  in- 
fant's property  brought  within  the  inn:  Watson  v.  Cross,  2  Duvall,  147.  We 
think  it  doubtful  that  the  innkeeper  can  claim  a  lien  for  the  necessary  enter- 
tainment. Besides,  this  case  seems  to  us  to  be  altogether  incorrectly  de- 
cided on  the  facts,  which  showed  that  the  infant  was  placed  by  his  guardian 
at  school,  but  left  there  and  came  to  the  inn. 

Suitable  clothing  may  likewise  undoubtedly  be  a  necessary  for  which  an 
infant  may  he  held  liable:  See  Saunders  v.  Ott,  1  McCord,  572;  Rivers  v. 
Oreijg,  5  Rich.  Eq.  274,  278;  Price  v.  Sanders,  60  Ind.  310,  314.  Regimentals 
furnished  in  perilous  times,  to  an  infant  who  was  a  member  of  a  volunteer 
corps,  were  held   by  Lord  EUenborough  to  be  necessaries:  Coates  v.    Wihon, 

5  Esp.  152;  and  an  infant,  a  captain  in  the  army,  was  held  liable  to  pay  for 
a  livery  ordered  for  his  servant,  but  not  for  cockades  ordered  for  the  soldiers 
of  his  company,  in  Hands  v.  Slaney,  8  Term  Rep.  578;  Lord  Kenyon  saying: 
"I  cannot  say  that  it  was  not  necessary  for  a  gentleman  in  the  defendant's 
situation  to  have  a  servant;  and  if  it  were  proper  for  him  to  have  one,  it  was 
equally  necessary  that  the  servant  should  have  a  livery."  Clothing  supplied 
an  infant  for  his  or  her  marriage,  although  not  suitable  for  ordinary  occa- 
sions, may  be  recovered  for  as  necessaries:  Sams  v.  SlocJcton,  14  B.  Mon.  232; 
Garr  v.  Baskett,  86  Ind.  373;  Jordan  v.  CoJJield,  70  N.  C.  110,  113.  But  ap- 
parel consisting  in  part  of  velvet  and  satin  suits  laced  with  gold  lace,  sup- 
plied an  infant  who  was  one  of  the  gentlemen  of  the  chamber  to  the  Earl 
of  Essex,  was  held  not  to  be  necessary,  in  Mackarell  v.  Bachelor,  Cro.  Eliz. 
583;  compare  Nicholion  v.  Spencer,  11  Ga.  607,  610,  per  Warner,  J.;  nor  are 
racing-jackets  necessaries,  unless  for  a  jockey:  Burghart  v.  Angerstein,  6  Car. 

6  P.  690,  698;  and  suitable  clothing  when  supplied  in  an  unreasonal)le  quan- 
tity may  not  be  recovered  for:  Johnson  v.  Lines,  6  Watts  &  S.  80;  40  Am. 
Dec.  542. 

Medical  attendance,  and  articles  furnished  for  the  purpose  of  health,  may 
also  unquestionably  be  recovered  for  as  necessaries:  See  Saitnders  v.  Ott,  1 
McCord,  572;  Price  v.  Sanders,  60  Ind.  310,  314.  Services  rendered  by  a 
dentist  to  a  minor,  in  filling  his  teeth,  which  were  decayed  and  gave  him 
pain,  the  work  being  essential  for  their  preservation,  were  held  to  be  neces- 


654  Craig  v.  Van  Bebber.  [Missouri, 

saries,  in  Strong  v.  Foote,  42  Conn.  203.  So  a  horse  may  be  a  necessary  for 
an  infant  who  has  medical  advice  to  take  exercise  on  horseback:  Hart  v. 
Prater,  1  Jur.  62.3;  and  see  Clowes  v.  Brooke,  2  Strange,  1101;  And.  277;  Aarcm 
V.  Harley,  '6  Rich.  L.  26;  bnt  not  if  the  horse  is  purchased  by  the  infant  for 
purposes  of  pleasure  or  business:  Skrine  v.  Gordon,  9  Ir.  Rep.  C.  L.  479;  Beeler 
V.  Young,  1  Bibb,  519;  Sf/iUhpeters  v.  Griffins  Acbnr,  10  B.  Mon.  259,  260; 
Rainwater  v.  Durh.am,  2  Note  &  McC.  524;  10  Am.  Dec.  637;  Grace  v.  Hale, 
2  Humph.  27;  36  Am.  Dec.  296;  Wood  v.  Losey,  50  Mich.  475;  House  v.  Alex- 
ander, 105  Ind.  109;  55  Am.  Rep.  189;  but  see  Molvney  v.  Erans,  51  Pa.  St.  80. 

A  common-school  education  is  a  necessary:  See  Middlehury  College  v.  Chan- 
dler, 16  Vt.  683;  42  Am.  Dec.  537;  Saunders  v.  Olt,  1  McCord,  572;  Rivers  v. 
Gregg,  5  Rich.  Eq.  274,  278;  but  not  a  collegiate  education,  at  least  not  for  an 
infant  whose  wealth,  station  in  society,  genius,  or  talent  did  not  suggest  its 
special  fitness  and  expediency:  Middlehury  College  v.  Chandler,  16  Vt.  683; 
42  Am.  Dec.  537;  certainly  a  professional  education  is  not  a  necessary:  Bou- 
chell  V.  Clary,  3  Brev.  194;  Turner  v.  Gaither,  83  N.  C.  357;  35  Am.  Rep.  574; 
and  in  Smith  v.  Gibson,  Peake  Ad.  Cas.  52,  Lord  Kenyon  was  of  the  opinon 
that  a  sum  of  money  advanced  by  the  plaintiff  to  place  out  the  infant  wife  of 
the  defendant  as  an  apprentice  to  learn  millinery  could  not  be  considered  a 
necessary. 

Proper  lodgings  may  also  be  included  in  necessaries  for  an  infant:  See 
Rivers  v.  Gregg,  5  Rich.  Eq.  274,  278;  Price  v.  Sanders,  60  Ind.  310,  314;  Crisp 
V.  Churchill,  cited  1  Bos.  &  P.  340;  and  wliere  an  infant  rented  a  house,  in 
which  he  lived  and  exercised  his  calling  as  a  barber,  it  was  held  that  it  was 
properly  left  to  the  jury  to  determine  whether  the  house  was  a  necessary  or 
not:  Lo2L'e  v.  Griffith,  1  Scott,  458;  1  Hodges,  30. 

Purchases  made  by  an  infant  for  the  purpose  of  trading,  although  he 
thereby  gain  his  living,  on  the  other  hand,  do  not  bind  him:  Whittingham  v. 
Hill,  Cro.  Jac.  494;  and  see  Dilk  v.  Keighley,  2  Esp.  480;  but  he  is  liable  for  so 
much  of  goods  supplied  him  to  trade  with  as  were  consumed  as  necessaries 
in  his  own  family:  Turberville  v.  Wliitehouse,  1  Car.  &  P.  94,  atfirmed  in  12 
Price,  693;  and  as  just  seen,  he  may  be  chargeable  for  the  use  and  occupation 
of  a  house  in  which  he  carries  on  his  business,  if  he  also  uses  it  as  a  dwelling: 
Lowe\.  Griffith,  1  Scott,  458;  1  Hodges,  30.  He  is  not  liable  as  for  necessaries 
for  advances  and  supplies  furnished  him  to  enable  him  to  carry  on  a  plantation 
or  farm:  Decell  v.  Lewenthal,  bl  Miss.  331;  34  Am.  Rep.  449;  State  v.  Howard, 
88  N.  G.  650,  651.  Nor  is  he  liable  for  a  horse  purchased  by  him  to  be  used 
in  farming,  although  he  thereby  supports  himself  and  family:  Rainivater  v. 
Durham,  2  Nott  &  McC.  524;  10  Am.  Dec.  637;  Grace  v.  Hale,  2  Humph.  27; 
36  Am.  Dec.  296;  Wood  v.  Losey,  50  Mich.  475;  House  v,  Alexander,  105  Ind. 
109;  55  Am.  Rep.  189;  but  in  Mohney  v.  Evans,  61  Pa.  St.  80,  where  a  lad 
seventeen  years  of  age,  carrying  on  a  farm  for  his  mother,  who  was  a  widow, 
and  his  guardian,  purchased  a  pair  of  oxen,  which  were  received  by  him  and 
his  mother,  and  afterwards  exchanged  for  a  horse,  which  was  used  to  work 
the  farm,  it  was  held  that  the  question  whether  the  purchase  of  the  oxen  was 
necessary  should  have  been  submitted  to  the  jury,  —  a  decision  at  variance  with 
the  weight  of  authority.  The  board  of  four  horses  for  six  months,  the  prin- 
cipal use  of  which  was  in  the  business  of  a  hackinan,  is  likewise  not  within 
the  class  of  necessaries  for  which  an  infant  is  liable,  although  the  horses  were 
occasionally  used  to  carry  his  family  out  for  a  drive:  Merriam  v.  Cunningham, 
1 1  Cush.  40. 

An  infant  is  not  liable,  furthermore,  as  for  necessaries,  for  repairs  upon  his 
dwelling-house,  although  required  for  the  prevention  of  immediate  and  seri- 


April,  1890.]  Craig  v.  Van  Bebbeb.  655 

ous  injury  to  the  house:  Tupper  v.  Cadwell,  12  Met.  559;  46  Am.  Dec.  704; 
Wallis  V.  Birdwell,  126  Mass.  366;  West  v.  Ore(jgs  Adrar,  1  Grant  Cas.  53. 
Nor  is  he  liable  for  labor  and  materials  furnished  for  the  erection  of  a  dwell- 
ing or  other  building  upon  his  land:  Freeman  v.  Brklyer,  4  Jones  L.  1;  67 
Am.  Dec.  258;  Price  v.  Sanders,  60  Ind.  310,  314;  Price  v.  Jennings,  62  Ind. 
Ill;  Wornock  v.  Loar,  88  Ky.  000;  Dewey,  J.,  sayirg  in  Tupper  v.  Cad- 
well,  12  Met.  559,  46  Am.  Dec.  704:  "No  necessity  can  exist  for  such  expendi- 
tures, solely  upon  the  credit  of  the  minor.  The  fact  that  he  has  real  estate 
which  may  require  supervision,  and  may  need  repairs,  furnishes  the  proper 
occasion  for  the  appointment  of  a  guardian,  through  whose  agency  such  re- 
pairs can  be  made,  and  as  tlie  law  assumes,  more  judiciously  made,  than 
througli  the  agency  of  the  minor."  Nor  is  a  contract  for  the  insurance  of  his 
property  against  loss  or  damage  by  fire  a  contract  for  necessaries  which  will 
bind  the  infant  absolutely:  Neic  Hayvpshire  Mut.  F.  Ins.  Co.  v.  Noyes,  32 
N.  H.  345.  Nor  is  an  infant  liable,  as  for  necessaries,  for  money  lent  him 
for  the  purpose  of  removing  encumbrances  upon  his  estate:  We4  v.  Gregijs 
Admr,  1  Grant  Cas.  53;  Magee  v.  Welsh,  IS  Cal.  155. 

Services  and  expenditures  of  counsel  in  an  action  to  recover  an  infant's  lands 
are  likewise  not  necessaries:  Ph'lfsy.  Worcester,  1 1  N.  H.  51.  "An  infant's 
rights  to  his  estate  are  not  prejudiced  by  his  infancy,  and  any  services  to 
sustain  such  rights  may  be  ratified  by  the  infant  when  he  comes  of  age,  but 
cannot  be  enforced  against  him  as  necessaries":  Phelps  v.  Worcester,  11  N.  H. 
51.  But  in  Epperson  v.  Nugent,  57  Miss.  45,  34  Am.  Rep.  434,  it  was  held 
that  where  there  is  no  guardian,  the  infant's  estate  is  liable  for  the  fees  of 
counsel  whose  services  contributed  to  secure  it;  the  court  saying:  "It  is 
stated  in  the  books  that  the  wants  supplied  must  be  personal  to  the  infant, 
either  for  the  body  or  the  mind,  in  order  to  come  within  the  description  of 
nFcessaries,  and  that  counsel  fees  and  expenditures  in  a  lawsuit  are  gener- 
ally excluded.  This  is,  no  doubt,  the  general  rule,  and  for  an  obvious  rea- 
son. Usually  an  infant  who  has  an  estate  has  a  guardian,  who  may  and 
should  engage  and  pay  counsel,  where  the  interests  of  the  infant  committed 
to  his  guardiansliip  require  it.  When  an  infant  has  no  guardian,  but  has 
rights  involved  in  litigation,  and  a  1  iwyer  has  espoused  the  cause  of  tlie  in- 
fant, and  devoted  his  services  to  the  protection  of  the  interests  of  the  infant 
in  such  litigation,  and  as  the  result  of  the  litigation  an  estate  has  been  se- 
cured to  the  infant,  it  is  just  and  proper,  and  within  the  principle  on  which  an 
infant  is  held  lialjle  for  necessaries,  that  the  reasonable  fees  of  such  counsel 
should  be  paid  out  of  the  estate  thus  obtained."  And  see  Thrall  v.  Wright,  38 
Vt.  494.  This  is  simply  begging  the  question.  Tiie  fact  that  the  infant  has 
no  guardian  is  no  reason  why  lie  should  be  able  to  contract  concerning  his 
estate.  A  guardian  can  easily  be  appointed.  Nor  does  the  fact  that  the  ser- 
vices rendered  have  resulted  in  great  benefit  to  the  estate  of  the  infant  fur- 
nish a  reason  why  he  should  bo  charged  for  them  as  for  necessaries.  If  this 
were  so,  the  infant  should  be  liable  upon  every  contract  by  which  he  secured 
a  benefit. 

It  is  entirely  a  difiFerent  matter,  however,  where  the  suit  is  strictly  per- 
sonal to  the  infant.  Thus  an  infant  is  liable,  as  for  necessaries,  for  reason- 
able attorney's  fees  for  defending  him  in  a  criminal  action:  Askey  v.  Wil- 
Hams,  74  Tex.  294.  "We  are  of  the  opinion,"  says  the  court,  "that  the 
services  of  an  attorney  should  be  held  necessary  to  an  infant,  where  he  is 
charged  by  an  indictment  with  crime.  His  life  or  his  l.berty  and  reputation 
are  at  stake,  and  it  would  be  unreasonable  to  deny  him  the  power  to  secure 
the  means  of  defending  himself.     He  may  contract  for  food  and  raiment  suit- 


656  Craig  v.  Van  Bebber.  [Missouri, 

able  to  his  condition  in  life,  though  they  be  &iich  as  are  not  demanded  by 
his  absolute  wants,  and  it  is  not  to  be  questioned  that  the  immunity  from 
punishment  and  disgrace  is  a  matter  of  far  more  importance  to  his  welfare." 
So  an  infant  is  liable,  as  for  necessaries,  for  the  reasonable  services  of  an  at- 
torney, rendered  in  defending  him  in  a  bastardy  proceeding,  the  proceeding 
affecting  his  liberty  and  good  name:  Burke}-  v.  Ilibhard,  54  N.  H.  539;  20 
Am.  Rep.  160.  And  in  Munson  v.  Washhand,  31  Conn.  303,  83  Am.  Dec. 
151,  it  was  held  that  while  the  ordinary  fees  and  advances  of  an  attorney  in 
the  prosecution  of  an  infant's  rights  to  property  could  not  generally  be  said 
to  be  necessaries,  yet  where  such  services  and  expenses  were  requisite  for  the 
personal  relief,  protection,  and  support  of  the  infant,  they  may  lawfully  be 
contracted  for  by  the  infant,  and  he  will  be  bound  in  law  to  pay  for  them. 
Therefore  an  attorney  might  recover  of  husband  and  wife  fees  for  his  ser- 
vices, and  moneys  expended  by  him  in  commencing  and  prosecuting  in  favor 
of  the  wife,  while  she  was  a  feme  sole  and  a  minor,  an  action  for  breach  of 
promise  of  marriage  against  her  present  husband,  with  whom  the  suit  was 
settled  by  the  marriage,  it  appearing  that  the  services  and  expenses  were  ab- 
solutely requisite  for  the  minor's  personal  relief,  protection,  and  support,  since 
she  had  been  seduced  and  was  pregnant,  and  was  left  by  her  relations  and 
friends  in  a  state  of  destitution  and  suffering.  "  A  civil  suit  may,  under 
extraordinary  circumstances,"  says  Hinman,  C.  J.,  "be  the  only  means  by 
which  an  infant  can  procure  tlie  absolute  necessaries  which  he  requires;  and 
where  such  is  the  case,  it  would  be  a  reproach  to  the  law  to  deny  him  the  power 
of  making  the  necessary  contracts  for  its  commencement  and  prosecution." 

A  number  of  cases  of  a  ver}'  miscellaneous  character  have  been  decided, 
and  remain  to  be  noticed.  Money  paid  at  the  request  of  an  infant  to  relieve 
him  from  a  military  draft,  to  which  he  was  subjected  by  law,  was  held  not  to 
come  within  the  term  "necessaries  ":  Dorrell  v.  Hastings,  28  Ind.  478,  479.  But 
a  recognizance  entered  into  by  a  minor  for  his  personal  appearance  at  court 
to  answer  to  a  criminal  charge  may,  it  was  held,  be  classed  among  neces- 
saries, since  the  infant  thereby  secured  his  personal  freedom:  St'ite  v. 
Weatherwax,  12  Kan.  463,  464;  and  see  also  CTx/ie  v.  Leslie,  5  Esp.  28.  A 
settlement  which  affords  a  provision  to  an  infant  who  on  her  marriage  has 
no  other  certain  provision  was  decided  in  England  to  be  a  necessary,  for  the 
costs  of  preparing  which  she  was  accordingly  liable  to  solicitors  whom  she 
engaged:  Helps  v.  Clayton,  17  Com.  B.,  N.  S.,  553.  And  an  infant  widow 
was  held  bound  by  her  contract,  as  for  necessaries,  for  the  funeral  expenses 
of  her  husband,  who  left  no  property  to  be  administered:  Chappie  v.  Cooper, 
13  Mees.  &  W.  252.  A  bridal  outfit,  including  a  chamber  set.  furnished  an 
infant  before  her  marriage,  may  be  classed  as  necessaries:  Joj-dan  v.  Cojield, 
70  N.  C.  110,  113;  and  see  also  Garry.  Haskelt,  86  Ind.  373;  Sarnsv.  Stock- 
ton, 14  B.  Mon.  232.  In  Hill  v.  Arbon,  34  L.  T.  125,  where  an  infant,  who 
was  sole  manager  of  a  farm  belonging  to  his  father,  and  who  had  some  expec- 
tations, bought  on  credit  a  pair  of  spurs,  a  suit  of  kersey  horse-clothing,  a 
hunting  breastplate,  a  set  of  harness,  a  saddle,  and  other  articles  of  like 
nature,  it  was  held  that  there  was  reasonable  evidence  to  go  to  the  jury,  con- 
sidering the  position  of  the  infant,  that  the  goods  supplied  were  necessaries, 
or,  as  Blackburn,  J.,  well  put  it,  "proprieties."  But  in  Johnson  v.  Lines,  6 
Watts  &  S.  80,  40  Am.  Dec.  542,  the  court  drew  the  line  at  an  account  against 
an  infant,  which  footed  up  to  more  than  one  thousand  dollars,  "comprising 
charges  for  many  articles  which  might  be  ranked  with  necessaries  when  sup- 
plied in  reason,  but  not  at  the  rate  of  twelve  coats,  seventeen  vests,  and 
twenty-three  pantaloons  in  the  space  of  fifteen  months  and  twenty-one  daysj 


April,  1890.]  Craig  v.  Van  Bebber.  657 

to  say  nothing  of  three  bowie-knifes,  sixteen  penknives,  eight  whips,  ten 
whip-lashes,  thirty-nine  handkerchiefs,  and  five  canes,  with  kid  gloves,  fur 
caps,  chip  hats,  and  fancy  bag  to  match;  and  in  Saunders  v.  Ott,  1  McCord, 
572,  the  court  refused  to  allow  for  "liquor,  pistols,  powder,  saddles,  bridles, 
whips,  fiddles,  fiddle-strings,  etc.,  amounting  to$111.53|."  And  also  in  Jen- 
ner  v.  Walker,  19  L.  T.  398,  Cockburn,  C.  J.,  thought  that  betting-books, 
especially  rich  and  costly  ones,  could  not  be  necessaries.  Balls  and  serenades 
cannot  be  accounted  necessaries,  even  in  case  of  a  nobleman:  North  and 
Thom-psons  Case,  cited  Cart.  216. 

An  infant  lieutenant  in  the  English  royal  navy  was  held  not  answerable 
for  the  price  of  a  chronometer,  as  a  necessary,  in  BeroUes  v.  Ramsay,  Holt 
N.  P.  77.  But  Baron  Parke  thought  that  breastpins  and  a  watch-chain,  fur- 
nished the  eldest  son  of  a  gentleman  of  fortune  and  member  of  Parliament, 
who  was  an  undergraduate  of  the  University  of  Cambridge,  might  be  neces- 
saries; "  the  former  [the  breastpins]  might  be  either  of  necessity  or  of  orna- 
ment; the  usefulness  of  the  other  miglit  depend  on  this:  whether  the  watch 
was  necessary.  If  it  was,  then  the  chain  might  become  necessary  itself."  In 
Ryder  v.  Womhwdl,  L.  R.  4  Ex.  32,  an  infant,  the  son  of  a  baronet,  and 
having  an  income  of  five  hundred  pounds  a  year,  with  the  prospect  of  twenty 
thousand  pounds  on  attaining  his  majority,  bought  on  credit  a  pair  of  jew- 
eled solitaire  shirt-sleeve  buttons  worth  twenty-five  pounds,  and  a  silver 
goblet  worth  fifteen  pounds  fifteen  shillings,  the  latter  for  presentation  to 
a  friend  at  whose  house  he  was  staying.  No  evidence  was  given  of  anything 
peculiar  in  his  station  rendering  it  exceptionally  necessary  for  him  to  have 
such  articles.  The  jury,  in  answer  to  the  question  put  to  them,  found  that 
the  articles  were  necessaries,  and  suitable  to  the  infant's  station  and  degree. 
It  was  held  that  as  the  onus  was  on  the  plaintiff  seeking  to  recover,  and  as 
he  gave  no  evidence  to  show  that  the  articles  were  necessaries,  the  question 
ought  not  to  have  been  left  to  the  jury.  But  in  Jenner  v.  Walker,  19  L.  T. 
398,  Chief  Justice  Cockburn  thought  that  a  present  of  amethyst  and  diamond 
ear-rings,  by  a  young  gentleman  who  had  an  income  of  from  seven  hundred 
to  one  thousand  pounds  per  annum,  to  a  young  lady  to  whom  he  was  engaged 
to  be  married,  and  who  eventually  became  his  wife,  were  necessaries. 

Dinners,  confectionery,  and  fruit  supplied  to  an  infant,  an  undergraduate 
of  Cambridge,  having  lodgings  in  town,  are  prima  facie  not  necessaries,  ac- 
cording to  Brooker  v.  Scoit,  11  Mees.  &  VV.  67;  and  in  an  action  brought 
against  him  for  such  supplies,  no  special  circumstances  being  shown,  the 
court  directed  a  nonsuit;  and  in  another  case,  on  a  very  similar  state  of  facts, 
it  was  held  that  in  default  of  explanation,  the  court  should  decide  the  articles 
not  to  be  necessaries,  as  a  matter  of  law;  but  that  in  case  of  explanation,  aa 
if  fruit  or  other  articles  were  supplied  in  illness,  the  question  whether  they 
were  necessaries  or  not  shouM  be  left  to  the  jury,  with  proper  directions: 
Wharton  v.  Mackenzie,  5  Q.  B.  606.  So  if  there  is  no  evidence  to  show  that 
cigars  and  tobacco  are  necessary,  medicinally  or  otherwise,  in  a  particular 
case,  the  question  should  not  be  left  to  the  jury:  Bryant  v.  Richardson,  L.  R. 
3  E.X.  93,  note. 

In  an  action  to  recover  £150,  the  purchase  price  of  a  hunter  sold  by  the 
plaintiff  to  the  defendant,  in  which  there  was  a  plea  of  infancy,  ami  a  repli- 
cation of  necessaries,  it  appeared  that  the  defendant  was  an  Etiudish  youth 
on  a  visit  to  a  country  hunting  gentleman  in  Ireland.  At  the  time  of  the 
bargain,  he  stated  that  he  was  a  member  of  the  Surrey  Stag  Hunt,  and  was 
accustomed  to  hunt  his  step-father's  horses,  and  talked  of  being  allowed  six 
hundred  pounds  a  year  by  his  step-father.  It  was  held  that  there  was  no  evi- 
Am.  St.  Kkp.,  \  oi,.  X\  lU.  —  42 


658  Craig  v.  Van  Bebber.  [Missouri, 

dence  which  could  be  properly  left  to  the  jury  that  the  hunter  was  a  neces- 
sary: Skrinf  v.  Gordon,  9  Ir.  Rep.  C.  L.  479.  In  Beeler  v.  Young,  1  Bibb,  519, 
a  horse  saddle  and  bridle  were  held  not  to  be  necessaries,  for  which  an 
infant  would  be  liable;  and  see  also  Smiihpcters  v.  Grijfin's  Adrnr,  10  B. 
Mon.  259,  260.  But  a  horse,  as  said  before,  might  be  a  necessary,  if  exercise 
on  horseback  be  recommended  by  a  physician:  Hart  v.  Prater,  1  Jur.  623; 
and  see  Clowes  v.  Brooke,  2  Strange,  1101;  And.  277;  Aaron  v.  Harley,  6 
Rich.  L.  26. 

Money  advanced  for  the  traveling  expenses  of  an  infant  on  a  pleasure  trip 
cannot  be  recovered  as  a  necessary:  McKanna  v.  Merry,  61  111.  177;  but, 
plainly,  traveling  expenses  under  dififerent  circumstances  might  be  a  neces- 
sary: See  Breed  v.  Judd,  1  Gray,  453,  458.  Money  paid  by  a  master  for  coach 
fares  for  the  mother  of  his  infant  servant  is  not  a  necessary,  and  therefore 
cannot  be  deducted  from  the  wages  of  the  servant:  Hedgeley  v.  Holt,  4  Car. 
&  P.  104.  In  Charters  v.  Bayntun,  7  Car.  &  P.  52,  it  was  left  to  the  jury  to 
say  whether  a  stanhope  was  a  necessary  for  an  infant,  under  the  circum- 
stances, for  the  hire  and  repair  of  which  he  was  liable;  but  in  Howard  v. 
Simpkins,  70  Ga.  322,  a  buggy  was  held  not  to  be  an  article  of  necessity  for 
an  infant;  and  in  Pyne  v.  Wood,  145  Mass.  558,  a  bicycle  was  held  not  to  be  a 
necessary  for  an  infant  seventeen  years  of  age,  who  lived  with  his  father, 
and  worked  in  a  shoe-shop  a  mile  from  his  father's  house,  and  who  went  home 
for  his  dinner,  and  was  allowed  to  be  absent  an  hour. 

Infant  is  Liable  for  Necessaries  Furnished  his  Wife  and  Family, 
as  well  as  those  furnished  himself,  and  for  the  same  reason:  Hill  and  Blactons 
Case,  1  Sid.  112;  Turner  v.  Trisby,  1  Strange,  168;  Turherville  v.  Whitehouse,  1 
Car.  &  P.  94,  affirmed  in  12  Price,  693;  Bu-ers  v.  Gregq,  5  Rich.  Eq.  274,  278; 
Cantine  v.  Phill/pi's  Adrnr,  5  Harr.  (Del.)  423;  Price  v.  Sanders,  60  Ind.  310, 
315;  Chapman  v.  Hughes,  61  Miss.  339. 

Liability  for  Money  Borrowed  or  Advanced  for  Necessaries. —  As 
before  observed,  under  the  head  "Lending  and  Borrowing  of  Money,"  it 
seems  to  be  the  rule  that  an  infant  is  not  liable  at  law  for  money  borrowed 
by  him  to  pay  for  necessaries,  although  actually  expended  by  him  for  that 
purpose,  but  that  he  is  liable  for  money  directly  applied  by  the  lender  in  pro- 
curing necessaries  for  him:  Bearsby  and  Cuffers  Case,  Godb.  219;  Darby  v. 
Boucher,  1  Salk.  279;  Earle  v.  Peale,  10  Mod.  67;  1  Salk.  •SSQ;Ellisv.  Ellis,  12 
Mod.  197;  3  Salk.  197;  1  Ld.  Rayra.  344;  Probartv.  Kaonth,  2  Esp.  472,  note; 
Clarke  v.  Leslie,  5  Esp.  28;  Hedgeley  v.  Holt,  4  Car.  &  P.  104,  105;  Bateman 
V.  Kingston,  6  L.  R.  Ir.  328;  Sioi/t  v,  Bennett,  10  Cush.  436;  Randall  v.  Sioeet, 
1  Denio,  460;  Smith  v.  Oliphant,  2  Sand.  306;  Price  v.  Sanders,  60  Ind.  310; 
Beeler  v.  Young,  1  Bibb,  519.  But  in  equity  the  infant  is  liable  for  money  bor- 
rowed and  actually  applied  by  him  for  the  payment  of  necessaries:  Marloio  v. 
Pitfeild,  1  P.  Wms.  558;  Hickman  y.  HalCs  Adm'rs,  5Litt.  3'>8,  342;  Watson  v. 
Cross,  2  Duval],  147,  149;  Price  v.  Sanders,  60  Ind.  310.  The  reason  why  an 
infant  is  not  liable  at  law  for  money  borrowed  by  him  to  pay  for  necessaries, 
although  actually  expended  by  him  for  that  purpose,  is  usually  stated  to  be 
that  the  lender,  by  intrusting  the  money  to  the  infant,  enables  him  to  waste 
and  misapply  it,  and  his  subsequent  proper  use  of  it  could  not  confer  an  actioa 
when  none  existed,  upon  the  contract  of  lending  at  the  time  of  the  loan.  We 
think,  however,  that  the  true  reason  why  the  lender  cannot  recover  at  law 
is  the  want  of  privity  between  the  lender  and  the  one  who  supplies  the  ne- 
cessaries: See  Bradley  v.  Pratt,  23  Vt.  378,  3S6,  per  Redfield,  J.;  and  see,  ia 
this  connection,  the  remarks  of  Dargan,  C,  in  Ricers  v.  Gregg,  5  Rich.  Eq, 
274. 


April,  1890.]  Craig  v.  Van  Bebber.  659 

In  conformity  with  these  rules,  if  an  infant  gives  a  note  for  necessaries, 
sigDed  by  a  surety,  the  surety  who  afterwards  pays  the  note  is  entitled  to 
recover  the  amount  so  paid  from  the  infant:  Conn  v.  Cohurn,  7  N.  H.  368; 
26  Am.  Dec.  746;  Haines  Admr  v.  Tarrant,  2  Hill  (S.  C.)  400;  and  see  Dial 
V.   Wood,  9  Baxt.  296;  contra,  Ayers  v.  Burns,  87  Ind.  245;  44  Am.  Rep.  759. 

Disaffirmance.  — The  rules  concerning  the  disaffirmance  of  their  contracts 
by  infants  relate  simply  to  those  contracts  which  are  voidable.  Such  con- 
tracts as  are  binding  upon  them,  either  by  virtue  of  the  common  law  or  by 
statute,  very  plainly  cannot  be  avoided  on  the  ground  of  infancy.  And 
should  a  statute  make  any  or  all  of  their  contracts  absolutely  void,  or  should 
the  notion  be  persisted  in,  contrary  to  principle  and  authority,  that  certain 
of  their  contracts  are  void  at  the  cominon  law,  there  can  obviously  be  no  dis- 
affirmance in  the  proper  sense  of  the  word;  for  the  contracts  being  mere  nul- 
lities, there  is  nothing  to  disaffirm.  In  regard  to  their  voidable  contracts,  it 
can  be  laid  down  as  a  general  rule  that  they  may  be  avoided  by  the  infant 
contracting  parties,  whether  the  contracts  be  completely  executory  or  exe- 
cuted, or  whether  executory  on  either  side  and  executed  on  the  other.  The 
idea  sometimes  entertained  that  a  contract  entirely  executed  is  not  subject 
to  disaffirmance  by  the  infant  because  it  is  executed  must  necessarily  be 
erroneous,  unless  it  be  true  that  certain  contracts  are  no  longer  voidable 
when  executed;  for  a  contract  cannot  be  voidable  by  him,  and  yet  be  binding 
upon  him.  It  is  certainly  not  true  that  the  great  mass  of  infants'  contracts 
are  binding  when  executed,  and  we  do  not  believe  it  is  ever  true,  either  upon 
principle  or  authority,  that  any  contract  which  an  infant  may  make  ceases  to 
be  voidable  when  and  because  it  is  executed.  It  may  be  that  an  infant  is 
sometimes  required  to  restore  the  consideration  which  he  may  have  received 
on  his  disaffirmance,  and,  where  this  is  a  money  payment,  and  he  seeks  to  re- 
cover money,  that  the  law,  to  avoid  circuity  of  action,  will  i  ive  the  parties, 
so  far  as  the  infant  has  been  compensated,  in  the  condition  in  which  it  finds 
them;  but  this  is  merely  an  incident  of  the  execution  of  the  contract:  See 
supra,  "Service." 

We  may  again  observe,  in  this  connection,  that  all  voidable  contracts  of  in- 
fants are  binding  until  disaffirmed  by  them.  It  is  not  the  rule  that  they  are 
nugatory  until  ratified,  but  that  they  are  good  until  avoided.  If  a  contract 
has  been  ratified,  it  is  then  no  longer  subject  to  disaffirmance;  but  until  it  is 
ratified,  it  may  be  disaffirmed.  Tiiese  propositions  are  necessarily  involved 
in  the  idea  of  a  voidable  contract.  It  makes  no  difference  whether  the  con- 
tract be  executory  or  executed,  although  it  may  be  that  a  ratification  will  be 
held  to  result  from  slighter  acts  and  circumstances  in  the  latter  case  than  in 
the  former.  See  a  distinction  between  executory  and  executed  contracts,  as 
to  their  binding  force,  noticed  and  criticised  supra,  title  "  Void  and  Void- 
able." 

Disaffirmance  of  Part  of  Transaction.  — If  an  infant  enters  into  several 
distinct  and  sepa.ate  contracts  he  may  evidently  disaffirm  one  or  more,  and 
not  the  others.  Thus  he  may,  on  arriving  at  full  age,  disaffirm  one  of  several 
deeds  made  by  him  during  his  minority,  and  leave  the  others  to  have  legal 
effect  as  if  made  when  of  full  age:  Tuniaon  v.  Chamhlin,  88  111.  378,  387.  But 
he  cannot  affirm  a  portion  of  a  single  transaction,  and  disaffirm  the  rest.  He 
must  abide  by  it,  or  disaffirm  it  in  tolo.  If  he  ratifies  a  part  of  the  agreement, 
he  ratifies  it  all.  Therefore  if  a  contract  bo  upon  a  condition,  if  he  wishes 
to  accept  the  contract  he  must  accept  it  in  its  entirety,  with  the  conditmn: 
Biederman  v.  O'Conner,  117  111.  493;  Loiory  v.  Drakes  Jleirs,  1  Dana,  46.  So 
infants  cannot,  on  coming  of  age,  adopt  their  agreement  for  the  partition  of 


660  Craig  v.  Van  Bebbeb.  [Missouri, 

lands  in  part,  but  may  be  compelled  in  equity  to  elect  either  to  confirm  the 
agreement  or  to  relinquish  all  rights  and  pretensions  resulting  from  it:  Over- 
bach  V.  Heermance,  1  Hopk.  Ch.  337;  14  Am.  Dec.  546.  And  where  an  infant 
purchased  a  kettle  and  other  articles  of  personal  property,  and  gave  his  note 
for  the  price,  under  an  agreement  that  he  might  return  the  kettle  if  it  did 
not  answer  his  purposes,  and  after  he  came  of  age  the  vendor  requested  him 
to  return  it  if  he  did  not  intend  to  keep  it,  but  he  retained  it  and  used  it  for 
several  months  afterwards,  it  was  held  that  he  thereby  ratified  the  contract 
as  to  the  kettle,  and  consequently  the  entire  contract,  and  therefore  an  action 
was  maintainable  against  him  on  the  note:  Aldrich  v.  Grimes,  ION.  H.  194. 
And  where  an  infant  sells  a  horse,  and  receives  the  vendee's  notes  for  the 
price,  he  affirms  the  contract  in  all  respects  by  bringing  an  action  on  the  notes 
after  coming  of  age;  and  hence  he  cannot,  by  pleading  his  infancy,  preclude 
the  defendant  from  offsetting  damages  for  a  breach  of  warranty  on  the  sale  of 
the  horse:  Morrill  v.  Aden,  19  Vt.  505. 

Again,  an  infant  who  purchases  land  or  chattels  cannot,  on  coming  of  age, 
retain  the  property  and  repudiate  his  note  given  for  the  price,  or  other  agree- 
ment upon  which  he  obtained  the  property:  Kitchen  v.  Lee,  11  Paige,  107;  42 
Am.  Dec.  101;  Henry  y.  Root,  33  N.  Y.  526;  Weed  v.  Beehe,  21  Vt.  495;  Phil- 
pot  V.  Sandwich  Mfg.  Co.,  IS  Neb.  54;  Armfield  v.  Tate,  7  Ired.  L.  258;  Bennett 
V.  McLaughlin,  13  111.  App.  349;  not  even  by  showing  that  a  partial  payment 
made  by  him  was  equal  to  the  entire  value  of  the  property;  Bennett  v.  Mc- 
Laughlin, 13  111.  App.  349.  Thus  in  Kitchen  v.  Lee,  11  Paige,  107,  42  Am. 
Dec.  101,  a  retiring  partner  assigned  his  interest  in  the  partnership  property 
to  his  copartner,  on  condition  that  the  latter  would  pay  the  debts  of  the 
firm.  The  assignee  subsequently  refused  to  pay  the  deijts,  on  the  ground  of 
infancy.  It  was  held  that  he  could  not  retain  the  partnership  efl"ects,  and  at 
the  same  time  refuse  to  perform  the  condition  upon  which  they  were  assigned 
to  him.  Where,  too,  an  infant  purchases  land  or  chattels,  and  gives  back 
a  mortgage  thereon  to  secure  the  price,  the  con\eyance  or  transfer  and 
the  mortgage  constitute  but  one  transaction,  and  the  infant  cannot  avoid 
the  mortgage  without  also  avoiding  the  conveyance  or  transfer,  or  in  other 
words,  he  cannot  repudiate  the  one  and  affirm  the  other;  and  if,  after  coming 
of  age,  he  ratifies  the  purchase,  he  thereby  necessarily  ratifies  the  mortgage: 
Roberts  v.  Wiggin,  1  N.  H.  73;  8  Am.  Dec.  38;  Heath  v.  West,  28  N.  H.  101; 
Habhardv.  Cummings,  1  Me.  11;  Dana  v.  Coombs,  6  Me.  89;  19  Am.  Dec.  194; 
Lyride  v.  Budd,  2  Paige,  191;  21  Am.  Dec.  84;  Ottman  v.  Aloak,  3  Sand.  Ch.  431; 
Bigelow  v.  Kinney,  3  Vt.  353;  21  Am.  Dec.  589;  Richardson  v.  Boright,  9  Vt. 
368;  Young  v.  McKee,  13  Mich.  552;  Gurtiss  v.  McDougal,  26  Ohio  St.  66;  Gal- 
lis  V.  Day,  38  Wis.  643;  Uecker  v.  Koehn,  21  Neb.  559;  59  Am.  Rep.  849;  Belts 
V.  Carroll,  6  Mo.  App.  518.  "Nothing  is  clearer,"  says  the  court  in  Bigelow 
V.  Kinney,  3  Vt.  353,  21  Am.  Dec.  589,  "than  that  a  party  cannot  affirm  an 
entire  contract  in  part  and  avoid  it  in  part;  and  to  allow  the  plaintiff  to  avail 
himself  of  the  deed  conveying  the  land  to  him,  and  to  avoid  the  mortgage 
given  by  him  to  secure  the  purchase-money,  woiald  be  no  less  repugnant  to 
law  than  to  the  plainest  dictates  of  justice."  So  in  a  suit  to  enforce  a  lieu 
for  the  purchase-money  reserved  on  the  face  of  a  deed,  the  infancy  of  the 
grantee  is  no  defense,  the  land  being  still  retained  by  him:  Smith  v.  Henkel, 
81  Va.  524.  And  where  an  infant  purchases  land,  and  assumes  the  payment 
of  mortgages  as  a  part  of  the  purchase  price,  and  afterwards,  and  during  her 
minority,  procures  a  loan,  and  mortgages  the  land  to  pay  ofiF  the  prior  encum- 
brances, if  she  ratifies  the  purchase  of  the  land  by  dealing  with  it  as  owner, 
after  her  majority,  she  thereby  ratifies  her  agreement  to  pay  the  existing 


April,  1890.]  Craiq  v.  Van  Bebber.  661 

mortgages,  and  also  ratifies  the  manner  in  which  she  dealt  with  those  mort- 
jgages,  and  consequently  ratifies  the  subsequent  mortgage  given  to  secure  the 
money  borrowed  by  her  to  satisfy  them:  Langdon  v.  Clayson,  75  Mich.  204. 
So,  it  is  held,  a  surety  on  an  infant's  note  for  the  purchase  price  of  chattels 
who  has  satisfied  a  judgment  recovered  on  the  note,  and  received  from  the 
infant  a  note  for  the  amount  so  paid  secured  by  a  mortgage  of  the  same 
chattels,  is  entitled  to  be  subrogated  to  the  rights  of  the  vender,  who,  had  he 
taken  the  mortgage  for  the  price,  would  have  been  entitled  to  enforce  it: 
Knaggsv.  Green,  48  Wis.  601;  33  Am.  Rep.  838. 

Disaffirmance  is  not  a  Fraudulent  Act  which  will  avoid  it,  or  render 
the  infant  liable  at  law  as  for  fraud,  or  against  which  a  court  of  equity  will 
relieve  on  that  ground:  Tucker  v.  Moreland,  10  Pet.  59,  77;  1  Am.  Lead. 
Cas.  *224  "234;  Olnnwrgan  v.  Lane,  9  Mo.  442,  471;  Bufk  v.  Caronddet  etc. 
B'yCo  ,  56  Mo.  202,  210;  Burns  v.  Hill,  19  Ga.  22;  Seabrook  v.  Gregg,  2  S.  C. 
€8;  Brantley  v.  Wolf,  60  Miss.  420,  430.  In  Tucker  v.  Moreland,  10  Pet.  59, 
77,  1  Am.  Lead.  Cas.*224,  *2.34,  iStory,  J,  says:  "In  many  cases  the  disaf- 
firmance of  a  deed  made  during  infancy  is  a  fraud  upon  the  other  party. 
But  this  has  never  been  held  sufficient  to  avoid  the  disaffirmance,  for  it 
would  otherwise  take  away  the  very  protection  which  the  law  intends  to 
throw  round  him,  to  guard  him  from  tlie  effects  of  his  folly,  rashness,  and 
misconduct ";  and  again,  it  is  said  in  Brantley  v.  Wolf,  60  Miss.  420,  430, 
"in  one  sense  it  is  always  a  wrong  and  an  injury  for  a  person  laboring  under 
a  disability  to  enter  into  a  contract  and  enjoy  its  fruits,  and  thereafter  to 
repudiate  it  to  the  prejudice  of  the  other  party;  but  legal  fraud  cannot  be 
predicated  of  such  conduct  by  a  minor  where  it  has  been  unmarked  with  any 
element  of  deceit  or  intentional  wrong,  because  the  right  of  disaffirmance  is 
the  privilege  which  the  law  attaches  to  the  comlition  of  disability,  and  of  this 
right  all  men  are  bound  to  take  notice."  As  to  whether  an  infant  will  be  es- 
topped from  availmg  himself  of  his  infancy  as  against  a  contract  entered  into 
through  his  concealments  or  misrepresentations,  see  siipra,  "  Infant's  Conceal- 
ment or  Misrepresentation  as  to  Age,  etc.";  and  as  to  his  lial)ility  in  dam- 
ages for  his  frauds,  and  other  torts  connected  with  his  contracts,  see  post, 
"Torts  of  Infants  Connected  with  Contracts." 

Disaffirmance  as  against  SuB.stQUKNT  Bona  Fide  Purchaser.  —  The 
protection  of  bona  fide  purchaser  for  value,  and  without  notice,  does  not  avail 
as  against  an  infant's  right  to  disaffirm  his  contract.  His  right  to  avoid  his 
contract  is  an  absolute  and  paramount  right,  superior  to  all  equities  of  other 
persons.  Therefore  a  purchaser  of  per.sonal  property  from  the  vendee  of  an 
infant,  although  a  purchaser  for  value,  and  without  notice,  cannot  hold  the 
property  as  against  the  infant  who  chooses  to  rescind«^is  contract  of  sale: 
Hill  V.  Anderson,  5  Smedes  &  M.  216.  Nor  is  a  bona  fide  holder  of  a  negotia- 
ble instrument  for  value  before  maturity,  and  without  notice,  protected 
against  the  plea  of  infancy:  Iloivard  v.  Simpklns,  70  Ga.  322;  Tiedeman  on 
•Commercial  Paper,  sec.  280.  And  an  infant  may  avoid  his  deed  of  convey- 
ance, or  executory  contract  to  convey  real  property,  as  against  a  subsequent 
bona  fide  purchaser  from  his  grantee  or  vendee  for  value,  and  without  no- 
tice of  the  fact  of  infancy:  Mustard  v.  Wohl/ord's  Heirs,  15  Gratt.  329, 
340;  76  Am.  Dec.  209,  213;  Harrod  v.  Myers,  21  Ark.  592;  76  Am.  Dec.  409; 
Jenkins  v  Jenkins,  \1  Iowa,  195,  200;  Mites  v.  Lingerman,  24  Ind.  385;  Sims  v. 
Smith,  86  Ind.  577;  Bur./vinan  v.  Hubbard,  96  Ind.  1;  Brnnlley  v.  Wolf,  60  Miss. 
420;  McMorrhi  v.  Webb,  17  S.  C.  558;  43  Am.  Rep.  629;  "the  right  of  the 
infant  to  avoid  his  contracts  is  an  absolute  and  paramount  right,  superior  to 
all  equities   of  other  persons,  and  may  therefore  be  exercised  against  bona 


662  Craig  v.  Van  Bebber.  [Missouri, 

Jide  purchasers  from  the  grantee  " :  Brantley  v.  Wolf,  60  Miss.  420;  and  in 
McMorris  v.  Webb,  17  S.  C.  558,  43  Am.  Rep.  629,  in  which  dower  was 
claimed  hy  a  widow  who  had  renounced  it  during  her  infancy,  it  was  said: 
"The  plea  of  purchaser  forvaluahle  consideration  without  notice  is  equitable 
in  its  character,  and  has  no  proper  application  to  a  claim  purely  legal,  like 
that  for  dower."  The  fact  that  an  infant  induced  a  person  to  purchase  his 
land  upon  the  faith  of  his  representation  that  he  was  of  full  age,  it  has  also 
been  held,  cannot  avail  such  purchaser  in  a  contest  between  him  and  an  in- 
nocent purchaser  to  whom  the  grantor  made  a  subsequent  conveyance  after 
he  became  of  age:    Vallandingltam  v.  Johnson,  85  Ky.  288. 

Disaffirmance  of  Previous  Deed,  where  Sub.sequent  Grantee  has 
Notice  thereof.  —  If  an  infant  disaffirms  his  deed  of  conveyance  by  the 
execution,  after  he  reaches  majority,  of  another  deed  to  a  different  person, 
the  second  deed  is  not  rendered  fraudulent  and  void  from  the  fact  that  the 
grantee  had  notice  of  the  prior  deed  made  during  infancy.  Tlie  privilege  of 
an  infant  to  disaffirm  his  contracts  might  be  of  little  value  to  him  if  he  were 
permitted  to  dispose  of  the  property  previously  conveyed  to  such  persons 
only  who  had  no  notice  of  that  conveyance:  Jackson  ex  don.  Brayton  v. 
Burckin,  14  Johns.  124;  Clamoryanv.  Lane,  9  Mo.  442,  471.  "The  transac- 
tion is  not,  however,  favored  by  a  court.  If  the  party  purchasing  under  such 
circumstances  gets  the  legal  advantage,  he  will  not  be  deprived  of  it;  but 
further  than  this,  the  court  is  under  no  obligation  to  go  ":  Glamorgan  v.  Lane, 
9  Mo.  442,  471.  It  has  been  held,  also,  that  if  an  infant  conveys  his  land, 
and  on  attaining  his  majority,  ratifies  the  conveyance,  and  then  conveys  to 
another  person  for  a  valuable  consideration,  the  second  grantee,  having  notice 
of  the  deed  made  in  infancy,  but  no  notice  of  the  ratification,  is  entitled  to 
hold  the  land:  Black  v.  Hills,  36  111.  376;  87  Am.  Dec.  224;  the  court  say- 
ing: "The  argument  that  the  subsequent  purchaser  takes  with  knowledge 
that  the  grantor  may  have  ratified,  and  therefore  takes  subject  to  that  risk, 
would  applj'  as  well  to  all  conveyances.  For  in  every  instance  where  a  deed 
is  made,  the  grantee  knows  that  the  grantor  may  have  made  a  former  con- 
veyance, and  it  is  precisely  to  protect  the  innocent  purchaser  against  such 
chances  that  our  registry  laws  are  enacted. "  And  again,  the  court  says:  "  It 
can  in  no  just  sense  be  said  that  the  grantee  of  a  person  who  had  conveyed 
during  his  infancy  is  not  to  be  deemed  an  innocent  purchaser,  if  he  has 
notice  of  tlie  first  deed.  He  has  as  perfect  a  legal  right  to  purchase  land 
which  his  grantor  had  sold  during  minority  as  he  would  have  to  purchase 
land  that  had  never  been  conveyed  at  all."  We  stop  toremnrk  that  this  lat- 
ter language  is  a  little  strong.  Finally,  it  was  observed:  "  If  the  ratification 
is  by  means  of  a  written  instrument,  it  is  within  the  policy  of  the  registry 

laws If  the  ratification  is  by  acts  in  pais,  then  a  subsequent  purchaser 

must  be  affected  with  notice  of  those  acts." 

Disaffirmance  is  Question  of  Intention,  to  be  Indicated  by  Some 
Positive  Act.  —  It  is  almost  a  self-evident  proposition  that  there  can  be  no 
disaffirmance  of  a  contract  unless  there  is  an  intention  to  disaffirm  on  the 
part  of  the  infant,  and  that  this  intention  must  be  indicated  by  some  positive 
act  inconsistent  with  the  continued  valitlity  of  the  contract:  Illinois  Land  and 
Loan  Co.  v.  Beem,  2  111.  App.  390;  Dixon  v.  Merritt,  21  Minn.  J96;  Roberts  v. 

Wiggin,  1  N.  H.  73,  75;  8  Am.  Dec.  38,  40.  And  where  a  female  infant  con- 
veyed her  real  estate  to  trustees,  by  way  of  marriage  settlement,  it  is  not 
sufficient  to  compel  a  purchaser  of  the  land  from  her,  after  attaining  her  ma- 
jority, to  accept  a  conveyance,  to  allege  that  no  act  had  been  done  or  caused 

to  be  dona  by  her  after  coming  of  age  in  confirmation  of  the  deed  of  settle- 


April,  1890.]  Craig  v.  Van  Bebbeb.  663 

ment;  but  it  must  be  alleged  and  proved  that  she  has,  since  coming  of  age,  by 
some  positive  act,  disaffirmed  such  deed,  the  deed  of  an  infant  not  being  aa 
a  matter  of  course  superseded  and  annulled  by  the  mere  execution,  after  he  at- 
tains his  age,  of  another  deed  to  another  person:  Dominich  v.  Michael,  4  Sand. 
374;  and  see  also  Voorhies  v.  Voorldes,  24  Barb.  150,  153.  It  is  not  necessary, 
however,  that  the  infant  should  expressly  disaffirm  his  contract.  It  may 
be  enough  if  the  act  of  disaffirmance  be  inconsistent  with  it:  Mustard  v. 
Wohl/ord's  Heirs,  15  Gratt.  329,  338;  76  Am.  Dec.  209,  212.  This  proposition 
finds  a  frequent  illustration  in  those  cases  where  an  infant's  deed  is  held 
to  be  disaffirmed  by  the  execution,  on  coming  of  age,  of  another  deed  of  the 
same  premises  to  another  person:  See  post,  "Execution  of  Second  Deed, 
Mortgage,  or  Lease."  A  disaffirmance,  involving,  as  it  does,  a  mental  condi- 
tion, "necessarily  implies  the  action  of  a  free  mind,  exempt  from  all  con- 
straint or  disability  ":  Sims  v.  Everhardt,  102  U.  S.  300,  312. 

Act  of  Disaffirmance,  whether  Required  to  be  of  Equal  Solemnity 
AS  Act  Disaffirmed.  — It  seems  that  a  feofifment  of  an  infant  with  livery 
of  seisin  could  only  be  avoided  by  an  entry  when  he  came  of  age  which  waa 
an  act  of  equal  notoriety,  or  by  writ  of  dum  fiat  infra  cetatem:  Jackson  ex 
dem.  Braytonw.  Burchim,  14  Johns.  124;  Bool  v.  Mix,  17  Wend.  119;  31  Am. 
Dec.  285;  Dominick  v.  Michael,  4  Sand.  374,  421;  Vallandiujham  v.  Johnson, 
85  Ky.  288,  293.  Some  few  early  cases  have  taken  the  view  that  deeds  oper- 
ating under  the  statute  of  uses  and  statutory  grants  executed  by  infanta 
must  be  disaffirmed  by  entry,  or  some  other  act  of  equal  notoriety  with  the 
original  conveyance;  a  re-entry,  however,  not  being  indispensable,  as  in  case 
of  feoffments:  See  Bool  v.  Mix,  17  Wend.  119;  31  Am.  Dec.  285;  Voorhies  v. 
Voorhies,  24  Barb.  150;  and  see  Dominick  v.  Michael,  4  Sand.  374,  421.  And 
there  can  certainly  be  no  question  that  if  the  disaffirming  act  is  of  equal  noto- 
riety with  the  deed  or  other  contract,  it  is  all  that  the  law  requires:  Mustard 
V.  Wohl/ord's  Heirs,  15  Gratt.  329,  338;  76  Am.  Dec.  209,  212;  Vallandtnijham 
V.  Johnson,  85  Ky.  288,  292;  and  see  Green  v.  Green,  G9  N.  Y.  553;  25  Am. 
Rep.  233,  2.34.  The  better  opinion,  however,  is,  that  any  act  of  the  infant 
unequivocally  manifesting  an  intention  to  disaffirm  his  deed  or  contract  gen- 
erally is  sufficient:  Drake's  Lessee  v.  Ramsay,  5  Ohio,  251,  253;  White  v.  Flora, 
2  Over.  426,  431;  State  v.  Plaisted,  43  N.  H.  413;  Cojley  v.  Cushman,  16  Minn. 
397,  402;  Chapin  v.  Shafer,  49  N.  Y.  407;  Long  v.  Williams,  74  Ind.  115; 
Allen  V.  Poole,  54  Miss.  323,  331;  McCarthy  v.  Nicrosi,  72  Ala.  332,  335;  47 
Am.  Rep.  418,  420;  Singer  Mfg.  Co.  v.  Lamb,  81  Mo.  221,  225;  Bagley  v. 
Fletcher,  44  Ark.  153;  and  see  Roberts  v.  Wiggin,  1  N.  H.  73,  75;  8  Am.  IJec. 
38,  40.  Thus  in  Drake's  Lessee  v.  Ramsay,  5  Ohio,  251,  253,  Mr.  Justice  Lane 
observes:  "Some  of  the  books  apparently  suppose  that  the  act  of  avoidmice 
must  be  of  equal  solemnity  with  the  act  of  grant.  But  I  cannot  find  it  to  be 
expressly  decided,  except  in  case  of  fouflfments,  where  a  peculiar  feudal  prin- 
ciple renders  it  necessary.  We  believe  that  an  entry,  suit,  or  action,  a  sub- 
sequent conveyance,  an  efifort  to  restore  parties  to  their  original  condition,  or 
an  act  unequivocally  manifesting  the  intention,  would  ren.ler  the  avoidance 
effectual."  And  ia  Singer  Mfg.  Co.  v.  Ltunb,  81  Mo.  221,  225,  Martiu,  C, 
says:  "The  ancient  doctrine,  which  required  the  disaffirming  act  to  be  of 
as  high  and  solemn  a  character  as  the  act  disaffirmed,  has  no  place  in  modern 
law.  The  disaffirming  act  need  take  no  particular  form  or  expression.  The 
deed  of  a  minor  may  be  avoided  by  acts  and  declarations  disclosing  an  un- 
equivocal intent  to  repudiate  the  binding  force  and  effect  of  it  as  a  valid 
instrument." 

It  may  be  here  stated  that  a  distinction  has  been  made  between  the  nature 


664  Craig  v.  Van  Bebbeb.  [Missouri, 

of  the  acts  which  are  sufficient  to  ratify  an  infant's  deed  or  other  contract, 
and  those  which  are  required  to  disaffirm  it.  "There  is,"  says  Strong,  J., 
in  Innm  v.  Irvine,  9  Wall.  617,  627,  "a  well-recognized  distinction  between 
the  nature  of  those  acts  which  are  necessary  to  avoid  an  infant's  deed,  and  the 

character  of  those  that  are  sufficient  to  confirm  it There  is  reason  for 

this  distinction  between  the  effect  of  acts  in  avoidance  and  that  of  acts  of  con- 
firmation. We  have  seen  that  an  infant's  deed  is  not  void;  it  passes  the  title 
of  the  land  to  the  grantee.  Now,  if  the  deed  be  avoided,  the  ownership  of 
the  land  is  retransferred.  The  seisin  is  changed.  There  is  fitness  in  a  rule 
that  title  to  land  shall  not  pass  by  acts  less  solemn  than  a  deed;  that  its 
ownership  shall  not  be  divested  by  anything  inferior  to  that  which  conferred 
it.  On  the  other  hand,  a  confirmation  passes  no  title;  it  effects  no  change 
of  property;  it  disturbs  no  seisin.  It  is  therefore  itself  an  act  of  a  character 
less  solemn  than  is  the  act  of  avoiding  a  deed,  and  it  may  well  be  effected  in 
a  less  formal  manner," 

Particular  Acts  Which  will  Amount  to  Disaffirmance.  —  The  fore- 
going general  propositions,  that  disaffirmance  is  a  question  of  intention  to  be 
indicated  by  some  positive  act  on  the  part  of  the  infant,  and  that  any  act  of 
his  unequivocally  manifesting  an  intention  to  disaffirm  his  contract  will  be 
sufficient  for  that  purpose,  will  now  be  illustrated. 

A  distinct  and  unequivocal  assertion  of  ownership  over  property  sold  dur- 
ing minority  which  results  in  obtaining  its  possession  is  such  a  disavowal  of 
the  contract  by  the  infant  as  will  relieve  the  purchaser  from  his  obligation 
to  pay  for  the  same;  but  the  acts  of  ownership  must  be  distinct  and  unequiv- 
ocal: Harris  v.  Mu-tgrove,  59  Tex.  401.  And  where  an  infant  purchased  per- 
sonal property,  and  gave  his  promissory  note  for  the  price,  his  tender  of  the 
property  to  the  payee,  with  a  demand  of  the  surrender  of  the  note,  annuls 
the  contract  on  both  sides:  Hoyt  v.    Wilkinson,  57  Vt.  404. 

Re-entry  in  Case  of  CoNVEyANCES.  — It  has  been  seen  under  the  pre- 
ceding title  but  one  that  a  re-entry  by  the  grantor,  after  coming  of  age, 
upon  land  conveyed  during  his  infancy,  for  the  purpose  of  avoiding  the  deed, 
will  have  that  effect,  although  other  acts  besides  re-entry  may  be  sufficient, 
except,  perhaps,  in  case  of  feoffments.  A  fortiori  would  this  be  true  if 
coupled  with  other  acts  indicating  a  disaffirmance.  Thus  a  re-entry,  with 
notice  of  disaffirmance,  will  avoid  the  deed:  Green  v.  Green,  69  N.  Y.  553; 
25  Am.  Rep.  233,  234.  Again,  in  White  v.  Flora,  2  Over.  426,  431,  an  infant, 
on  coming  of  age,  expressed  himself  to  the  effect  that  he  would  never  agree 
to  a  deed  executed  by  him  during  infancy,  instituted  a  search  for  the  land, 
entered  upon  it,  and  made  an  agreement  to  convey  it.  It  was  held  that 
his  deed  was  thereby  disaffirmed.  As  to  whether  an  entry  is  ever  necessary 
before  the  execution  of  another  deed  of  the  lands  to  a  different  person,  or 
before  bringing  ejectment  for  the  lands,  after  the  infant  comes  of  age,  see 
post,  "Execution  of  a  Second  Deed,"  and  "  Disaffirmance  by  Suit." 

Notice  of  Disaffirmance.  —  A  notice  of  disaffirmance  of  his  deed  ex- 
ecuted during  infancy,  given  by  the  grantor  after  coming  of  age,  is  a  suffi- 
cient act  of  avoidance:  Scranton  v.  Stewart,  52  Tnd.  68;  Long  v.  Williams,  74 
Ind.  115;  Roberts  v.  Wiggin,  1  N.  H.  73,  75;  8  Am.  Dec.  38,  40;  especially 
if  coupled  with  a  re-entry:  Green  v.  Green,  09  N.  Y.  553;  25  Am.  Rep.  233, 
234.  If  this  is  true  of  his  deeds  of  conveyance,  it  is  certainly  true  of  hia 
contracts  in  general. 

Sale  of  Personal  Property  Previously  Mortgaged  by  the  infant  to 
another  person  very  plainly  indicates  an  intention  to  avoid  the  mortgage, 


April,  1890.]  Craig  v.  Van  Bebber.  665 

and  hence  will  amount  to  a  disaffirmance  of  it,  if  the  sale  be  absolute  and 
unconditional:  Chapin  v.  Shafer,  49  N.  Y.  407;  State  v.  Plaisted,  43  N.  H. 
413;  State  v.  Howard,  88  N.  C.  .650. 

Execution  of  a  Second  Deed,  Mortgage,  or  Lease.  — An  infant's  deed 
operating  under  the  statute  of  uses,  or  his  statutory  conveyance,  it  is  well 
settled,  is  disaffirmed  by  his  execution,  after  attaining  majority,  of  a  like 
absolute  and  inconsistent  deed  of  conveyance  to  another  person:  Frost  v. 
Wolverston,  1  Strange,  94;  Tucker  v.  Morcland,  10  Pet.  59;  1  Am.  Lead  Cas. 
•224;  Jackson  ex  dem.  Wallace  v.  Caripenter,  II  Johns.  539;  Jackson  ex  dem. 
Brayton  v.  Burchim,  14  Johns.  124;  Bool  v.  Mix,  17  Wend.  119;  31  Am.  Dec. 
285;  Roberts  v.  Wiggin,  1  N.  H.  73,  75;  8  Am.  Dec.  38,  40;  Den  ex  dem. 
Hoyle  V.  Stowe,  2  Dev.  &  B.  320,  326;  Wimherly  v.  Jones,  1  Ga.  Dec.  91; 
Harris  v.  Cannon,  6  Ga.  382;  Pitcher  v.  Laycock,  7  Ind.  398;  Pii'jgs  v.  Fisk, 
64  Ind.  100;  Long  v.  Williams,  74  Ind.  115;  Losey  v.  Bond,  94  Ind.  67,  70; 
Cresinqer  v.  Welch's  Lessee,  15  Ohio,  15G;  45  Am.  Dec.  565;  McGan  v.  Mar- 
shall, 7  Humph.  121;  YoiiseY.  Norcoms,  12  Mo.  549,  564;  51  Am.  Dec.  175; 
Norcum  v.  Sheahnn,  21  Mo.  25;  64  Am.  Dec.  214;  Peterson  v.  Laik,  24  Mo. 
541;  69  Am.  Dec.  441;  Hastings  v.  Dollarhide,  24  Cal.  195;  Dawson  v. 
Hebnes,  30  Minn.  107;  Bagley  \.  Fletcher,  44  Ark.  153;  Haynes  v.  Bennett,  53 
Mich.  15;  Corbett  v.  Spencer,  63  Mich.  731;  Vallandinghani  v.  Johnson,  85  Ky. 
288.  This  is  so  at  the  present  time  in  Georgia,  by  statute:  Code  1882,  sec. 
2694.  The  execution  of  the  suljsequent  inconsistent  deed  by  the  grantor 
after  attaining  majority  indicates  an  intention  not  to  be  bound  by  the  previ- 
ous conveyance,  and  the  latter  is  consequently  thereby  avoided.  There  can 
be  no  doubt  about  the  proposition  where  the  subsequent  deed  is  a  grant,  bar- 
gain, and  sale  or  a  warranty  deed,  or  a  deed  in  the  form  prescribed  by 
statute;  but  it  has  also  been  held  that  a  quitclaim  deed  may  operate  as  a  dis- 
affirmance of  a  prior  deed,  executed  during  minority,  to  a  different  person, 
since  a  quitclaim  deed  is,  in  this  country,  a  substantive  mode  of  conveyance, 
and  is  as  effectual  to  carry  all  the  right,  title,  interest,  claim,  and  estate  of 
the  grantor  as  a  deed  with  full  covenants:  Bagley  v,  Fletcher,  44  Ark.  153. 

No  entry  by  the  grantor  is  ever  necessary  for  the  purpose  of  avoi<Ung  the 
previous  deed  executed  during  infancy,  and  for  the  purpose  of  making  the 
subsequent  deed  efifective,  where  the  land  is  vacant  and  unoccupied  at 
the  time  of  the  execution  of  the  latter,  or,  of  course,  where  the  grantor 
remains  in  possession;  but  if  the  land  is  at  that  time  in  the  adverse  posses- 
sion of  the  first  grantee  or  other  persons,  then,  in  those  states  where  land 
adversely  held  cannot  be  conveyed,  at  least  to  all  intents  and  purposes,  the 
grantor,  before  executing  the  subsequent  deed,  must  make  an  entry:  Tucker 
V.  Moreland,  10  Pet.  59;  1  Am.  Lead.  Cas.  *224;  Jackson  ex  dem.  Wallace  v. 
Carpenter,  11  Johns.  5.39;  Jadcson  ex  dem.  Brayton  v.  Burchin,  14  Johns.  124; 
Bool  V.  Mix,  17  Wend.  119;  31  Am.  Dec.  285;  Dominick  v.  Michael,  4  Sand. 
374;  Den  ex  dem.  Murray  v.  Shanklin,  4  Dev.  &  B.  289;  Harris  v.  Cannon,  6 
Ga.  382;  Harrison  v.  Adcock,  8  Ga.  68;  Doe  ex  dem.  Moore  v,  Abernathy,  7 
Blackf.  442,  445;  compare  Den  ex  dem.  Hoyle  v.  Stowe,  2  Dev.  &  B.  320; 
Pitcher  v.  Laycock,  7  Ind.  398.  It  is  sometimes  said,  under  this  view,  that  if 
the  land  is  held  adversely,  the  subsequent  deed  would  be  void,  and  could  not 
operate  as  a  disaffirmance  of  the  prior  deed  executed  during  infancy;  but, 
we  take  it,  the  correct  rule  is  that  announced  by  Biggs  v.  Fisk,  64  Ind.  100, 
namely,  that  if  the  land  is  held  adversely  by  one  claiming  under  the  first 
deed  or  otherwise,  the  grantor,  before  he  can  make  the  second  deed  effectual 
for  all  purposes,  must  first  obtain  possession  by  entry  or  other  proper  pro- 
ceedings; but  while  the  second  deed,  made  by  the  minor  after  he  arrives  at 


666  Craig  v.  Van  Bebber.  [Missouri, 

full  age,  will  not  be  fully  operative  against  the  third  person  in  adverse  pos- 
Bession,  it  is  nevertheless  good  between  the  parties  and  as  to  the  rest  of  the 
world,  and  operates  as  a  disaffirmance  of  the  first  deed,  and  authorizes  the 
second  grantee  to  prosecute  a  suit  in  the  name  of  the  grantor  for  the  recovery 
of  the  land.  In  many  states,  land  in  the  adverse  possession  of  another  may 
be  conveyed  without  any  objection  whatever;  and  where  this  is  the  case,  a 
subsequent  deed,  executed  by  the  grantor  after  attaining  his  majority,  is  as 
completely  eflfective  to  disaffirm  his  prior  deed  made  during  minority,  when 
the  land  is  adversely  held  at  the  time,  as  when  it  is  vacant  and  unoccupied, 
or  when  he  is  himself  in  possession,  and  no  entry  whatever  is  required:  CreS' 
inger  v,  Welch's  Lessee,  15  Ohio,  156;  45  Am.  Dec.  565;  Norcum  v.  ShcaJian, 
21  Mo.  25;  64  Am.  Dec.  214;  Mustard  v.  Wohl/ord's  Heirs,  15  Gratt.  329;  76 
Am.  Dec.  209;  Haynes  v.  Bennett,  53  Mich.  15;  and  see  Allen  v.  Poole,  54 
Miss.  323,  331;  and  this  is  now  the  rule  in  Georgia:  Code  1882,  sees.  2694, 
2695. 

If  a  minor  executes  a  deed  of  conveyance,  and  after  arriving  at  age,  gives 
a  mortgage  on  the  land  conveyed,  this  will  amount  to  a  disaffirmance  of  the 
deed,  for  it  implies  that  he  still  considered  himself  the  owner;  but  it  would 
be  otherwise  if  he  joined  with  the  grantee  in  executing  the  mortgage  to  secure 
a  debt  of  the  grantee:  Watkins  v.  Wassell,  15  Ark.  73.  And  the  execution 
by  an  infant,  after  attaining  majority,  of  a  warranty  deed  of  land  mortgaged 
during  infancy  is  a  disaffirmance  of  the  mortgage:  Dixon  v.  Merritt,  21  Minn. 
196;  compare  Singer  Mfg.  Co.  v.  Lamb,  81  Mo.  221,  where  the  warranty  deed 
was  executed  during  infancy.  The  same  is  said  to  be  true  of  an  ordinary  abso- 
lute  deed  making  no  allusion  to  the  mortgage:  Allen  v.  Poole,  54  Miss.  323; 
but  we  think  the  contrary  opinion  is  the  correct  one,  since  the  mortgage  and 
the  deed  are  not  inconsistent,  but  may  well  stand  together:  Palmer  v.  Miller, 
25  Barb.  399;  especially  where  the  deed  is  a  quitclaim  deed:  Singer  Mfg.  Co. 
V.  Lamb,  81  Mo.  221.  If,  however,  the  deed  recites  that  the  conveyance  is 
subject  to  a  mortgage,  the  mortgage  is  thereby  confirmed:  President  etc.  of 
Boston  Bank  v.  Chamberlin,  15  Mass.  220;  Losey  v.  Bond,  94  Ind.  67. 

Again,  if  an  infant  sells  a  tract  of  land,  and  executes  a  title  bond,  and  on 
coming  of  age  sells  the  land  to  another  person,  and  executes  to  him  a  title 
bond,  the  first  contract  is  thereby  avoided:  Mustard  v.  Wohlford's  Heirs,  15 
Gratt.  329;  76  Am.  Dec.  209. 

But,  as  said  in  Dominick  v.  Michael,  4  Sand.  374,  421,  "the  deed  of  an 
infant  is  not  as  a  matter  of  course  superseded  and  annulled  by  the  mere 
execution,  after  he  attains  his  age,  of  another  conveyance,  even  to  a  pur- 
chaser for  value."  The  instruments  must  be  inconsistent.  "If  the  minor, 
after  reaching  his  majority,"  says  Martin,  C.,  in  Singer  Mfg.  Co.  v.  Lamb,  81 
Mo.  221,  225,  "has  expressly  repudiated  his  deed,  there  remains  nothing  for 
construction.  But  when  the  disaffirmance  proceeds  from  the  acts  of  the 
minor  after  reaching  majority,  they  must  in  their  nature  imply  a  repudiation 
of  the  voidable  instrument.  If  they  are  consistent  with  the  continued  exist- 
ence of  such  instrument,  there  is  no  disaffirmance,  and  the  deed  remains 
unaffected."  Therefore  a  deed  which  purports  to  convey  the  grantor's  right 
and  interest  in  any  lands  in  a  certain  town,  not  theretofore  conveyed  by  the 
grantor,  does  not  embrace  lands  sold  by  the  grantor  during  her  infancy: 
Philips  V.  Green,  3  A.  K.  Marsh.  7;  13  Am.  Dec.  124;  and  where  a  minor  con- 
veyed her  interest  in  a  tract  of  land,  and  afterwards  acquired  another  interest 
by  inheritance,  a  deed  subsequently  executed  by  her,  after  majority,  con- 
veying simply  her  right,  title,  and  interest  in  the  tract,  does  not  avoid 
the  prior  deed:  Leitensdorfer  v.   Hempstead,  18  Mo.  269;  and  also  where  a 


April,  1890.]  Cratq  v.  Van  Bebber.  667 

purchaser  from  the  grantee  of  an  infant  took  a  quitclaim  deerl  from  the  in- 
fant after  he  came  of  age,  the  latter  deed  only  operates  as  a  confirmatioa 
of  the  first,  and  does  not  take  precedence  over  a  mortgac;e  given  by  the  ori- 
ginal grantee  of  the  infant,  subject  to  which  the  second  grantee  purchased 
the  prfipcrty:  Eagle  Fire  Co.  v.  Lent,  6  Paige,  635,  affirming  1  Edw.  Ch.  301. 
Again,  a  conveyance  by  an  infant  of  a  tract  of  land,  part  of  a  larger  tract  in 
which  he  was  interested  as  heir  of  his  father,  is  not  disaffirmed  by  the  execu- 
tion of  a  deed,  after  attaining  majority,  to  another  person,  of  all  his  "  right, 
title,  interest,  and  claim  in  and  to  the  estate  "  of  his  father:  Stuart  v.  Baker, 
17  Tex.  417,  4'21;  but,  as  already  seen,  if  the  quitclaim  were  exactly  co-extea- 
Bive  with  the  previous  deed,  it  is  held  to  be  a  disaffirmance:  Baijley  v. 
Fletcher,  44  Ark.  153;  and  a  quitclaim  deed  or  any  other  deed,  unless,  per- 
haps, a  warranty  deed,  will  not  operate  to  disaffirm  a  mortgage  executed  by 
the  grantor  to  another  person  during  infancy:  Sinrfr  Mfg.  Co.  v.  Lamb,  81 
Mo.  221;  Palmer  v.  Miller,  25  Barb.  399;  Dixon  v.  Merrilt,  21  Minn.  196;  but 
see  Allen  v.  Poole,  54  Miss.  323.  A  subsequent  deed  of  trust  to  secure  debts, 
not  being  inconsistent  with  a  prior  mortgage  executed  during  infancy,  will 
not  operate  as  a  disaffirmance  of  the  mortgage:  McGan  v.  Marshall,  7 
Humph.  121;  compare  Inman  v.  Inman,  L.  R.  15  Eq.  260.  And  a  lease 
by  an  infant  is  not  avoided  by  the  mere  execution  of  a  second  lease  of  the 
same  lands,  made  to  another  person  by  the  infant  on  his  attaining  full  age, 
since  both  contracts  might  stand  together,  the  one  as  a  lease  and  the  other  as 
a  grant  of  the  reversion;  and  it  is  held  an  estate,  though  voidable,  having 
passed  under  the  first  lease,  and  the  lessee  being  in  possession  thereunder 
when  the  infant  became  of  age,  the  estate  could  not  be  divested  but  by  some 
act  of  notoriety,  as  ejectment,  entry,  demand  of  possession,  or  the  like,  or, 
at  least,  notice:  Slator  v.  Brady,  14  Jr.  C.  L.  61. 

Whether  a  deed  executed  by  a  grantor  after  attaining  majority  amounts 
to  a  disaffirmance  of  a  previous  deed  of  the  same  land  made  by  him  during 
infancy,  is  held  to  be  a  question  of  law  for  the  determination  of  the  court, 
and  should  not  be  submitted  to  the  jury:  Peterson  v.  Laik,  24  Mo.  541;  69 
Am.  Dec.  441. 

Dlsaffirmance  by  Suit.  —  Under  the  common-law  theory  of  the  action 
of  ejectment,  which  regards  the  defendant  as  a  trespasser,  it  has  been  held 
that  an  infant  could  not,  on  arriving  at  full  age,  maintain  the  action  to  re- 
cover lands  conveyed  during  his  infancy,  without  a  previous  entry,  notice,  or 
other  act  in  disaffirmance  of  the  deed:  Bool  v.  Mix,  17  Wend.  119;  31  Am. 
Dec.  285;  Clawson  v.  Doe  ex  dem.  Moore,  5  Blackf.  300;  Doe  ex  dem.  Moore  v. 
Ahernathy,  7  Blackf.  442;  Wallace's  Lessee  v.  Levns,  4  Harr.  (Del.)  75;  and  in 
Law  V.  Long,  41  Ind.  586,  this  rule  was  extended  to  a  statutory  action  to 
obtain  an  assignment  of  dower  in  lands  conveyed.  Thus  in  Clawson  v.  Doe 
ex  dem.  Moore,  5  Blackf.  300,  it  is  said:  "The  action  of  ejectment  is  an  ac- 
tion of  trespass,  and  the  defendant  is  always  regarded  by  the  plaintifiF  as  a 
trespasser.  Hence,  where  an  individual  is  in  the  possession  of  land  with  the 
permission  or  acquiescence  of  the  owner,  a  suit  cannot  be  sustained  against 
him  for  the  possession  witlmut  a  r'jtice  to  quit,  or  until  there  be  a  demand  of 
possession  and  a  refusal,  or  until  he  be  guilty  of  some  other  act  which  will 
make  him  a  wrong-doer." 

This  may  be  very  true;  yet  we  think  the  courts  have  overlooked  th<»  fact 
that  a  disaffirmance  of  his  deed  by  an  infant  makes  it  void  ab  initio,  and 
therefore  those  in  possession  under  it  may  very  well  be  regarded  as  trespass- 
ers, at  least  so  far  as  it  may  lie  necessary  to  maintain  ejectment  without  any 
previous  act  on  the  part  of  the  grantor.     And  it  is  in  accordance  with  the 


668  Craig  v.  Van  Bebber.  [Missouri, 

decided  weight  of  authority  that  a  deed  executed  by  the  grantor  during  in- 
fancy is  disaffirmed  by  the  mere  institution  of  a  suit  by  him,  after  coming  of 
age,  to  recover  possession  of  the  land  conveyed,  without  any  previous  act, 
whether  the  suit  be  ejectment,  —  especially  ejectment  as  it  at  present  exists 
in  most  of  the  states,  -  writ  of  entry,  or  summary  or  other  statutory  proceed- 
ings: See  Drake's  Lessee  v.  Ramsay,  5  Ohio,  251,  253;  Hughes  v.  Watson,  10  Ohio, 
127,  134;  Den  ex  dem.  Hoyle  v.  Stoioe,  2  Dev.  &  B.  320,  324;  Chndbourne  v. 
RackVff,  30  Me.  354;  Webb  v.  Hall,  35  Me.  336;  Walker  v.  Ellis,  12  111.  470 
(contract  to  sell);  Cole  v.  Pennoyer,  14  111.  158,  162;  Birch  v.  Linton,  78  Va. 
584;  49  Am.  Rep.  381,  383;  Harris  v.  Ross,  86  Mo.  89;  56  Am.  Rep.  411; 
Clark  V.  Tate,  7  Mont.  171;  Craig  v.  Van  Bebber,  100  Mo.  584;  and  see 
Roberts  v.  Wiggin,  1  N.  H.  73,  75;  8  Am.  Dec.  38,  40;  Haynes  v.  Bennett, 
53  Mich,  15,  17.  Certainly  the  deed  would  be  avoided  by  an  equitable  suit 
to  cancel  or  set  it  aside  on  the  ground  that  it  was  executed  during  infancy: 
Harrod  v.  Myers,  21  Ark.  592,  600;  76  Am,  Dec.  409,  416;  Schaffer  v.  Lav 
retta,  67  Ala.  14;  Bedingerv.  Wharton,  27Gratt,  857;  Gillespie  v.  Bailey,  12  W. 
Va.  70,  89;  29  Am.  Rep.  445,  447;  Tunison  v,  Chamblin,  88  111.  378, 

An  infant's  release  of  a  claim  on  account  of  personal  injuries  sustained  by 
reason  of  the  negligence  of  the  releasee  may  be  disaffirmed  by  bringing  suit 
upon  the  original  claim:  St.  Louis  etc.  Ry  v.  Higgins,  44  Ark.  293.  So  an  in- 
fant may  disaffirm  a  contract  for  work  and  labor  by  leaving  the  service  before 
the  time  expires,  and  bringing  an  action  upon  a  quantum  meruit:  Moses  v.  Ste- 
vens, 2  Pick.  332,  335;  Harney  v.  Owen,  4  Blackf.  337;  30  Am.  Dec.  662,  But 
it  is  held  that  if  an  infant  contributes  certain  property,  under  a  partnership 
agreement,  to  the  capital  of  the  firm,  his  copartner  acquires  an  interest  therein 
which  is  subject  to  attachment,  unless  the  agreement  had  been  avoided,  and 
that  the  infant,  by  claiming  the  property  in  replevin  against  the  attaching 
officer,  did  not  signify  his  election  to  avoid  the  partnership  contract;  there 
should  have  been  some  act  of  avoidance  before  the  institution  of  the  suit: 
Belts  V.  Carroll,  6  Mo.  App.  518,  — a  questionable  decision. 

Disaffirmance  by  Plea  of  Infancy. — A  plea  of  infancy  to  an  action 
brought  against  an  infant  on  his  contract  is  obviously  a  sufficient  disaffirm- 
ance, provided,  of  course,  the  contract  has  not  already  been  ratified  by  him: 
Strain  v.  Wright,  7  Ga.  568;  Freeman  v.  Nichols,  13S  Mass.  313,  314;  Schrock 
V,  Crowl,  83  Ind.  243;  Sparr  v,  Florida  Southern  R'y,  25  Fla.  185,  In  Best 
V.  Oivens,  3  B,  Mon.  72,  74,  it  was,  however,  held  that  although  a  plea  of 
infancy  to  an  action  on  a  note  was  a  proper  mode  or  step  for  avoiding  the 
note,  yet  it  was  but  an  initiatory  step,  and  did  not  ijmo  facto  accomplish  that 
end;  for  not  only  might  the  plea  have  been  sufficiently  answered  by  the  rep- 
lication and  be  defeated  on  the  trial,  but  it  might  have  been  withdrawn  at 
any  time  before  judgment;  and  hence  the  defendant  might,  at  any  time  be- 
fore trial,  confirm  the  note,  notwithstanding  the  plea.  The  remedy  by  plea 
is,  of  course,  only  applicable  in  case  of  executory  contracts,  or  where  the 
question  is  presented  in  such  a  form  that  an  opportunity  to  plead  the  infancy 
is  presented:  See  Bool  v.  Mix,  17  Wend.  119,  132;  31  Am.  Dec.  285,  291;  In- 
habitants of  Worcester  v.  Eaton,  13  Mass.  371.  375;  7  Am.  Dec,  155,  157. 

Disaffirmance  during  Minority  of  Personal  Contracts,  and  con- 
cerning Personalty.  —  An  infant's  personal  contracts,  and  contracts  relat- 
ing to  personal  property,  whether  executory  or  executed,  may  be  disaffirmed 
by  him  during  his  minority.  It  might  seem,  at  first  blush,  that  an  infant 
has  no  more  legal  discretion  to  avoid  a  contract  during  his  infancy  than  he 
has  to  enter  into  one,  and  that,  therefore,  he  could  not  conclusively  disaffirm 


April,  1890.]  Craig  v.  Van  Bebber.  669 

any  contract  until  he  reaches  full  age.  But  the  protection  of  the  infant  is  to 
be  considered;  and  where  this  can  the  better  be  subserved  by  allowing  him 
to  avoid  his  contract  during  his  infancy,  he  should  be  permitted  to  make  the 
disafBrmance.  And,  as  said  in  Towle  v.  Dresser,  73  Me.  252,  "by  reason  of 
the  transitory  nature  of  personal  property,  to  withhold  this  right  from  an 
infant  until  he  became  of  age  would,  in  many  cases,  be  to  make  it  utterly 
valueless."  Accordingly  he  may  avoid  a  sale  or  exchange  of  his  chattels  be- 
fore reaching  full  age:  Stafford  v.  Roof,  9  Cow.  626,  reversing  Roo/v.  Stafford, 
7  Cow.  179;  Bool  v.  Mix,  17  Wend.  119;  31  Am.  Dec.  285;  Carr  v.  Clough, 
26  N.  H.  280;  59  Am.  Dec.  345;  Shipman  v.  Norton,  17  Conn.  481;  Bailey  v. 
Barnherrj''r,  11  B.  Mon.  113  (land- warrant);  Carpenter  v.  Carpenter,  45  Ind. 
142;  Towle  v.  Dresser,  73  Me.  252;  Bloomingdale  v.  Chittenden,  74  Mich.  698. 
In  some  of  the  earlier  decisions,  the  rule  is  stated  as  though  it  were  confined 
to  the  case  where  tlie  property  had  been  delivered.  Thus  in  Carr  v.  Clough, 
26  N.  H.  280,  59  Am.  Dec.  345,  it  was  said:  "If  the  subject  of  the  sale  be 
personal  property,  and  a  delivery  to  and  possession  by  the  vendee  follows, 
and  there  are  no  legal  means  to  regain  the  property  till  the  minor  arrives  at 
full  age,  so  as  to  decide  whether  he  will  ratify  the  contract  or  not,  the  prop- 
erty may  all  be  wasted  and  gone  beyond  recovery,  and  in  many  cases  for  a 
very  inadequate  consideration."  See  also  Stafford  v.  Boo/,  9  Cow.  626;  Bool 
V.  Alix,  17  Wend.  119;  31  Am.  Dec.  285.  We  may  inquire.  What  real  dififer- 
ence  does  it  make  whether  the  property  has  been  delivered  or  not  ?  If  he  can 
rescind  when  there  has  been  a  delivery,  why  may  he  not  rescind  when  there 
has  been  no  delivery?  Certainly  the  law  would  not  require  him  to  make  a 
delivery,  in  order  that  he  might  be  able  to  disaffirm.  The  more  recent  cases 
do  not  recognize  the  distinction.  In  Stafford  v.  Bonf,  9  Cow.  626,  it  was  held 
that  where  an  infant  sold  a  horse,  but  there  was  no  evidence  that  he  deliv- 
ered it  with  his  own  hand,  he  might  avoid  the  sale  during  infancy,  and  main- 
tain trover  against  the  vendee  without  demand,  Jones,  C,  observing  that 
there  being  no  evidence  of  a  manual  delivery  by  the  infant,  the  case  stood  at 
best  "as  the  case  of  an  infant  contracting  to  sell,  and  the  vendee  taking  pos- 
session in  virtue  of  the  contract,  without  its  being  followed  up  by  any  act  of 
delivery.  Such  a  taking  would  be  tortious,  and  a  conversion  in  itself."  This 
decision  is  founded  upon  tlie  erroneous  notion  that  if  an  infant  does  not  him- 
self make  a  delivery  of  the  property  sold,  the  sale  is  void,  because  he  could 
not  appoint  an  agent  to  do  it  for  him.  We  think  that  no  demand  was  neces- 
sary in  this  case,  nor  in  any  other  case  of  a  sale  which  has  been  disaflSrmed, 
in  order  that  an  action  of  trover  can  be  maintained  for  the  property;  but,  for 
the  reason  that  when  the  sale  is  avoi<led,  the  contract  is  rendered  void  ab 
initio,  and  gives  no  protection  against  the  action. 

An  infant's  chattel  mortgage  may  likewise  be  disafHrmed  by  him  during 
minority:  State  v.  Plained,  43  N.  H.  413;  Chapin  v.  Shafer,  49  N.  Y.  407; 
Cagley  v.  Cushman,  16  Minn.  397.  401;  Miller  v.  Smith,  26  Minn.  248;  37  Am. 
Rep.  407.  So  may  hisjjurchase  of  personal  property:  Cagley  v.  Cnshman,  16 
Minn.  397,  401 ;  Indianapolis  Chair  Mfg.  Co.  v.  Wilcox,  59  Ind.  429;  Bice  v. 
Boyer,  108  Ind.  472;  58  Am.  Rep.  53,  55;  Riley  v.  Mallory,  33  Conn.  201. 
And  these  rules  are  not  changed  by  section  2238  of  the  Iowa  code,  which 
provides  that  "a  minor  is  bound,  not  only  by  contracts  for  necessaries,  but 
also  by  his  other  contracts,  unless  he  disaffirms  them  within  a  reasonable 
time  after  he  attains  his  majority,"  the  statute  only  fixing  a  time  within 
which  contracts  must  be  disaffirmed:  Childs  v.  Dobbins,  55  Iowa,  205;  Lea- 
cox  V.  Griffith,  76  Iowa,  89,  93.  His  contract  of  subscription  for  shares  of 
stock  iu  a  corporation  may  also  be  repudiated  during  his  nonage:  Newry  etc. 


670  CRAia  V.  Van  Bebber.  [Missouri, 

R'y  V.  Coombe,  3  Ex.  565;  and  see   also  Indlannipolis  Chair  Mfg.  Co.  v.   WU- 
cox,  59  Ind.  429. 

An  infant  may  also  avoid  his  contract  of  partnership  before  he  reaches  his 
majority:  Adams  v.  Beall,  67  Md.  53;  1  Am.  St.  Rep.  .379;  contra,  Duntonv. 
Brown,  31  Mich.  182;  and  see  Armltage  v.  Widoe,  36  Mich.  VIA,  130;  or  his 
contract  of  service:  Clark  v.  Goddard,  39  Ala.  1C4,  171;  8-t  Am.  Dec.  777, 
780. 

Disaffirmance  during  Minokity  of  Deeds,  Leases,  and  Mortgages. — 
An  infant's  conveyance  of  realty  cannot  be  conclusively  avoided  by  him  until 
he  reaches  full  age,  although,  it  seems,  he  may  enter  during  his  minority,  and 
enjoy  the  profits:  Zouch  v.  Parsons,  3  Burr.  1794,  1808;  Stafford  v.  Roof,  9 
Cow.  626,  628;  Bool  v.  Mix,  17  Wend.  119;  31  Am.  Dec.  285;  Matthewson 
V.  Johnson,  1  Hoff.  Ch.  560;  Cunrmings  v.  Powell,  8  Tex.  80;  Kihjore  v.  Jor- 
dan, 17  Tex.  341;  Chapman  v.  Chapman,  13  Ind.  396;  Welch  v.  Bunce,  83 
Ind.  382;  Irvine  v.  Irvine,  5  Minn.  61,  65;  Harrod  v.  Myers,  21  Ark.  592, 
600;  76  Am.  Dec.  409,  416;  Doe  ex  dem.  McCormic  v.  Leggett,  8  Jones  L.  425; 
Hastings  v.  Dollarhide,  24  Cal.  195;  McCarthy  v.  Nicrosi,  72  Ala.  332,  335; 
47  Am.  Rep.  418,  420;  Singer  Mfg.  Co.  v.  Lamb,  81  Mo.  221;  and  see  code  of 
Georgia  (1882),  sec.  2694;  Nathans  v.  ArkwrigJit,  66  Ga.  179;  compare 
Cal.  Civ.  Code,  sec.  35;  Dak.  Civ.  Code,  sec.  17.  The  reason  which  per- 
mits the  infant  to  disaffirm  his  contracts  of  a  personal  nature,  and  those 
relating  to  personal  property,  during  his  minority,  does  not  apply,  at  least 
ander  ordinary  circumstances,  to  his  deeds  of  conveyance.  He  is  amply  pro- 
tected, while  his  infancy  lasts,  by  his  right  to  enter  and  take  the  profits. 
And  it  seems,  also,  that  he  may  apply  to  a  court  of  chancery  for  the  appoint- 
ment of  a  receiver,  as  the  equivalent  to  such  an  entry:  Matthewson  v.  John- 
son,  1  Hofif.  Ch.  560.  In  Cummings  v.  Pov:ell,  8  Tex.  80,  91,  Chief  Justice 
Hemphill  says:  "Upon  principle,  it  would  seem  that  if  an  act  of  an  infant 
be  only  voidable,  and  be  binding  upon  the  other  party  until  it  is  avoided, 
that  the  act  of  disaffirmance  must  be  by  the  infant  himself  on  attaining  ma- 
ture age.  That  it  can  be  avoided  at  all  is  owing  to  the  want  of  legal  discre- 
tion in  the  infant  at  the  time  of  its  execuion;  and  this  continues  during  his 
nonage  and  renders  his  affirmance  or  disaffirmance  before  majority  of  no 
avail."  We  may  remark  that  this  would  undoubtedly  always  be  so,  were  it 
not  for  the  fact  that  his  protection  requires  that  he  should  be  permitted 
to  avoid  certain  of  his  contracts  during  his  infancy. 

The  rule  which  denies  the  right  of  an  infant  to  disaffirm  his  conveyance 
during  minority  is  held  not  to  be  changed  by  a  statute  which  provides  that 
"when  an  infant  shall  have  a  right  of  action,  such  infant  shall  be  entitled 
to  maintain  suit  thereon,  and  the  same  shall  not  be  delayed  or  deferred  on 
account  of  such  infant  not  being  of  full  age  ";  for  an  infant  has  no  right  of  ac- 
tion as  to  lands  conveyed  by  him,  simply  on  the  ground  of  infancy,  until  the 
conveyance  has  been  disaffirmed,  and  it  cannot  be  disaffirmed  until  the  infant 
has  arrived  at  majority:  Welch  v.  Bunce,  83  Ind.  382.  According  to  the  rule, 
the  deed  of  an  infant  will  not  be  held  to  be  disaffirmed  by  his  subsequent  deed 
of  the  same  land  to  another  person,  where  there  is  no  evidence  that  he  was 
of  full  age  when  the  second  deed  was  executed,  and  the  presumption  that  he 
was  still  an  infant  is  not  overcome  by  a  considerable  lapse  of  time  between 
the  conveyances:  Kilgore  v.  Jordan,  17  Tex.  341;  and  in  an  action  to  cancel 
a  deed  executed  during  the  infancy  of  the  plaintifiF,  he  should  show  affirm- 
atively that  he  has  attained  his  majority  before  the  commencement  of  the 
action;  there  can  be  no  implication  in  his  favor  as  to  his  age  from  the  fact 
that  he  has  commenced  an  action  in  his  own  name;  and  the  nature  of  the 


J 


April,  1890.]  Craig  v.  Van  Bebber.  671 

relief  he  seeks  requires  him  to  show  that  he  was  a  minor  at  the  time  of  exe- 
cuting the  deed,  and  the  presumption  is,  that  such  condition  continues  until 
be  negatives  it:  Irvine  v.  Irvine,  5  Minn.  61.  If  the  deed  of  an  infant  be  held 
to  be  absolutely  void,  as  where  it  is  executed  without  consideration,  and 
therefore  necessarily  prejudicial  to  him  under  the  rule  of  Lord  Chief  Justice 
Eyre,  there  would  then  seem  to  be  no  objection  to  a  suit  during  his  infancy 
to  have  it  declared  void:  Swafford  v.  Ferguson,  3  Lea,  292;  31  Am.  Rep.  639. 
It  may  be  remarked  that  this  case  virtually  stands  alone  among  recent  cases  in 
its  persistent  adherence  to  a  criterion  long  since  exploded.  In  Barker  v.  Wilson, 
4  Heisk.  268,  it  was  held  that  where,  by  statute,  a  husband  has  an  interest 
in  the  real  estate  of  his  wife,  and  it  is  necessary  for  the  husband  and  wife  to 
unite  in  a  deed  of  her  real  estate,  if  the  husband  is  an  infant,  he  may,  on 
coming  of  age,  avoid  the  deed  entirely;  for  "the  husband  having  under- 
taken to  do  that  to  which  he  did  not  bind  himself,  and  to  defeat  which  he 
avails  himself  of  his  infancy,  thereby  destroying  his  consent  to  his  own  act, 
his  exercise  of  the  grant  of  his  wife's  permission  to  sell,  wholly  disengaging 
himself  of  the  transaction,  leaves  the  conveyance  as  if  made  by  the  wife 
alone." 

In  regard  to  leases  made  by  infants,  two  of  the  judges  in  Slator  v.  Trim.' 
hie,  14  Ir.  C.  L.  342,  were  of  the  opinion  that  the  infant  lessor  could  not,  by 
any  act  of  his  during  infancy,  absolutely  avoid  the  lease.  We  are  of  the 
belief,  however,  that  the  best  interests  and  welfare  of  the  infant  should  give 
him  this  right;  and  we  may  observe  that  he  has,  at  all  events,  the  right  to 
enter  and  take  the  profits  of  the  land  while  his  infancy  continues,  and  that 
Buch  an  act  virtually  ends  a  lease,  which  by  its  terms  would  expire  at  or 
before  he  attains  his  majority.  If  a  lease  be  made  to  an  infant,  we  have 
authority  that  it  may  be  repudiated  during  infancy:  Blake  v.  Concannon,  4  Ir. 
Rep.  C.  L.  323;  see  also  Ketsey's  Case,  Cro.  Jac.  320;  Flexner  v.  Dickerson,  72 
Ala.  318;  and  so  far  as  these  cases  maintain  this  proposition,  we  think  them 
unquestionably  sound.  It  needs  no  argument  to  show  that  it  may  be  highly 
advantageous  for  an  infant  lessee  to  avoid  the  lease  during  his  minority,  and 
escape  liability  for  rent;  and  wo  think  it  ought  not  to  be  questioned  that  a 
plea  of  infancy  is  good  in  an  action  for  rent  or  on  any  covenant  contained  in 
the  lease:  See  ante,  title  "Leases."  We  do  not  see  why  the  same  observa- 
tions should  not  apply  where  a  deed  of  conveyance  is  made  to  an  infant,  so 
that  he  could,  while  still  a  minor,  avoid  the  deed  and  recover  back  the  pur- 
chase price  paid,  or  defend  au  action  for  the  price,  if  it  has  not  been  paid. 

If  an  infant  mortgages  his  real  estate,  we  also  think  the  ruling  sound  that 
he  may  avoid  the  mortgage  during  his  minority,  at  least  by  pleading  his  in- 
fancy to  a  suit  to  foreclose:  Schneider  v.  Stalhr,  20  Mo.  269.  "As  in  this 
mstance,"  says  the  court,  "the  effect  of  the  omission  of  the  wife  to  plead 
her  infancy  would  be  to  subject  her  estate  to  be  sold  under  execution,  by 
which  an  innocent  purchaser  might  be  injured,  and  as  the  proceeding  is  in 
the  nature  of  an  action  to  subject  her  estate  to  the  payment  of  a  debt,  from 
analogy  to  the  course  in  a  suit  on  a  contract  by  which  an  infant  is  jointly 
bound  with  others,  we  see  no  impropriety  in  permitting  her  to  .set  up  her 
infancy,  though  under  age,  in  avoidance  of  this  claim  against  her." 

Disaffirmance  of  Contracts  in  General  within  Reasonable  Timb 
AJTF,R  PvEACHiNG  FuLL  Age.  —  While  it  is  thus  seen  that  certain  contracts 
of  an  infant  may  be  avoided  by  him  during  his  minority,  there  is  very  little 
diflference  of  opinion  upon  the  proposition  that  it  is  never  imperative  that 
he  should  do  so.  The  right  to  disaffirm  a  contract  while  his  infancy  con- 
tinues is  simply  a  privilege  or  option  which  the  law  allows  him  to  exerciie 


672  Craig  v.  Van  Bebber.  [Missouri, 

for  his  protection,  at  his  pleasure.  There  is  nothing  compulsory  about  it. 
To  hold  otherwise  would  be  to  say  that  he  might  ratify  liis  contracts  during 
his  infancy;  and  to  say  that  he  might  so  ratify  his  contracts  would  be  to 
say  that  his  contracts  were  binding  upon  him.  We  know  of  no  authority 
to  the  contrary  except  the  cases  of  Kelii/  v.  Coote,  5  Ir,  C.  L.  469,  and  Blaise 
V.  Concaniion,  4  Ir.  Rep.  C.  L.  323,  which  hokl  that  an  infant  lessee,  or  an 
infant  who  acquires  an  estate  on  which  rent  has  been  reserved,  must  repu- 
diate before  the  rent  day  comes,  although  he  is  still  an  infant,  or  he  will  be 
liable  for  the  installment  of  rent;  and  we  think  the  cases  are  clearly  unsound: 
See  supra,  "  Leases." 

After  an  infant  arrives  at  majority,  there  is  no  doubt  about  his  power  to 
repudiate  as  well  as  confirm  his  contracts  made  during  minority.  Bat  it  is 
a  question  involved  in  considerable  confusion  whether  any  or  all  of  an  in- 
fant's contracts  not  previously  avoided  must  be  disaffirmed  by  him  within 
a  reasonable  or  any  particular  time  after  he  reaches  full  age;  or  in  other 
words,  whether  his  contracts  may  become  binding  upon  him  by  the  lapse  of 
time,  and  no  longer  subject  to  disaffirmance.  Much  of  this  confusion  has 
resulted  from  the  application,  or  rather  misapplication,  of  a  dictmn  by  Dal- 
las, J.,  in  Holmes  v.  Blogg,  8  Taunt.  35,  39,  to  the  following  effect:  "I  agree 
that  in  every  instance  of  a  contract  voidable  only  by  an  infant  on  coming  of 
age,  the  infant  is  bound  to  give  notice  of  disaffirmance  of  such  contract  ia 
reasonable  time;  and  if  the  case  before  the  court  [the  case  of  a  lease  to  an 
infant]  were  that  simple  case,  I  should  be  disposed  to  hold  that  as  the  in- 
fant had  not  given  express  notice  of  disaffirmance  within  four  months,  he 
had  not  given  notice  of  disaifirmance  in  reasonable  time."  There  is 
certainly  a  distinction,  which  this  quotation  fails, to  make,  between  the  dif- 
ferent contracts  which  an  infant  may  enter  into  with  respect  to  his  obliga- 
tion to  disaffirm  within  a  reasonable  time  after  he  comes  of  age:  See  the 
classification  made  by  Shepley,  J.,  in  Boody  v.  McKenney,  23  Me.  517,  523- 
526.  And  sometimes  the  distinction  is  said  to  be  between  his  executory  and 
his  executed  contracts.  Thus,  to  illustrate  the  use  of  these  terras,  it  is  as- 
serted that  where  the  contract  of  an  infant  is  executory,  the  infant  must,  to 
render  him  liable  thereon,  on  arriving  at  full  age,  expressly  ratify  it;  but 
where  the  act  is  executed,  the  infant  must,  on  attaining  full  age,  do  some 
act  to  disaffirm  the  contract:  Law  v.  Long,  41  Ind.  586,  596;  Scranton  v. 
Stewart,  52  Ind.  68,  92;  and  see  State  ex  rel.  Petty  v.  Rousiieau,  94  N.  C.  355, 
361.  "In  other  words,"  says  Buskirk,  J.,  in  the  first  of  these  cases,  "where 
the  contract  is  executory,  there  must  be  an  affirmance,  to  render  the  contract 
valid;  and  where  it  is  executed,  there  must  be  a  disaffirmance,  to  avoid  the 
operation  of  the  deed."  What,  we  may  stop  to  inquire,  does  the  court  mean 
by  an  "  executory  "  contract?  One  that  is  promissory  on  both  sides,  or  on  the 
side  of  the  infant,  or  of  the  other  contracting  party,  or  any  or  all  of  these? 
And  what  does  it  mean  by  an  "  executed  "  contract  ?  It  is  very  evident  that 
such  a  rule  is  worse  than  useless  because  of  its  inaccurate  use  of  legal  lan- 
guage; and  besides,  it  will  be  shown  that  giving  the  expressions  any  of  the 
meanings  suggested,  the  rule  is  not  correct.  Another  good  illustration  of 
the  careless  use  of  words  in  this  regard  may  be  found  in  Beardsley  v.  Botch- 
kiss,  96  N.  Y.  201,  211,  where  it  is  said:  "As  to  contracts  purely  executory, 
it  must  be  shown  that  the  infant  ratified  them  after  he  became  of  age,  be- 
fore they  can  be  enforced  against  him.  As  to  contracts  executed,  such  as 
deeds  of  land  or  conveyances  of  personal  property,  they  will  generally  be 
deemed  ratified,  and  will  thus  become  just  as  valid  and  effectual  as  the  con- 
tracts of  an  adult,  unless  they  be  disaffirmed  by  the  infant  before  he  arrives 


April,  1890.]  Craig  v.  Van  Bebber.  673 

at  age,  or  within  a  reasonable  time  thereafter."'     We  will  now  consider  the 
specific  rules  which  have  been  established. 

A  purchase  of  personal  property  by  an  infant  must  be  disaffirmed  by  him 
within  a  reasonable  time  after  he  reaches  his  majority,  if  he  continues  to  hold 
the  property,  or  the  right  of  disaffirmance  will  be  lost.  Or  to  state  the  prop- 
osition in  another  form,  the  retention  of  personal  property  purchased  dur- 
ing infancy  by  the  infant,  for  an  unreasonable  time  after  coming  of  age, 
without  any  act  of  disaffirmance,  amounts  to  a  ratification  of  the  contract. 
This  is  particularly  true  if  the  infant  uses  the  property,  or  exercises  other 
acts  of  ownership  over  it.  The  retention  of  the  property  for  an  unreasonable 
time  after  attaining  full  age  is  of  itself  inconsistent  with  any  other  idea  than 
that  of  ownership,  and  hence  of  ratification:  See  Boyden  v.  Boyden,  9  Met. 
519;  Delano  v.  Blake,  11  Wend.  85;  25  Am.  Dec.  617;  Alexander  v.  Heriot, 
Bail.  Eq.  223;  Thomasson  v.  Boyd,  13  Ala.  419;  Aldrich  v.  Grimes,  10  N.  H. 
194;  McKamy  v.  Cooper,  81  Ga.  679;  Georgia  Code  (1882),  sec.  2731.  And 
the  evidence  of  ratilication  may  be  rendered  still  stronger  by  declarations,  a 
sale  of  the  property,  and  the  like:  See  Chei^ldre  v.  Barrett,  4  McCord,  241; 
17  Am.  Dec.  735;  Euhanks  v.  Peak,  2  Bail.  L.  497;  Lawson  v.  Lovejoy,  8  Me. 
405;  23  Am.  Dec.  526;  Boody  v.  McKenney,  23  Me.  517,  525;  Williams  v. 
Brown,  34  Me.  594;  Deason  v.  Boyd,  1  Dana,  115;  Robinson  v.  Boskins,  14 
Bash,  393;  Shro'psJvre  v.  Burns,  46  Ala.  108;  Minock  v.  Shortridge,  21  Mich. 
304;  compare  Aldrich  v.  Grimes,  10  N.  H.  194,  198;  Counts  v.  Bates,  Harp.  L. 
464.  An  infant's  contract  of  subscription  for  shares  in  a  corporation  must 
likewise  be  repudiated  by  him  within  a  reasonable  time  after  coming  of  age, 
or  he  will  be  bound  by  it:  Cork  etc.  R'y  v.  Cazenove,  10  Q.  B.  935;  Leeds  etc 
R'y  v.  Fearnley,  4  Ex.  26;  Northwestern  R'y  v.  McMichael,  5  Ex.  114;  Dub- 
lin  etc.  R'y  v.  Black,  8  Ex.  181. 

If  a  minor  purchases  and  takes  a  conveyance  of  real  property,  or  makes 
an  exchange  of  lands,  or  enters  into  an  agreement  to  purchase  lands,  and 
goes  into  possession,  he  must,  for  like  reasons,  elect  to  disaffirm  within  a 
reasonable  time  after  attaining  full  age,  or  he  will  be  held  to  have  ratified  the 
transaction  by  his  acquiescence.  See  Cecil  v.  Comes  Salisbury,  2  Vern.  225; 
Roherts  v.  Wig;iin,  1  N.  H.  73,  75;  8  Am.  Dec.  38,  40;  Boody  v.  McKenney, 
23  Me.  517,  524:  Baker  v.  Kennett,  54  Mo.  82;  Henry  v.  Root,  33  N.  Y. 
526;  Walsh  v.  Powers,  43  N.  Y.  23,  26;  3  Am.  Kep.  654,  655;  Callis  v.  Day, 
38  Wis.  643;  Plook  v.  Donaldson,  9  Lea,  56;  Ellis  v.  Alford,  64  Miss.  8; 
and  see  Evelyn  v.  Chichester,  3  Burr.  1717;  Armjield  v.  Tate,  7  Ired.  L.  258; 
Middleton  v.  Hof/e,  5  Bush,  478;  Georgia  Code  (1882),  sec.  2731;  compare 
Benham  v.  Blihop,  9  Conn.  330;  23  Am.  Dec.  358.  The  same  is  true  re- 
specting a  settlement  of  boundaries:  See  Brown  v.  Caldwell,  10  Serg.  &  R. 
114;  13  Am.  Dec.  660;  Geonje  v.  Thomas,  16  Tex.  74;  67  Am.  Dec.  612. 
And  if  an  infant  takes  a  lease,  he  must  also  disaffirm  within  a  reasonable 
time  after  reaching  majority;  and  we  should  say,  at  all  events,  before  rent 
day  came:  See  Boody  v.  McKenney,  23  Me.  517,  524;  Baxter  v.  Bu^h,  29  Vt. 
465;  70  Am.  Dec.  429;  McClure  v.  McClure,  74  Ind.  108;  Mahon  v.  O'Farrell, 
10  Jr.  L.  R.  527  (the  case  of  an  infant  assignee);  and  see  Kctsey'a  Case,  Cro. 
Jac.  .3"J0;  but  compare  Kelly  v.  Coof.e,  5  Ir.  C.  L.  469;  Bl<d:e  v.  Concannon, 
4  Ir.  Rep.  C.  L.  323,  discussed  a7ite,  "Leases."  In  addition  to  a  retention  of 
the  property,  and  a  failure  to  disaffirm  within  a  reasonable  time  after  com- 
ing of  age,  the  case  may  show  a  ratification  by  the  infant's  use  of  the  prop- 
erty, or  otherwise  treating  it  as  his  own,  or  a  ratification  by  a  sale  and 
conveyance  of  the  property:  See  j^ost,  "Ratification  by  Sale  or  Conveyance 
of  Property  Purcliased." 

AM.  6T.  Hkv.,  Vol.  XVIII. —  43 


674  Craig  v.  Van  Bebber.  [Missouri, 

But,  on  the  other  hand,  the  mere  retention  by  a  minor,  after  coming  of  age, 
of  either  real  or  personal  property  purchased  by  him  during  his  infancy,  may 
be  under  such  circumstances  as  not  to  indicate  an  intention  to  ratify  the  con- 
tract, as  where  he  endeavors  to  rescind,  or  holds  the  property  by  virtue  of  a 
contract  with  some  third  person:  See  House  v.  Alexander,  105  Ind.  109;  55 
Am.  Rep.  189,  191;  Baker  v.  Kennett,  54  Mo.  82;  Scott  v.  Scott,  29  S.  C.  414; 
Thing  v.  Libhey,  16  Me.  55;  Smith  v.  Kelley,  13  Met.  309;  Todd  v.  Cla-pp,  118 
Mass.  495;  Tobey  v.  Wood,  123  Mass.  88;  25  Am.  Rep,  27;  and  see  Dana  v. 
Stearns,  3  Gush.  372,  375;  Flexner  v,  Dickerson,  72  Ala.  318;  McCarty  v.  Car- 
ter, 49  111.  53;  95  Am.  Dec.  572.  These  cases  will  be  found  discussed,  post, 
under  the  title  "Ratification  by  Retention  of  Property  Purchased." 

The  retention  of  the  considerat'on  by  the  infant,  for  an  unreasonable  time 
after  coming  of  age,  without  any  expression  of  dissent,  it  is  thus  seen,  ratifies 
the  contract.  It  may  be  that  this  is  what  some  of  the  cases  call  an  "exe- 
cuted "  contract,  which  requires  a  disaffirmance.  What  is  a  reasonable  time, 
we  should  say,  depends  upon  the  circumstances  of  each  case,  and  is,  perhaps, 
a  mixed  question  of  fact  and  of  law.  If  the  infant  has  never  received  any  con- 
sideration from  the  other  contracting  party,  that  is,  if  the  contract  is  executory 
on  both  sides,  or  on  the  side  of  the  opposite  party,  or  if  he  has  received  the 
consideration,  but  has  spent,  wasted,  or  in  any  disposed  of  it  during  his  minor- 
ity, so  that  it  no  longer  remains  in  his  hands  on  attaining  full  age,  the  reason 
which  requires  him  to  disaffirm  the  contract  within  a  reasonable  time  after 
coming  of  age,  in  order  to  avoid  being  bound,  does  not  exist.  It  has  therefore 
been  held  that  an  infant  need  not  disaffirm  his  note,  or  a  note  and  mortgage 
of  his  property,  or  any  contract  to  pay  money,  after  coming  of  age,  in  order  to 
escape  a  ratification  by  inaction,  to  which,  however,  must  be  added  the  qualifi- 
cation, provided  he  does  not  retain  the  specific  consideration:  Buzzrll  v.  Ben- 
nett. 2  Cal.  101;  Magee  v.  Wekh,  18  Cal.  155;  Neio  Hamp-^hive  Mut.  F.  Ins.  Co. 
V.  Nojjes,  32  N.  H.  345;  Baker  v.  Stone,  136  Mass.  405;  Tyler  v.  Estate  of  Gal- 
lop, 68  Mich.  185;  13  Am.  St.  Rep.  336;  and  see  Grabtree  v.  May,  1  B.  Mon. 
289.  The  same  is  true  where  he  has  sold  or  assigned  his  personal  property: 
Boody  V.  McKenney,  23  Me.  517,  525;  Vaughan  v.  Parr,  20  Ark.  600;  contra, 
Hastings  v.  Dollar-hide,  24  Cal.  195;  Summers  v.  Wilson,  2  Cold.  469;  or 
where  he  executes  a  chattel  mortgage  thereon:  Hill  v.  Nelms,  86  Ala.  442; 
although  acquiescence  in  the  sale,  assignment,  or  mortgage  of  property  which 
has  been  delivered,  if  continued  sufficiently  long,  might  prevent  his  regaining 
the  property,  by  virtue  of  the  statute  of  limitations:  See  Hill  v.  Nelms,  86 
Ala.  442;  and  perhaps  his  laches  in  avoiding  the  contract  might  result  in  a 
denial  of  equitable  relief  against  it;  certainly  if  continued  for  such  a  length 
of  time  as  would  bar  an  action  for  the  recovery  of  the  property:  See  Merri- 
weatliers  Adm\  v,  Herran,  8  B.  Mon.  162.  The  contrary  decisions  of  Has- 
tings V.  Dollarhide,  24  Cal.  195,  and  Summers  v.  Wilson,  2  Cold.  469,  cannot 
be  supported  either  by  principle  or  by  authority. 

In  Iowa,  it  is  provided  by  section  2238  of  the  code  that  "a  minor  is  bound 
not  only  by  contracts  for  necessaries,  but  also  by  his  otner  contracts,  unless 
he  disaffirms  them  within  a  reasonable  time  after  he  attains  his  majority," 
Unless,  therefore,  any  contr:ict  whatever  is  disaffirmed  within  such  reason- 
able time,  it  becomes  binding,  under  this  statute,  both  at  law  and  in  equity: 
Stucker  v.  Yoder,  33  Iowa,  177.  What  is  a  reasonable  time  within  which  the 
minor  must  disaffirm  depends  upon  the  circumstances  of  each  case:  Jenkins 
V.  Jenkins,  12  Iowa,  195;  Stout  v.  Merrill,  35  Iowa,  47;  Gre^n  v.  Wilding,  59 
Iowa,  679;  44  Am.  Rep.  696,     A  disaffirmance  on  the  eighteenth  day  after 


April,  1890.]  Craig  v.  Van  Bebber.  675 

attaining  majority  was  held  to  be  within  a  reasonable  time,  in  Jenkins  v.  Jen^ 
Una,  12  Iowa,  195;  and  the  same  was  held  where  the  disaffirmance  was  on 
the  thirty -second  day:  Leacox  v.  Griffith,  76  Iowa,  89,  95;  but,  on  the  other 
hand,  a  delay  of  two  years  was  held  to  be  unreasonable,  in  Wright  v.  Ger- 
main, 21  Iowa,  585;  so  with  a  delay  of  four  months:  Stout  v.  Men-ill,  35  Iowa, 
47;  and  of  tlii/teen  years:  Weaver  v.  Carpenter,  42  iowa,  343;  of  six  months: 
Jones  V.  Jones,  46  Iowa,  466;  Hoover  v.  Kinsey  Plouyh  Co.,  55  Iowa,  608;  and 
of  three  years  and  eight  months:  Green  v.  Wilding,  59  Iowa,  679;  44  Am. 
Rep.  696. 

Disaffirmance  of  Deeds  within  Reasonable  Time  after  Reaciiinq  Full 
Age. —  There  has  been  more  dispute  on  the  question  whether  an  iufaut  must 
disaffirm  his  deeds  of  conveyance  of  his  lands  within  a  reasonable  time  after 
reaching  full  age  than  concerning  the  disaffirmance  of  his  other  contracts. 
According  to  one  line  of  cases,  he  is  required  to  avoid  a  deed  of  his  lands 
within  a  reasonable  time  after  attaining  his  majority,  or  he  will  be  bound  by 
his  acquiescence:  Hastings  v.  Dollarhide,  24  Cal.  195;  Kline  v.  Beehe,  6  Conn. 
494,  506;  Wallace's  Lessee  v.  Lewis,  4  Harr.  (Del.)  75;  Nathans  v.  Arkwright, 
66  Ga.  179;  Cole  v.  Pennoyer,  14  111.  158;  Blankenship  v.  Stout,  25  111.  1.32; 
Illinois  Land  and  Loan  Co.  v.  Bonner,  75  111.  315,  322;  Keil  v.  Healey,  84  111. 
104;  25  Am.  Rep.  434;  Tunison  v.  Chambiin,  88  111.  378;  Scranton  v. 
Stewart,  52  Ind.  68;  Long  v.  Williams,  74  Ind.  115;  Wiley  v.  Wilson,  77  Ind. 
596;  Stringer  V.  Northwestern  Mut.  L.  Ins.  Co.,  82  Ind.  100;  Sims  v.  Bardoner, 
86  Ind.  87;  44  Am.  Rep  263;  Bichardson  v.  Pate,  93  Ind.  423;  47  Am.  Rop. 
374;  Ooodnoio  v.  Empire  Lumber  Co.,  31  Minn.  468;  47  Am.  Rep.  798;  O'Brien 
V.  Gaslin,  20  Neb.  347;  Ward  v.  Laverty,  19  Neb.  429;  Scott  v.  Buchanan,  11 
Humph.  468;  Matherson  v.  Davis,  2  Cold.  443,  451;  Bingham  v.  Barley,  55 
Tex.  281;  40  Am.  Rep.  801;  Ferguson  v.  Homton  etc.  B'y,  73  Tex.  344;  Ad-ey 
V.  Williams,  74  Tex.  294;  Bigeloiv  v.  Kinney,  3  Vt.  353;  21  Am.  Dec.  5S9; 
Richardson  v.  Bpright,  9  Vt.  368;  and  see  Doe  exdem.  Aloore  v.  Abernathy,  7 
Blackf.  442,  This  is  the  rule  in  Iowa,  by  virtue  of  statute:  See  section  2238 
of  the  code,  and  the  cases  cited  under  the  last  preceding  head,  particularly 
Jenkins  v.  Jenlcins,  12  Iowa,  195;  Wright  v.  Germain,  21  Iowa,  585;  Stout  v. 
Merrill,  35  Iowa,  47;  Weaver  v.  Carpenter,  42  Iowa,  343;  Green  v.  Wilding, 
59  Iowa,  679;  44  Am.  Rep.  696.  Of  course,  under  this  view,  lapse  of  time, 
taken  in  connection  with  other  circumstances,  as  where  the  infant  grantor, 
after  reaching  full  age,  retains  the  consideration,  sees  the  land  being  im- 
proved by  those  who  claim  under  his  deed,  and  the  like,  will  preclude  him 
from  thereafter  disaffirming  his  deed,  or  in  other  words,  will  amount  to  % 
confirmation:  Kline  v.  Beebe,  6  Conn.  494;  Wallace's  Lessees.  Lewis,  4  Harr. 
(Del.)  75;  Wheatonv.  East,  5  Yerg.  41;  26  Am.  Dec.  251;  Hartman  v.  Ken- 
dall, 4  Ind.  403,  404;  Ihley  v.  Padgett,  27  S.  C.  300;  Ferguson  v.  Houston  etc. 
R'y,  73  Tex.  344;  compare  Doe  ex  dem.  Moore  v.  Abernathy,  7  Blackf.  442; 
Sima  V.  Bardoner,  86  Ind.  87;  44  Am.  Rep.  263;  Richardson  v.  Pate,  93  Ind. 
423,  4l'8;  Buchanan  v.  Hubbard,  96  Ind.  1.  In  Ihley  v.  Padgett,  27  S.  C. 
300,  it  was  held  that  where  an  infant  joined  in  the  execution  of  a  deed  of  a 
tract  of  land  in  which  he  held  an  interest  in  remainder,  and  the  proceeds  of 
the  sale  were  in  part  invested  in  another  tract,  the  title  to  which  was  partly 
taken  in  his  name,  and  where  he,  after  attaining  his  majority,  lived  on  the 
land  so  purchased,  and  mortgaged  his  interest  therein,  and  made  no  com- 
plaint for  over  fourteen  jears,  and  until  the  death  of  the  life  tenant,  his  deed 
was  thereby  coutirmed.  The  court  said:  "It  was  very  properly  conceded  in 
the  argument  that  acquiescence  for  such  a  period  of  time  would  have  been 
amply  sufficient  to   make  out  a  case  of   implied  contirmation  if   there  had 


676  Craig  v.  Van  Berber.  [Missouri, 

been  no  insuperable  obstacle  in  the  way  of  his  avoiding  the  deed  during  the 
life  of  his  mother  ";  yet  it  was  held  that  the  infant  might  have  instituted  an 
action  to  avoid  the  deed  of  his  interest  in  remainder  as  soon  as  he  at- 
tained his  majority,  notwithstanding  he  had  no  right  to  the  possession  of 
such  interest  until  tlie  death  of  the  life  tenant,  and  hence  there  was  no  such 
obstacle. 

What  is  a  reasonable  time,  under  this  view,  depends  upon  the  circum- 
stances of  the  case,  and,  at  all  events,  cannot  exceed  the  period  prescribed 
by  the  statute  of  limitations  within  which  an  action  must  be  brought  to  re- 
cover the  land.  "  What  constitutes  the  reasonable  time,"  says  Morris,  C, 
in  Sims  v.  Bardoner,  86  Ind.  87,  91,  44  Am.  Rep.  263,  266,  "within  which  a 
person  who  has  executed  a  deed  during  his  infancy  shall  disaffirm  it  depends 
upon  the  particular  circumstances  of  each  case.  The  right  must  be  exercised 
before  the  statute  of  limitations  has  become  a  bar  to  an  action  to  recover  the 
land  conveyed,  and  it  may  be,  under  the  circumstances  of  the  particular 
case,  that  it  should  be  exercised  within  a  shorter  period."  Again,  says 
Quinan,  C,  in  Bingham  v.  Barley,  55  Tex.  281,  288,  40  Am.  Rep.  801,  805, 
"  What  is  a  reasonable  time  is  such  a  period  as,  in  view  of  the  attending 
facts,  would  rebut  any  presumption  of  an  intended  disaffirmance.  The  si- 
lence or  non-claim  of  the  minor  for  a  considerable  length  of  time,  though  less 
than  the  period  of  limitation  for  the  recovery  of  lands,  may  as  effectually 
prove  his  affirmance  or  ratification,  in  connection  with  the  circumstances 
of  the  case,  as  his  express  acts  or  declarations  to  that  effect." 

In  Illinois,  a  statute  provides  that  a  person  who  continues  in  the  actual 
possession  of  lands  or  tenements  under  claim  and  color  of  title,  made  in 
good  faith,  for  seven  years,  paying  the  taxes  thereon,  shall  be  the  legal 
owner  thereof,  provided  that  when  an  adverse  title  ahall  be  held  by  an  in- 
fant, he  shall  commence  an  action  to  recover  such  lands  or  tenements  within 
three  years  after  the  disability  shall  cease  to  exist.  Under  this  statute  it  is 
held  that  the  limit  of  reasonable  time  within  whicli  an  infant  must  disaffirm 
his  deed  after  reaching  majority  is  tliree  years:  Cole  v.  Pennoyer,  14  111. 
158;  Blankenshi'p  v.  Stout,  25  111.  132;  llUnopi  Land  and  Loan  Co.  v.  Bonner, 
75  111.  315,  322;  Kcil  v.  Healey,  84  III.  104;  25  Am.  Rep.  434;  Tunison  v. 
Chamhlhi,  88  111.  378;  and  it  is  held  that  the  heirs  of  the  infant  grantor  are 
to  disaffirm  within  the  same  time  that  the  infant  might  himself,  if  living: 
Illinois  Land  and  Loan  Co.  v.  Bonner,  75  111.  315. 

It  is  sometimes  held  that  the  question  as  to  what  is  a  reasonable  time  is 
one  of  fact  for  the  jury:  Wiley  v.  Wilson,  77  Ind.  596;  Stringer  v.  Northwest- 
ern Mut.  L.  Ins.  Co.,  82  Ind.  100;  Scott  v.  Buchanan,  11  Humph.  468;  but 
perhaps  the  better  view  is,  that  the  question  may  be  either  for  the  court  or 
for  the  jury:  Qoodnow  v.  Empire  Lumber  Co.,  31  Minn.  468,  472;  47  Am. 
Rep.  798,  801;  compare  O'Brien  v.  Gaslin,  20  Neb.  347;  Ward  v.  Laverty, 
19  Neb.  429;  and  see  the  Iowa  cases  cited  under  the  last  preceding  head.  It 
is  held  in  Iowa  that  an  unreasonable  delay  is  not  excused  by  the  fact  that  the 
infant  was  fraudulently  induced  to  execute  the  deed  under  the  belief  tliat  she 
was  simply  executing  an  instrument  authorizing  the  sale  of  the  land,  and 
that  she  proceeded  to  disaffirm  the  deed  as  soon  as  she  was  informed  of  its 
existence,  she  being  chargeable  with  negligence  in  making  no  effort  to  inform 
herself:  Weaver  v.  Carpenter,  42  Iowa,  343;  nor  by  the  fact  that  the  infant 
grantor  was  informed  by  persons,  not  qualified  to  give  legal  advice,  that  she 
could  not  disaffirm  until  her  infant  brother,  who  united  with  her  in  the  deed, 
became  of  age:  Green  v.  Wilding,  59  Iowa,  679;  44  Am.  Rep.  696.  And  it 
is  held  in  Illinois  that  mere  forgetfuluess  of  having  made  a  deed,  for  twelve 


April,  1890.]  Craig  v.  Van  Bebbeb.  677 

years  after  attaining  majority,  furnished  no  excuse  for  the  delay  in  disafSrm- 
ing  the  deed  made  during  minority:  Tunhon  v.  Chamhlin,  88  111.  378;  and 
that  the  marriage  of  an  infant  shortly  after  majority  did  not  extend  the  time 
for  avoiding  her  deed:  Kdl  v,  Healey,  84  111.  104;  25  Am.  Rep.  434.  And 
in  Long  v,  Williams,  74  Ind.  115,  it  was  held  that  the  possession  of  real  estate 
by  a  widow,  under  right  of  dower,  was  no  excuse  for  the  failure  of  a  minor 
heir,  to  whom  the  fee  belonged,  to  disaffirm  a  deed  made  thereof  within  a 
reasonable  time  after  arriving  at  full  age. 

According  to  another  line  of  cases,  the  mere  silent  acquiescence  of  an  infant 
grantor,  after  coming  of  age,  for  any  period  of  time  less  than  that  prescribed 
by  the  statute  of  limitations  for  a  recovery  of  the  land  in  the  a<lverse  pos- 
session of  another,  will  not  bar  his  right  to  avoid  his  deed,  and  consequently 
will  not  amount  to  a  ratification:  Tucker  v.  Morelaml,  10  Pet.  59,  76;  1  Am. 
Lead.  Cas.  *224,  *233;  Irvine  v.  Irvine,  9  Wall.  617;  Sim^s  v.  Ererhardt,  102 
U.  S.  300;  Wdls  V.  Seixas,  24  Fed.  Rep.  82;  Eureka  Company  v.  Edwards, 
71  Ala.  248;  McCarthy  v.  Nicrosi,  72  Ala.  3.32;  47  Am.  Rep.  418,  420; 
Kountz  V.  Dav'is,  34  Ark.  590;  Stull  v.  HarrU,  51  Ark.  294;  Hoffert  v.  Miller, 
86  Ky.  572;  Boody  v.  AIcKenney,  23  Me.  517,  523;  Daris  v.  Dudley,  70  Me. 
286;  35  Am.  Rep.  318;  Prout  v.  Wiley,  28  Mich.  164;  Wallace  v.  Latham, 
62  Miss.  291;  Allen  v.  Poole,  54  Miss.  323,  330;  Peterson  v.  Laik,  24  Mo. 
641,  544;  69  Am.  Dec.  441;  H^dh  v.  Carondelet  Marine  Ky  etc.  Co.,  56  Mo. 
202;  Thomas  \.  Pullis,  56  Mo.  211,  219;  Jackson  ex  dem.  Wallace  v.  Carpenter, 
11  Johns.  539;  Voorhiesv.  Voorhies,  24  Barb.  150,  153;  Green  v.  Green,  69  N.  Y. 
653;  25  Am.  Rep.  233;  Den  ex  dem.  Hoyle  v.  Stowe,  2  Dev.  &  B.  320,  327; 
Drake's  Lessee  v.  Pamsay,  5  Ohio,  251;  HiKjhes  v.  Watson,  10  Ohio,  127,  134; 
Cresinger  v.  Welch's  Lessee,  15  Ohio,  156;  45  Am.  Dec.  565;  Ui-han  v.  Grimes, 
2  Grant  Cas.  96;  Birch  v.  Linton,  78  Va.  584;  49  Am.  Rep.  381;  Gillespie  v. 
Bailey,  12  W.  Va.  70;  29  Am.  Rep.  445;  and  see  and  compare  Scltaffer  v. 
Lavretta,  57  Ala.  14;  Bozeman  v.  Browning,  31  Ark.  364;  Bagley  v.  Fletcher, 
44  Ark.  153;  Petty  v.  Roberts,  7  Bush,  410;  Brantley  v.  Wolf,  60  Miss.  420; 
Jones  V.Butler,  30  Barb.  641;  ii'ilson  v.  Branch,  71  Va.  65,  71,  72;  46  Am. 
Rep.  709,  712,  713.  Although  it  is  conceded  that  lapse  of  time,  taken  in 
connection  with  other  circumstances,  as  retention  of  the  consideration  by 
the  grantor  after  coming  of  age,  standing  by  and  seeing  improvements  made 
upon  the  land,  and  the  like,  may  amount  to  a  ratirication  or  estop  the  gran- 
tor from  avoiding;  the  deed:  Irvine  v.  Irvine,  9  Wall.  617,  627;  Davis  v.  Dud- 
ley, 70  Me.  236;  35  Am.  Rep.  318;  Prout  v.  Wiley,  28  Mich.  164;  Wallace  v. 
Latham,  52  Miss.  291;  Allen  v.  Poole,  54  Miss.  323,  330;  T/iomas  v.  Pullis, 
66  Mo.  211,  219;  Drake's  Lessee  v.  Ramsay,  5  Ohio,  251,  254;  Cresinger  v. 
Welch's  Lessee,  15  Ohio,  156;  45  Am.  Dec.  565;  Birch  v.  Linton,  78  Va.  584; 
49  Am.  Rep.  381;  Gillespie  v.  Bailey,  12  W.  Va.  70;  29  Am.  Rep.  445;  com- 
pare You.te  V.  Norcoms,  12  Mo.  549,  563;  51  Am.  Dec.  175.  Under  this 
principal  rule  it  will  be  observed  that  the  mere  lapse  of  time  raises  a  ques- 
tion, not  of  ratification,  but  of  the  statute  of  limitations.  It  follows,  then, 
that  although  a  time  exceeding  the  statutory  period  has  expired  since  the 
infant  grantor  became  of  age,  yet  if  possession  be  not  held  under  the  deed 
for  a  sufficient  length  of  time  to  constitute  a  bar,  no  obstacle  exi.sts,  in  the 
absence  of  acts  or  conduct  on  the  part  of  the  grantor  creating  an  affirmance 
or  estoppel,  to  his  disregarding  his  deed  and  asserting  a  claim  to  the  land: 
Oillcspie  V.  Bailey,  12  W.  Va.  70;  29  Am.  Rep.  445. 

The  reasons  of  these  two  opposing  rules  as  to  the  eflfect  of  a  lapse  of  time 
after  tlie  infant  becomes  of  age  remain  to  be  examined.  Concerning  the 
first  rule,  which  seems  to  be  founded  upon  the  dictum  of  Dallas,  J.,  in  Holmes 


678  Craig  v.  Van  Bebber.  [Missouri, 

V.  Blogg,  8  Taunt.  35,  quoted  under  the  preceding  head,  it  is  said  by  Chief 
Justice  Prentiss,  in  B'uje.low  v.  Kinney,  3  Vt.  353,  359,  21  Am.  Dec.  589,  592: 
"A  deed  executed  and  delivered  by  an  infant,  conveying  land,  remains  good 
and  valid  until  it  is  avoided  by  him;  and  as  he  alone  has  the  power  of  avoid- 
ing the  deed  atid  rescinding  the  contract,  he  is  bound,  in  reason  and  justice, 
after  he  comes  of  age,  and  is  competent  to  exercise  a  discretion  upon  the 
subject,  to  make  his  election,  and  give  notice  of  his  intention.  He  ought 
not  to  be  allowed  to  leave  the  grantee,  upon  whom  the  contract  is  binding, 
in  a  state  of  suspense  and  uncertainty;  and  unless  he  makes  known  his  de- 
termination in  a  reasonable  time,  it  is  just  that  the  contract  should  become 
absolute  against  him";  and  again,  by  Gilfillan,  C.  J.,  in  Goodnow  v.  Empire 
Lumber  Co.,  31  Minn.  468,  471,  47  Am.  Rep.  798,  801:  "Tlie  right  of  a 
minor  to  disaffirm,  on  coming  of  age,  like  the  right  to  disaffirm  in  any  otlier 
case,  should  be  exercised  with  some  regard  to  the  rights  of  others,  —  with 
as  much  regard  to  tliose  rights  as  is  fairly  consistent  with  due  pro- 
tection to  the  interests  of  the  minor.  In  every  other  case  of  a  right  to  dis- 
affirm, the  party  holding  it  is  required,  out  of  regard  to  the  rights  of  those 
who  may  be  affected  by  its  exercise,  to  act  upon  it  within  a  reasonable  time. 
There  is  no  reason  for  allowing  greater  latitude  where  the  right  exists  be- 
cause of  infancy  at  the  time  of  making  the  contract.  A  reasonable  time 
after  majority  within  which  to  act  is  all  that  is  essential  to  the  infant's  pro- 
tection." 

We  may  observe  that  this  reasoning  applies  as  well  to  any  other  contract 
which  an  infant  may  make  as  it  does  to  his  deed  of  conveyance;  and  there- 
fore it  would  require,  if  logically  followed  out,  that  an  infant,  after  coming 
of  age,  should  repudiate,  within  a  reasonable  time,  a  sale  or  assignment  of 
personal  property,  and  even  a  promissory  note,  made  by  him  during  his  in- 
fancy. This,  however,  is  not  the  case.  And  the  only  sound  reason  why  an 
infant  is  required  to  disaffirm  his  contract  in  any  case  within  a  reasonable 
time  after  arriving  at  full  age  is,  that  a  ratification  by  the  retention  of  the 
consideration  may  be  inferred  against  him.  No  such  inference  can  ordina- 
rily be  drawn  where  he  sells  and  conveys  his  property,  receiving,  as  he  would 
usually  do,  a  return  in  money.  When  it  is  said  that  the  grantee  should  not 
be  left  in  a  state  of  suspense  and  uncertainty  as  to  whether  the  grantor  will 
avoid  the  deed  or  not,  it  may  be  replied  that  the  grantee  should  not  have 
dealt  with  an  infant.  We  think  that  this  line  of  cases  does  not  give  suffi- 
cient weight  to  the  fact  that  although  the  infant's  deed  is  good  until  avoided, 
it  is  nevertheless  subject  to  an  infirmity  which,  outside  of  the  statute  of  lim- 
itations, only  a  ratification  or  an  estoppel  can  cure;  and  it  cannot  be  claimed 
that  mere  silence  or  acquiescence  will  amount  to  either.  Furthermore,  Chief 
Justice  Gilfillan  is  not  quite  correct  when  he  says  that  in  every  other  case 
of  a  right  to  disaffirm,  the  party  holding  the  right  is  required  to  disaffirm 
within  a  reasonable  time.  The  case  of  a  person  non  compos  stands  on  the 
some  footing  as  the  case  of  an  infant;  and  a  personal  disability  of  this  sort  is 
entirely  difl'erent  from  an  infirmity,  such  as  fraud,  in  the  contract  merely. 
We  think,  therefore,  that  the  second  rule  is  supported  by  the  better  reason, 
as  it  certainly  is  by  the  weight  of  authority.  It  is  not,  however,  to  be  sus- 
tained, as  suggested  in  some  of  the  cases,  for  example,  Boody  v.  McKenney,  23 
Me.  517,  52.S,  because  the  grantor,  by  his  silent  acquiescence,  "occasions  no 
injury  to  other  persons,  and  secures  no  benefits  or  new  rights  to  himself";  for 
his  failure  to  disaffirm  may,  and  perhaps  often  will,  operate  as  an  injury,  but 
because  mere  acquiescence  does  not  amount  to  either  an  affirmance  or  aa 
estoppeL 


April,  1890.]  Craig  v.  Van  Bebbeb.  679 

There  is,  of  course,  in  any  view,  as  already  seen,  a  distinction,  as  to  dis- 
aflSrmance,  between  the  case  where  an  infant  conveys  his  lands,  and  where 
lands  are  conveyed  to  him;  and  to  say,  as  was  said  in  Hastings  v.  Dollarhide, 
2A  Cal.  195,  216,  that  "on  princijjle,  we  can  see  no  distinction  between  the 
case  of  an  infant  grantor  and  the  case  of  an  infant  grantee  justifying  a  dis- 
tinction between  them.  If  the  infant,  on  attaining  majority,  is  bound  by 
the  rule  of  diligence  in  the  one  relation,  then  he  must  be  in  the  other,"  —  ia 
to  confess  one's  self  as  being  unable  to  appreciate  clear  and  sound  legal  dif- 
frences:  See  supra,  the  preceding  title. 

Disaffirmance  of  Deeds  of  Infant  Femes  Covert  after  Reaching 
Full  Age.  —  The  question  just  considered  of  the  obligation  of  a  grantor  to 
disaffirm  a  deed  of  conveyance  executed  during  infancy  within  a  reasonable 
time  after  reaching  full  age,  may  be  complicated  by  the  fact  that  the  grantor 
is  laboring  under  the  disability  of  coverture  as  well  as  that  of  infancy.  It  ia 
the  settled  rule,  wherever  coverture  at  the  time  a  cause  of  action  accrues  is 
a  disability,  so  that  the  feme  covert  is  not  required  to  sue,  although  she  may 
be  pernutted  to  sue,  and  so  that  the  statute  of  limitations  will  not  run  against 
her,  that  an  infant /emc  covert  who  executes  a  deed  of  her  lands  according  to 
the  statutory  requirements  will  not  be  precluded  from  disalBrming  the  deed 
by  her  mere  omission  for  an}'  length  of  time  to  disaffirm  it,  after  she  attains 
her  majority,  while  her  coverture  continues.  A  fortiori  would  she  not  be 
barred  of  her  right  to  disaffirm  the  deed  by  any  mere  lapse  of  time  during 
the  existence  of  the  coverture,  if  the  husband,  who  united  in  the  deed,  ac- 
quired by  virtue  of  the  marriage  an  estate  by  the  curtesy  in  the  wife's  lands, 
or  at  all  events,  a  right  to  take  their  rents  and  profits  during  his  lifetime; 
for  the  deed  would  convey  the  husband's  interest,  and  hence  the  grantee 
would  have  a  right  to  the  possession  and  profits  of  the  lands  while  that  in- 
terest continued,  or  in  other  words,  during  the  coverture,  and  the  wife 
would  consequently  be  powerless  to  disaffirm  the  deed  during  that  time,  or, 
at  least,  any  disaffirmance  would  be  a  vain  act:  See  Sims  v.  Everliardt,  102 
U.  S.  800;  Miles  v.  Linjerman,  24  Intl.  385;  Stringer  v.  Northwestern  Mut.  L. 
Im.  Co.,  82  Ind.  100,  108;  Sims  v.  Bardoner,  86  Ind.  87;  44  Am.  Rep.  263; 
Temple  v.  Hawley,  1  Sand.  Ch.  153;  Mcllvaine  v.  Kadel,  30  How,  Pr.  193;  3 
Rob.  (N.  Y.)429;  Scott  v.  Buchanan,  11  Humph.  468;  Matherson  v.  Davis^ 
2  Cold.  443,  451;  Youse  v.  Korcoms,  12  Mo.  549,  563;  51  Am.  Dec.  175;  Bed- 
inger  V.  Wharton,  27  Gratt.  857;  H'iUon  v.  Branch,  11  Va.  65;  46  Am.  Rep. 
709;  Darraugh  v.  Blachford,  84  Va.  509;  Stull  v.  Harrl-<,  51  Ark.  294;  Eppa 
V.  Flowers,  101  N.  C.  158;  and  see  Vaughan  v.  Parr,  20  Ark.  600  (sale  of  an 
interest  in  remainder  in  a  slave);  Mngee  v.  Wehh,  18  Cal.  155  (execution  of 
a  note  and  mortgage);  compare  Craig  v.  Van  Behher,  100  Mo.  584,  — the  prin- 
cifial  case. 

It  was,  however,  asserted  in  Scranton  v.  Stewart,  52  Ind.  68,  92,  that  an 
infant /eme  corert  is  required  to  disaffirm  a  deed  of  her  lands  by  some  such 
act  as  notice  within  a  reasonable  time  after  coming  of  age,  notwithstanding 
her  coverture,  and  notwithstanding  coverture  at  the  time  a  cause  of  action 
accrues  prevents  the  running  of  the  statute  of  limitations,  so  that  while  she 
continued  married  she  would  not  be  required  to  bring  an  action  concerning 
the  property;  tiie  court  saying  that  there  was  a  "  well-defined  distinction 
between  laying  the  foundation  to  bring  an  action,  and  the  actual  bringing  of 
the  action";  but  this  dictum  was  disapproved  in  Sims  v.  Evcrhnrdt,  102  U.  S. 
300,  307,  a  case  which  arose  from  Indiana,  and  by  a  number  of  Indiana  cases: 
Stringer  v.  Northwestern  Mut.  L.  Ins.  Co.,  82  Ind.  100,  108;  Sims  v.  Bardoner, 
86  Ind.  87,  96;  44  Am.  Rep.  263,  270;  Richardson  v.  Pate,  93  Ind.  423,  426; 


680  Craig  v.  Van  Bebber.  [Missouri, 

47  Am.  Rep.  374,  376.  The  case,  therefore,  is  not  law  upon  this  point;  and 
it  is  difBcult  to  see  how  any  such  view  could  be  sustained,  where  the  com- 
mon-law rights  of  the  husband  in  the  lands  of  his  wife  exist,  and  he  joins  in 
the  conveyance,  since  it  is  very  questionable  whether  she  could  disaffirm  by 
any  act,  and  even  if  she  could,  she  could  not,  of  course,  recover  possession 
of  the  land  as  long  as  the  coverture  lasted,  and  the  disaffirmance  would  be 
in  reality  an  idle  act:  See  Sims  v.  Ererhardt,  102  U.  S.  300,  307.  Never- 
theless it  has  been  held,  under  such  circumstances,  that  while  she  would  not 
be  obliged  to  disaffirm  during  her  coverture,  she  might  do  so  if  she  pleased, 
and  maintain  an  action  to  quiet  her  title  to  the  land,  although  she  would  not 
be  entitled  to  its  possession:  Sims  v.  Smith,  86  Ind.  577;  SimJi  v.  Bardoner, 
86  Ind.  87;  44  Am.  Rep.  263;  and  see  Ihley  v.  Padgett,  27  S.  C.  300.  If 
coverture  is  a  disability  which  will  prevent  the  running  of  the  statute  of 
limitations,  but  if,  notwithstanding,  a  married  woman  is  permitted  to  sue 
concerning  her  lands  independently  of  her  husband,  and  the  common  law 
concerning  the  marital  rights  of  the  husband  does  not  exist,  then  it  would 
seem  she  might  disaffirm  her  deed,  executed  while  an  infant,  during  the 
existence  of  the  coverture,  although  she  would  not  be  obliged  to  do  so:  See 
Buchanan  v.  Btthbard,  96  Ind.  1;  119  Ind.  187,  193;  and  see  Mcllvaine  v. 
Kadel,  30  How.  Pr.  193;  3  Rob.  (N.  Y.)  429. 

If  it  be  true  that  an  infant  feme  covert  will  not  be  prevented  from  dis- 
affirming a  deed  of  conveyance  of  her  own  lands  by  any  mere  lapse  of  time 
while  the  disability  of  coverture  lasts,  we  should  say  that  it  would  certainly 
be  true  that  the  lapse  of  time  would  not  bar  her  right  to  disaffirm  a  deed 
by  which  she  released  her  dower  in  the  lands  of  her  husband,  since  she  would 
have  no  right  to  avoid  her  release  by  claiming  dower  during  the  lifetime  of 
her  husband:  McMorris  v.  Webb,  17  S.  C.  558;  43  Am.  Rep.  629;  and  see 
Sanfordv.  McLean,  3  Paige,  117,  122;  23  Am.  Dec.  773,  775;  Richardson  v. 
Pate,  93  Ind.  423;  47  Am.  Rep.  374. 

It  was  held,  in  a  state  where  curtesy  exists,  that  where  an  infant  feme 
covert  and  her  husband  executed  a  deed  of  her  lands,  and  the  wife  died  after 
.coming  of  age,  leaving  her  husband  and  two  minor  children  surviving  her, 
as  the  husband  could  not  sue,  since  the  deed  was  binding  upon  him  as  to  his 
estate  by  the  curtesy,  and  as  the  wife  could  not  sue  alone,  the  statute  of 
limitations  never  began  to  run  against  the  wife  during  her  lifetime,  and 
consequently  did  not  begin  to  run  against  her  children,  who  continued  to  be 
infants,  so  as  to  bar  their  claim  to  the  land;  and  besides,  since  upon  the 
death  of  the  wife  the  grantee  became  invested  with  an  estate  for  the  life  of 
the  husband,  the  statute  would  not  begin  to  run  against  the  heirs  of  the  wife 
until  the  termination  of  the  life  estate,  as  well  as  the  removal  of  their  dis- 
abilities: Matherson  v.  Davis,  2  Cold.  443,  449,  450;  and  see,  to  the  same  efifect, 
Harris  v.  Ross,  86  Mo.  89;  56  Am.  Rep.  411. 

Lapse  of  time,  taken  in  connection  with  other  circumstances,  may  possibly 
preclude  a.  feme  covert  from  repudiating  a  deed  of  her  lands,  executed  during 
infancy.  But  where  a  female  infant,  residing  in  one  state,  executed  there  a 
deed  of  lands  in  another  state,  and  afterwards  married,  but  it  did  not  appear 
whether  before  or  after  her  majority,  nor  where  she  and  her  husband  resided 
after  the  execution  of  the  deed,  nor  that  the  husband  acquiesced  in  the  deed 
after  he  knew  of  it,  it  was  held  that  the  lapse  of  about  five  years  after  the 
wife's  majority,  without  any  attempt  to  disaffirm  the  deed,  did  not,  under 
the  circumstances,  prevent  the  husband  and  wife  from  disaffirming  it:  Doe 
ex  dem.  Moore  v.  Ahernathy,  7  Blackf.  442;  and  that  the  silence  and  inaction 
of  an  infant  feme  covert  for  thirty  years  after  the  execution  of  a  deed  of  her 


April,  1890.]  Craig  v.  Van  Bebber.  681 

lands  by  herself  and  husband,  and  for  more  than  twenty-six  years  after  she 
attained  her  majority,  coupled  with  the  fact  that  she  lived  in  the  city  where 
the  lands  were  situated,  and  was  probably  aware  that  valuable  improve- 
ments were  being  made,  did  not  amount  to  an  affirmance  of  the  deed:  Youse 
V.  Norcoms,  12  Mo.  549,  5(53;  51  Am.  Dec.  175;  and  again,  that  a  disaffirm- 
ance by  an  infant /ewje  covert  of  a  deed  of  her  lands,  executed  by  herself  and 
husband,  thirty-three  years  after  she  attained  her  majority,  was  within  a 
reasonable  time,  where  she  continued  under  coverture,  and  where  the  hus- 
band had  received  the  entire  consideration  of  the  lands,  and  she  was  under 
his  control,  and  he  refused  to  permit  her  to  disaffirm  the  deed  until  shortly 
before  the  commencement  of  the  suit  in  question  to  quiet  her  title  against 
the  heir  of  her  grantee  in  possession:  Sims  v.  Bardoner,  86  Ind.  87;  44  Am. 
Rep.  263;  also,  that  an  infant  feme  covert,  who  unites  with  her  husband  in  a 
conveyance  of  his  lauds,  was  not  estopped  from  disaffirming  the  deed  after 
her  husband's  death,  and  claiming  her  interest  in  the  lands  as  widow,  by  the 
fact  that  the  grantee,  or  his  successors,  have,  with  her  knowledge,  made 
valuable  improvements  upon  the  lands,  if  such  improvements  were  made 
prior  to  her  husband's  death:  Richanhon  v.  Pate,  93  Ind.  423,  428;  and  it  is 
further  held,  in  BiicJuman  v.  Hubbard,  96  Ind.  1,  that  a  married  woman 
was  not  estopped  from  disaffirming,  during  coverture,  a  deed  of  her  own 
lands,  executed  during  infancy,  from  the  fact  that  the  grantee,  with  her 
knowledge,  after  reaching  majority,  made  improvements  upon  the  lands;  and 
also  that  the  fact  that  she  united  with  her  husband  in  enjoying  or  exercising 
dominion  over  property  received  by  the  husband  as  part  of  the  considera- 
tion did  not  preclude  her  from  asserting  the  disability  of  infancy  against  the 
grantee,  or  his  successors.  But,  on  the  other  hand,  where  a  female  infant 
joined  in  a  conveyance  of  her  husband's  lands,  and  for  thirteen  years  after 
she  attained  her  majority,  and  her  husband's  death,  lived  in  the  vicinity  of 
the  lands,  which  were  being  greatly  improved  by  the  grantee,  it  was  held 
that  she  was  thereby  precluded  from  avoiding  her  deed,  and  claiming  dower 
in  the  lands:  Hart/nan  v.  Kendall,  4  Ind.  403,  404. 

The  time  within  which  the  grantor  must  disaffirm  her  deed  executed  during 
infancy,  after  the  disability  of  coverture  is  removed,  we  should  say,  in  accord- 
ance with  our  views  expressed  under  the  last  preceding  head,  would  properly 
be  fixed  by  the  statute  of  limitations,  which  begins  to  run  at  the  removal  of 
the  disability,  and  that  her  right  to  disaffirm  would  not  be  barred  until  barred 
by  the  statute.  Some  of  the  foregoing  cases  seem,  however,  to  hold  that  she 
must  disaffirm  within  a  reasonable  time  after  becoming  discovert.  The  ques- 
tion does  not  appear  to  be  distinctly  discussed  in  any  case. 

CONSFQUENCES  OF  DISAFFIRMANCE  —  CONTRACT  IS  RENDERED  VOID  A B  IN- 
ITIO.—  The  disaffirmance  of  a  contract  by  a  minor  annuls  or  renders  it  void 
on  both  sides  ab  initio:  Boijden  v.  Boijden,  9  Met.  519,  521;  Mustard  v. 
Wohlford's  Heirs,  15  Gratt.  329;  76  Am.  Dec.  209;  French  v.  McAndrew,  61 
Miss.  187;  Schrock  v.  Crowl,  83  Ind.  243;  Rice  v.  Boyer,  108  Ind.  472;  58  Am. 
Rep.  53,  55;  Hoyt  v.  Wilkinson,  57  Vt.  404.  Therefore,  if  an  infant  sells  a 
tract  of  laud  and  executes  a  title  bond,  and  on  coming  of  age  sells  the  land 
to  another  person,  and  executes  to  him  a  title  bond,  the  effect  of  the  disaf- 
firmance of  the  first  contract  by  the  second  is  to  extinguish  from  the  begin- 
ning any  interest  at  law  or  in  equity  which  the  first  vendee  may  have  acquired 
under  the  contract,  and  hence  he  gets  no  priority  over  the  second  vendee  by 
obtaining  a  deed  of  the  land  from  the  vendor  after  such  disaffirmance,  espe- 
cially if  the  first  vendee  had  not  paid  full  value,  and  had  taken  the  deed  with 
notice  of  the  second  contract:  Mustard  v.  Wohl/ord's  Heirs,  15  Gratt.  329;  76 


682  Craig  v.  Van  Bebber.  [Missouri, 

Am.  Dec.  209;  and  if  a  grantor  disaffirms  a  deed  executed  during  infancy, 
the  conveyance  being  rendered  void  ab  initio,  he  is  entitled  to  charge  the 
grantee  for  rents  during  the  entire  time  that  he  occupied  the  land,  claiming 
under  the  deed:  French  v.  McAndrew,    61  Miss.  187. 

Infant's  Rights,  in  General,  on  Disaffirmance  of  Contract. —  Where 
the  contract  of  an  infant  effects  a  transfer  of  his  property,  his  rights  on  dis- 
affirming the  contract  are  clear.  If  his  real  estate  is  sold  and  possession 
delivered,  the  title  is  revested  in  him  by  the  disaffirmance,  and  he  can,  with- 
out any  doubt,  recover  the  land,  if  it  is  still  in  the  hands  of  the  party  who 
contracted  with  him,  and  if  it  has  been  transferred,  even  to  a  bona  fide  pur- 
chaser for  value,  he  may,  as  above  seen,  still  recover  it.  If  he  sells  his  real 
property,  but  has  retained  possession,  no  affirmative  action  on  his  part  is,  of 
course,  required.  If  he  sells  and  delivers  his  personal  property,  the  title  is 
likewise  revested  in  him  on  disaffirming  the  contract,  and  he  is  entitled  to 
the  property  in  whosesoever  hands  it  may  be,  and  may  retake  the  same,  and 
may  maintain  an  action  of  replevin  or  trover  for  it:  See  Skipman  v.  Norton, 
17  Conn.  481;  Bailey  v.  Bamberger,  11  B.  Mou.  113;  Towle  v.  Dresser,  73 
Me.  252;  Bloomin</dale  v.  Chitteuden,  74  Mich.  698.  And  therefore  no  action 
of  trespass  can  be  sustained  against  him  for  taking  the  property  into  his  pos- 
Bession:  Skipman  v.  Horton,  17  Conn.  481.  We  doubt,  also,  if  any  demand 
would,  on  principle,  ever  be  a  necessary  prerequisite  to  maintaining  replevin 
or  trover  for  the  property,  the  contract  being  rendered  void  ab  initio  by  the 
rescission:  But  see  contra,  Stafford  v.  Roof,  9  Cow.  626;  Cogky  v.  Cmhman, 
16  Minn.  397;  Betts  v.  Can-oil,  6  Mo.  App.  518.  Of  course,  the  repudiation 
of  a  sale  of  personal  property  will  not  vest  in  the  infant  a  title  to  goods  which 
he  never  owned,  but  which  were  purchased  by  the  vendee  from  the  avails  of 
the  property  sold  to  him  by  the  infant:  Skipman  v.  Horton,  17  Conn.  481. 
The  foregoing  propositions  suppose  that  the  infant  has  not,  on  or  after  the 
disaffirmance,  transferred  the  property,  real  or  personal,  to  some  other  person. 
If  such  a  transfer  is  made,  we  should  say,  however,  that  the  transferee  stands 
in  the  shoes  of  the  infant,  so  far  as  a  recovery  of  the  property  may  be  con- 
cerned. 

An  infant  who  has  mortgaged  his  crops  to  secure  advances  cannot  be  in- 
dicted for  afterwards  disposing  of  the  crops,  since  the  contract  of  mortgage, 
when  disaffirmed  by  the  subsequent  disposition,  became  absolutely  void,  and 
the  infant  could  not  be  held  amenable  to  the  criminal  law  for  the  violation 
of  a  void  contract:  State  v.  Howard,  88  N.  C.  650.  In  McCarthy  v.  Nicrosi, 
72  Ala.  332,  47  Am.  Rep.  418,  it  was  held  that  where  a  sewer  was  con- 
structed through  the  defendant's  lot,  at  the  joint  expense  of  himself  and 
plaintiff,  who  owned  the  adjoining  upper  lot,  under  a  written  agreement  en- 
tered into  while  defendant  was  an  infant,  the  latter's  disaffirmance  of  the 
contract  operated  as  a  revocation  of  the  easement  created  by  it,  and  the 
plaintiff's  continued  use  of  the  sewer  thereafter  would  be  a  nuisance,  which 
the  defendant  might  abate  by  obstructing  the  sewer. 

If  an  infant  purchases  a  chattel,  and  gives  his  promissory  note  for  the  price, 
his  disaffirmance  of  the  contract  operates  to  divest  the  payee  of  his  title  to 
the  note,  and  to  reinvest  him  with  the  title  to  the  chattel,  so  that  no  action 
can  be  maintained  on  the  note  against  the  infant,  either  by  the  payee  or  his 
subsequent  transferee:  Hoyt  v.  Wilkinson,  57  Vt.  404.  An  infant  indorser  of 
a  note  may  disaffirm  his  indorsement  and  intercept  payment  to  the  indorsee: 
Hastings  v.  Dollarkide,  24  Cal.  195;  and  may  even  disaffirm  the  transfer,  and 
recover  of  the  maker,  notwithstanding  the  maker  paid  the  paper  to  the 
transferee  before  the  infant's  disaffirmance  of  the  assignment:  Brigga  v.  Mc- 


April,  1890.]  Craig  v.  Van  Bebbeb.  683 

Cahe,  27  Ind.  327;  89  Am.  Dec.  503,  506;  contra,  Welch  v.  Welch,  103  Mass. 
562;  aud  see  supra,  "Bills  and  Notes."  And  where  the  payee  of  anon-nego- 
tiable note,  who  was  a  minor,  exchanged  it  with  a  third  person  for  a  watch, 
but  on  the  next  day  tendered  back  the  watch  and  demanded  the  note,  which 
was  refused,  and  the  maker  of  the  note,  being  informed  of  the  transaction, 
gave  a  new  note  for  the  debt,  it  was  held  that  there  could  be  no  recovery 
against  the  maker  on  the  first  note  by  a  subsequent  transferee,  since  when 
the  assignment  of  the  note  was  rescinded  by  the  minor  the  note  ceased  to  be 
the  property  of  the  assignee,  and  the  maker  had  then  the  right  to  consider 
it  as  still  the  property  of  the  minor,  and  he  became  discharged  from  liability 
thereon  when  he  gave  the  new  note  in  lieu  thereof:  Willis  v.  Twambly,  13 
Mass.  204. 

If,  also,  an  infant  makes  a  special  contract  to  labor,  on  disaffirming  the 
contract  he  may  recover  on  a  qnanlum  meruit  for  the  services  performed,  aa 
though  no  special  contract  had  been  made,  and,  furthermore,  the  damages  sus- 
tained by  the  employer  by  reason  of  the  infant's  abandoning  the  contract,  or 
otherwise  failing  to  comply  with  its  terms,  cannot  be  taken  into  considera- 
tion in  the  action  by  the  infant:  See  supra,  "  Service." 

Infant's  Right  to  Recover  back  Money  Paid  by  Him  on  Disaffirm- 
ance. —  The  right  of  an  infant  to  recover  back  money  paid  by  him  on  dis- 
affirming his  contract  is  a  question  about  which  there  has  been  a  good  deal 
of  difference  of  opinion.  The  notion  that  he  cannot  recover  seems  to  be 
founded  on  a  reported  dictum  of  Lord  Mansfield  in  Earl  of  Buckinghamshire 
V.  Drury,  2  Eden,  60,  72,  as  follows:  "If  an  infant  pays  money  with  his 
own  hand,  without  a  valuable  consideration  for  it,  he  cannot  get  it  back 
again."  This  dictum  was  approved  by  Chief  Justice  Gibbs  in  the  much- 
discussed  case  of  Holmes  v.  Blogg,  8  Taunt.  50S,  2  Moore,  552,  and  the  rule 
announced  that  an  infant  who  pays  money  on  a  valuable  consideration  could 
not  recover  the  money  back,  after  having  partially  enjoyed  the  considera- 
ation;  and  therefore  an  infant  who  took  a  lease  of  a  house,  occupied  the 
premises  for  a  time,  and  paid  the  rent,  could  not  recover  back  the  rent  so 
paid,  on  avoiding  the  lease  and  quitting  the  premises.  And  in  Wilson  v. 
Kearse,  Peake  Add,  Cas.  196,  Lord  Kenyon  held,  at  nisi  pi'ius,  that  though  aa 
infant  who  had  entered  into  a  contract  to  purchase  the  good-will  and  stock 
of  a  public  house  could  not  be  compelled  to  complete  it,  yet  he  could  not, 
on  refusing  to  go  on  with  the  contract,  maintaia  an  action  to  recover  back  a 
deposit  which  he  had  paid.  In  Corpe  v.  Overton,  10  Bing.  252,  3  Moore  &  S. 
738,  the  next  case  which  presented  the  question,  it  was  decided  that  an  in- 
fant who  agreed  to  enter  into  a  partnership  with  a  tradesman,  and  who  paid 
a  deposit  towards  the  purchase  of  an  interest  in  the  business,  which  was  to 
be  forfeited  to  the  tradesman  if  the  infant  failed  to  fulfill  the  agreement, 
might  rescind  the  agreement,  and  recover  back  the  money  so  paid  by  him. 
The  court  did  not,  in  terms,  purport  to  overrule  Ilohnes  v,  Blogg,  8  Taunt. 
503,  2  Moore,  552,  but  distinguished  it  on  the  ground  that  in  it  the  infant 
had  received  sometliing  of  value  for  the  money  he  had  paid,  and  could  not 
put  the  defenilant  in  the  same  position  as  before,  while  in  the  case  before 
the  court  the  infant  had  derived  no  benefit  from  the  transaction,  and,  besides, 
was  subjected  to  a  penalty. 

In  Ex  pirte  Taylor,  8  De  Gex,  M.  &  G.  254,  an  infant  paid,  by  means  of 
borrowed  money,  a  premium  upon  entering  into  a  partnership,  and  before  he 
became  of  age  disaffirmed  the  contract  of  partnership.  The  court  went  back 
to  Holmes  v.  Blogg,  8  Taunt.  508,  2  Moore,  552,  and  Wilson  v.  Kearse,  Peake 
Add.  Cas.  196,  aud  held  that  the  infant  could  not  have  recovered  back  the 


684  Craig  v.  Van  Bebber.  [Missouri, 

premium  had  his  partners  remained  solvent,  and  therefore  could  not  prove 
for  it  under  their  bankruptcy;  Lord  Justice  Turner  saying:  "It  is  clear  that 
an  infant  cannot  be  absolutely  bound  by  a  contract  entered  into  during  his 
minority.  He  must  have  a  right,  upon  his  attaining  his  majority,  to  elect 
whether  he  will  adopt  the  contract  or  not.  It  is,  however,  a  different  ques- 
tion whether,  if  an  infant  pays  money  on  the  footing  of  a  contract,  he  can 
afterwards  recover  it  back  ";  and  concluding  with  the  language  of  Lord  Ken- 
yon  in  Wilson  v.  Kearse,  Peake  Add.  Cas.  196:  "If  an  infant  buys  an  article 
which  is  not  a  necessary,  he  cannot  be  compelled  to  pay  for  it;  but  if  he  does 
pay  for  it  during  his  minority,  he  cannot,  on  attaining  his  majority,  recover 
the  money  back."  Finally,  in  Everett  v.  Wilkins,  29  L.  T.  846,  the  plaintiff, 
during  his  infancy,  entered  into  an  agreement  with  the  defendant  for  the 
purchase  of  a  one-half  share  in  the  defendant's  public-house  business. 
Under  the  agreement,  the  plaintiff  was  to  pay  an  installment  of  the  pur- 
chase-money at  once,  and  the  balance  at  a  future  uncertain  time.  The  de- 
fendant was  to  provide  board  and  lodging  for  the  plaintiff  and  his  wife,  the 
plaintiff  paying  therefor,  and  the  plaintiff  was  not  to  receive  any  of  the 
fruits  of  the  partnership  until  the  balance  of  the  purchase- money  was  paid. 
The  plaintiff  paid  an  installment,  and  went  with  his  wife  to  board  and  lodge 
with  the  defendant,  and  shared  in  the  management  of  the  business,  but 
afterwards,  and  before  his  majority,  rescinded  the  agreement.  It  was  held 
that  the  plaintiff  might  recover  back  the  installment  paid  under  the  agree- 
ment, less  the  amount  due  for  board  and  lodging  [necessaries].  The  case,  it 
will  be  observed,  is  the  same  in  principle  as  Gorpe  v.  Overton,  10  Bing.  252;  3 
Moore  &  S.  738.  As  to  the  right  of  an  infant,  under  the  Infants'  Relief  Act, 
1874,  37  and  38  Victoria,  chapter  62,  to  recover  back  money  paid  by  him  in 
pursuance  of  a  contract  made  void  by  the  act,  see  Vcdentini  v.  CanaU,  L.  R. 
24  Q.  B.  D.  166. 

In  this  country,  it  has  been  held,  on  the  authority  of  Holmes  v.  Blogg,  8 
Taunt.  508,  2  Moore,  552,  and  Lord  Mansfield's  dictum  in  Earl  of  Buckingkam- 
shire  V.  Drury,  2  Eden,  60,  72,  that  where  an  infant  does  work  and  pays  money 
on  account  of  the  purchase  price  of  land,  which  was  agreed  to  be  conveyed  to 
him  in  the  future,  he  could  not,  by  avoiding  the  contract,  recover  compensa- 
tion for  his  labor,  and  get  back  the  money  paid:  McCoy  v.  Huffman,  8  Cow.  84. 
But  the  case  differs  from  Holmes  v.  Blo.jg,  8  Taunt.  508,  2  Moore,  552,  in  that 
the  infant  never  had  the  possession  and  enjoyment  of  the  premises;  and  it  is 
expressly  disapproved,  and  so  far,  at  least,  as  it  denies  the  right  of  the  infant 
to  avoid  his  contract  under  which  services  were  rendered,  and  recover  the  value 
of  the  services,  is  overruled  in  Medhury  v.  Watrous,  7  Hill,  110.  See  also  Weeks 
V.  Leighton,  5  N.  H.  343;  overruled  in  Lufhin  v.  Mayall,  25  N.  H.  82.  In  sev- 
eral cases  it  has  also  been  held,  in  confirmity  with  Holmes  v.  Blogg,  8  Taunt. 
508,  2  Moore,  552,  that  where  an  infant  puts  money  into  a  partnership  busi- 
ness, or  pays  money  in  consideration  of  being  admitted  as  a  partner  in  a  bu.si- 
ness,  he  cannot,  after  remaining  a  partner  for  a  time,  recover  back  the  money 
so  paid:  Moley  v.  Brine,  120  Mass.  324;  Page  v.  Morse,  128  Mass.  99;  Adams 
v.  Beall,  67  Md.  53;  1  Am.  St.  Rep.  379;  and  see  Breed  v.  Jmld,  1  Gray,  455; 
also  see  supra,  "  Partnership  Agreements  and  Transactions."  And  in  Crum- 
mey  v.  Mills,  40  Hun,  370,  it  was  held  that  an  infant  could  not,  on  coming  of 
age,  recover  back  money  paid  and  stock  deposited  with  brokers  as  a  margin 
for  the  purchase  of  more  stock,  he  having  failed  to  keep  his  margin  good,  and 
his  stock  having  been  consequently  all  sold  out,  leaving  him  indebted  to  the 
brokers;  the  court  saying:  "No  rule  of  law  has  ever  permitted  a  minor  to 
avoid  a  contract  of  which  he  has  enjoyed  the  benefit,  and  recover  back  the 


April,  1S90.]  Craig  v.  Van  Bebbsr.  685 

consideration  paid  on  the  attainment  of  his  majority  ";  and  also  quoting  1 
Parsons  on  Contracts,  *322,  to  the  effect  that  "  if  an  infant  advances  money 
on  a  voidable  contract  which  he  afterwards  rescinds,  he  cannot  recover  this 
money  back,  because  it  is  lost  to  him  by  his  own  act,  and  the  privilege  of 
infancy  does  not  extend  so  far  as  to  restore  this  money,  unless  it  was  obtained 
from  biim  by  fraud."     But  compare  Ruchizky  v.  De  Haven,  97  Pa.  St.  202. 

On  the  other  hand,  it  is  maintained  that  where  the  minor  has  received  no 
benefit  from  the  contract  under  which  he  has  paid  money,  as  where  he  hag 
purchased  property  of  which  he  never  obtains  the  possession,  he  may,  on  re- 
pudiating the  contract,  recover  Ijack  the  money:  Robinson  v.  Weeks,  56  Me. 
102;  Shurtlef  v.  Millard,  12  R.  I.  272;  34  Am.  Rep.  G40;  the  court  saying  in  the 
first  of  these  cases:  "  There  seems  to  be  no  good  reason  why,  if  lands  conveyed 
and  goods  sold  and  delivered  may  be  reclaimed  by  the  infant,  money  paid 
fihould  not  be  ";  disapproving  Earl  of  Buckinghamshire  v.  Drury,  2  Eden,  60, 
72,  and  Holmes  v.  Blogg,  8  Taunt.  508,  2  Moore,  552,  and  explaining  the  latter 
case;  and  in  Slairtleffv.  Millard,  12  R.  I.  272,  34  Am.  Rep.  640,  it  was  decided 
that  the  vendor  was  not  entitled  to  deduct  from  the  amount  of  money  sued 
for  the  expense  of  advertising  and  selling  the  property  again,  brought  about 
by  the  plaintiff 's  rescinding  the  contract.  See  also  Ruchizky  v.  De  Haven,  97 
Pa.  St.  202,  where  money  was  deposited  by  a  minor  with  brokers  as  margins 
in  stock  speculations;  and  Holt  v.  Holt,  59  Me.  464,  the  case  of  a  gift  of  money 
by  an  infant;  but  compare  Welch  v.  Welch,  103  Mass.  562;  Brown  v.  Town  of 
Canton,  4  Lans.  409.  And  it  has  also  been  held  that  if  an  infant  purchases 
property,  he  may  recover  back  the  price  paid,  if  he  restores  or  ofi'ers  to  re- 
store the  property  to  the  vendor:  Riley  v.  Mallory,  33  Conn.  201;  Cooper  v. 
Allport,  10  Daly,  352;  McCarthy  v.  Henderson,  138  Mass.  310;  House  v.  Alex- 
ander, 105  lud.  109;  55  Am.  Rep.  189;  and  see  Price  v.  Furman,  27  Vt.  268; 
65  Am.  Dec.  194;  compare  Shirk  v.  Shultz,  113  Ind.  571;  although  a  restora- 
tion is  not  necessary  if  the  property  has  been  taken  from  him,  either  by  the 
vendor  or  by  some  tliird  person:  Whitcomb  v.  Joslyn,  51  Vt.  79;  31  Am.  Rep. 
678;  Lemmon  v.  Beeman,  45  Ohio  St.  505;  and  in  McCarthy  v.  Henderson,  138 
Mass.  310,  it  was  held  that  the  vendors  were  not  entitled  to  recoup  for  the 
use  of  the  property  while  in  the  possession  of  the  minor.  It  has  been  likewise 
decided  that  an  infant  might  avoid  an  agreement  of  partnership,  and  recover 
back  the  money  which  he  was  induced  to  invest  in  the  business,  on  restoring 
the  benefits  received  from  the  partnership:  Sparman  v.  Kei/n,  83  N.  Y.  245; 
and  in  Heath  v.  Stevens,  48  N.  H.  251,  it  was  held  that  "  An  infant,  upon  re- 
scinding an  executed  contract,  may  recover  for  what  he  has  done  or  paid 
under  it,  provided  he  restore  or  account  for  what  he  has  received  under 
the  contract ";  and  hence,  where  the  defendant  gave  the  plaintiff,  who  was 
then  an  infant,  information  respecting  bounties  paid  for  enlistment  in  New 
York,  paid  the  plaintiff's  fare  to  New  York,  and  agreed  to  pay  his  fare  back 
again  if  he  was  uot  accepted  as  a  recruit,  for  which  the  plaintiff  paid  the  de- 
fendant two  hundred  dollars  out  of  his  bounty,  the  plaintiff  might  rescind 
the  contract  and  recover  what  he  had  paid  under  it,  but  in  such  an  action  the 
money  advanced  by  the  defendant  to  the  plaintiff  should  be  allowed  the  de- 
fendant, and  it  should  be  left  to  a  jury  to  say  what  should  be  a  further  rea- 
sonable sum  for  the  defendant  to  have  on  account  of  what  he  did  and  the 
risks  he  took. 

In  regard  to  the  foregoing  cases,  it  may  be  said,  in  the  first  place,  that 
Lord  Mansfield's  dictum  in  Earl  of  Buckinghamshire  v.  Drury,  2  Eden,  60,  72, 
is  unquestionably  not  law;  and  in  the  next  place,  we  think  that  Holmes  v. 
Blogg,  8  Tauut.  508,  2  Moore,  552,  cannot  be  sustained.     We  think  it  per- 


686  Craig  v.  Van  Bebber.  [Missouri, 

fectly  clear  that  if  the  infant  has  received  no  benefit  under  the  contract,  he 
may,  on  disaffirming  it,  recover  back  any  money  which  he  may  have  paid; 
and  we  think  it  equally  clear  that  the  result  is  the  same  where  the  infant  re- 
stores or  offers  to  restore  property  obtained  by  him  by  virtue  of  the  contract 
from  the  other  contracting  party;  for,  in  the  language  of  the  court  in  Ale- 
Carthy  v.  Henderson,  138  Mass.  310,  "he  is  in  the  position  of  an  infant  who 
has  paid  money  under  a  void  contract  and  without  consideration,  and  is  enti- 
tled to  recover  it  back."  Furthermore,  we  think  that  the  infant  should  be 
permitted  to  recover  back  the  money  paid  by  him  without  restoring  or  offer- 
ing to  restore  property  received  under  the  contract  which  remains  in  his 
hands  at  the  time,  although  such  property,  because  of  the  disaffirmance  of 
the  contract,  undoubtedly  belongs  to  the  other  contracting  party,  who  may 
retake  it  if  he  can,  or  maintain  any  appropriate  action  for  it.  If  the  infant 
has  received  a  benefit  under  the  contract  of  a  nature  like  that  in  Holmes  v. 
Blogg,  8  Taunt.  508,  2  Moore,  552,  which  cannot  be  restored,  or  if  he  has  ob- 
tained property  which  he  has  consumed,  destroyed,  or  in  any  way  disposed 
of  during  his  minority,  so  that  it  no  longer  remains  in  his  hands,  we  do  not 
see  why,  on  principle,  the  infant  may  not  still  recover  back  the  money  paid. 
The  notion  that  the  opposite  contracting  party  must  be  restored  to  his  origi- 
nal condition  before  the  infant  can  recover  back  the  money  paid  is  unsound. 
We  do  not  see  any  difference  in  reason  between  the  case  where  an  infant 
parts  with  money  and  the  case  where  he  parts  with  property,  and  why  he 
should  not  be  able  to  recover  the  one  under  precisely  the  same  conditions  aa 
the  other.  Where,  however,  what  the  infant  has  received  under  the  con- 
tract has  also  been  money,  it  may  be  that,  to  avoid  circuity  of  action,  a 
deduction  of  that  sum  should  be  made  from  the  amount  of  the  infant's  re- 
covery; and  to  this  extent  we  think  the  foregoing  case  of  Heath  v.  Stevens, 
48  N.  H.  251,  is  correct. 

Adult's  Right  to  Recover  back  Consideration  from  Infant  on 
Disaffirmance. —  Since  the  disaffirmance  of  a  contract  by  an  infant  annuls 
or  renders  it  void  on  both  sides  ab  initio,  it  follows  that  the  opposite  contract- 
ing party  has  the  right  to  reclaim  any  property  transferred  to  the  infant 
under  the  contract,  and  which  may  remain  in  the  infant's  hands.  To  hold 
that  the  infant  might  repudiate  the  contract,  and  still  retain  the  property 
received  by  virtue  of  it,  would  be,  in  the  language  of  Lord  Mansfield  iu 
Zouch  v.  Parsons,  3  Burr.  1794,  to  make  the  privilege  of  infancy  not  a  shield, 
but  a  sword.  Hence  if  an  infant  disaffirms  his  purchase  of  personal  prop- 
erty, the  title  revests  in  the  vendor,  who  may  reclaim  the  property  from  the 
infant  if  it  be  still  in  his  hands,  or  may  maintain  trover  for  its  conversion, 
although,  perhaps,  he  may  have  consumed,  destroyed,  or  parted  with  the 
property  after  the  avoidance  of  the  contract:  Badger  v.  Phinney,  15  Mass. 
359;  8  Am.  Dec.  105;  Boyden  v.  Bot/dai.  9  Met.  519,  521;  Walker  v.  Davis,  1 
Gray,  506;  Strain  v.  Wrijht,  7  Ga.  568;  Fitts  v.  Hall,  9  N.  H.  441;  Heath  v. 
West,  28  N.  H.  101;  Skinner  v.  Maxwell,  66  N.  C.  45;  Carpenter  v.  Carpenter, 
45  Ind.  142;  Shirk  v.  Shultz,  113  Ind.  571;  Nichol  v.  Steger,  2  Tenn.  Ch.  328; 
affirmed  in  6  Lea,  393;  Bennett  v.  McLaughlin,  13  111.  App.  349;  or  the  prop- 
erty may  be  attached  at  the  suit  of  the  creditors  of  the  vendor:  B<tts  v. 
Carroll,  6  Mo.  App.  518.  "We  cannot  sanction  the  doctrine  contended  for," 
says  Warner,  J.,  in  Strain  v.  Wright,  7  Ga.  568,  "  that  an  infant  who  obtains 
property  by  virtue  of  a  contract  with  an  adult  may,  when  of  age,  disaffirm 
such  contract  under  the  law  made  for  his  protection,  and  then  refuse  to  re- 
store the  property  thus  obtained.  The  law,  which  was  intended,  in  the 
language  of  the   authorities,  aa  a  shield  for  the  protection  of  the  infant, 


April,  1890.]  Craig  v.  Van  Bebber.  687 

would  be  an  instrument  in  his  hands  for  ofiFensive  operations.  It  would  en- 
able him  to  act  aggressively  upon  the  rights  of  others,  instead  of  enabling 
him  to  guard  and  protect  his  own  rights." 

This  rule  also  unquestionably  applies  to  a  purchase  of  real  estate  by  an  in- 
fant which  he  afterwards  disaffirms.  And  in  case  of  a  sale  of  real  property 
by  an  infant,  and  we  may  add  that  the  same  must  be  true  of  a  sale  of  per- 
sonal property  subsequently  disaffirmed  by  him,  the  purchaser  may  likewise 
recover  the  consideration  transferred  to  the  infant,  if  the  infant  still  retains 
it:  Mmtard  v.  Wohlford's  Heirs,  15  Gratt.  3'_'9,  340;  76  Am.  Dec.  209,  214; 
and  see  Manning  v.  Johnson,  26  Ala.  446;  62  Am.  Dec.  732.  We  do  not  see 
why  this  rule  should  not  apply  equally  where  the  consideration  is  money,  aa 
where  it  is  anything  else,  although  it  may  be  true  that  the  identical  money 
paid  cannot  be  recovered.  This,  however,  was  denied  in  DM  v.  Bowe.n,  54 
Ind.  204;  the  court  saying:  "Having  disaffirmed  the  contract,  the  law  im- 
poses upon  her  [the  infant]  no  legal  obligation  to  repay  the  purchase-money. 
This  is  implied  in  the  proposition  that  she  may  disaffirm  without  restoring 
or  offering  to  restore  the  purchase-money.  If  an  infant  disaffirm  a  contract 
after  coming  of  age,  he  must  do  it  in  toto;  that  is  to  say,  if  he  has  property  in 
his  hands  acquired  by  the  contract,  the  other  party  may  reclaim  it.  But  if 
the  property  has  passed  from  his  hands,  or  if  he  has  received  money,  the  law 
imposes  no  obligation  upon  him  to  account  for  the  property,  or  repay  the 
money,  upon  his  disaffirmance  of  the  contract.  It  is  not  necessary  that  the 
other  party  should  be  placed  in  statu  quo."  We  do  not  think  that  this  con- 
fused and  unreasoned  statement  can  detract  very  much  from  what  we  have 
just  said  to  the  contrary.  There  is,  notwithstanding,  one  truth  which  it  rec- 
ognizes, and  which  should  be  carefully  borne  in  mind,  namely,  that  where 
the  infant  has  consumed,  destroyed,  or  in  any  manner  parted  with  the  origi- 
nal consideration  received  by  him,  so  that  none  of  it  remains  in  kind  in  his 
hands,  he  is  under  no  obligation  to  repay  its  value  or  restore  an  equivalent: 
See  Nicholv.  Steger,  2  Tenn.  Ch.  328;  Mustard  v.  Wohlford's  Heirs,  15  Gratt. 
329,  340;  76  Am.  Dec.  209,  214;  and  if  property  received  by  the  infant  is  in 
his  hands  in  an  injured  condition,  he  is  not  liable  for  the  injury,  unless,  per- 
haps, under  some  circumstances,  in  an  action  of  tort:  See  Carpenter  v.  Car- 
penter,  45  Ind.  142. 

Infant's  Obliqation  to  Restore  Consideration  on  Disaffirmance.  — 
The  obligation  of  an  infant  to  restore  the  consideration  received  by  him  as  a 
condition  precedent  to  the  disaffirmance  of  his  contract,  or  to  his  obtaining 
relief  based  upon  such  disaffirmance,  is  a  question  which  has  an  intimate  con- 
nection with  the  one  just  discussed, — of  the  right  of  the  other  contracting 
party  to  recover  back  the  consideration  parted  with,  from  the  infant,  on  the 
disaffirmance.  That  question  supposed  that  the  contract  had  been  avoided, 
and  that  the  adult  was  the  actor.  Here  the  infant  is  the  actor,  and  is  at- 
tempting to  obtain  some  relief  against  his  contract,  based  upon  his  privilege 
of  infancy  and  his  right  to  repudiate  his  agreements.  It  would  seem  to  be 
plain  that  where  the  infant  is  sued  upon  his  contract,  he  is  under  no  condi- 
tions in  asserting  its  invalidity  on  account  of  his  infancy.  As  was  well  said 
in  Eureka  Company  v.  Edwards,  71  Ala.  248,  256,  46  Am.  Rep.  314,  315: 
"Being  voidable,  and  he  making  timely  election  to  avoid  by  pleading  hia 
minority,  his  defense,  if  sustained  by  proof,  will  prevail.  He  need  not  ten- 
der back  anything  he  may  have  acquired  or  received  under  the  contract.  The 
most  that  can  be  required  of  him  is,  that  if  he  retained  and  held  all  or  any 
part  of  what  he  had  received  under  the  contract  until  he  reached  the  age  of 
twenty-one  [and  we  may  add,  before  he  reaches  that  age],  then,  on  demand 


688  Craig  v.  Van  Berber.  [Missouri, 

or  suit,  he  can  be  held  to  account  for  it";  and  see  also  West  v.  Gregrfs  Adm'r, 
1  Grant  Gas.  53,  55.  It  will  be  noticed  that  the  court  is  speaking,  not  of  a 
suit  to  recover  back  from  the  minor  the  consideration  parted  with,  but  of  a 
suit  to  enforce  the  contract  against  him. 

It  is  difficult  to  see  upon  what  theory  of  pleading  or  practice  the  infant 
could  be  required  in  such  an  action  against  him  on  the  contract  to  restore 
the  consideration,  if  he  wished  to  take  advantage  of  his  infancy,  unless  a 
restoration  of  the  consideration  be  a  condition  precedent  to  a  disaffirmance, 
which  is  very  seldom  maintained.  Yet  in  Hall  v.  Butterfield,  5'J  N.  H.  354, 
47  Am.  Rep.  209,  it  was  held  that  an  infant  who  purchases  goods  for  the 
purposes  of  trade,  and  does  not  return  them,  is  liable  for  so  much  of  the  price 
as  is  equal  to  the  benefit  derived  by  him  from  the  purchase;  the  court  saying! 
"The  true  rule  is,  that  the  contract  of  an  infant  or  lunatic,  whether  exe- 
cuted or  executory,  cannot  be  rescinded  or  avoided  without  restoring  to  the 
other  party  the  consideration  received,  or  allowing  him  to  recover  compensa- 
tion for  all  the  benefit  conferred  upon  the  party  seeking  to  avoid  the  con- 
tract";  and  in  Bartle't  v.  Bailey,  59  N.  H.  408,  it  was  also  said  that  "a 
person  seeking  to  avoid  his  contract  on  the  ground  of  infancy  must  account 
for  what  he  has  received  under  it  by  restoring  or  paying  the  value  of  what. 
ever  remains  in  specie  within  his  control,  and  allowing  for  the  benefit  derived 
from  whatever  cannot  be  restored  in  specie.  This  doctrine  has  been  repeat- 
edly recognized  in  actions  brought  to  recover  what  has  been  paid,  or  compensa- 
tion for  what  has  been  done,  under  contracts  made  by  infants.  No  reason 
exists  why  it  is  not  equally  applicable  to  cases  where  infancy  is  set  up  as  a 
defense.  Whether  an  infant  is  plaintiff  or  defendant  in  an  action  cannot 
affect  his  legal  rights  as  to  his  contracts";  and  it  was  therefore  decided,  where 
the  plaintiff  sold  and  delivered  milk  to  the  defendant,  who  was  a  minor  en- 
gaged in  the  niilk  business,  and  who  sold  the  milk  to  his  customers,  that  the 
plaintiff  was  entitled  to  recover  of  the  defendant  the  value  of  the  benefit 
derived  by  him  from  the  purchase  of  the  milk.  According  to  these  New 
Hampshire  cases,  there  does  not  seem  to  be  very  much  real  difference  between 
an  infant's  general  contracts  and  his  contracts  for  necessaries,  as  to  his  liabil- 
ity. It  is  almost  needless  to  say  that  the  position  taken  by  them  as  to  an 
infant  being  liable,  at  all  events  to  the  extent  of  the  benefits  received  by 
him,  is  not  correct  on  principle,  nor  is  it  sustained  by  the  authorities.  It 
seems  also  to  be  held  by  other  cases  that  in  an  action  against  an  infant  on  his 
contract,  he  must  restore  the  consideration  if  he  would  disaffirm:  Dickerson 
V.  Gordon,  24  N.  Y.  St.  Rep.  448;  Combs  v.  Hawes,  8  Pac.  Rep.  597  (decided 
under  the  California  Civil  Code). 

The  obligation  of  an  infant  to  restore  the  consideration  received  by  him 
under  a  contract  which  he  claims  to  disaffirm,  where  he  is  a  party  plaintiff  in 
an  action  founded  on  the  disaffirmance,  has  been  the  subject  of  a  good  deal  of 
difference  of  opinion,  and  there  can  hardly  be  said  to  be  anj'  well-defined 
rule.  It  has  sometimes  been  held  that  a  restoration  of  the  consideration,  or 
an  offer  to  restore  it,  was  a  condition  precedent  to  a  disaffirmance  by  an  in- 
fant of  his  contract,  so  that  there  could  be  no  effectual  avoidance  unless  this 
condition  had  been  complied  with:  Kilgore  v.  Jordan,  17  Tex.  341;  Stuart  v. 
Baker,  17  Tex.  417;  Bingham  v.  Barley,  55  Tex.  281;  40  Am.  Rep.  801;  and 
these  cases,  which  were  legal  actions,  appear  to  disregard  the  inquiry  whether 
the  consideration  still  remains  in  the  infant's  hands  or  not;  and  see  Manning 
V.  Johnson,  26  Ala.  446;  62  Am.  Dec.  732.  It  is  safe  to  affirm  that  the  au- 
thorities generally  do  not  require  the  performance  of  any  such  condition 
to  a  disaffirmance;  and  although  some  of  them  may  say  that,  under  certain 


April,  1890.]  Craig  v.  Van  Berber,  689 

circumstances,  an  infant  cannot  disaffirm  his  contract  and  maintain  an  action 
to  recover  back  the  property'  or  money  parted  with,  unless  he  restores  or 
offers  to  restore  the  consideration,  yet  we  take  it  that  all  tliat  is  meant  is, 
that  a  restoration  or  an  offer  to  restore  is  simply  a  condition  to  the  obtaining 
of  the  relief  sought,  and  not  to  the  disaffirmance  itself.  Were  the  contrary 
true,  a  minor  could  not,  at  least  where  he  retained  the  consideration,  defend 
an  action  on  his  contract  on  the  ground  of  infancy,  unless  he  first  made  a 
restoration  or  an  offer  to  restore,  and  an  action  brought  by  him,  based  upon 
a  disaffirmance,  would  be  premature,  unless  this  step  had  been  observed. 

In  opposition  to  this  view,  that  a  restoration  of  the  consideration,  or  an  of- 
fer to  restore  it,  is  a  condition  precedent  to  a  disaffirmance,  Wells,  J.,  says,  in 
0/iandler  v.  Simmons,  97  Mass.  508,  514,  93  Am.  Dec.  117,  122,  where  the 
action  was  a  writ  of  entry:  "Anotlier  ground  relied  on  by  the  defendant  is, 
that  the  deeil  cannot  be  avoided  without  a  return  of  the  consideration.  We 
do  not  understand  that  such  a  condition  is  ever  attached  to  the  right  of  a 
minor  to  avoid  his  deed.  If  it  were  so,  the  privilege  would  fail  to  protect 
him  when  most  needed.  It  is  to  guard  him  against  the  improvidence  which 
is  incident  to  his  immaturity  that  this  right  is  maintained.  If  the  minor, 
when  avoiding  his  contract,  have  in  his  hands  any  of  its  fruits  specifically, 
the  act  of  avoiding  the  contract  by  which  he  acquired  such  property  will  di- 
vest him  of  all  right  to  retain  the  same,  and  the  other  party  may  reclaim  it. 
He  cannot  avoid  in  part  only,  but  must  make  the  contract  wholly  void,  if  at 
all,  so  that  it  will  no  longer  protect  him  in  the  retention  of  the  considera- 
tion. Or  if  he  retain  and  use  or  dispose  of  such  property  after  becoming  of 
age,  it  may  be  held  as  an  affirmance  of  the  contract  by  which  he  acquired  it, 
and  thus  deprive  him  of  the  right  to  avoid.  But  if  the  consideration  has 
passed  from  his  hands,  either  wasted  or  expended  during  his  minority, 
he  is  not  thereby  to  be  deprived  of  his  right  or  capacity  to  avoid  his  deed, 
any  more  than  he  is  to  avoid  his  executory  contracts.  And  the  adult  who 
deals  with  him  must  seek  the  return  of  the  consideration  paid  or  delivered 
to  the  minor  in  the  same  modes  and  with  the  same  chances  of  loss  in  the  one 
case  as  in  the  other.  It  is  not  necessary,  in  order  to  give  effect  to  the  dis- 
affirmance of  the  deed  or  contract  of  a  minor,  that  the  other  party  should  be 
placed  in  statu  quo."  See  also,  to  the  same  effect,  Tucker  v.  Morelaml,  10 
Pet.  58,  74;  1  Am.  Lead.  Cas.  *224,  *232;  Gibson  v.  Soper,  6  Gray,  279, 
282,  283:  66  Am.  Dec.  414,  417  (lunatic's  deed);  Cresinger  v.  Welclis  Leasee, 
15  Ohio,  156;  45  Am.  Dec.  565;  Pitcher  v.  Lnycock,  7  Ind.  398;  Green  v. 
Oreeii,  69  N.  Y.  553;  25  Am.  Rep.  233;  Corey  v.  Burton,  32  Mich.  30;  Daw- 
son V.  Helmes,  30  Minn.  107,  113;  St.  Lotus  etc.  R'y  v.  Higgim,  44  Ark.  293; 
Vallandiwjham  v.  Jo/inson,  85  Ky.  288;  and  see  Bartlett  v.  Drake,  100  Mass.  176, 
compare  Lemmon  v.  Bceman,  45  Ohio  St.  505. 

It  is  very  evident  if  no  consideration  was  ever  received  by  an  infant, 
either  because  the  other  contracting  party  had  not  paid  it  over  at  all,  or  be- 
cause it  had  been  paid  over  to  some  one  else,  as  the  father  or  husband  of  the 
infant,  that  the  infant  may  disaffirm  the  contract  and  recover  back  the 
money  or  property  transferred,  or  obtain  any  appropriate  relief,  either  at  law 
or  in  equity,  without  restoring  or  offering  to  restore  the  consideration:  Grijis 
V.  Youiif/er,  6  Ired.  Eq.  520;  51  Am.  Dec.  438;  Robinson  v.  Weeks,  56  Me. 
102;  Rtichizhj  V.  De  Haven,  97  Pa.  St.  202;  Clark  v.  Tate,  7  Mont.  171;  Bed- 
infjer  v.  Wharton,  27  Gratt.  857;  Stall  v.  Harris,  51  Ark.  294;  Vojelsanj  v. 
Null,  67  Tex.  465;  and  see  Lata  v.  Lomj,  41  Ind.  586;  Richardson  v.  Pate,  93 
Ind.  423,  428.  In  Voijelsamj  v.  NuU,  67  Tex.  465,  it  was  held  that  the  fact  the 
third  party,  who  received  the  purchase-money  for  lands  of  the  infant,  and 
Am.  Sf.  Kei-.,  \  uL.  XVIll.  —  44 


690  Craiq  v.  Van  Bebber.  [Missouri, 

failed  to  pay  it  over,  was  the  recognized  agent  of  the  infant  to  receive  it,  was 
immaterial,  since  an  infant  could  not  appoint  an  agent  to  perforin  an  act  to 
his  injury,  although  he  might  constitute  an  agent  to  do  an  act  for  his  benefit, 
and  whether  the  act  was  beneficial  or  injurious  was  left  to  the  discretion  of  the 
infant.  We  think  the  decision  correct,  although  the  reason  is  absurd.  It 
follows,  from  the  foregoing,  that  where  the  infant  transfers  his  property 
without  any  consideration  whatever,  that  no  obligation  rests  upon  him  to 
restore  anything.  Therefore  it  is  unnecessary,  in  a  bill  to  cancel  a  deed  on 
the  ground  of  the  infancy  of  the  grantor,  for  the  complainant  to  offer  to  re- 
fund the  purchase-money  recited  in  the  deed  to  have  been  paid,  if  he  avers 
that  the  deeJ  was  procured  without  consideration:  Cook  v.  Toumbs,  36  Miss. 
685;  tlie  infant  is  not  bound  by  the  recital  of  the  consideration  in  the  deed: 
Cook  V.  Toumbs,  36  Miss.  685;  but  it  is,  of  course,  incumbent  on  the  infant  to 
establish,  in  such  a  case,  that  no  consideration  waa  in  fact  paid:  Wade  v. 
Love,  69  Tex.  522. 

It  has  occcisionally  been  broadly  laid  down  in  actions  at  law,  brought  by 
infants  to  recover  money  or  property,  based  on  their  right  to  avoid  their  con- 
tracts, that  an  infant  could  not  disaffirm  his  contract  and  recover  back  money 
paid  or  property  transferred  thereunder,  witliout  restoring  or  ofi"ering  to 
restore  the  consideration  received  by  him:  Ta/i  v.  Pike,  14  Vt.  405;  39  Am. 
Dec.  228;  Farr  v.  Sumner,  12  Vt.  2S;  36  Am.  Dec.  327;  Bailey  v.  Barnherger, 
11  B.  Mon.  113,  115;  Bartholomew  v.  Finnemore,  17  Barb.  428;  and  see  Bart- 
lett  V.  Cowles,  15  Grray,  445,  which  should  be  compared  with  Oihson  v.  Sopei',  6 
Gray,  279,  282,  283,  66  Am.  Dec.  414,  417,  and  Chandler  v.  Simmam,  97 
Mass.  508,  514,  93  Am.  Dec.  117,  122,  cited  supra;  also  compare  the  more 
recent  Vermont  cases  of  Price  v.  Fur  man,  27  Vt.  268,  65  Am.  Dec.  194,  and 
Whilcomb  v.  Joslyn,  51  Vt.  79,  31  Am.  Rep.  678,  with  the  earlier  ones  above 
cited;  also  see  Green  v.  Green,  69  N.  Y.  553;  25  Am.  Rep.  233.  In  Bartholo' 
mew  V.  Finnemore,  17  Barb.  428,  an  infant  purchased  a  horse  of  the  defendant, 
and  paid  for  it  in  property.  He  kept  the  horse  about  a  month,  during  which 
time,  in  consequence  of  his  misuse  of  it,  its  value  was  greatly  lessened,  and 
then  tendered  it  back  to  the  defendant,  and  demanded  the  property  he  had 
delivered  to  the  latter.  It  was  held  that  he  could  not  recover  the  property 
on  a  refusal  to  deliver  it.  Hand,  P.  J.,  said:  "After  he  has  enjoyed  the 
benefit  of  it,  in  wliole  or  in  part,  there  is  no  equity  in  his  avoiding  his  con- 
tract and  reclaiming  the  property  he  delivered  in  exchange,  without  restoring 
the  consideration,  or  at  least  an  equivalent.  This  the  plaintifi'  did  not  do 
nor  ofiFer  to  do  in  this  case.  He  had  the  use  of  the  horse  for  some  time,  and 
probably,  by  improper  treatment,  reduced  him  to  one  lialf  of  his  former 
value,  for  all  of  which  he  offered  no  compensation."  This  theory  that  the 
infant  must  restore  the  consideration  received  by  him,  or  if  it  cannot  for 
any  reason  be  restored,  he  is  chargeable  with  an  equivalent,  or  rather  with 
its  value,  has  been  carried  to  its  fullest  extent  in  New  Hampshire,  as  already 
seen:  Heath  v.  Stevens,  48  N.  H.  251;  Kimball  v.  Bruce,  58  N.  H.  327;  City 
Savings  Bank  v.  Whittle,  63  N.  H.  587;  also  Flail  v.  ButterfAd,  59  N.  H.  354, 
47  Am.  Rep.  209;  Bartlctt  v.  Baiky,  59  N.  H.  408,  discussed  supra:  coujpare 
Carr  v.  Clough,  26  N.  H.  280;  59  Am.  Dec.  345. 

In  other  cases  at  law,  brought  by  infants,  it  has  been  said  that  an  infant 
who  would  rescind  his  contract  must  restore  or  ofifer  to  restore  the  consid- 
eration, if  it  be  in  his  hands;  but  his  obligation  with  respect  to  a  restoration 
does  not  exist  if  he  has  lost,  consumed,  destroyed,  or  in  any  way  parted  with 
the  consideration  during  his  minority:  Carr  v.  Cioinjh,  26  N.  H.  280;  59  Am. 
Dec.  345;  Price  v.  Furman,  27  Vt.  268;  65  Am.  Dec.  194;  Manning  v.  John- 


M 


April,  1890.]  Craig  v.  Van  Bebber.  691 

son,  26  Ala.  446;  62  Am.  Dec.  732;  Oreen  v.  Green,  69  N.  Y.  553;  25  Am. 
Dec.  233;  Hangen  v.  HachmeHer,  17  Jones  &  S.  34;  Milier  v.  Smith,  26  Miiia. 
24S;  37  Am.  Rep.  407;  St.  Louis  etc.  R'y  v.  Hii/giiis,  44  Ark.  293;  Bennett 
V.  McLaughlin,  13  111.  App.  349;  Craig  v.  Van  Bebber,  100  Mo.  584;  and 
see  Corey  v.  Burton,  32  Mich.  30;  Mustard  v.  Wohl/ord's  Heirs,  15  Gratt. 
329,  340;  76  Am.  Dec.  209,  214,  per  Moncure,  J.;  Gillesjnev.  Bailey,  12  W.  Va. 
70,  9'2;  29  Am.  Rep.  445,  449;  Chief  Justice  Church  saying,  in  Green  v.  Green, 
69  N.  Y.  553,  25  Am.  Dec.  233:  "The  right  to  repudiate  is  based  ujjon  the 
incapacity  of  the  infant  to  contract,  and  that  incapacity  applies  as  well  to 
the  avails  as  to  the  property  itself,  and  when  the  avails  of  the  property  ara 
improvidently  spent  or  lost  by  speculation  or  otherwise  during  minority,  the 
infant  should  not  be  held  responsible  for  an  inability  to  restore  them.  To 
do  so  would  operate  as  a  serious  restriction  upon  the  right  of  an  infant  to 
avoid  his  contract,  and  in  many  cases  would  destroy  the  right  altogether." 
In  Whitcomb  v.  JoMyn,  51  Vt.  79,  31  Am.  Rep.  678,  an  infant  purchased  a 
wagon,  paying  part  of  the  purcliase  price,  and  giving  his  promissory  note, 
secured  by  a  lien  on  the  wagon,  for  the  remainder.  The  vendor  afterwards 
took  the  wagon  under  his  lien  and  sold  it.  It  was  held  that  as  the  vendor  had 
retaken  the  wagon,  there  was  nothing  for  the  infant  to  do,  to  entitle  him  to 
recover  the  money  paid  by  him  towards  the  wagon,  but  to  disaffirm  the  con- 
tract. And  furthermore,  that  the  infant's  right  of  recovery  was  not  afifected 
by  the  fact  that  the  wagon  had  depreciated  in  value  while  in  his  possession, 
by  reason  of  use  or  otherwise,  for  he  was  "no  more  liable  for  the  use  of  tha 
wagon  than  for  the  agreed  price."  See  also  Price  v.  Furman,  27  Vt.  268,  65 
Ara.  Dec.  194,  on  the  proposition  that  where  an  infant  rescinds  his  contract 
of  exchange  offers  to  return  the  property  receivdl  by  him,  and  lirings  trover 
for  his  property,  evidence  that  the  property  offered  to  be  returned  had  depre- 
ciated in  value  is  inadmissible,  either  for  tlie  purpose  of  defeating  a  recovery 
or  reducing  the  damages.  In  Lemmon  v.  Beeman,  45  Ohio  St.  505,  it  was 
held  that  where  a  minor  purchased  a  stock  of  goods,  he  might  disaffirm  the 
purchase,  and  recover  back  the  consideration  paid,  without  restoring  tha 
goods,  if  they  have  been  taken  from  him,  whether  rightfully  or  not,  upon  an 
execution  against  a  third  person.  In  such  a  case,  he  was  not  required,  as  a 
condition  of  his  right  to  recover,  to  take  any  steps  to  regain  the  property 
taken  from  him.  It  was  sufficient  if  it  had  ceased  to  be  in  his  possession  or 
subject  to  his  control.  Compare  Cremiiger  v.  Welch's  Lessee,  15  Ohio,  156;  45 
Am.  Dec.  565. 

There  is  still  another  line  of  cases  taking  the  view  that  an  infant  may  dis- 
affirm his  contract  and  recover  back,  in  a  court  of  law,  property  transferred, 
or  money  paid  in  pursuance  thereof,  without  any  condition  as  to  restoring  the 
consideration  received  by  him:  Eureka  Company  v.  E'l wards,  71  Ala.  24S,  256; 
46  Am.  Rep  314,  315;  Miles  v.  Liwjerman,  24  Ind.  385;  Brig!/s  v.  McCahe,  27 
Ind.  327;  89  Am.  Dec.  503;  Carpenter  v.  Carpenter,  45  Ind.  142;  White  v. 
Branch,  51  Ind.  210;  Clark  v.  Van  Court,  100  Ind.  113;  50  Am.  Rep.  774;  Shirk 
v.  Sliullz,  113  Ind.  571;  Chandler  v.  Simmons,  97  Mass.  508,  514;  93  Am.  Dec. 
117,  122;  Walsh  y.  Young,  110  Mass.  396;  Dawson  v.  Hebncs,  30  Minn.  107, 
113:  Shaw  V.  Boyd,  5  Serg.  &  R.  309;  and  see  Shuford  v.  Alexander,  74  Ga. 
293;  Pitcher  v.  Lnycock,  7  Ind.  398;  Law  v.  Long,  41  Ind.  586;  Rhhardson  v. 
Pate,  93  Ind.  423,  428;  although  if  the  infant  still  has  the  consideration  in  hia 
hands,  the  opposite  contracting  party  is  of  course  entitle<l  to  recover  it  in  an 
action  brought  therefor.  It  follows,  it  is  no  defense  to  an  action  by  an  infant 
to  recover  possesion  of  a  horse  that  another  horse  received  by  him  in  ex- 
change therefor  has  been  so  misused  by  him  that  though  sound  and  of  equal 


692  Craig  v.  Van  Bebber.  [Missouri, 

value  with  the  horse  given  by  him  in  exchange  at  the  time  of  the  transaction, 
it  became  unsound  and  of  no  value:  White  v.  Branch,  51  Ind.  210.  We  think 
that  the  rule  of  these  cases  better  accords  with  pleading  and  practice  in  ac- 
tions at  law  than  either  of  the  others  noticed  above.  Particularly  is  the  rule 
to  be  condemned  which  compels  c.ie  infant,  if  he  cannot  restore  the  original 
consideration  received,  to  restore  or  offer  to  restore  an  equivalant,  or  to  ac- 
count for  the  benefits  derived  therefrom.  To  so  hold  would  operate,  in  the 
language  of  Chief  Justice  Church  in  Green  v.  Green,  quoted  above,  "as  a 
serious  restriction  upon  the  right  of  an  infant  to  avoid  his  contract,  and  in 
many  cases  would  destroy  the  right  altogether." 

It  seems  to  be  regarded  by  some  authorities  that  if  a  person  applies  to  a 
court  of  equity  for  relief  against  his  contract  on  the  ground  of  infancy,  he  will 
be  required  to  do  equity  by  restoring  the  consideration  to  the  other  contract- 
ing party  if  he  still  retains  it,  or  if  not,  by  paying  an  equivalent:  See  Hillyer  v. 
Bennett,  3  Edw.  Ch.  222,  225;  Gra>i  v.  Lessiwjton,  2  Bosw.  257,  262;  Smith  v. 
Evans,  5  Humph.  70;  Manning  v.  Johnson,  26  Ala.  446,  452;  62  Am.  Dec.  732, 
734;  Bryant  v.  Pottinge?;  6  Bush,  473;  Bozeman  v.  Browning,  31  Ark.  364; 
Cummings  v.  Powell,  8  Tex.  80;  Foils  v.  Ferguson,  77  Tex.  301 ;  and  see  Pitc/ier 
V.  Laycock,  7  Ind.  389.  Thus,  says  the  vice-chancellor  in  Hillyer  v.  Bennett,  3 
Edw.  Ch.  222,  225,  "if  after  an  infant  comes  of  age  he  seeks  to  disaffirm  and 
avoid  his  contract  in  a  court  of  equity,  and  files  his  bill  there  for  the  purpose 
of  obtaining  its  aid  in  restoring  to  himself  the  possession  of  the  property  he  has 
parted  with,  a  court  of  equity  must  deal  with  him  as  it  would  with  any  other 
adult  party,  and  require  him  to  do  equity  before  he  shall  have  equity  done 
unto  him.  He  must  restore  what  he  received  when  he  parted  with  the  prop- 
erty which  he  seeks  to  get  back,  especially  if  it  appears  that  the  other  dealt 
with  him  in  ignorance  of  the  fact  of  nonage."  And  in  Gray  v.  Lessington, 
2  Bosw.  257,  262,  it  was  held  that  an  infant  who  goes  into  a  court  of  equity  to 
have  her  purchase  of  personal  property  rescinded,  and  her  promissory  notes 
and  mortgage,  given  to  secure  a  part  of  the  purchase  price,  canceled,  and  the 
money  paid  by  her  returned,  must  do  equity  and  restore  the  property,  and 
make  full  satisfaction  for  the  deterioration  arising  from  its  use.  We  do  not 
think  that  so  broad  a  rule  can  be  sustained.  The  privilege  of  infancy  should 
be  recognized  in  equity  to  the  same  general  extent  as  at  law;  and  if  the  infant 
has  in  any  way  parted  with  the  consideration  during  his  minority,  so  that  he 
no  longer  retains  it,  we  do  not  think  that  equity  should  deny  him  relief  un- 
less he  restores  an  equivalent.  It  seems  to  us  that  the  maxim,  "He  who 
seeks  equity  must  do  equity,"  should  not  apply  to  such  a  case. 

This  latter  is  the  view  taken  by  other  cases.  If,  therefore,  an  infant  retains 
the  consideration  received  from  the  other  contracting  party,  equity  may  very 
properly  require  its  restoration  to  the  latter  as  a  condition  on  which  relief 
will  be  granted  him  in  avoidance  of  his  contract;  but  if  the  infant  has  lost, 
consumed,  destroyed,  or  in  any  manner  parted  with  the  consideration  during 
his  minority,  so  that  it  no  longer  remains  in  his  hands,  his  obligation  with 
respect  to  a  restoration  is  at  an  end:  See  Eureka  Compiny  v.  Edioardu,  71 
Ala.  248;  46  Am.  Rep.  314;  Reynolds  v.  McGurry,  100  111.  356;  Brantley  v. 
Wolf,  60  Miss.  420;  Bedinger  v.  Wharton,  27  Gratt.  857;  Stull  v.  Harris,  51 
Ark.  294;  and  see  Gillespie  v,  Bailey,  12  W.  Va.  70;  29  Am.  Rep.  445;  Bran- 
don v.  Brown,  106  111.  519,  and  cases  cited;  and  certainly  there  would  be  no 
obligation  to  restore,  if  the  purchase-money  for  an  infant's  lands  had  been 
paid  to  her  husband  and  retained  bj'  him:  Bedinger  v.  Wharton,  27  Gratt, 
857;  Stull  V.  Harris,  51  Ark.  294;  not  even,  it  is  held,  where  a  large  portion 
of  it  had  been  applied  to  the  support  of  the  infant  and  her  family:  Bedinger 


I 


m 


April,  1890.]  Craig  v.  Van  Bebber.  693 

V.  Wharton,  27  Gratt.  857;  and  we  should  say  that  this  principle  would  forci- 
bly apply  where  an  infant  feme  covert  unites  with  her  husband  in  a  convey- 
ance of  his  lands,  in  which  she  afterwards  claims  dower:  See  Law  v.  Long,  41 
Ind.  586;  Richardson  v.  Pale,  93  Ind.  423,  428.  In  Weed  v.  Beebe,  21  Vt.  495, 
it  was  held  that  where  an  infant,  on  coming  of  age,  conveyed  land  purchased 
by  him  to  a  third  person,  who  took  with  notice  of  the  fact  that  a  portion  of 
the  purchase  price  remained  unpaid,  the  grantor  might  enforce  his  lien  there- 
for in  chancery  without  paying  or  offering  to  pay  the  amount  already  re- 
ceived by  him;  but  here  the  infant  had  really  ratified  his  purchase  by  the 
conveyance  after  majority. 

If  the  suit  is  not  brought  by  the  infant  himself,  but  by  his  subsequent 
grantee  or  purchaser,  claiming  that  a  prior  conveyance  or  sale  by  the  infant 
to  the  defendant  had  been  disaffirmed,  the  question  is  presented,  whether  the 
same  obligation  to  make  a  restoration  of  the  consideration  rests  upon  the 
plaintiff  as  would  rest  upon  the  infant  had  he  sued  instead.  If  it  be  held 
that  a  restoration  or  an  offer  to  restore  is  a  condition  precedent  to  a  disaf- 
firmance, th3  defendant  may  of  course  show  that  this  step  had  not  been  com- 
plied with:  See  Ktlgore  v.  Jordan,  17  Tex.  341;  Stuart  v.  Baker,  17  Tex.  417; 
Bingham  v.  Barley,  55  Tex.  281;  40  Am.  Rep.  801.  But  where  such  a  ruling 
does  not  obtain,  we  are  inclined  to  think  it  a  sound  doctrine  that  if  the  in- 
fant is  not  a  party  to  the  suit,  any  claim  which  the  defendant  whose  pre- 
vious contract  has  been  disaffirmed  may  have  on  account  of  the  consideration 
is  a  personal  claim  against  the  infant,  and  cannot  be  enforced  in  the  action: 
Mmtard  v.   Wohlford's  Heirs,  15  Gratt.  329;  76  Am.  Dec.  209. 

In  some  of  the  states,  the  foregoing  questions  concerning  the  restoration  of 
the  consideration  are  controlled  by  statutes.  Thus  the  following  legislative 
attempt  exists  in  California:  "  In  all  cases  other  than  those  specified  in  sections 
36  and  37  [sections  relating  to  contracts  for  necessaries,  and  obligations  entered 
into  under  the  express  authority  or  direction  of  statutes],  the  contract  of  a 
minor,  if  made  whilst  he  is  under  the  age  of  eighteen,  may  be  disaffirmed  by 
the  minor  himself,  either  before  his  majority  or  within  a  reasonable  time 
afterwards,  or,  in  case  of  his  death  within  that  period,  by  his  heirs  or  per- 
sonal representatives;  and  if  the  contract  be  made  by  the  minor  whilst  he  is 
over  the  age  of  eighteen,  it  may  be  disaffirmed  in  like  manner  upon  restoring 
the  consideration  to  the  party  from  whom  it  was  received,  or  paying  its 
equivalent":  Civ.  Code,  sec.  35.  Section  17  of  the  Dakota  Civil  Code  is  the 
same  in  language,  except  that,  instead  of  the  words  "  or  within  a  reasonable 
time  afterwards,"  the  section  reads,  "or  within  one  year's  time  afterwards," 
and  adds  to  the  end  of  the  section  the  words  "with  interest."  It  lias  been 
shown  supra,  "Statutory  Regulation,"  that  certain  general  contracts  of  in- 
fants under  the  age  of  eighteen  are,  in  these  states,  absolutely  void,  while  the 
others  are  voidable  merely.  So  far  as  the  foregoing  section  speaks  of  con- 
tracts made  under  the  age  of  eighteen,  it  must  have  reference  only  to  the 
latter,  and  not  to  those  which  are  absolutely  void,  since  these  cannot  be  dis- 
affirmed, in  the  proper  sense  of  the  word.  It  will  be  observed  that  the  sec- 
tion says  nothing  about  restoring  the  consideration  when  contracts  made 
under  the  age  of  eighteen  are  disaffirmed,  while  it  says  that  if  the  contracts 
are  made  by  a  minor  over  the  age  of  eigtiteen,  they  may  be  disaffirmed  "  upon 
restoring  the  consideration  to  the  party  from  whom  it  was  received,  or  paying 
its  equivalent."  It  would  seem,  therefore,  that  the  disaffirmance  by  minors 
of  contracts  made  under  the  age  of  eigliteen  is  left  to  be  governed  by  the 
general  rules  of  the  law  upon  the  subject,  and  consequently  no  restoration 
or  offer  to  restore  should  ever  be  required  as  a  condition  precedent  to  a  dia- 


694  Craig  v.  Van  Bebber.  [Missouri, 

affirmance,  nor  as  a  condition  to  obtaining  relief  in  an  action  brought  by  the 
infant,  except  it  be  an  equitable  action,  and  only  then  when  he  has  not  parted 
with  the  consideration  during  his  minority,  but  still  retains  it.  But  if  a 
minor  would  disaffirm  a  contract  made  while  he  is  over  the  age  of  eighteen, 
it  appears  to  be  a  condition  precedent  to  a  disaffirmance  that  he  should  re- 
store, or  at  least  offer  to  restore,  the  consideration  received  by  him,  or  pay 
its  equivalent,  and  unless  he  observes  this  step,  auy  attempted  disaffirmance 
would  be  ineffectual.  This  seems  to  have  been  the  view  taken  in  Combs  v. 
Nawes,  8  Pac.  Rep.  597  (Cal.).  There  can  be  only  one  opinion  about  such  a 
statutory  distinction  between  contracts,  and  that  is,  that  the  distinction  is 
extremely  foolish,  there  being  absolutely  no  reason  whatever  to  justify  its 
existence. 

In  Iowa,  it  is  provided  by  section  2238  of  the  code  that  "  a  minor  is  bound, 
not  only  by  contracts  for  necessaries,  but  also  by  his  other  contracts,  unless 
he  disaffirms  them  within  a  reasonable  time  after  he  attains  his  majority,  and 
restores  to  the  other  party  all  money  or  property  received  by  him  by  virtue 
of  the  contract,  and  remaining  within  his  control  at  any  time  after  attaining 
his  majority."  It  has  therefore  been  held,  under  this  provision,  that  it  is 
essential  to  the  disaffirmance  of  a  deed  executed  by  the  grantor  during  his 
minority  that  he  return  or  tender  the  fruits  received  by  him,  if  under  his 
control:  Stout  v.  Merrill,  35  Iowa,  47.  The  section,  it  is  held,  only  requires 
the  return  of  the  identical  money  or  property  received  by  the  minor,  and  not 
the  payment  of  any  other  consideration,  if  that  is  gone:  Jenkins  v.  Jenkim,  12 
Iowa,  195;  Hawe-t  v.  Burlinijton  etc.  B'y,  64  Iowa,  315;  Learox  v.  Griffith,  76 
Iowa,  89,  94.  "  If,"  says  the  court  in  the  last  case,  "he  had  disposed  of  the 
property,  and  squandered  the  money  received  from  the  other  party,  he  may 
nevertheless  avoid  the  contract." 

In  Indiana,  it  is  enacted  by  a  statute  passed  September  19,  1881,  that  "in 
all  sales  by  an  infant  feme  covert  of  lands  belonging  to  her,  and  in  which 
sale  and  conveyance  her  husband  has  joined,  he  being  of  full  age,  said  infant 
shall  not  be  permitted  to  disaffirm  said  sale  until  she  shall  first  restore  to 
the  person  owning  said  real  estate  the  consideration  she  received  for  said 
land;  provided,  however,  that  if  she  will  allege,  in  her  complaint,  that  she 
received  no  consideration  for  said  sale,  an  issue  may  be  made  upon  such  alle- 
gation; and  if,  upon  the  trial,  the  court  or  jury  find  that  any  consideration 
was  received  by  her,  the  court  shall,  in  the  finding  and  decree,  declare  such 
amount  so  found  a  first  lien  against  said  land  in  favor  of  the  defendant ":  2 
R.  S.  1888,  sec.  2944.  And  "in  all  sales  of  real  estate  by  an  infant,  he  or 
she  shall  not  be  permitted  to  disaffirm  said  sale  without  first  restoring  to  the 
person  owning  the  property  sold  the  consideration  received  in  said  sale,  if 
said  infant  falsely  represented  himself  or  herself  to  said  purchaser  to  be 
over  the  age  of  twenty-one  years,  and  the  party  buying  from  said  infant 
acted  in  good  faith,  and  relied  upon  said  representations  in  such  sale,  and  had 
good  cause  to  believe  said  infant  of  full  age  ":  2  R.  S.  1888,  sec.  2945. 

Disaffirmance,  whether  Subject  to  Subsequent  Avoidance. — It  has 
been  seen  that  an  infant  is  permitted  to  disaffirm  certain  of  his  contracts 
during  his  minority,  and  the  question  is  presented  whether,  after  coming  of 
age,  he  may  avoid  such  disaffirmance.  The  opinion  has  been  expressed  ia 
some  English  cases  that  he  may  do  so:  Newry  etc.  B'u  v.  Coomhe,  3  Ex.  565; 
Northwestern  Ji'y  v.  Mc Michael,  5  Ex.  114,  127.  We  think,  however  that  a 
disaffirmance  once  made  by  the  infant,  although  during  his  minority,  should 
be  held  binding  upon  him.  This  was  so  decided  in  Edgerton  v.  Wolf,  6  Gray, 
453.     If  the  disaffirmance  takes  place  after  the  infant  attains  hia  majority. 


April,  1890.]  Craiq  v.  Van  Bebber.  695 

it  should  unquestionably,  especially  where  the  rights  of  others  intervene,  be 
binding,  and  not  subject  to  a  subsequent  recall:  See  White  v.  Flora,  2  Over, 
426,  432;  see^  also  Derrick  v.  Kennedt/,  i  Port.  41 ;  McCarthy  v.  ^icroiii,  72 
Ala.  332;  47  Am.  Rep.  418,  421.  See  a  question  of  incomplete  disaffirmance 
discussed  in  Beat  v.  Givens,  3  B.  Mon.  72,  74. 

Who  may  Take  Advantage  of  Infancy.  — It  is  a  well-settled  general 
rule  tliat  infancy  is  a  personal  privilege,  of  which  no  one  is  permitted  to 
take  advantage  except  the  infant  himself:  Coan  v.  Bowles,  1  Show.  165,  171; 
Grey  v.  Cooper,  3  Doug.  65;  Shropshire  v.  Burns,  46  Ala.  108;  Hastings  v. 
Dollarhide,  24  Cal.  11)5;  Frazier  v.  Alassey,  14  Ind.  382;  Schrock  v.  Croiol,  83 
Ind.  243;  Cannon  v.  Alshury,  1  A.  K.  Marsh.  76;  10  Am.  Dec.  709;  Beder 
V.  Bullitt,  3  A.  K.  Marsh.  280;  13  Am.  Dec.  161;  Hardy  v.  Waters,  38  Me. 
450;  Oliver  v.  Houdlet,  13  Mass.  237,  239;  7  Am.  Dec.  134,  135;  Nighiim/ale 
V.  Withiwjton,  15  Mass.  272;  8  Am.  Dec.  101;  Hill  v.  Kcyes,  10  Allen,  258, 
260;  Monayhan  v.  Agricultural  F.  Ins.  Co.,  53  Mich.  2.S8;  Voorhees  v.  Wait, 
15  N.  J.  L.  343;  Patterson  v.  Lippincott,  47  N.  J.  L.  457;  Inhabitants  of  Bar- 
dentotvn  v.  Wallace,  50  N.  J.  L.  13;  Van  Bramer  v.  Cooper,  2  Johns.  279; 
Hartness  v.  Thompson.  5  Johns.  160;  Mason  v.  Denison,  15  Wend.  64-66; 
Parker  v.  Baker,  1  Clarke  Ch.  136;  Beardsley  v.  Hotchkiss,  96  N.  Y.  201; 
S locum  V.  Hooker,  13  Barb.  536;  Jones  v.  Butler,  30  Barb.  641;  Ilesser  v. 
Steiner,  5  Watts  &  S.  476;  Kutis's  Ex'rs  v.  Young,  34  Pa.  St.  60;  McGill  v. 
Woodward,  3  Brev.  401;  White  v.  Flora,  2  Over.  426,  431;  Harris  v.  Mus- 
grove,  59  Tex.  401;  Wamsley  v.  Lindenherger,  2  Rand.  478;  Code  of  Geor- 
gia (1882),  sec.  2732.  This  rule,  which  lias  been  established  from  the 
earliest  times,  is  utterly  inconsistent  with  any  other  idea  than  that  the  con- 
tracts of  infants  are  voidable  merely,  and  not  void.  Being  voidable  only, 
it  rests  solely  with  the  infant  to  say  whether  a  contract  made  by  him  shall 
be  binding  or  not. 

It  follows  that  a  stranger  to  the  contract  cannot  assert  that  it  is  not  bind- 
ing because  entered  into  by  an  infant:  Keane  v.  Boycott,  2  H.  Black.  51 1,  515; 
Douglas  V.  Watson,  17  Com.  B.  685,  691;  34  Eng.  Law  &  Eq.  447,  551;  Bald- 
win  V.  Rosier,  1  McCrary,  384;  Babcock  v.  Doe  ex  dem.  Bowman,  8  In<l.  1 10; 
Tru-'itees  of  La  Grange  Collegiate  Institute  v.  Anderson,  63  Ind.  367;  30  Am. 
Rep.  224;  Ridgeky  v.  Crandall,  4  Md.  435,  441;  Thompson  v.  Hamilton,  12 
Pick.  425;  23  Am.  Dec.  619;  Kendall  v.  Lawrence,  22  Pick.  540;  McCarty  v. 
Murray,  3  Gray,  578;  Kingman  v.  Perkins,  105  Mass.  Ill;  Mansfield  v.  Gor- 
don, 144  Mass.  168;  Soper  v.  Fry,  37  Mich.  236;  Holmes  v.  Rice,  45  Mich. 
142;  GrilJith  v.  Schivenderman,  27  Mo.  412;  Roberts  v.  Wlggin,  1  N.  H.  73;  8 
Am.  Dec.  38;  Dominick  v.  Michael,  4  Sand.  374,  418;  Rose  v.  Daniel,  3  Brev. 
438;  Lester  v.  Frazer,  2  Hill  Eq.  529;  Riley  Eq.  76.  To  illustrate:  tn  an  ac- 
tion against  the  defendant  for  enticing  away  the  plaintiff's  servant,  the  de- 
fendant was  not  permitted  to  allege  that  the  contract  of  service  was  void 
because  the  servant  was  an  infant:  Keane  v.  Boycott,  2  H  Black.  511,  515; 
and  in  an  action  on  a  note  executed  to  the  trustees  of  a  college  for  the  pur- 
pose of  an  endowment  fund,  and  payable  on  condition  that  a  certain  sura 
should  be  "secured"  for  that  purpose  prior  to  a  date  named,  an  answer  by 
the  defendant  that  a  portion  of  the  required  sum  was  secured  by  notes  exe- 
cuted by  infants  is  insufficient:  Trustees  of  La  Grange  Collegiate  Institute  v. 
Anderson,  63  In<l.  367;  30  Am.  Rep.  224;  so  an  action  against  the  general 
owners  of  a  ship,  which  had  been  chartered  by  an  infant,  for  not  delivering 
goods,  cannot  be  maintained  if  the  contract  of  charter  has  not  been  avoided  by 
the  infant:  Thompson  v.  HamiUoii,  12  Pick.  425;  23  Am.  Dec.  619;  again,  it 
is  no  defense  to  an  action  of  ejectment  that  the  grantor,  under  whom  the 


696  Craig  v.  Van  Bebber.  [Missouri, 

plaintiff  claimed,  was  an  infant:  Bahcoch  v.  Doe  ex  dem.  Bowman,  8  Ind. 
110;  and  in  a  suit  to  foreclose  a  mortgage,  given  to  secure  a  promissory  note, 
while  the  maker  of  the  note  may  plead  his  infancy,  a  subsequent  lien-holder 
cannot  join  in  the  defense:  Baldwin  v.  Rosier,  1  McCrary,  384;  and  a  con- 
veyance, mortgage,  assignment,  or  other  transfer  of  property  by  an  infant 
cannot  be  attacked  as  invalid  because  of  infancy  by  his  creditors:  Kendall  v. 
Lawrence,  22  Pick.  540;  McCarty  v.  Murray,  3  Gray,  578;  Kimjman  v.  Per- 
kins, 105  Mass.  Ill;  Roberts  v.  Wiggin,  1  K  H.  73;  8  Am.  Dec.  38;  Lester  v. 
Frazer,  2  Hill  Eq.  529;  Riley  Eq.  76. 

Again,  it  follows  that  the  adult  party  to  the  contract  with  the  infant  is 
bound,  and  cannot  take  advantage  of  the  infancy:  Forrester^  Case,  1  Sid. 
41;  S.  C,  suh  nom.  Gable  v.  Forester,  1  Keb.  1;  Smith  v.  Bowen,  1  Mod.  25; 
Holt  V.  Ward  Clarencietix,  2  Strange,  937;  Warwick  v.  Bruce,  6  Taunt.  118; 
affirming  2  Maule  &  S.  205;  Chicago  etc.  R.  R.  v.  Lammert,  19  III.  App. 
135,  140;  Johnson  v.  Rockwell,  12  Ind.  76;  Bexison  v.  Carlton,  13  Ind.  354; 
Cannon  v.  Alsbury,  1  A.  K.  Marsh.  76;  10  Am.  Dec.  709;  Arnous  v.  Lesas- 
sier,  10  La.  592;  29  Am.  Dec.  470;  Oliver  v.  Houdlet,  13  Mass.  237,  239;  7 
Am.  Dec.  134,  135;  Boyden  v.  Boyden,  9  Met.  519,  521;  Stiff  v.  Keith,  143 
Mass.  224;  Monaghan  v.  Agricultural  F.  Ins.  Co.,  53  Mich.  238;  Voorhees  v. 
Wait,  15  N.  J.  L.  343;  Hunt  v.  Peake,  5  Cow.  475;  15  Am.  Dec.  475; 
Willard  v.  Stone,  7  Cow.  22;  17  Am.  Dec.  496;  Yates  v.  Lyon,  61  N.  Y. 
344;  Crymes  v.  Day,  ]  Bail.  L.  320;  Harris  v.  Musgrove,  59  Tex.  401;  and 
see  Code  of  Georgia  (1882),  sec.  2732.  Hence,  as  seen  ante,  "  Contracts  to 
Marry,"  while  the  mere  promise  to  marry  of  an  infant  is  not  binding  upon 
him,  yet  the  adult  party  to  the  contract  is  bound,  and  therefore  the  infancy 
of  the  plaintiff  is  no  defense  to  an  action  for  breach  of  promise  against  the 
adslt:  Holt  v.  Ward  Clarencieux,  2  Strange,  937;  Cannon  v.  Alsbury,  1  A.  K. 
Marsh.  76;  10  Am.  Dec.  709;  Hunt  v.  Peake,  5  Cow.  475;  15  Am.  Dec.  475; 
Willard  v.  Stone,  7  Cow.  22;  17  Am.  Dec.  496.  And  if  a  person  contracts 
with  au  infant  to  receive  from  him  a  conveyance  of  land,  which  he  knows, 
at  the  time  of  contracting,  will  be  executed  before  the  infant  shall  have  ar- 
rived at  his  majority,  he  cannot  avail  himself  of  that  fact  in  defense  to  an 
action  on  a  promissory  note  for  the  purchase-money:  Beeson  v.  Carlton,  13 
Ind.  354;  and  if  personal  property  be  sold  to  an  infant,  the  fact  that  the 
vendor  retains  or  afterwards  comes  into  possession  of  the  property  as  guar- 
dian of  the  infant  will  not  authorize  him  to  rescind  the  sale:  Crymes  v. 
Day,  1  Bail.  L.  320;  even  a  contract  of  bailment,  made  by  the  bailee  with 
the  agent  of  an  undisclosed  principal,  who  is  a  minor,  cannot  be  rescinded 
by  the  bailee  on  the  ground  of  the  principal's  minority:  Stiff  v.  Keith,  143 
Mass.  224.  There  is  one  apparent  exception  to  this  rule,  that  the  adult  party 
to  a  contract  with  an  infant  caunot  take  advantage  of  the  infancy  of  the 
other  party;  namely,  an  infant  cannot  maintain  a  suit  for  the  specific  per- 
formance of  his  contract,  because  the  remedy  is  not  mutual,  since  the  defend- 
ant could  not  have  maintained  the  suit  against  the  infant  plaintiff:  Fliijht 
V.  Bolland,  4  Russ.  298;  and  see  Carrell  v.  Potter,  23  Mich.  377;  compare 
Smith  V.  Smith,  36  Ga.  184. 

For  the  same  reason,  if  a  joint  co-promisor  is  an  infant,  the  promisee,  in 
an  action  brought  upon  the  contract,  cannot  consider  the  contract  as  void  as 
to  the  infant,  but  must  join  him  as  a  party  defendant:  Wamsley  v.  Linden- 
berger,  2  Rand.  478;  S locum  v.  Hooker,  13  Barb.  536.  The  cases  of  Burgess 
V.  Merrill,  4  Taunt.  468,  Gibbs  v.  Merrill,  3  Taunt.  307,  313,  Assignees  of 
Hull  V.  Connolly,  3  McCord,  6,  15  Am.  Dec.  612,  maintaining  the  contrary, 
cannot  be  sustained.     And  if  a  defendant,  in  an  action  upon  a  joint  contract, 


April,  1890.]  Craig  v.  Van  Bebber.  697 

sets  up  his  infancy  as  a  defense,  the  plaintifif  may  enter  a  nolle  pj-osequi  or 
discontinue  as  to  him,  and  proceed  to  judgment  against  the  other  defend- 
ants: Hartnes$  v.  Thompson,  5  Johns.  IGO;  lUason  v.  Denisoii,  15  Wend.  64- 
66;  Woodward  v.  Newhall,  1  Pick.  500;  Vole  v.  Pennell,  2  Rand.  174,  179; 
Cutts  V.  Gordon,  13  Me.  474;  Kirhyv.  Cannon,  9  Ind.  371;  Tarjlor  v.  Dansby, 
42  Mich.  82;  or,  of  course,  the  plaintiff  may  try  the  question  of  infancy,  and 
if  found  against  him,  may  still  have  judgment  against  the  other  defendants: 
Cutts  V.  Gordon,  13  Me.  474.  The  opinion  entertained  by  the  nisi  prius  cases 
of  Chandler  v.  Parkes,  3  Esp.  76,  Jaffray  v.  Frehain,  5  Esp.  47,  that  this 
practice  could  not  be  followed,  but  that  the  plaintiff  should  discontinue  the 
action,  and  commence  a  new  action  against  the  adult  defendants  only,  has 
been  repeatedly  condemned,  and  is  no  longer  the  law. 

An  adult  defendant  likewise  cannot  plead  the  infancy  of  his  co-promisor, 
or  join  with  him  in  a  plea  of  infancy:  Van  Bramer  v.  Cooper,  2  Johns.  279; 
Inhabitants  of  Bordtntown  v.  Wallace,  50  N.  J.  L.  13;  and  a  joint  plea  of  the 
infancy  of  one  defendant  being  bad  on  demurrer  as  to  the  adult,  is  bad  as  to 
both:  Inhabitants  of  Bordentown  v.  Wallace,  50  N.  J.  L.  13.  So  a  firm  of 
copartners  cannot  avail  themselves  of  the  exception  to  the  rule  that  a  party 
cannot  rescind  a  contract  and  retain  the  consideration,  existing  in  favor  of 
infants,  when  they  bring  an  action  upon  a  policy  of  fire  insurance  after  a 
settlement  has  been  made  with  the  company  by  an  infant  member  of  the 
firm:  Brown  v.  Hartford  F.  Ins.  Co.,  117  Mass.  479. 

The  rule  that  the  infancy  of  the  payee  of  a  bill  or  note  is  no  defense  to 
an  action  on  the  paper  by  an  indorsee  or  transferee  against  the  acceptor, 
drawer,  or  maker  may  also  be  placed  on  the  ground  that  the  privilege  of 
infancy  is  personal:  Gray  v.  Cooper,  3  Doug.  65;  Taylor  v.  CroTcer,  4  Esp.  187; 
Nightinfjale  v.  Withinrjton,  15  Mass.  272;  8  Am.  Dec.  101;  Dulty  v.  Brownfield, 
1  Pa.  St.  497;  Hardy  v.  Waters,  38  Me.  450;  Frazier  v.  Massey,  14  Ind.  382; 
Oarner  v.  Cook,  30  Ind.  331;  Hastings  v.  Dollarhide,  24  Cal.  195.  And  to  an 
action  on  a  promise  to  pay  the  note  or  other  obligation  of  another,  the  fact 
that  the  latter  was  an  infant  is  no  defense:  Hesser  v.  Steiner,  5  Watts  &  S. 
476;  Kuiis's  Ex'rs  v.  Young,  34  Pa.  St.  GO;  and  an  injunction  to  restrain  pro- 
ceedings at  law  on  a  note  of  an  infant,  indorsed  by  his  father  as  security, 
given  for  the  purchase  of  lands  by  the  infant,  issued  on  a  bill  filed  by  the 
infant  to  disaffirm  the  sale,  -will  be  dissolved  as  to  the  father:  Parker  v. 
Baker,  1  Clarke  Ch.  136. 

The  foregoing  general  rule,  that  no  one  can  take  advantage  of  the  infancy 
of  a  party  to  a  contract  except  the  infant  himself,  is  subject  to  some  limita- 
tions. Thus  it  is  well  settled  that  a  privy  in  blood,  or  in  other  words,  the 
heir  of  an  infant,  may,  when  interested,  avoid  the  infant's  contracts  on  the 
ground  of  his  infancy,  provided,  of  course,  the  right  to  avoid  has  not  beea 
lost:  Whittingharns  Case,  8  Coke,  42  b;  White  v.  Flora,  2  Over.  426,  431; 
Breckenridge's  Heirs  v.  OrmsT/y,  1  J.  J.  Marsh.  236;  19  Am.  Dec.  71;  Lever- 
ing v.  Heighe,  2  Md.  Ch.  81;  3  Md.  Ch.  365;  Dominick  v.  Michael,  4  Sand. 
374,  418;  Hardy  v.  Waters,  38  Me.  450;  Hill  v.  Keyes,  10  Allen,  258,  260; 
Illinois  Land  and  Loan  Co.  v.  Bonner,  75  111.  315,  322;  Bozeman  v.  Browning, 
31  Ark.  364;  Veal  v.  Fortson,  57  Tex.  482;  Austin  v.  Charlestown  Female 
Seminary,  8  Met.  196,  203;  Cal.  Civ.  Code,  sec.  35;  Dak.  Civ.  Code,  sec.  17. 
So,  also,  an  infant's  personal  representatives  may  disaffirm  his  contracts: 
Hussey  v.  Jeivett,  9  Mass.  100;  Hill  v.  Keyes,  10  Allen,  258,  260;  Brecken- 
ridge's  Heirs  v.  Ormsby,  1  J.  J.  Marsh.  236;  19  Am.  Dec.  71;  Counts  v.  Bates, 
Harp.  L.  464;  Parsons  v.  Hill,  8  Mo.  135;  Ferguson  v.  BelVs  Adrnr,  17  Mo. 
347,  351;   Jefford's  Adm'r  v.  Ringgold,  6  Ala.  544;  Shropshire  v.  Burns,  4& 


698  Craig  v.  Van  Bebbeb.  [Missouri, 

Ala.  108;  Hardy  v.  Water.%  38  Me.  450;  Vaughan  v.  Parr,  20  Ark.  600; 
Bozeman  v.  Broinihig,  31  Ark.  3G4;  THlingha-st  v.  Holbrooh,  7  R.  I.  230,  243; 
Hastings  v.  DoUarhkle,  24  Cal.  195;  Cal.  Civ.  Code,  sec.  35;  Dak.  Civ.  Code, 
Bee.  1-7. 

But  the  guardian  of  an  infant,  it  is  held,  cannot  rescind  the  contracts  of 
his  ward:  Oliver  v.  Hoiidlet,  13  Mass.  237;  7  Am.  Dec.  134;  Crymes  v.  Day,  1 
Bail.  L.  320;  the  court,  in  the  first  of  these  cases,  saying:  "The  authority  and 
interest  of  a  guardian  extend  only  to  such  things  as  may  be  for  the  benefit 
and  advantage  of  tlie  ward.  If  an  infant  makes  a  contract  from  which  he 
derives  a  benefit,  it  cannot  be  avoided  by  his  guardian;  for  this,  being  injurious 
to  tlie  infant,  would  be  a  violation  of  the  guardian's  duty."  It  was,  how- 
ever, decided  in  Chandler  v.  Simmons,  97  Mass.  508.  93  Am.  Dec.  117,  that 
the  deed  of  conveyance  of  a  minor  may  be  avoided,  after  he  becomes  of  age, 
by  a  guardian  appointed  over  him  as  a  spendthrift.  "  After  the  infant  is  of 
full  age,"  says  the  court,  "if  unable  to  exercise  his  privilege,  by  reason  of 
mental  or  legal  incapacity,  it  seems  reasonable,  and  consistent  with  the  nature 
and  purpose  of  this  right,  that  it  should  be  exercised  for  him,  and  in  his  name 
by  the  guardian  who  may  have  charge  of  his  interests.  Otherwise  he  might 
be  remediless  for  most  serious  impositions,  as  he  can  do  no  legally  valid  act 
himself.  The  right  may  be  asserted  by  heirs;  and  we  cannot  doubt  that  it  may 
be,  also,  by  a  guardian  appointed  over  his  property  for  any  cause  for  which 
adult  persons  are  placed  under  guardianship. "  It  has  been  also  held  that  an 
assignee  in  insolvency  cannot  maintain  a  bill  in  equity  to  relieve  the  real 
estate  of  the  insolvent  from  the  encuml)rance  of  a  mortgage  thereon,  executed 
by  the  insolvent  when  a  minor,  and  not  ratified  or  disaffirmed  by  him  after 
coming  of  age:  Mansfield  v.  Gordon,  144  Mass.  168.  "While  the  rights  of  an 
assignee,"  says  Devens,  J.,  "  are  not  always  tested  by  those  of  an  individual 
creditor,  there  would  seem  to  be  no  reason  why  larger  rights  in  an  estate 
conveyed  by  a  minor  are  obtained  by  an  assignee  acting  on  behalf  of  all  the 
creditors."  An  objection  to  the  validity  of  a  marriage  settlement,  on  the 
ground  that  the  parties  to  it  were  infants,  cannot  be  made  by  the  trustee 
acting  under  it,  especially  when  a  court  of  equity  is  asked  to  compel  him  to 
render  an  account:  Jones  v.  Butler,  30  Barb.  641. 

It  has  sometimes  been  said  that  privies  in  estate  with  an  infant  might 
also  take  advantage  of  the  privilege  of  infancy:  White  v.  Flora,  2  Over.  426, 
431;  Jackson  ex  dem.  Brayton  v.  Biirchin,  14  Johns.  124,  127;  Beeler  v.  Bullitt, 
3  A.  K.  Marsh.  280;  13  Am.  Dec.  161;  Dominick  v.  Michael,  4  Sand.  374,  418; 
Nelson  V.  Eaton,  1  Redf.  498;  but  this  dictum  is  erroneous:  Whittingham's  Case, 
8  Coke,  42  b;  Breckenridge's  Heirs  v.  Ormsby,  1  J.  J.  Marsh.  236;  19  Am.  Dec. 
71;  Bozeman  v.  Broicning,  31  Ark.  364;  the  last  case  denying  the  right  to 
avoid  to  the  infant's  devisees.  It  should,  however,  be  carefully  noted  that 
after  the  infant  has  disaffirmed  his  contract,  a  privy  in  estate,  or  indeed  any 
one  whatever,  may  take  advantage  of  such  disaffirmance:  Jackson  ex  dem. 
Wallace  V.  Carpenter,  11  Johns.  539;  Jackson  ex  dem.  Brayton  v.  Burchin,  14 
Johns.  124,  127;  McGillv.  Woodward,  3  Brev.  401;  Williams  v.  Norris,  2  Litt. 
157;  Breckenridge's  Heirs  v.  Ormshy,  1  J.  J.  Marsh.  236;  19  Am.  Dec.  71;  Den 
ex  dem.  Hoyle  v.  Stowe.  2  Dev.  &  B.  320,  323;  Wimherly  v.  Jones,  1  Ga.  Dec. 
91;  Harris  v.  Cannon,  6  Ga.  382.  This  is  for  the  simple  reason  that  when  the 
contract  has  been  avoided,  it  is  as  though  it  had  never  exists.  One  who 
claims  to  be  the  owner  of  property  could  therefore  assert  that  a  previous 
transfer  of  the  property  made  during  infancy  by  the  person  under  whom  he 
derives  title  had  been  disaffirmed  by  the  latter.  So  sureties  on  the  note 
of  an  infant  given  for  the  price  of  land  purchased  by  him  are  not  liable  where 


April,  1890.]  Craig  v.  Van  Bebber.  699 

the  infant  disaffirms  the  contract  after  attaining  majority,  and  restores  the 
land  to  the  grantor:  Baker  v.  Kennett,  54  Mo.  82.  And  one  to  whom  land  has 
been  conveyed,  against  which  a  mechanic's  lien  for  materials  furnished  ia 
sought  to  be  enforced,  may,  after  the  grantor  has  disaffirmed  the  contract  on 
the  ground  of  infancy,  avail  himself  of  the  disaffirmance  in  defense;  and  this, 
it  is  held,  although  the  contract  was  disaffirmed  by  the  grantor  by  a  plea  of 
infancy  in  the  same  action:  Price  v.  Jennings,  62  Ind.  111.  Also,  where  an 
infant  mortgagor  has,  in  a  suit  against  him  and  his  vendee  to  foreclose, 
pleaded  his  infancy,  he  thereby  renders  his  mortgage  void  ab  initio,  and  a 
separate  answer  by  the  vendee,  alleging  such  infancy  and  avoidance,  is  good: 
Shrock  V.  Crowl,  83  Ind.  243.  The  right  of  avoidance,  however,  is  not  as- 
signable: Avstin  V.  Charlestown  Female  Seminary,  8  Met.  19(5,  203;  and  see 
Arndtage  v.  Widoe,  36  Mich,  124. 

Ratification  —  What  Contracts  of  Infants  may  be  Ratified. — The 
ratification  of  a  contract  made  during  infancy  necessarily  presupposes  that  the 
contract  was  not  absolutely  binding,  and,  on  the  other  hand,  that  is  was  no 
more  than  voidable.  If  the  contract  of  au  infant  be,  for  any  reason,  void, 
very  plainly  there  is  nothing  which  can  be  ratified.  Any  so-called  ratifica- 
tion could,  at  the  most,  be  but  a  new  contract,  into  which  all  the  elements, 
including  consideration,  must  enter.  Those  cases  which  hold  an  infant's  con- 
tract, entered  into  by  an  agent,  to  be  absolutely  void,  because  an  infant  can- 
not appoint  an  agent,  must,  to  be  consistent,  also  hold  the  contract  to  be 
incapable  of  ratification,  and  such  a  ruling  has  sometimes  actually  been 
made:  Doe  ex  dem.  Thomas  v.  Roberts,  16  Mees.  &  W\  778,  781;  Tmeblood  v. 
Trueblood,  8  Ind.  195;  65  Am.  Dec.  756;  Wainwright  v.  Wilkinson,  62  Md. 
146;  but  see  supra,  "  Delegation  of  Authority,"  and  particularly  the  case  of 
Whitney  v.  Dutch,  14  Mass.  457,  7  Am.  Dec.  229,  in  which  the  question  of  the 
ratification  of  a  note  executed  by  an  agent  of  an  infant  was  involved. 

If  any  or  all  contracts  of  infants  are  made  void  by  statute,  then,  of  course, 
the  contracts  cannot  be  ratified.  The  Infants'  Relief  Act  of  England  has 
already  been  noticed  above,  under  the  head  "Statutory  Regulation."  By 
the  second  section  of  that  act,  it  is  provided  that  "no  action  shall  be 
brought  whereby  to  charge  any  person  upon  any  promise  made  after  full 
age  to  pay  any  debt  contracted  during  infancy,  or  upon  any  ratification 
made  after  full  age  of  any  promise  or  contract  made  during  infancy, 
whether  there  shall  or  shall  not  be  any  new  consideration  for  such  prom- 
ise or  ratification  after  full  age."  It  has  been  held  that  this  provision 
applies  to  ratifications  made  after  the  passage  of  the  act  of  contracts  en- 
tered into  before  that  time:  Ex  parte  Kibble,  L.  R.  10  Ch.  373;  but  that 
an  action  was  maintainable  by  a  bona  fide  indorsee  for  value,  and  without 
notice,  against  the  acceptor  of  a  bill  of  exchange,  who  accepted  the  bill 
after  attaining  twenty-one  years  of  age,  for  a  debt  contracted  during  in- 
fancy, and  after  the  passage  of  the  act;  although  it  seems  that  in  such  a 
case  the  acceptance  would,  as  between  the  immediate  parties  to  the  bill,  be 
a  "  promise  or  ratification,"  within  the  meaning  of  the  section,  upon  which 
an  action  at  the  suit  of  the  drawer  would  not  lie:  Belfast  Banking  Co.  v. 
DoMrty,  4  L.  R.  Ir.  124.  It  has  also  been  held  that  this  section  applies  to 
promises  to  marry:  See  supra,  "Contracts  to  Marry  ";  and  that  therefore  a 
ratification  of  such  a  promise,  after  the  infant  became  of  full  age  wou'd  not 
be  binding,  although  a  fresh  promise  would  be:  Coxhead  v.  Midlis,  L.  R.  3 
C.  P.  D.  439;  Northcote  v.  Doughty,  L.  R.  4  C.  P.  D.  385;  Ditcham  v.  Wor- 
rail,  L.  R.  5  C.  P.  D.  410.  For  cases  and  comments  upon  statutes  of  states 
of  this  country,  see  supra,  "Statutory  Regulation." 


700  Craig  v.  Van  Bebber.  [Missouri, 

Independently  of  statute,  and  the  few  cases  which  stubbornly  insist  that 
certain  contracts  of  infants  are  void  at  common  law,  the  rule  is,  that  the  gen- 
eral contracts  of  an  infant  may  be  ratified  by  him  after  coming  of  age,  and 
thus  rendered  no  longer  subject  to  his  disaffirmance. 

Nature  ajjd  Effect  of  Ratification.  —  It  has  sometimes  been  said  that 
if  a  person,  after  attaining  his  majority,  ratifies  a  contract  made  by  him 
during  infancy,  he  takes  upon  himself  a  new  liability  founded  upon  an  exist- 
ing moral  obligation:  Thornton  v.  lUini/worth,  2  Barn.  &  C.  824,  826;  4  Dowl. 
&  R.  545;  Wilcox  v.  Roath,  12  Conn.  550;  Wathins  v.  Stevens,  4  Barb.  168, 
175;  Hodges  w  Hunt,  22  Barb.  150,  151;  Fetrowv.  Wiseman,  40  Ind.  148,  157. 
Thus,  says  Bayley,  J.,  in  Thornton  v.  Illingworth,  2  Barn  &  C.  824,  825, 
"if  he  makes  a  promise,  after  he  comes  of  age,  that  binds  him,  on  the  ground 
of  his  taking  upon  himself  a  new  liability  upon  a  moral  consideration  exist- 
ing before,  it  does  not  make  a  legal  debt  from  the  time  of  making  the  bargain"; 
and  in  Hodges  v.  Hunt,  22  Barb.  150,  151,  Paige,  J.,  says:  "Although  most  of 
the  contracts  of  infants  are  now  held  to  be  voidable,  and  not  absolutely  void, 
yet,  as  they  are  not  binding  on  the  infant,  a  new  promise  does  not  impart  to 
them  any  legal  validity  so  aa  to  enable  the  creditor  to  enforce  them;  but  the 
new  promise  creates  a  new  contract,  founded  upon  and  deriving  its  aliment 
from  the  old  demand,  upon  which  the  creditor  may  sustain  a  suit  against  the 
infant."  This  theory  seems  to  be  a  result  of  the  old  notion  that  many,  if 
not  most,  contracts  of  infants  are  void,  and  is  utterly  unsound.  The  truth 
is,  a  ratification  simply  extinguishes  the  infirmity  of  infancy  in  the  contract, 
so  that  the  contract  can  no  longer  be  disaffirmed.  A  ratification  is  not  the 
creation  of  any  new  liability,  but  is  merely  the  removal  of  an  objection  to 
an  already  existing  and  continuing  liability.  An  infant's  contract  is  binding 
upon  him  until  disaffirmed,  and  when  ratified  it  ceases  to  be  the  subject  of 
avoidance.  As  was  correctly  said  by  McGowan,  J.,  in  Ihley  v.  Padgett,  27 
S.  C.  300,  302:  "From  its  very  nature,  a  thing  only  voidable  needs  no  pos- 
itive confirmation,  but  stands  good  until  impeached  by  a  proper  party.  In 
the  first  instance,  confirmation  has  no  proper  application  to  it,  but  when 
there  is  an  effort  to  avoid  the  act,  it  becomes  important  to  inquire  whether 
there  has  been  confirmation;  for  if  so,  the  matter  has  passed  beyond  the  con- 
trol of  the  party,  and  is  no  longer  voidable."  Compare  a  distinction  made 
between  an  infant's  executed  and  his  executory  contracts,  as  to  their  binding 
force,  commented  upon  ante,  title  "Void  and  Voidable." 

It  may  furthermore  be  regarded  as  settled,  contrary  to  expressions  of 
opinion  found  in  some  of  the  foregoing  cases,  that  the  ratification  of  a  con- 
tract entered  into  during  infancy  relates  back  to  the  time  the  contract  was 
made,  and  renders  it  valid  from  the  beginning:  Slator  v.  Trimble,  14  Ir.  C. 
L.  342;  CJveshire  v.  Barrett,  4  McCord,  241;  17  Am.  Dec.  735;  Reedv.  Batchel- 
der,  1  Met.  559;  West  v.  Penny,  16  Ala.  187,  191;  Doe  ex  dem.  McCormic  v. 
Leggett,  8  Jones  L.  425,  427;  Palmer  v.  Miller,  25  Barb.  399;  Hall  v.  Jones, 
21  Md.  439;  Minock  v.  Shortridge,  21  Mich.  304,  316.  Thus,  it  is  said  by 
Graves,  J.,  in  Minock  v.  Shortridge,  21  Mich.  304,  315,  "when  a  ratifica- 
tion occurs,  it  excludes  all  right  to  disavow  the  original  undertaking,  and 
makes  it  obligatory  as  against  the  defense  of  infancy.  The  new  matter 
reaches  back  and  renders  the  original  contract  binding  from  the  time  it  was 
made,  and  the  first  agreement,  having  in  its  entirety  received  the  assent  of 
the  promisor  after  the  ceasing  of  his  disability,  is  made  in  all  its  parts  the 
binding  contract  of  the  parties."  It  follows,  therefore,  that  if  a  promissory 
note  made  during  infancy  is  confirmed,  a  transferee  holds  the  paper  as  a 
valid  negotiable  instrument,  on  which  he  can  maintain  an  action  in  hia  own 


April,  1890.J  Craiq  v.  Van  Bebbeb.  701 

name:  Cheshire  v.  Barrett,  4  McCord,  241;  17  Am.  Dec.  735;  Eeed  v.  Batch- 
elder,  1  Met.  559;  and  a  ratification  by  infants  of  a  contract  of  sale  of  their 
lands  will  inure  to  the  benefit  of  the  party  entitled  under  the  original  ven- 
dee: Hall  V.  Jones,  21  Md.  439.  So  it  is  held  the  ratification  of  a  mortgage 
executed  during  infancy  will  cuooff  a  voluntary  conveyance  of  the  premisea 
by  the  mortgagor  to  a  third  person,  in  trust  for  the  mortgagor's  wife  and 
children,  made  intermediate  the  execution  of  the  mortgage  and  its  ratifica- 
tioa:  Palmer  v.  Miller,  25  Barb.  399. 

Finally,  it  is  the  rule  that  a  ratification  once  validly  made  of  a  contract 
entered  into  by  the  party  while  an  infant  is  binding  upon  him,  and  cannot  be 
recalled  or  disaffirmed:  Derrick  v.  Kennedy,  4  Port.  41;  McCarthy  v.  Nicrosi, 
72  Ala.  332;  47  Am.  Rep.  418,  421;  Voltz  v.  Voltz,  75  Ala.  555;  Hastings  v. 
Dollarhide,  24  Cal.  195;  and  see  Mustard  v.  Woh{ford's  Heirs,  15  Gratt.  329; 
7(5  Am.  Dec.  209. 

Suit  should  be  Brought  on  the  Contract  Ratified,  and  if  infancy 
is  pleaded,  the  plaintiff  should  reply  the  confirmation.  This  is  generally 
conceded  to  be  the  proper  rule  of  pleading  when  a  contract  made  during  in- 
fancy is  subsequently  ratified,  although  some  of  the  cases  intimate  that  the 
plaintiff  might,  in  case  the  defendant  had  made  a  new  promise  after  coming 
of  age,  declare  on  the  new  promise:  Hunt  v.  Massey,  5  Barn.  &  Adol.  902, 
903;  West  v.  Penny,  16  Ala.  187,  191;  Stern  v.  Freeman,  4  Met.  (Ky.)  309, 
312;  Watkins  v.  Stevens,  4  Barb.  168,  175;  Hodges  v.  Hunt,  22  Barb.  150,  151; 
contra,  Bliss  v.  Ferryman,  1  Scam.  484.  In  Stern  v.  Freeman,  4  Met.  (Ky. ) 
309,  312,  Bullitt,  J.,  says:  "  Probably  where  a  person  after  coming  of  age 
has  promised  to  pay  a  debt  contracted  during  infancy,  or  has  done  an  act 
from  which  the  law  implies  such  a  promise,  the  plaintiff  might  declare  upon 
the  new  promise,  relying  upon  the  original  consideration  to  support  it. 
But  he  is  not  obliged  to  do  so.  He  may  declare  upon  the  original  contract, 
and  show  the  new  promise,  like  any  other  ratification,  in  avoidance  of  the 
plea  of  infancy.  This  results  necessarily  from  the  fact  that  the  contract  is 
voidable  only,  and  not  void.  It  is  valid  until  disaffirmed.  No  ratification  is 
needed  to  make  it  binding.  Disaffirmance  is  needed  to  invalidate  it.  The 
plaintiff  may,  therefore,  sue  upon  it,  and  if  the  defendant  pleads  infancy, 
the  plaintiff  may  avoid  the  plea  by  showing  a  promise,  or  other  act  of  rati- 
fication, by  which  the  defendant  has  deprived  himself  of  the  right  to  avoid 
the  contract.  In  such  a  case,  the  only  effect  of  the  ratification  is  to  prevent 
the  defendant  from  disaffirming  the  contract  sued  upon,  which,  being  valid 
until  disaffirmed,  clearly  forms  the  basis  of  recovery,  the  ratification  form- 
ing matter  of  confession  and  avoidance  to  the  plea  of  infancy." 

If  the  contract  is  ratified  by  an  absolute  promise,  we  think  that  the  action 
should  always  properly  be  brought  upon  the  contract,  and  not  upon  the  new 
promise.  There  seems  to  be  no  principle  upon  which  the  new  promise,  in 
such  a  case,  can  be  regarded  as  a  contract  supplanting  the  contract  ratified. 
It  is  true  that  there  is  a  theory,  noticed  under  the  preceding  head,  that  a 
ratification  simply  creates  a  new  liability,  based  upon  a  moral  consideration, 
but  there  is  no  sound  reason  to  support  it.  Those  who  maintain  the  theory 
are  compelled  to  say  that  tlie  rule  in  question,  by  which  an  action  can  be 
brought  upon  the  contract  ratified,  is  an  anomaly:  See  Hodjes  v.  Hunt,  22 
Barb.  150,  151.  There  are  cases,  however,  where  a  new  promise  may  not 
amount  to  a  ratification  at  all,  but  an  original  undertaking,  and  where,  there- 
fore, no  action  can  be  brouglit  upon  the  contract  made  during  infancy,  but  only 
upon  the  new  promise;  or  wliere  tlie  new  promise  may  amount  to  a  condi- 
tional ratification,  and  hence  where  no  action  can  be  brought  upon  the  origi- 


702  Craig  v.  Van  Bebbeb.  [Missouri, 

nal  contract,  or,  perhaps,  upon  the  new  promise,  until  the  condition  has  been 
performed.  These  cases  can  be  best  explained  by  quoting  the  language  of 
Mr.  Justice  Graves  in  Minock  v.  ShoHrid'je,  21  Mich.  304,  316,  as  follows: 
"  The  minor,  on  coming  of  age,  may,  however,  fail  or  decline  to  assent  to  a 
confirmation  of  the  first  agreement,  but  may  be  willing  to  make  himself 
liable  upon  a  new,  express,  or  implied  undertaking  based  on  the  original 
consideration.  He  may,  expressly  or  by  implication,  agree  to  terms  which 
necessarily  create  a  conditional,  qualified,  or  restricted  liability,  and  in  f?uch 
case,  the  first  agreement  is  not  ratified  by  the  second.  A  new  agreement  is 
constituted,  which  is  operative  only  from  the  time  of  its  creation,  and  effect- 
ive according  to  its  nature.  If  the  promise  or  act  of  the  party  after  ma- 
jority amounts  to  a  conditional  ratification,  instead  of  a  new  substantive 
engagement,  the  contract  made  during  minority  may  then  be  enforced,  but 
not  until  the  condition  is  fulfilled."  And  see  post,  "Ratification  of  Con- 
tracts, Executory  on  Infant's  Part,  by  New  Promises  or  Acknowledgments," 
and  particularly  the  quotation  under  tliat  head  from  Edijerly  v,  Shaw,  25 
N.  H.  514,  517;  57  Am.  Dec.  349,  351. 

If  the  rules  of  pleading  do  not  admit  of  a  reply,  as  in  some  of  the  code 
states,  and  the  defendant,  in  an  action  upon  a  contract,  pleads  infancy,  the 
plaintiff  may  give  the  ratification  in  evidence  without  alleging  it  in  his 
original  or  in  an  amended  complaint:  Stern  v.  Freeman,  4  Met.  (Ky.)  309; 
Hodijes  V.  Hunt,  22  Barb.  150;  but  where  a  reply  to  afiirmative  matter  in  the 
answer  is  required,  and  there  is  no  reply  of  a  ratification  to  a  plea  of  infancy, 
evidence  of  such  ratification  is  inadmissible,  it  being  affirmative  matter: 
Fetrow  V.  Wiseman,  40  Ind.  148.  Infancy  is,  of  course,  admitted  by  the 
replication  of  a  new  promise  to  a  plea  of  infancy,  and  hence  need  not  be 
proved  by  the  defendant:  Ooodsell  v.  Myers,  3  Wend.  479. 

Ratification  after  Suit  Brought. — It  has  been  very  generally  held  that 
a  ratification  of  a  contract  entered  into  during  minority  must  be  made  before 
suit  brought,  in  order  that  the  action  can  be  sustained  against  a  plea  of  infancy: 
Thornton  v.  lUingworth,  2  Barn.  &  C.  824;  4  Dowl.  &  R.  545;  Hyer  v,  Hyatt, 
■3  Cranch  C.  C.  276;  Ford  v.  Phillips,  1  Pick.  202;  Freeman  v.  Nicliols,  138 
Mass.  313;  Mernam  v.  Wilkins,  6  N.  H.  432;  25  Am,  Dec.  472;  Hale  v.  Ger- 
rish,  8  N.  H.  374;  Aldrich  v,  Orimes,  10  N,  H.  194,  198;  Martin  v,  Byrom, 
Dud.  (Ga.)  203,  204.  This  rule  is  founded  on  the  notion  that  the  contract  of 
an  infant  is  utterly  invalid  until  it  is  ratified,  and  that  the  ratification  creates 
the  liability,  although  the  rules  of  pleading  permit  an  action  to  be  brought 
on  the  contract.  Thus,  says  the  court  in  Ford  v.  Phillipi,  1  Pick.  202,  "the 
right  of  a  party  to  recover  is  to  be  tried  by  its  validity  at  the  time  when  the 
action  is  commenced  ";  and  in  Merriam  v,  WilMns,  6  N.  H.  432,  25  Am.  Dec. 
472:  "In  the  case  of  infancy,  there  is  no  cause  of  action  until  the  contract  is 
ratified  after  the  infant  arrives  at  an  age  when  the  law  allows  him  to  bind 
himself  by  a  contract.  The  contract  of  an  infant  to  pay  for  goods  sold  and 
delivered  to  him  is,  unless  the  goods  are  necessaries,  no  foundation  for  an 
action.  The  delivery  of  the  goods  may  be  a  moral  consideration  which  will 
sustain  a  promise  to  pay  for  them  made  after  he  comes  of  age.  But  such 
promise  cannot  relate  back,  upon  any  principle  with  which  we  are  acquainted, 
so  as  to  make  the  original  contract  a  good  foundation  for  an  action  from 
the  beginning.    There  is  no  legal  cause  of  action  until  the  contract  is  ratified." 

The  rule,  therefore,  rests  upon  reasoning  wholly  indefensible,  and  it  seems 
surprising  that  such  a  case  as  Hyer  v.  Hyatt,  3  Cranch  C.  C.  276,  should 
have  adopted  it.  Since,  as  has  been  said,  the  action  is  brought  upon  the 
contract  itself,  and  not  upon  the  ratification,  and  since  the  ratification  simply 


i 


April,  1890.]  Craig  v.  Van  Bebbee.  703 

avoids  the  objection  of  infancy,  (it  would  seem  clear  that  a  ratification, 
although  made  after  the  commencement  of  the  action,  should  overcome  the 
plea  of  infancy.  This  is  the  view  taken  by  some  cases,  and  we  think  it  cor- 
rect: Wright  v.  Steele,  2  N.  H.  51;  Best  v.  Oivens,  3  B.  Mon.  72;  Slator  v. 
Trimble,  14  Ir.  C.  L.  342,  353;  and  see  Doe  ex  dem.  McCoiTnic  v.  Leggett, 
8  Jones  L.  425,  427.  The  subsequent  New  Hampshire  cases  have,  however, 
overruled  Wright  v.  Steele,  2  N.  H.  51,  and  taken  the  erroneous  position  no- 
ticed above. 

Ratification  of  Part  of  Transaction.  — The  consequences  of  ratifying 
a  part  of  a  transaction  have  been  fully  discussed  ante,  under  the  title  "Dis- 
affirmance of  Part  of  Transaction,"  and  need  not  be  repeated  here.  It  ia 
enough  to  say,  as  was  said  there,  that  a  person  cannot  affirm  a  portion  of  a 
single  transaction  entered  into  during  infancy,  and  repudiate  the  rest.  He 
must  abide  by  it,  or  disaffirm  it  in  toto.  And  if  he  ratifies  a  part  of  the  agree- 
ment, he  ratifies  it  all. 

Ratification  cannot  be  Made  until  Full  Age.  —  It  has  been  seen 
that  an  infant,  in  order  that  he  may  be  completly  protected,  is  permitted  by 
the  law  to  disaffirm  certain  of  his  contracts  during  minority.  But,  on  the 
other  hand,  he  can  never  ratify  a  contract  wliile  his  infancy  continues:  Corey 
V.  Burton,  32  Mich.  30;  Bank  of  Silver  Creek  v.  Browning,  16  App.  Pr.  272. 
The  reason  ia  evident.  Any  attempted  ratification  would  be  subject  to  the 
same  infirmity  as  the  contract  itself,  and  could  not  possil)ly  render  the  con- 
tract binding,  so  that  it  could  not  afterwards  be  disaffirmed.  But  a  replica- 
tion to  a  plea  of  infancy,  that  the  defendant,  since  the  making  of  the  promises, 
attained  the  age  of  twenty-one,  and  that,  before  the  commencement  of  the 
suit,  he  ratified  and  confirmed  the  promises,  is  good  after  verdict,  though  it 
omits  to  allege  that  he  ratified  and  confirmed  after  he  became  of  age:  Cohen 
V.  Armstrong,  1  Maule  &  S.  724. 

It  might  be  here  noticed  that  if  the  plaintiff  replies  to  a  plea  of  infancy 
that  the  defendant,  after  he  attained  the  age  of  twenty-one  years,  ratified 
the  contract,  and  the  defendant  takes  issue  on  the  allegation,  the  plaintiff 
need  only  prove  the  ratification,  and  the  defendant  must  show  his  infancy 
at  the  time,  the  presumption  being  that  when  a  person  contracts  he  is  of 
proper  age,  and  the  incapacity  lying  within  the  defendant's  knowledge,  and 
therefore  properly  to  be  proved  by  him:  Borthwick  v.  Carruthers,  1  Term 
Rep.  648;  Hartley  v  ,  Wharton,  11  Ad.  &  E.  934;  3  Perry  &  D.  529;  Bigelow 
V.  Orannls,  4  Hill,  206;  Bay  v.  Gunn,  1  Denio,  108. 

Who  may  Rati  fy.  —  So  far  aa  the  question  of  disaffirmance  of  infants' 
contracts  is  concerned,  it  has  been  shown  that  infancy  is  a  personal  privilege, 
of  which  no  one  is  perniitteil  to  take  advantage  except  the  infant  himself, 
and  his  personal  representatives  and  heirs.  We  do  not  see  why  the  same 
rule  should  not  apply  to  the  ratification  of  infants'  contracts.  Indeed,  it 
has  been  held  that  the  contract  of  an  infant  may  be  ratified  by  his  personal 
representatives  after  his  death:  Jefford's  Adm'r  v.  Ringgold,  6  Ala.  544; 
Shropshire  v.  Burns,  46  Ala.  108;  Bozemnn  v.  Browning,  31  Ark.  304,  374, 
378;  and  that  acts  by  the  personal  representative  of  an  infant  which  would  have 
amounted  to  a  ratification  by  the  infant  himself  will  likewise  amount  to  a 
ratification  by  the  personal  representative:  Shropshire  v.  Burns,  46  Ala.  108; 
and  that,  therefore,  where  an  infant  purchased  a  horse,  and  died  in  possession 
of  the  same  before  attaining  majority,  the  taking  possession  and  sale  of  the  horse 
by  the  infant's  administrator,  as  a  part  of  the  infant's  estate,  with  full  knowl- 
edge that  it  had  been  purchased  by  the  infant,  and  that  a  promissory  note 


704  Craig  v.  Van  Bebbeb.  [Missouri, 

given  by  the  infant  for  the  price  had  not  been  paid,  is  a  ratification  of  the  pur- 
chase, and  consequently  infancy  will  no  longer  be  a  defense  to  an  action  on 
the  note:  Shropshire  v.  Burns,  46  Ala.  108;  but  see  contra.  Counts  v.  Bates, 
Harp.  L.  464.  Where,  however,  the  heir  of  a  person  who  had  conveyed  lands 
during  infancy  filed  a  statement  in  the  court  where  administration  of  the 
infant's  estate  was  had  that  he  had  no  other  claim  against  the  estate,  except 
the  amount  due  on  guardian's  account,  the  statement  having  reference  to 
personal  estate  solely,  has  no  bearing  upon  his  claim  as  heir,  and  therefore  ia 
no  affirmance  of  the  infant's  conveyance:  Illinois  Land  and  Loan  Co.  v.  Bon- 
ner, 75  111.  315. 

We  may  observe,  in  conclusion,  that  although  an  infant  himself  has  not 
the  legal  capacity  to  confirm  his  contracts  until  he  reaches  his  majority,  yet 
■we  think  it  cannot  be  questioned  that  any  other  person,  as  above,  to  whom 
the  law  gives  the  privilege  of  ratifying  the  infant's  contracts,  and  who  him- 
self labors  under  no  disability,  may  exercise  the  privilege  before  the  time  at 
which  the  infant  would  have  arrived  at  full  age,  had  he  lived:  See  Jefford'a 
Adrn'r  v.  Ringgold,  6  Ala.  544;  Shropshire  v.  Burns,  46  Ala.  108. 

Ratification  is  Question  of  Intention,  to  be  inferred  from  the  conduct 
or  words  of  the  party  ratifying:  Rainsford  v.  Rainsford,  Speers  Eq.  385,  392; 
Davidson  v.  Young,  38  111.  145,  153;  McCarty  v.  Carter,  49  111.  53,  56;  95  Am. 
Dec.  572,  576;  Durfee  v.  Abhott,  61  Mich.  471,  478;  Scott  v.  Scott,  29  S.  C.  414. 
"Ratification,"  says  the  court  in  McCarty  v.  Carter,  49  111.  53,  56,  95  Am. 
Dec.  572,  576,  "  by  an  adult  of  a  contract  made  by  him  when  a  minor  is  a 
question  of  intention.  It  can  be  inferred  only  from  his  free  and  voluntary  acts 
or  words."  It  is  possible,  however,  that  a  party  who  will  be  deemed  to  have 
ratified  his  contract,  made  during  infancy,  by  his  conduct  after  coming  of  full 
age,  may  have  no  distinct  idea  of  ratification,  but  his  conduct  be  neverthe- 
less inconsistent  with  any  other  result,  as  where,  after  coming  of  age,  he  re- 
tains property  purchased  for  an  unreasonable  time,  or  uses  it  as  his  own,  or 
sells  it.  In  such  a  case,  we  should  say  that  it  would  make  no  diS'erence 
whether  he  distinctly  contemplated  a  ratification  or  not.  This  is  perhaps 
what  Chancellor  Harper  had  in  mind  when  he  said,  in  Rainsford  v.  Rains- 
ford,  Speers  Eq.  385,  392:  "I  have  looked  a  good  deal  into  the  cases  in  re- 
lation to  the  confirmation  of  contracts  made  by  infants,  and  it  appears  to 
me  either  that  it  must  directly  appear  that  the  act  was  intended  to  con- 
firm, or  that  it  was  of  such  a  nature  as  to  operate  a  fraud  on  the  other  party 
if  the  contract  were  not  affirmed,  or  what  perhaps  amounts  to  the  same 
thing,  to  give  an  advantage  to  the  infant  contracting  party  to  which  he 
would  not  be  entitled  but  on  the  supposition  of  the  validity  of  the  con- 
tract. " 

In  Burdett  v.  Williams,  30  Fed.  Rep.  Rep.  697,  where  a  minor,  four 
months  after  coming  of  age,  filed  a  petition  to  become  a  co-libelant  in 
a  libel  by  certain  seamen  of  a  vessel,  under  their  written  contract  for 
wages,  in  which  nothing  was  said  in  regard  to  his  minority,  and  it  appear- 
ing that  he  was  neither  intelligent  nor  provident,  but  that  having  heard 
that  his  associates  had  brought  a  suit  for  wages,  obtained  the  services  of  the 
lawyer  who  was  acting  for  the  rest,  it  was  held  that  there  was  not  sufficient 
evidence  of  intelligent  action  to  show  a  ratification  of  the  contract. 

The  question  as  to  what  acts  will  amount  to  a  confirmation  has  been  held 
to  be  one  which  should  be  submitted  to  and  determined  by  a  jury,  under 
proper  instructions  from  the  court:  Durfee  v.  Abbott,  61  Mich.  471,  478;  and 
see  Irvine  v.  Irvine,  9  Wall.  617;  Soutlierton  v.  Whittock,  1  Strange,  690. 


1 


April,  1890.]  Craig  v.  Van  Bebber.  705 

IIatification  must  be  Voluntary,  the  action  of  a  free  mind,  exempt 
from  all  constraint  and  disability.  This  proposition  is  sustained  by  a  few  de- 
cisions and  by  the  dicta  of  many  cases,  and  is  unquestionably  correct,  since 
the  confirmatory  acts  involve  a  mental,  assent.  It  applies  particularly  to  a 
ratification  by  means  of  an  express  promise:  Hanner  v.  K'dling,  5  Esp.  102; 
Kay  V.  Smith,  21  Beav.  522;  Sims  v.  Everhardt,  102  U.  S.  300,  312;  Alexander 
V.  Hutcheson,  2  Hawks,  535,  536;  Dunlap  v.  Hales,  2  Jones  L.  381,  382; 
Turner  v.  Gaither,  83  N.  C.  357,  363;  35  Am.  Rep.  574,  577;  Martin  v.  By- 
rom.  Dud.  (Ga.)  203,  204;  Reed  v.  Boshears,  4  Sueed,  118;  Fetrow  v.  Wise- 
man, 40  Ind.  148;  McCarty  v.  Carter,  49  111.  53,  56;  95  Am.  Dec.  572,  574. 
A  promise,  or  other  positive  act  of  confirmation,  must,  therefore,  not  be 
made  under  duress,  or  procured  through  fraud.  In  Chandler  v.  Simmons,  97 
Mas.s.  50S,  512,  93  Am.  Dec.  117,  120,  it  was  held  that  a  ratification  by  a  per- 
son of  his  deed  of  conveyance,  made  during  infancy,  by  waiver,  or  implied  from 
acts  or  from  an  omission  to  avoid,  requires  on  his  part  a  mental  and  legal 
capacity  to  exercise  the  right,  and  to  bind  himself  by  such  act  or  omission; 
and  his  express  acts  of  confirmation  are  in  the  nature  of  a  contract,  and  re- 
quire all  the  elements  of  a  contract,  except  a  new  consideration,  to  give  them 
effect;  and,  therefore,  the  express  ratification  by  an  adult  of  a  deed  of  con- 
veyance made  by  him  while  a  minor  is  void,  if  made  after  proceedings  to 
place  him  under  guardianship  as  a  spendthrift  have  been  taken,  which  re- 
sulted in  the  appointment  of  a  guardian,  under  a  statute  which  provides 
that  "if  a  guardian  is  appointed  upon  such  complaint,  all  contracts,  except 
for  necessaries,  and  all  gifts,  sales,  or  transfers  of  real  or  personal  estate, 
made  by  the  spendthrift  after  such  filing  of  the  complaint  and  order,  and  be- 
fore the  termination  of  the  guardianship,  shall  be  void." 

Ratification,  whether  must  have  been  Made  with  Knowledge  of 
NoN -LIABILITY.  —  The  rule  is  sustained  by  the  decisions  and  dicta  of  a  con- 
siderable number  of  cases  that  a  new  promise,  or  other  express  confirmatory 
act  of  a  contract  entered  into  during  infancy,  must,  in  order  to  amount  to  a 
binding  ratification,  be  made  by  the  party  with  full  knowledge  that  he  is 
not  legally  liable  upon  the  contract:  Ilarmer  v.  Killing,  5  Esp.  102;  Tucker 
V.  Moreland,  10  Pet.  59,  76;  1  Am.  Lead.  Gas.  *224,  *233;  Curtin  v.  Patton,  11 
Serg.  &  R.  305;  Hinely  v.  Manjarilz,  3  Pa.  St.  428;  Alexander  v.  Hutcheson, 
2  Hawks,  535,  536;  Dunlap  v.  Hales,  2  Jones  L.  381,  382;  Turner  v.  Gaither, 
83  N.  C.  357,  363;  35  Am.  Rep.  574,  577;  Scott  v.  Buchanan,  11  Humph. 
468;  Reed  v.  Boshears,  4  Sneed,  118;  Norrk  v.  Vance,  3  Rich.  L.  164;  Petty 
V.  Roberts,  7  Bush,  410;  Fetrow  v.  Wiseman,  40  Ind.  148;  Baker  v.  Kennett, 
54  Mo.  82;  Owen  v.  Lon</,  112  Mass.  403;  Eureka  Company  v.  Edwards,  71 
Ahi.  248;  Flexner  v.  Dicherson,  72  Ala.  318;  Hatch  v.  Hatch's  Estate,  60  Vt. 
160  171.  This  rule,  however,  has  been  severely  condenmed,  and  it  has  been 
held,  on  the  other  liand,  not  to  be  necessary  to  a  valid  ratification  that  the 
party  should  know  that  he  is  not  legally  liable  by  reason  of  his  infancy: 
Morse  v.  Wheeler,  4  Allen,  570;  Anderson  v.  Soward,  40  Ohio  St.  325;  48  Am. 
Rep.  687;  Ring  v.  Jamison,  66  Mo.  424;  Clark  v.  Van  Court,  100  Ind.  113; 
50  Am.  Rep.  774;  compare  Owen  v.  Long,  112  Mass.  403;  the  court  saying 
in  J/o)-*'e  v.  Wheeler,^  Allen,  570:  "It  is  a  long-established  legal  principle 
that  he  who  makes  a  contract  freely  and  fairly  cannot  bo  excused  from  per- 
forming it  by  reason  of  his  ignorance  of  tlie  law  when  he  made  it";  and  in 
Tajl  v.  Sergeant,  18  Barb.  .320,  it  was  held  tliat  it  is  to  be  presumed,  in  the 
absence  of  evidence  to  the  contrary,  that  at  the  time  a  person  makes  a  new 
promise  to  pay  a  debt  incurred  during  infancy,  he  was  aware  of  his  rigiits, 
and  knew  the  facts  necessary  to  establish  his  exemption  from  Ugal  liability. 
Am.  ST.  Ktr.,  Vol.  XVllI.  —45 


706  Craig  v.  Van  Bebber.  [Missouri, 

While  we  agree  with  what  the  court  says  in  Morse  v.  Wheeler,  4  Allen,  570, 
iu  its  application  to  contracts,  we  do  not  think  that  it  should  be  applied  to 
the  removal  of  a  disability.  It  seems  to  us  that  if  the  objection  of  infancy 
to  a  contract  is  to  be  removed,  the  party  should,  as  a  rule,  know  that  such 
an  objection  exists,  before  he  is  held  Ijound  by  his  acts  and  conduct. 

Burden  of  Showing  Ratification  Rests  upon  Him  Who  Claims  It.  — 
If,  then,  to  an  action  on  a  contract,  the  defendant  pleads  infancy,  unless  the 
plaintiff  takes  issue  upon  that  fact,  or  unless  he  shows  that  the  contract  wa3 
for  necessaries,  he  will  be  obliged  to  reply  a  ratiiicatiou  by  the  defendant 
after  coming  of  full  age,  if  a  reply  is  permitted  by  the  rules  of  pleading,  and, 
at  all  events,  prove  the  ratification:  Dockery  v.  Day,  7  Port.  518;  Find  v. 
Cathcart,  8  Ala.  725;  Walsh  v.  Powers,  43  N.  Y.  23,  26,  27;  3  Am.  Rep.  654, 
655;  Tobeyv.  Wood,  123  Mass.  88;  25  Am.  Rep.  27,  28;  Catlin  v.  Haddox,  49 
Conn.  492;  44  Am.  Rep.  249,  254;  Tykr  v.  Estate  of  Gallop,  68  Mich.  185;  13 
Am.  St.  Rep.  336.  Although,  in  such  a  case,  as  seen  above,  under  the  head 
"Ratification  cannot  be  Made  until  Full  Age,"  it  does  not  devolve  upon  the 
plaiutifi^  to  prove,  in  the  first  instance,  that  the  ratification  was  made  by  the 
defendant  after  full  age,  but  the  burden  rests  upon  the  defendant  to  show 
his  infancy  at  the  time. 

How  A  Ratification  may  be  Made.  —  There  are  three  modes  by  which 
a  contract  made  during  infancy  may  be  ratified:  By  express  words;  by  acts 
and  conduct  whicli  reasonably  imply  a  ratification;  and  by  an  omission,  un- 
der certain  circumstances,  to  disalfirm  within  a  reasonable  time  after  reach- 
ing full  age:  See  Little  v.  Duncan,  9  Rich.  L.  55,  59;  64  Am.  Dec.  760,  762; 
Norris  v.  Vance,  3  Rich.  L.  164,  168;  Tohey  v.  Wood,  123  Mass.  88,  89;  25 
Am.  Rep.  27,  28.     Ihese  modes  of  ratification  will  now  be  considered. 

New  Consideration  is  not  Required  to  a  Valid  Ratification.  — This 
is  a  rule  which  applies  particularly  to  new  promises  made  after  full  age.  It 
has  been  seen  that  a  ratification  is  simply  a  waiver  of  the  objection  of  infancy 
to  the  contract,  and  that  an  action  should  be  based,  not  upon  the  ratification, 
but  upon  the  contract.  If,  then,  the  contract,  as  is  assumed,  had  a  consid- 
eration, nothing  further  in  that  respect  is  required,  in  order  to  sustain  an 
action  upon  it.  Even  the  theory  that  the  action  is  really  founded  on  the 
ratification  asserts  that  the  moral  obligation  growing  out  of  the  contract  is  a 
sufficient  consideration  to  support  the  ratification.  Hence,  in  any  aspect,  no 
new  consideration  is  necessary:  Kay  v.  Smith,  21  Beav.  522;  Jeford's  Adrn'r 
V.  Ringgold,  6  Ala.  544;  Conklin  v.  Ogborn,  7  Inil.  553;  and  see  Chandler  v. 
Simmons,  97  Mass.  508,  512;  93  Am.  Dec.  117,  120.  It  is  sometimes  said 
that  a  new  promise  must  be  equivalent  to  a  new  contract,  or  must  possess  all 
the  ingredients  of  a  complete  agreement,  in  order  to  constitute  a  valid  ratifi- 
cation: Watkins  v.  Stevens,  4  Barb.  168,  175;  Hodges  v.  Hunt,  22  Barb.  150, 
151;  but  this  statement  supposes  that  it  is  upon  the  new  promise  that  the  ac- 
tion is  to  be  sustained,  and  even  then,  as  just  said,  no  new  consiaeration  is 
required.  We  think  that  the  judges  who  assert  such  a  dictum  have  been  de- 
ceived by  resemblances.  A  ratification  must  be  the  free  and  voluntary  act. 
not  brought  about  by  deception,  by  a  person  having  a  competent  mind;  but 
it  is  no  contract  in  any  proper  sense  of  the  word. 

Ratification,  whether  must  be  in  Writing.  —  Unless  required  by 
statute  to  be  in  writing,  a  ratification,  being  simply  a  waiver  of  the  objec- 
tion of  infancy,  and  not  a  new  contract,  may  be  verbal,  although  the  contract 
ratified  be  a  deed  of  conveyance,  or  an  instrument  under  seal  generally,  or, 
we  should  say,  any  contract  required  by  law  to  be  in  writing:    Phillips  v. 


April,  1890.]  Craig  v.  Van  Bebber.  707 

Greet),  5  T.  B.  Mon.  344,  353;  Wheaton  v.  East,  5  Yerg.,  41,  62;  26  Am.  Dec. 
251,  253;  Jeford's  Adnir  v.  Rlw/f/old,  6  Ala.  544;  West  v.  Penny,  16  Ala. 
187,  191;  Vaughan  v.  Parr,  20  Ark.  600;  Stokes  v.  Brown,  4  Chand.  39;  3 
Pinney,  311.  Compare  Rogers  v.  Hurd,  4  Day,  57;  4  Am.  Dec.  182;  and 
SQQ  po-ft,  "Ratification  of  Deeds,  Leases,  and  Mortgages  by  Declarations  and 
Recitals."  In  fact,  it  Mas  been  seen,  the  retention  by  the  jtarty  of  the 
specific  consideration  received  during  infancy  for  an  unreasonable  time  after 
coming  of  age  may  itself  amount  to  an  affirmance,  as  also  will  the  exercise 
of  acts  of  ownership  over  the  property:  8ee  Kupra,  "Disaffirmance  of  Con- 
tracts, in  General,  within  Reasonable  Time  after  E,eachiiig  Full  Age."  The 
effect  of  the  ratifi::ation  of  a  deed  or  contract  relating  to  realty  may,  however, 
be  controlled  by  the  recording  acts.  If,  as  was  said  in  Black  v.  Hills,  36  111. 
376,  380,  87  Am.  Dec.  224,  226,  the  ratification  is  by  means  of  a  written  in- 
strument, the  instrument  should  be  recorded,  in  order  to  protect  the  grantee, 
and  if  the  ratification  ia  by  other  means,  a  subsequent  purchaser  from  the 
infant,  after  attaining  full  age,  must  have  notice  thereof,  in  order  that  he 
may  be  bound. 

By  Lord  Tenterden's  Act,  9  George  IV.,  chapter  14,  section  5,  it  was  pro- 
vided that  "no  action  shall  be  maintained  wliereby  to  charge  any  person  upon 
any  promise  made  after  full  age  to  pay  any  debt  contracted  during  infancy,  or 
upon  any  ratification  after  full  age  of  any  promise  or  simple  contract  made  dur- 
ing infancy,  unless  such  promise  or  ratification  sliall  be  made  b}'  some  writing 
signed  by  the  party  to  be  charged  therewith."  This  enactment  has  been  sub- 
stantially adopted  in  a  number  of  the  states  of  this  countrj':  Ky.  Gen.  Stats. 
1887,  c.  22,  sec.  1;  Miss.  Rev.  Code  1871,  sec.  2898;  1  Mo.  R.  S.  1879,  sec. 
2516;  S.  C.  Gen.  Stats.  1882,  sec.  2023;  Va.  Code  1887,  sec.  2S40;  2 
W.  Va.  R.  S.  1879,  c.  95,  sec.  1.  The  Arkansas  statute  differs  somewhat: 
"No  action  shall  be  maintained  whereby  to  charge  any  person  upon  any 
promise  made  after  full  age  to  pay  any  debt  contracted  during  infancy, 
unless  such  promise  or  ratification  shall  be  made  by  some  writing  signed  by 
the  party  to  be  charged  therewith  ":  Digest  of  Stats.  1884,  sec.  3384.  And 
the  present  Maine  statute  reads  as  follows:  " No  action  shall  be  maintained 
on  any  contract  made  by  a  minor,  unless  he,  or  some  person  lawfully  au- 
thorized, ratified  it  in  writing  after  he  arrived  at  the  age  of  twenty-one 
years,  except  for  necessaries,  or  real  estate  of  which  he  has  received  the  title 
and  retains  the  benefit":  R.  S.  1883,  c.  Ill,  sec.  2. 

It  ia  very  evident  that  Lord  Tenderden's  Act  does  not  apply  to  every  case 
of  confirmation  of  a  contract  made  during  infancy.  It  applies  to  every  ex- 
press "promise  to  pay  any  debt  "  contracted  during  infancy,  but  it  does  not 
apply  to  an  express  promise  to  perform  any  other  contract  made  during 
infancy,  unless  such  promise  is  embraced  in  the  word  "ratification":  See 
Stern  v.  Freeman,  4  Met.  (Ky. )  309;  and  that  there  is  a  distinction  between 
"promise  "  and  "  ratilication,"  see  Mairson  v.  Blane,  10  Ex.  'J06,  210,  per 
Parke,  B.  The  statute,  also,  does  not  apply,  at  least  not  generally,  to  ratifica- 
tions other  tiian  by  means  of  promises.  Tims  where  an  infant  entered  into 
the  service  of  a  milk-seller,  and  covenaiited  not  to  carry  on  the  same  busi- 
ness within  two  miles  of  the  plaintifif  's  house  for  two  years  after  quitting  the 
service,  and  after  he  came  of  age  he  continued  in  the  same  service  for  eigh- 
teen months  without  repudiating  the  contract,  it  was  held  that  this  conduct 
amounted  to  a  ratification  of  tae  contract  in  equity,  and  an  injunction  to 
restrain  a  breach  of  the  covenant  was  granted:  Cornwall  v.  Hatukin-i,  41  L.  J. 
Ch.  435;  26  L.  T.  607;  20  Week.  Rep.  653.  The  court  held  that  the  statute 
would  not  be  allowed  to  be  made  an  in.strument  of  fraud,  and  the  defendant 


708  Craig  v.  Van  Berber.  [Missouri, 

could  not  rely  upon  it  to  enable  him  to  repudiate  the  contract,  after  having 
taken  the  benefit  of  it  for  a  considerable  time  after  coming  of  age.  Again, 
if  an  infant  purchases  personal  property,  and  after  coining  of  age  sells  the 
same,  he  thereby  ratifies  the  contract,  and  is  liable  for  the  price,  notwith- 
standing the  statute:  Rohinnon  v.  Uo-ikim,  14  Barb.  393;  the  court  saying: 
"It  is  true  that  the  plaintiff  cannot  sue  upon  the  defendant's  promise,  made 
after  he  was  of  age,  to  pay  the  debt  incurred  during  infancy,  unless  such 
promise  is  evidenced  by  a  writinji;;  but  if  the  purchase  is  made  during  in- 
fancy, and  the  thing  purchased  has  been  kept  and  used  by  the  infant  till  his 
arrival  at  age,  and  then  converted  to  his  own  use,  such  conduct  amounts  to 
an  election  by  the  adult  to  stand  by  the  contract  made  while  he  was  an  in- 
fant." We  may  add  that  the  same  would  be  true  of  any  case  where  the 
infant  continues  to  enjoy  the  consideration  after  coming  of  age.  The  Keti- 
tuckj'  statute  does  not  require  the  plaintiff  to  produce  a  written  ratification, 
but  only  requires  that  the  "ratification,  or  some  memoranihim  or  note 
tliereof,"  shall  be  in  writing,  and  therefore  it  is  lield  a  writing  showing  that 
the  defendant  has  performed  an  act  of  ratification  is  as  effective  as  one  con- 
taining an  express  ratification:  Stern  v.  Freeman,  4  Met.  (Ky.)  309;  and 
where  a  writing,  addressed  to  another  than  the  plaintiff,  is  relied  upon,  not 
as  constituting  a  ratification  or  containing  a  promise,  but  as  evidence  of  a 
ratification  previously  made  by  the  defendant,  it  is  entitled  to  the  same 
weight  as  if  it  had  been  addressed  to  the  plaintiff:  Stern  v.  Freeman,  4  Met. 
(Ky.)  309. 

If  a  case  falls  within  the  statute,  the  promise  or  ratification  must,  of  course, 
be  in  writing.  Hence  no  action  can  be  maintained  to  recover  for  goods  sold 
to  a  minor,  unless  the  contract  of  purchase  be  ratified  by  a  writing  signed  by 
him  after  arriving  at  the  age  of  twenty-one  years,  or  by  some  person  thereto 
by  him  lawfully  authorized:  Thurlow  v.  Gilmore,  40  Me.  378;  a  verbal  prom- 
ise to  pay  will  not  suffice;  nor  can  a  set-off  be  sustained  of  a  debt  contracted 
by  the  plaintiff  during  infancy,  and  not  ratified  by  liim  in  writing  after  full 
age:  Rawley  v.  Eawley,  L.  R.  1  Q.  B.  D.  460.  The  writing,  furtliermore, 
to  amount  to  a  ratification,  must  be  a  recognition  by  the  party,  after  attain- 
ing majority,  of  the  debt  as  a  debt  binding  upon  him:  Harris  v.  Wall,  I  Ex. 
122;  Maccord  v.  Oshorne,  L.  R.  1  C.  P.  D.  568;  Roioe  v.  Ho-pioood,  L.  R.  4 
Q.  B.  1.  "Any  written  instrument  signed  by  the  party,"  say  Baron  Rolfe 
in  Harris  v.  Wall,  1  Ex.  122,  "which  in  the  case  of  adults  would  have 
amounted  to  the  adoption  of  the  act  of  a  partj'  acting  as  agent  will,  in  the 
case  of  an  infant  who  has  attained  his  majority,  amount  to  a  ratification." 
And,  says  Cotton,  L.  J.,  in  Trowell  v.  Shenton,  ]j.  R.  8  Ch.  D.  318,  325,  "a 
ratification  in  writing  must,  either  in  terms,  or  on  the  fair  construction  of  the 
instrument,  refer  to  the  contract  which  is  to  be  ratified,  and  treat  it  as  a  sub- 
sisting contract."  Accordingly,  it  has  been  held  that  a  written  promise  to 
pay  a  debt  contracted  during  infancy  was  sufficient,  although  it  did  not  con- 
tain the  name  of  the  creditor,  the  amount  due,  or  the  date,  parol  evidence 
being  admissible  to  supply  these  particulars:  Hartley  v.  Wharton,  11  Ad.  & 
E.  934;  3  Perry  &  D.  529;  but  a  promise  made  by  a  person  at  full  age  to  pay 
a  debt  guaranteed  by  him  during  infancy,  "  as  a  debt  of  honor,"  is  not  such 
a  ratification  as  is  required  by  the  statute  to  charge  him:  Maccord  v.  Osborne, 
L.  R.  1  C.  P.  D.  568;  and  where  goods  were  supplied  by  the  plaintiff  to  the 
defendant  while  he  was  an  infant,  and  when  he  came  of  age  an  account  with 
the  items  and  prices  was  submitted  to  him,  at  the  foot  of  which  he  signed: 
"  Particulars  of  account  to  the  end  of  1867,  amounting  to  £162  Qd  ,  I  certify 
to  be  correct  and  satisfactory," — this  does  not  amount  to  a  recognition  of  the 


April,  1890.]  Craig  v.  Van  Bebber.  709 

debt  as  an  existing  liability,  so  as  to  be  a  ratification  of  the  contract  within 
the  statute:  Bowe  v.  Hopwood,  L.  R.  4  Q.  B.  1.  So  where  an  infant  soltl  a 
horse  with  warranty  of  soundness,  and  took  from  the  vendee  a  note  in  which 
it  was  stipulated  that  the  horse  shoulil  remain  the  vendor's  property  until 
the  note  was  paid,  an  indorsement  written  on  the  note  by  the  vendor  after 
he  became  of  age,  and  when  the  note  was  paid,  that  "  the  within  note  being 
paid,  I  hereby  discHarge  the  property  thereby  secured,"  cannot  be  construed 
as  a  ratification  in  writing  of  the  warranty  of  the  horse:  Bird  v.  Swain,  79 
Me.  529. 

Ratification  of  Contracts,  Executory  on  Infant's  Part,  by  New  Prom- 
ises OK  Acknowledgments. — There  is  a  distinction,  to  some  extent,  as  to 
what  will  amount  to  a  ratification,  between  contracts  which  are  executory  on 
the  part  of  an  infant  and  those  which  are  executed.  It  is  not  difficult  to 
understand  why  the  law  might  possibly  require  more  positive  acts  to  cMnfirm 
the  former  than  the  latter.  Yet  we  should  say  that  where  the  ratification  is 
based  upon  some  such  act  of  the  infant  after  attaining  full  age,  as  the  reten- 
tion of  the  property  received  by  him  under  the  contract  for  an  unreasonable 
time,  the  use  or  sale  of  the  property,  the  acceptance  of  the  consideration 
from  the  opposite  party,  and  other  such  acts  or  conduct  which  are  in- 
consistent with  any  other  idea  than  an  intention  to  abide  by  the  contract, 
it  makes  no  difference,  or  very  little  difference,  whether  the  contract  is 
executory  or  executed  on  his  part.  A  ratification  will  be  inferred  in  the  one 
case  about,  if  not  quite,  as  readily  as  in  the  other.  Where,  however,  words 
or  declarations  are  relied  upon  to  constitute  a  ratification,  then,  if  the  con- 
tract is  executory  on  the  part  of  the  infant,  especially  if  it  is  for  the  payment 
of  money  by  him,  the  rule  is  sustained  by  numerous  authorities  that  a  mere 
acknowledgment  of  liability,  as  in  the  case  of  the  statute  of  limitations, 
will  not  be  sufficient  to  constitute  a  ratification,  but  that  there  must  be  an 
express  or  direct  promise  or  confirmation:  TIrrupp  v.  Fielder,  2  Esp.  628; 
Benham  v.  Buihop,  9  Conn.  330;  2.3  Am.  Dec.  358;  Wilcox  v.  Roath,  12  Conn. 
550;  Catlin  v.  Haddox,  49  Conn.  492;  44  Am.  Rep.  249;  Bennett  v.  Collim,  52 
Conn.  1;  Martin  v.  Byrom,  Dud.  (Ga.)  203,  204;  Conklin  v.  Oijhorn,  7  Ind. 
553;  Fetrow  v.  Wiseman,  40  Ind.  US;  Smith  v.  Mayo,  9  Mass.  62;  6  Am.  Dec. 
28;  Martinv.  Mayo,  10  Mass.  137;  6  Am.  Dec.  103;  Jackson  v.  Mayo,  11  Mass. 
147;  6  Am.  Dec.  167;  Whitney  v.  Dufch,  14  Mass.  457,  460;  7  Am.  Dec.  229, 
230;  Ford  v.  Phillips,  1  Pick.  202,  203;  Tappan  v.  Ahhot,  cited  1  Pick.  203; 
Barnnhy  v.  Barnahy,  1  Pick.  221,  223;  Thompson  v.  Lay,  4  Pick.  48,  49;  16 
Am.  Dec.  325;  Peirce  v.  Tohey,  5  Met.  168,  172;  Smith  v.  Kelley,  13  Met.  309, 
310;  Proctor  v.  Sears,  4  Allen,  95;  Baker  v.  Kennett,  54  Mo.  82;  Wri,/ht  v. 
Strele,  2  N.  H.  51;  Hale  v.  Oerrish,  8  N.  H.  374;  Hoit  v.  Underhill,  9  N.  H. 
436;  32  Am.  Dec.  380;  Tihhets  v.  GerrUh,  25  N.  H.  41;  57  Am.  Dec.  307;  New 
Hampshire  Mat.  F.  fns.  Co.  v.  Noyes,  32  N.  H.  345;  Alexander  v.  Hutcheson,  2 
Hawks,  535;  Dunlapv.  H<des,  2  Jones  L.  381;  Turner  v.  Oaither,  83  N.  C.  357; 
35  Am.  Rop.  574;  Ilindy  v.  Mar<jaritz,  3  Pa.  St.  428;  Chambers  v.  Wherry,  1 
Bail.  L.  28;  Reed  v.  Boshears,  4  Sneed,  118;  Hatch  v.  Hatch's  Estate,  60  Vt.  160; 
compare  Orvis  v.  Kimball,  3  N.  H.  314. 

A  ratification  certainly  will  not  be  inferred  from  incidental  and  collateral 
circumstances,  in  the  face  of  the  party's  explicit  declarations  that  he  did  not 
intend  to  become  bound:  Minock  v.  Shortridi/e,  21  Mich.  304;  nor  will  an 
offer  to  compromise  be  sufficient,  since  it  is  not  even  an  acknowledgment  of 
liability:  Martin  v.  Byrom,  Dud.  (Ga.)  203,  204;  Bennett  v.  Collins,  52 
Conn.  1;  nor  does  a  submission  of  the  question  of  liability  to  arbitration 
prove  or  tend  to  prove  a  ratification:  Benham  v.  Bisliop,  9  Conn.  330;  23  Am 


710  Craig  v.  Van  Bebbeb.  [Missouri, 

Dec.  358;  but  where  the  defendant,  in  an  action  of  assumpsit  for  the  price  of 
goods  sold,  defeated  the  action  on  the  ground  that  the  account  had  heea 
merged  in  a  note  executed  by  him  therefor,  it  was  held  that  he  thereby 
necessarily  affirmed  the  validity  of  the  note,  and  the  confirmation  could  be 
successfully  replied  to  a  plea  of  infancy  set  up  by  him  in  an  action  on  the 
note:  Best  v.  Givens,  3  B.  Mon.  72. 

Since  a  mere  acknowledgment  will  not  be  sufficient  to  aonstitute  a  ratifica- 
tion, a  part  payment  will  not  suffice:  Thrupp  v.  Fielder,  2  Esp.  628;  Barnahif 
V.  Barnahy,  1  Pick.  221,  223;  Hinely  v.  Marjaritz,  3  Pa.  St.  428;  Catliii  v.  Hnil- 
dox,  49  Conn.  492;  44  Am.  Rep.  249;  especially  in  case  of  a  note,  if  it  be  ev- 
idenced by  indorsements  made  b}^  the  payee  on  the  note:  Catlin  v.  Haddox, 
49  Conn.  492;  44  Am.  Rep.  249.  The  following  cases  will  also  illustrate  the 
proposition  that  a  mere  acknowledgment  will  not  amount  to  a  ratification.  In 
Ford  V.  Phillips,  1  Pick.  202,  203,  the  defendant,  in  a  conversation  respect- 
ing a  promissory  note  given  by  him  when  an  infant,  said  that  "he  owed  the 
plaintiff,  but  was  unable  to  pay  him;  he  would,  however,  endeavor  to  get 
his  brother  to  be  bound  with  him."  It  was  heM  that  this  did  not  amount 
to  a  renewal  of  the  promise.  And  where  the  defendant,  after  he  came  of 
age,  said  to  the  officer  who  had  the  writ  to  serve,  "that  his  brother  ought 
to  have  paid  the  note;  that  the  writ  should  not  go  to  court;  that  it  should 
be  settled;  that  he  would  see  his  brother,  who  ought  to  pay  it,"  and  after 
the  writ  was  returned,  "that  he  meant  to  go  to  jail  on  it,"  this  evidence  is 
likewise  insufficient  to  establisli  a  renewal  of  the  promise:  Tappnn  v.  Abbot, 
cited  1  Pick.  203;  so  where  the  defendant,  after  attaining  his  majority,  ad- 
mitted that  he  owed  a  debt  contracted  during  infancy,  and  said  that  "the 
plaintiff  would  get  his  pay,"  but  refused  to  give  a  note,  lest  he  might  be 
arrested,  it  was  also  held  that  there  was  no  such  ratification  as  would  render 
the  defendant  liable:  Hale  v.  Gerrish,  8  N.  H.  374;  and  where  an  infant  pur- 
chased slaves,  and  gave  a  note  for  the  price,  and  after  he  came  of  age,  pro- 
posed in  writing  to  give  the  slaves  back  and  pay  half  the  note,  adding  that 
if  the  holders  of  the  note  would  not  accept  the  offer,  "  I  will  have  to  pay 
them,  I  suppose,  but  I  shall  do  so  at  my  convenience,  as  it  will  be  nothing 
less  than  a  free  gift  on  my  part,"  there  is  no  such  new  promise  as  wUl  avoid 
the  plea  of  infancy  to  an  action  on  the  note:  Dunlap  v.  Hales,  2  Jones  L. 
381;  and  also  where  a  minor  received  money  of  the  plaintiff,  and  gave  a  note, 
promising  to  pay  the  same  to  the  plaintiff's  daughter,  and  after  he  came  of 
age,  being  applied  to  by  the  daughter's  husband,  said  it  was  not  then  con- 
venient for  him  to  pay  it,  but  that  on  his  arrival  at  a  certain  place,  to  which 
he  was  then  bound,  he  should  pay  the  plaintiff  the  money  due  him,  it  wa» 
held  that  this  did  not  amount  to  an  express  promise  to  the  plaintiff  himself, 
era  renewal  to  him  of  the  promise  expressed  in  his  note,  and  therefore  a  plea 
of  infancy  by  his  executors  was  a  good  defense  to  an  action  on  the  note;  but 
as  the  evidence  showed  money  in  the  hands  of  the  deceased,  intrusted  ta 
him,  which  he  had  not  paid  over,  a  general  indebitatus  assumpsit  for  money 
received  for  the  use  of  the  plaintiff  might  be  maintained:  Jackson  v.  Mayo, 
11  Mass.  147;  6  Am.  Dec.  1(57. 

A  direction  by  a  testator  in  his  will  to  pay  his  "just"  debts,  it  is  likewise 
held,  is  no  answer  to  a  plea  of  infancy:  Smith  v.  Mayo,  9  Mass.  62;  6  Am. 
Dec.  28;  Martin  v.  Mayo,  10  Mass.  137-139;  6  Am.  Dec.  103;  Jackson  v. 
Mayo,  II  Mass.  147;  6  Am.  Dec.  167;  for,  said  the  court  in  the  first  case,  in, 
speaking  of  the  will,  "  It  was  made  some  time  after  the  testator  came  of 
age,  and  it  may  have  had  reference  to  debts  contracted  after  that  period. 
At  any  rate,  it  contains  a  direction  to  pay  only  'just  debts,  and  there  ia 


i 


April,  1890.]  Craig  v.  Van  Bebber.  711 

nothing  in  the  case  from  which  we  can  infer  that  what  was  not  in  law  a  debt 
could  be  considered  by  the  testator  as  a  just  debt."  But  a  different  view  was 
taken,  under  similar  circumstances,  in  Merchants'  F.  Ins.  Co.  v.  Grant,  2 
Edw.  Ch.  544,  and  a  bond  and  mortgage  were  taken  as  confirmed,  by  a  di- 
rection by  the  mortgagor  in  his  will,  made  after  full  age,  to  pay  "all  my  just 
debts."  The  authority  for  the  latter  case  is  ffampson  v.  Ladi/  Sydenham, 
Nels.  Ch.  55,  in  whicli  it  was  held  that,  in  equity,  a  bond  debt  of  an  infant 
should  be  paid,  where  he  had  executed  a  will,  while  still  under  age,  though 
of  sufficient  capacity  to  make  a  will,  directing  that  his  executrix  should  pay 
all  his  debts  out  of  his  personal  estate,  particularly  those  to  which  he  had 
set  his  hand.  The  fact  that  the  will  was  made  under  age  does  not  seem  to 
have  l)een  noticed. 

On  the  other  hand,  also,  where  an  infant,  after  coming  of  age,  wrote  a 
letter  to  the  indorsee  of  his  promissory  note,  saying,  "all  that  is  justly  due 
shall  be  paid,"  this  was  held  a  sufficient  absolute  and  express  promise  to  re- 
move the  bar  of  infancy,  the  mere  fact  of  infancy  not  rendering  the  debt 
not  "justly"  due:  Wrii/ht  v.  Steele,  2  N.  H.  51;  and  where  an  infant,  after 
coming  of  age,  said  to  the  plaintiff  and  another  creditor,  "When  I  return 
from  this  voyage,  I  will  pay  you  both,"  and  at  another  time  told  the  plain- 
tiff, when  pressed  for  payment,  that  he  had  not  the  money  then,  but  when 
he  should  return  from  the  voyage,  he  would  settle  M'ith  the  plaintiff,  it  was 
held  that  these  declarations  had  an  immediate  reference  to  the  indebtedness 
incurred  during  infancy,  and  amounted  to  an  express  promise  of  payment: 
Martin  v.  Mayo,  10  Mass.  137;  6  Am.  Dec.  103.  So  where  an  infant  made  a 
promissory  note,  and  when  of  age,  being  applied  to  for  payment,  acknowl- 
edged that  the  money  was  due,  and  promised  that,  on  his  return  to  his  home, 
he  would  endeavor  to  procure  it,  and  send  it  to  the  creditor,  this  was  held 
to  be  a  sufficient  ratification:  Whitney  v.  Dutch,  14  Mass.  457;  7  Am.  Dec. 
229.  And  a  promise  by  an  infant,  after  coming  of  age,  to  pay  a  promissory 
note,  "if  he  signed  it,"  is  a  sufficient  ratification:  l^ibbets  v.  Gerritih,  25  N.  H. 
41;  57  Am.  Dec.  307. 

Furthermore,  the  promise  or  confirmation  should  be  made  by  the  infant, 
after  attaining  full  age,  to  the  opposite  contracting  party,  or  creditor,  him- 
self, or  to  his  agent  or  attorney;  at  all  events,  admissions  or  declarations  to 
a  stranger  cannot  be  relied  upon  as  constituting  a  ratification:  Goodsell  v. 
Myers,  3  Weud.  479;  Bhjdow  v.  GrannU,  2  Hill,  1'20;  Hoit  v.  Underhill,  9 
N.  H.  43(i;  32  Am.  Dec.  380;  Chandler  v.  Glovers  Adnir,  32  Pa.  St.  509; 
and  see  Jackson  v.  Mayo,  11  Mass.  147;  6  Am.  Dec.  1G7;  compare  Oi-vis  v. 
Kimball,  3  N.  H.  314;  Stern  v.  Freeman,  4  Met.  (Ky.)  309.  A  new  promise, 
made  to  the  attorney  of  the  plaintiff,  to  whom  the  plaintiff  had  sent  the  note 
in  question  for  collection,  is  binding:  Hodyes  v.  Hunt,  22  Barb,  150;  and 
where  the  holder  of  a  promissory  note  left  it  with  his  agent  for  collection, 
and  the  agent  directed  his  clerk  to  present  it  to  the  debtor  for  payment,  the 
clerk  is  not  a  stranger,  and  therefore  a  promise  made  to  him  is  effectual  to 
remove  the  defense  of  infancy:  Mayer  v.  McLure,  36  Miss.  389;  72  Am.  Dec. 
190;  so  a  promise  by  a  party  of  full  age  to  repay  money  which  had  been 
paid  by  a  surety  for  him  during  his  infancy,  made  to'an  agent  of  the  surety, 
who  was  authorized  to  call  on  him  for  that  purpose,  is  sufficient  to  charge 
him,  notwithstanding  there  is  no  evidence  that  the  agent  disclosed  his 
agency  at  the  time,  nor  any  express  evidence  that  the  party  had  knowledge 
of  the  authority:   Hoit  v.  Underhill,  10  N.  H.  220;  34  Am.  Dec.  148, 

The  general  rule  on  this  subject  under  consideration  is  sometimes  stated  as 
though  an  express  promise  was  always  required.     We  think,  however,  that 


712  Craig  v.  Van  Bebber.  [Missouri, 

this  a  mistake,  and  that  there  may  be  an  express  ratification  without  any 
promise  whatever,  although  a  mere  acknowledgment  will  not  answer.  Thus, 
says  Chief  Justice  Parker  in  Whitney  v.  Dutch,  14  Mass.  457,  460,  7  Am.  Dec. 
229,  230,  •'  the  terms  of  ratification  need  not  be  such  as  to  import  a  direct 
promise  to  pay.  All  that  is  necessary  is  that  he  expressly  agrees  to  ratify 
his  contract,  not  by  doubtful  acts,  such  as  payment  of  a  part  of  the  money 
due,  or  the  interest,  but  by  words,  oral  or  in  writing,  which  import  a  recogni- 
tion and  a  confirmation  of  his  promise  ";  and  the  learned  chief  justice  again 
says,  in  Tliompson  v.  Lay,  4  Pick.  48,  49,  16  Am.  Dec.  .325:  "A  ratification 
may  be  proved  in  divei's  ways;  but  it  cannot  be  inferred  from  a  mere  ac- 
knowledgment of  debt,  as  in  cases  on  the  statute  of  limitations.  A  promise 
to  pay  is  evidence  of  a  ratification;  so  is  a  direct  confirmation,  though  not  in 
words  amounting  to  a  direct  promise;  as  if  the  party  should  say,  after  coming 
of  age,  'I  do  ratify  and  confirm,'  or  'do  agree  to  pay  the  debt.'"  See  aLo 
Baker  v.  Kennett,  54  Mo.  82;  HatcJi  v.  Hatch's  Estate,  60  Vt.  160. 

The  use,  then,  of  some  such  express  words  as  "I  ratify"  is  undoubtedly 
all  that  is  required  to  constitute  an  afiirmance,  but  we  think  that  either  such 
an  express  confirmation  or  an  express  promise  is  nect  s  ^ary.  In  our  opinion 
the  proposition  is  stated  too  broadly  by  some  cases;  as,  for  instance,  Alexander 
V.  Hutchison,  1  Dev.  L.  13,  where  Henderson,  J.,  says:  "  The  law  has  prescribed 
no  form  in  which  this  promise  shall  be  made;  it  may  be  by  words,  it  may  be 
by  signs  or  acts;  anything  which  shows  an  acquiescence,  or  an  assent  of  the 
party's  mind,  is  sufficient."  The  lattpr  portion  of  the  quotation  is  not  sus- 
tained by  the  authorities.  In  Henry  v.  Root,  33  N.  Y.  526,  537,  also,  Davies, 
J.,  criticises  the  rule  which  requires  an  express  promise  on  the  part  of  the 
infant  after  attaining  majority,  and  maintains  that  the  contract  of  an  infant 
may  be  revived  by  him  "upon  the  same  principles  and  for  the  same  rea- 
sons and  by  the  same  means  as  a  debt  barred  by  the  statute  of  limitations 
may  be  revived  and  restored  to  its  pristine  vigor  and  efiicacy,"  We  be- 
lieve, however,  that  the  rule  above  stated  as  to  the  necessity  of  a  direct 
promise  or  confirmation  is  correct,  although  the  reasoning  of  some  of  the 
cases  which  support  it  is  open  to  criticism.  An  express  or  direct  promise 
or  ratification  is  required,  not  because  the  original  promise  is  void,  or  because 
an  action  is  to  be  brought  upon  the  new  promise,  for  such,  we  have  seen,  is 
not  the  case,  but  simply  because  nothing  short  of  an  unequivocal  expression 
of  an  assent  to  be  bound  will  or  ought  to  remove  the  objection  of  infancy. 

Thus  far  we  have  been  speaking  of  an  absolute  and  complete  promise  or 
ratification;  but  besides  this,  the  promise  may  be  partial,  or  it  may  be  quali- 
fied or  conditional.  The  nature  and  efiect  of  a  partial  promise  were  thus 
explained  by  Gilchrist,  C.  J.,  in  Edijerly  v.  Shaw,  25  N.  H.  514,  517,  57  Am. 
Dec.  349,  351:  "The  partial  promise,  or  the  promise  to  payor  perform  a 
part  of  the  original  debt  or  agreement,  is  binding  only  to  the  extent  of  the 
new  promise,  and  is  not  a  ratification  of  the  original  debt,  but  a  new  and 
distinct  promise,  though  founded  upon  the  original  consideration  ";  and  with 
respect  to  qualified  promises  he  says  (pages  517,  351):  "  A  new  promise  may  be 
qualified  in  various  ways.  It  may  bind  the  promisor  to  pay  the  debt  at  a 
difi'erent  time  or  place  from  these  originally  stipulated.  It  may  be  a  promise 
to  p^y,  not  in  money,  but  in  specific  articles  or  in  personal  services.  These 
cases  cannot  be  distinguished,  in  principle,  from  that  last  stated.  They  are 
new  contracts,  not  ratifications  of  the  old  ones."  He  continues:  "Within 
the  class  of  qualified  promises  in  renewal  of  contracts  entered  into  by  an  in- 
fant are  the  cases  of  new  promises,  to  be  performed  upon  a  condition  or  a 
contingency.     They  are  distinguishable  from  other  cases  of  qualified  prom- 


April,  1890.]  Craig  v.  Van  Bebber.  713 

ises  by  the  nature  of  the  qualification If  a  new  promise  be  made  to 

pay  or  perform  a  contract  made  under  age,  upon  a  contingency  or  a  condi- 
tion, no  action  will  lie  until  the  happening  of  the  contingency  or  the  perform- 
ance of  the  condition,  for  the  old  contract  will  not  until  that  time  have  been 
confirmed,  and  the  new  agreement  is  distinct  from  it:  and  of  that,  in  the 
case  supposed,  there  will  then  have  been  no  breach.  When  the  contingency  has 
happened,  or  the  condition  is  fulfilled,  the  new  contract  becomes  absolute,  the 
original  contract  is  ratified,  and  the  plaintiff  may  declare  upon  it,  or  upon  the 
new  agreement.  If  he  declare  upon  the  original  contract,  and  infancy  be 
plf'i  ^d,  he  may  reply  a  confirmation,  and  upon  proper  evidence  he  will  be 
en.  Jud  to  recover.  Or  he  may  declare  upon  the  new  promise,  and  set  it 
forth  with  the  necessary  averments;  and  upoii  sufficient  proof  wdl  be  entitled 
to  recover  in  that  case."     See  also  MinO'k  v.  Shortridje,  21  Mich.  304,  315. 

If,  then,  an  infant,  after  attaining  majority,  promises  to  pay  an  indebted- 
ness "  as  soon  as  he  is  able,"  or  "  as  soon  as  he  could,"  no  action  can  be  sus- 
tained against  him,  by  virtue  of  such  new  promise,  without  proof  of  his  ability 
to  pay:  Cole  v.  Saxhy,  3  Esp.  159;  Thompson  v.  Lay,  4  Pick.  48;  16  Am.  Dec. 
325;  Proctor  v.  Sears,  4  Allen,  95;  Everson  v.  Carpenter,  17  Wend.  419; 
Chandler  v.  Olover's  Adm'r,  32  Pa,  St.  500;  compare  Bobo  v.  Hansell,  2 
Bail.  L.  114.  In  Edijerly  v.  Shaw,  25  N.  H.  514,  57  Am.  Dec.  349,  a  prom- 
ise, made  after  majority,  by  the  maker  of  a  promissory  note  executed  in 
infancy,  to  pay  it  at  the  end  of  a  specified  time  in  labor,  or  else  in  money, 
was  held  to  be  a  conditional  promise,  wliich  became  absolute  upon  the  expi- 
ration of  the  specified  time,  whereby  tlie  original  contract  was  confirmed,  and 
the  promisor  made  liable  to  suit  on  either  contract.  In  Taft  v.  Senjeant,  18 
Barb.  320,  it  was  held  that  where  the  defendant,  who  had  executed  a  promis- 
sory note  during  infancy,  promised  the  payee,  after  coming  of  age,  to  give  him 
the  note  of  a  third  person,  and  to  pay  the  balance  in  money,  the  new  promise 
was  an  afSrmance  of  the  defendant's  note,  and  failing  to  comply  with  the  pro- 
visions of  the  new  promise,  his  liability  on  the  note  directly  was  complete,  and 
the  note  stood  revived  and  ratified,  and  discharged  of  the  special  contract  in 
relation  to  the  mode  of  payment:  See  also  Stokes  v.  Brown,  4  Chand.  39;  3 
Pinney,  311;  Little  v.  Duncan,  9  Rich.  L.  55;  64  Am.  Dec.  760. 

Ratification  cf  Dkkus,  Leasks,  and  Mortga(5es,  and  Transfers  of 
Personal  Property  by  Declarations  and  Recitals.  — It  seems  that  a 
ratification  of  a  contract  executed  on  the  infant's  part,  such  as  his  deed  of 
conveyance,  lease,  or  mortgage  of  his  realty,  or  his  sale  of  personalty,  will  be 
held  to  result  from  words  somewhat  less  positive  than  in  case  of  his  executory 
agreements,  just  considered.  In  fact,  as  has  been  seen,  according  to  one 
theory,  an  infant  must  disaffirm  a  deed  of  his  lands  within  a  reasonable  time 
after  attaining  his  majority,  or  he  will  be  bound  by  his  mere  acquiescence: 
See  ante,  "  Disaffirmance  of  Deeds  within  a  Reasonable  Time  after  Reaching 
Full  Age."  Yet  the  mere  admission  or  recognition  by  a  person  of  the  fact 
that  he  had  made  a  deed  of  conveyance  during  his  minority  will  not  amount 
to  an  affirmance  of  the  deed:  Jackson  ex  deni.  Brayton  v.  Burrhin,  14  Johns. 
124;  Tucker  v.  Morcland,  10  Pet.  59;  1  Am.  Lead.  Cas.  *224;  Ba,jlcy  v.  Fletcher, 
44  Ark.  153;  Craig  v.  VanBehher,  100  Mo.  584.  Acts  in  pals,  says  Story,  J.,  in 
Tucker  v.  Moreland,  10  Pet.  59,  to  amount  to  a  confirmation  of  a  deed,  "should 
be  of  such  a  solemn  and  unequivocal  nature  as  to  establish  a  clear  intention  to 
confirm  the  deed,  after  a  full  knowledge  that  it  was  voidable."  And,  says  the 
court  in  Den  ex  dem.  Hoyle  v.  Stowe,  2  Dev.  &  B.  320,  328,  admitting  that 
declarations  are  in  any  case  sufficient  to  confirm  a  deed,  yet  loose  and  am. 
biguou^  words,  from  which  inferences  of  opposite  kinds  may  be  drawn,  ut- 


714  Craig  v.  Van  Bebbeb.  [Missouri, 

tered  incidentany  by  the  grantor  in  casual  conversations  with  third  persons, 
and  without  deliberation,  and  without  any  view  at  the  time  of  thereby  con- 
firming the  deed,  will  not  be  sufficient.  The  declarations  should  at  least  be 
clear  and  unequivocal,  and  made  with  a  view  to  ratification.  Certainly,  mere 
declarations  of  willingness  by  a  person  to  confirm  his  deed  executed  during 
infancy,  or  a  promise  by  him  to  make  a  deed  of  confirmation  upon  certain 
conditions,  will  not  operate  as  an  affirmance:  Clamorrjan  v.  Lane,  9  Mo.  442. 

But  where  an  infant  made  a  lease,  and  on  coming  of  age  said  to  his  lessee, 
"God  give  you  joy  of  it,"  it  was  held  that  be  thereby  affirmed  the  lease: 
Anonymous,  4  Leon.  4;  and  where  an  infant  conveyed  his  land,  and  after 
coming  of  age,  told  the  grantee  that  he  would  never  take  advantage  of  his 
having  been  an  infant  at  the  time  of  executing  the  deed,  and  that  it  was  his 
wish  that  the  grantee  should  keep  the  land,  this  was  held  to  be  a  confirma- 
tion of  the  deed,  entitling  the  grantee  to  recover  the  land,  in  ejectment,  from 
one  to  whom  the  grantor  thereafter  conveyed  it:  Houserv.  Reynolds,  1  Hayw. 
(N.  C.)  143.  The  declarations  may  be  coupled  with  other  acts  or  conduct  of 
a  confirmatory  character,  making  a  stronger  case  of  ratification.'  Thus  in 
Fenjuson  v.  Bell's  Adm'r,  17  Mo.  347,  an  infant  executed  a  deed,  and  after 
coming  of  age,  expressed  satisfaction  with  her  bargain,  recei\ed  part  of  the 
purchase  price,  and  spoke  of  her  intention  to  make  a  confirmatory  deed,  but 
died  suddenly  without  doing  so,  there  was  held  to  be  a  sufficient  ratification; 
the  court  saying:  "Any  act  of  Miss  Bell  showing  her  acquiescence  in  the 
Bale,  and  deed  thereon  by  her  after  she  became  of  age,  would  be  sufficient, 
—  such  as  receiving  a  part  of  the  consideration  money  for  the  land,  and  ex- 
pressing herself  satisfied  with  the  contract ";  and  where  an  infant,  shortly 
before  coming  of  age,  executed  a  deed  of  land  for  a  full  price,  and  after  he 
arrived  at  the  age  of  majority,  was  often  in  the  neighborhood  of  the  land, 
saw  the  purchaser  making  valuable  improvements,  said  nothing  in  dis- 
affirmance for  about  four  years,  but  admitted  on  several  occasions  that  he 
had  sold  the  land,  had  been  honorably  paid,  and  was  satisfied,  and  at  one 
time  authorized  a  proposition  for  its  purchase,  it  was  held  that  these  circum- 
etances  fully  warranted  the  jury  in  finding  that  he  had  affirmed  the  contract: 
Wheaton  v.  East,  5  Yerg.  41;  26  Am.  Dec.  251;  the  court  observing:  "Any- 
thing from  which  his  assent,  after  he  arrives  at  age,  may  be  fairly  inferred 
will  be  sufficient  to  affirm  the  deed  made  during  infancy,  and  prevent  him 
from  afterwards  electing  to  disaffirm  it."  See  also  Phillips  v.  Green,  5  T.  B. 
Mon.  344;  but  compare  Rogers  v.  Hard,  4  Day,  57;  4  Am.  Dec.  182.  It  was, 
however,  held  in  Matherson  v.  Davis,  2  Cold.  443,  448,  that  the  deed  of  an 
infant /eme  covert  could  not  be  ratified  after  she  came  of  age,  and  while  her 
coverture  continued,  by  her  declarations  expressing  her  satisfaction  with  the 
terms  of  sale,  nor  in  any  manner,  if  at  all,  other  than  the  mode  provided  by 
statute  for  the  conveyance  of  the  real  estate  of  a,  feme  covert.  It  seems  to  us 
that  although  the  court  says  that  the  deed  of  a  feme  covert,  executed  and 
acknowledged  according  to  statute,  will  pass  the  title  as  if  she  were  sufeme 
sole,  yet  the  above  ruling  can  only  rest  on  the  unsound  theory  that  the  deed 
passed  no  title. 

Again,  a  deed  executed  by  the  grantor  after  coming  of  age,  which  refers 
to  a  deed  executed  by  her  during  infancy,  and  purports  to  be  made  "in  com- 
pliance "  with  the  latter  deed,  operates  as  an  affirmance  of  it:  Phillips  v. 
Green,  5  T.  B.  Mon.  344;  and  where  an  infant,  after  attaining  his  majority, 
indorsed  on  his  deed,  "I  do  acknowledge  that  I  have  signetl,  by  making  my 
mark,  the  within  deed  for  tlie  expressed  purposes;  and  with  the  desire  to 
ratify  the  same,  I  hereunto  affix  my  hand  and  seal,"  and  delivered  the  in- 


April,  1890.]  Craig  v.  Van  Bebber.  715 

strument  to  the  grantee  again,  the  deed  is  thereby  confirmed:  De77  ex  dem, 
Murray  v.  SlinnkUa,  4  Dev.  &  B.  289.  There  can  be  no  doubt  about  the 
efifect  of  such  express  words.  The  mortgage  of  an  infant  is  also  confirmed 
by  the  execution,  after  he  comes  of  age,  of  a  deed  by  which  the  land  is  con- 
veyed "subject  "to  the  mortgage:  President  etc.  of  Bodon  Bank  v.  Chamber- 
lin,  15  Mass.  220;  Losey  v.  Bond,  94  lad.  67;  and  see  Allen  v.  Poole,  54 
Miss.  323;  and  where  a  person  takes  a  lease  of  an  infant's  lands,  and  the 
infant  on  coming  of  age  mortgages  the  property  to  the  lessee  by  deed  refer- 
ring to  the  lease,  this  is  a  confirmation  of  the  lease:  Story  v.  Jolmson,  2 
Younge  &  C.  Ex.  580. 

Ratification  by  Bringing  Suit.  —  If  a  person,  after  coming  of  age,  in- 
stitutes an  action  to  enforce  a  contract,  or  based  upon  a  contract,  entered 
into  during  his  minority,  there  is  no  doubt  that,  under  ordinary  circum- 
stances, he  will  be  held  thereby  to  have  ratified  the  contract,  because  his 
conduct  shows  an  intention  to  abide  by  it.  Theiofore  an  infant  waives  an 
avoidance  of  a  purchase  of  land  made  by  him,  on  the  ground  of  infancy, 
by  suing  his  grantor,  after  attaining  his  majority,  for  an  alleged  fraud  in  the 
sale:  MiddUton  v.  Hocje,  5  Bush,  478.  But  while  a  suit  by  an  infant,  after 
reaching  full  age,  to  enforce  his  agreement,  is  an  act  of  afhrmance,  a  suit  by 
his  assignee,  claiming  under  an  assignment  from  him  during  his  minority, 
will  have  no  such  effect:  Carrellv.  Potter,  23  Mich.  377.  And  where  a  minor, 
four  months  after  coming  of  age,  filed  a  petition  to  become  co-libelant  in  a 
libel  by  certain  seamen  of  a  vessel,  under  their  written  contract  for  wages,  in 
which  nothing  was  said  in  regard  to  his  minority,  and  it  appearing  that  he 
was  neither  intelligent  nor  provident,  but  that  having  heard  that  his  associ- 
ates had  brought  a  suit  for  wages,  obtained  the  services  of  the  lawyer  who 
was  acting  for  the  rest,  it  was  held  that  there  was  not  sufficient  evidence  of 
intelligent  action  to  show  a  ratification  of  the  contract:  Burdett  v.  Williams, 
SO  Fed.  Rep.  697. 

Ratification  by  Accepting  Consideration.  —  If  a  person,  after  attain- 
ing his  majority,  accepts  the  consideration  of  a  contract  made  by  him  while 
an  infant,  such  an  act  very  plainly  amounts  to  a  ratification  of  the  contract. 
As  where  an  infant  lessor  accepts  rent  after  reaching  full  age:  Ashjield  v.  Ash- 
JieUl,  W.  Jones,  157;  Latch,  199;  Godb.  364;  Smith  v.  Loio,  1  Atk.  489;  Sla- 
tor  V.  Trimble,  14  Ir.  C.  L.  342;  or  receives  interest  under  his  agreement: 
Franklin  v.  Thornebury,  1  Veru.  132;  or  accepts  the  purchase  price  of  prop- 
erty sold  by  him:  Fenjuion  v.  Bell's  Admr,  17  Mo.  347;  Doe  ex  dem.  Mo 
Cormic  V.  Leyjett,  8  Jones  L.  425,  427;  Highley  v.  Barron,  49  Mo.  103;  or 
receives  a  portion  of  the  consideration  for  a  mortgage  of  his  property:  Keejan 
V.  Cox,  116  Mass.  289;  or  receives  the  proceeds  of  an  awani,  pursuant  to  a 
submission  of  iiis  claim  to  arbitration:  Jones  v.  Phneaix  Bank,  8  N.  Y.  228. 
But,  it  is  held,  an  infant/e//ie  covert  is  not  estopped  from  disaffirming  a  deed 
of  her  lands,  in  which  she  united  with  her  husband,  from  the  fact  that  after 
Bhe  came  of  age  tlie  grantee  paid  the  husband  a  portion  of  the  purchase  price, 
unless  she  knew  that  such  purchase-money  was  unpaid,  and  the  grantee  was 
ignorant  of  the  fact  that  the  grantor  was  an  infant  when  she  executed  the 
deed:  Scranton  v.  Stewart,  52  Ind.  68.  In  Owc/w  v.  Phelps,  95  N.  C.  28(),  it 
was  held  that  where  it  is  sought  to  establish  that  a  person  has  ratified  a  con- 
tract in  regard  to  his  property,  made  while  an  infant,  evidence  is  ailmissible 
to  show  that  the  money  received  in  pursuance  of  such  contract  was  u.<ed  for 
the  infant's  advantage,  with  his  knowledge.  The  evidence  does  not  of  itself 
Bhow  a  ratification,  but  is  admissible  as  explanatory  of  what  occurred. 


716  Craig  v.  Van  Bebber.  [Missouri. 

Ratification  by  Retention  of  Property  Purcha.sed.  —  The  effect  of  the 
retention  of  property  purchased  by  a  minor,  after  he  becomes  of  age,  has  al- 
ready been  considered  above,  under  the  title  "Disaffirmance  of  Contracts,  in 
General,  within  Reasonable  Time  after  Reaching  Full  Age."  But  little  more 
remains  to  be  added.  As  there  stated,  the  retention  of  personal  property  pur- 
chased during  infancy,  by  the  vendee,  for  an  unreasonable  time  after  he  attains 
fcis  majority,  without  any  act  of  disaffirmance  on  his  part,  is  inconsistent  with 
any  other  idea  than  that  of  ownership,  and  therefore  it  will  of  itself  amount 
to  a  ratification  of  the  contract;  although  if,  after  coming  of  age,  he  uses  the 
property  or  exercises  other  acts  of  ownersliip  over  it  in  addition,  as,  perhaps, 
will  generally  be  the  case,  we  should  say  that  the  question  of  time  is  then 
unimportant,  and  the  contract  is  therel:)y  affirmed:  See  Boiiden  v.  Boyden, 
9  Met.  519;  Delano  v.  Blake,  11  Wend.  85;  25  Am.  Dec.  617;  Alexander  v. 
Heriot,  Bail.  Eq.  223;  EuhanJcsv.  Peak,  2  Bail.  L.  497;  Thoma.osonv.  Boyd,  13 
Ala.  419;  Aldrick  v.  Grimes,  10  N.  H.  194;  McKamy  v.  Cooper,  81  Ga.  679; 
Georgia  Code  (1882),  sec.  2731.  So  if  an  infant  does  not  repudiate  his  con- 
tract of  subscription  for  shares  in  a  corporation  within  a  reasonable  time 
after  coming  of  age,  he  will  be  held  to  have  ratified  the  contract:  Cork  etc.  R'y 
V.  Cazenove,  10  Q.  B.  935;  Leeds  etc.  B'y  v.  Fearnley,  4  Ex.  26;  Nortlavestern 
E'y  V.  AIcMkhael,  5  Ex.  114;  Dublin  etc.  R'y  v.  Black,  8  Ex.  181.  An  infant, 
also,  who  retains  possession  of  real  estate  purchased  or  received  in  exchange 
by  him  for  an  unreasonable  time  after  he  attains  full  age  thereby  likewise 
affirms  the  contract  of  purchase  or  exchange:  See  Cecil  v.  Comes  Salisbury,  2 
Vern.  225;  Roberts  v.  Wirjgin,  1  N.  H.  73,  75;  8  Am.  Dec.  38,  40;  Boody  v. 
McKenney,  23  Me.  517,  524;  Baker  v.  Kennett,  54  Mo.  82;  Henry  v.  Root,  33 
N.  Y.  526;  Walsh  v.  Powers,  43  N.  Y.  23,  26;  3  Am.  Rep.  654,  655;  Callis  v. 
Day,  38  Wis.  643;  Hook  v.  Donaldson,  9  Lea,  56;  Ellis  v.  Alford,  64  Miss.  8; 
and  see  Evelyn  v.  Chichester,  3  Burr.  1717;  Annjield  v.  Tate,  7  Ired.  L.  258; 
Middleton  v.  Hoge,  5  Bush,  478;  Ihley  v.  Padgett,  27  S.  C.  300;  Langdon  v. 
Ckiyson,  75  Mich.  204;  Georgia  Code  (1882),  sec.  2731;  compare  Benham  v. 
Bishop,  9  Conn.  330;  23  Am.  Dec.  358.  A  similar  rule  may  be  said  to  exist 
in  case  of  a  settlement  of  boundaries  made  during  his  infancy:  Brown  v. 
Caldwell,  10  Serg.  &  R.  114;  13  Am.  Dec.  660;  George  v.  Thomas,  16  Tex. 
74;  67  Am.  Dec.  612.  An  infant  lessee  who  retains  possession  of  the  premises 
for  an  unreasonable  time,  and,  perhaps,  in  any  case,  after  a  rent  day,  after 
he  attains  his  majority,  similarly  ratifies  the  letting,  as  a  consequence: 
Boody  V.  McKenney,  23  Me.  517,  524;  Baxter  v.  Bush,  29  Vt.  465;  70  Am. 
Dec.  429;  McClure  v.  McClure,  74  Ind.  108;  Mahon  v.  O'Farrell,  10  Ir.  L.  R. 
527. 

The  retention  of  property  may,  however,  be  under  such  circumstances  as 
not  to  indicate  an  intention  to  affirm  the  contract.  Thus  an  infant  cannot 
be  held  to  have  ratified  a  contract  of  purchase  of  personal  property,  because 
the  property  is  still  retained  by  him,  after  he  has  done  all  in  his  power  to  se- 
cure a  rescission,  and  has  brought  suit  for  that  purpose:  House  v.  Alexander, 
105  Ind.  109;  55  Am.  Rep.  189,  191;  and  where  an  infant  who  had  taken  a 
conveyance  of  land  made  an  attempt  to  disaffirm  the  contract  before  his  ma- 
jority, and  again,  within  a  few  days  thereafter,  and  upon  the  refusal  of  the 
grantor  to  rescind,  offered  to  give  the  grantor  a  sum  of  money,  together  with 
the  improvements  erected  by  himself  on  the  land,  by  way  of  compromise, 
and  then  abandoned  the  premises,  and  left  them  in  a  position  for  the  vendor 
to  occupy  at  any  time  he  saw  fit,  his  acts  were  sufficiently  speedy  and  un- 
equivocal to  avoid  the  contract:  Baker  v.  Kennett,  54  Mo.  82;  so  the  reten- 
tion of  possession  and  receipt  of  rents  by  a  party,  after  majority,  of  a  lot  of 


April,  1890.]  Ckaig  v.  Van  Bebber.  717 

land  purchased  for  her  in  her  infancy,  is  not  a  ratification  of  the  purchase, 
where  she  repudiated  the  purcliase  on  the  day  she  reached  full  age,  and 
brought  an  action  within  three  months  thereafter  to  recover  out  of  its  sale  so 
much  of  her  money  as  was  expended  in  its  purchase:  Scott  v.  Scott,  29  S.  C 
414. 

Again,  where  an  infant  transferred  a  portion  of  goods  purchased  by  him  to 
a  tliird  person  to  secure  a  debt,  his  retention  of  these  goods  for  sale,  after  he 
became  of  age,  as  the  servant  of  the  assignee,  does  not  amount  to  a  ratification 
of  the  contract  of  purchase:  Thing  v.  Libbey,  16  Me.  55.  In  Smith  v.  Kelley,  13 
Met.  309,  an  infant  bought  goods,  and  the  sellers,  three  days  before  he  came 
of  age,  brought  an  action  against  him  for  the  price,  and  attached  the  goods  on 
their  writ.  The  goods  remained  in  the  hands  of  the  a1  taching  officer  at  the 
time  of  the  trial  of  the  action,  and  the  defendant  gave  no  notice,  after  reach- 
ing his  majority,  of  his  intention  not  to  be  bound  by  the  contract  of  sale.  It 
was  held  that  there  was  not  a  ratification  of  the  contract  by  the  defendant, 
and  the  action  could  not  be  maintained.  The  court  said  that  while  if  an  in- 
fant, after  coming  of  age,  "used  the  property  bought  as  his  own,  or  sold  it,  or 
kept  it  a  long  time,  that  would  be  evidence  of  ratification,  yet  such  use,  dis- 
position, or  retention  must  be  a  voluntary  act  on  the  part  of  the  minor,  by 
which  he  manifests  an  intention  to  keep  the  property.  In  Todd  v.  Clapp, 
118  Mass.  495,  in  an  action  to  recover  tiie  price  of  goods  sold  to  a  firm,  one 
member  of  which  was  an  infant  at  the  time  of  the  sale,  it  appeared  that  the 
action  was  brought  before  the  infant  became  of  age,  and  that  a  portion  of 
the  goods  sold  were  attached  upon  the  writ,  among  otlier  goods;  that  the  at- 
tached goods  were  sold  at  auction  by  consent  of  all  parties,  and  were  bid  off 
by  the  grandfather  and  guardian  of  the  infant;  and  that  the  infant,  after 
coming  of  age,  purchased  the  goods  of  his  grandfather,  and  afterwards  used 
and  sold  them  for  his  sole  benefit.  It  was  held  that  the  court  correctly  ruled 
that  the  jury  could  not  find,  from  these  facts,  that  the  infant  ratified  the 
original  contract.  The  court  said:  "The  ground  upon  which  the  retention 
and  use  by  a  defendant,  after  he  becomes  of  age,  of  property  bought  while  he 
was  an  infant,  are  held  to  be  an  affirmance  of  the  contract  of  purchase,  is, 
that  these  acts  show  a  promise  or  undertaking  to  perform  it  after  his  inca- 
pacity to  make  contracts  is  removed.  His  only  rigiit  to  retain  the  goods  is 
by  virtue  of  the  contract,  and  he  can  conscientiously  do  it  only  upon  the  as- 
sumption that  the  contract  is  valid.  But  the  case  at  bar  is  difi^erent.  The 
defendant,  Clapp,  after  he  became  of  age,  did  not  claim  or  hold  the  goods 
under  or  by  virtue  of  the  contract  with  the  plaintiffs.  He  held  them  by  vir- 
tue of  a  new  and  independent  contract  of  purchase.  There  is  no  inconsis- 
tency in  his  claim  to  hold  the  goods  under  this  new  purchase  and  his  claim 
that  his  contract  with  the  plaintififs  was  invalid,  and  no  inference  can  be 
drawn,  from  his  thus  holding  the  goods,  of  an  intention  to  ratify  and  affirm 
the  plaintiffs'  contract."  And  in  Maxpin  v.  Grady,  71  Mo.  278,  where  a 
minor,  on  the  sale  of  land  under  a  deed  of  trust  executed  by  his  mother  and 
brother  to  secure  a  debt,  gave  his  promissory  note  for  the  balance  of  the 
debt  remaining  after  the  sale,  and,  after  coming  of  age,  the  minor  bought 
the  land  from  the  purchaser,  it  was  held,  in  an  action  against  him  on  the 
note,  that  the  doctrine  that  infancy  could  not  be  invoked  as  a  defense  to  a 
note  while  the  defendant  held  the  property  for  which  it  was  given  was  not 
applicable,  since  the  note  was  not  given  for  the  land.  See  also  Baker  v. 
Stone,  136  Mass.  405;  Carrcll  v.  Potter,  23  Mich.  377.  It  has  also  been  held 
that  the  fact  that  a  married  woman  united  with  her  husband  in  enjoying  or 
exercising  dominion  over  property  received  by  the  husband  as  part  of  the 


718  Craig  v.  Van  Bebbeb.  [Missouri, 

consideration  for  a  conveyance  of  her  lands  does  not  preclude  her  from  as- 
serting the  disability  of  infancy  against  her  grantee  or  his  successors:  Bu- 
chanan  v.  Hubbard,  96  Ind.  1. 

Furthermore,  an  infant  who  enters  into  a  partnership  does  not,  hy  re- 
ceiving profits  of  the  partnership  during  his  minority,  and  retaining  the  same 
after  he  comes  of  age,  become  liable  for  partnership  debts  contracted  before 
dissolution,  which  occurred  before  he  came  of  age:  Dana  v.  Steaims,  3  Cush. 
372,  375;  and  the  fact  that  infants  retained  and  sold  the  crops  raised  by  them 
on  land  which  they  had  leased  is  not  a  ratification  of  their  contract  to  pay 
rent,  the  consideration  of  the  latter  agreement  not  being  crops,  but  the  use  of 
land,  and  the  appropriation  by  defendants  of  the  fruits  of  their  labor  not 
being  such  a  positive  and  unequivocal  act  as  to  indicate  an  intention  to  bind 
themselves  for  the  rent:  Flexner  y.  Dickerson,  72  Ala.  318;  so  where  a  minor 
contracts  for  materials  and  labor  for  the  improvement  of  his  property,  his 
receipt  of  the  rents  from  the  property  so  improved,  after  he  becomes  of  age, 
will  not  amount  to  a  ratification  of  the  contract  so  as  to  give  the  contractor 
a  mechanic's  lien  upon  the  property:  McCarty  v.  Carter,  49  111.  53;  95  Am. 
Dec.  572.  In  Tohey  v.  Wood,'l23  Mass.  88,  25  Am.  Rep.  27,  a  firm,  of 
wliich  an  infant  was  a  member,  gave  certain  checks  in  payment  for  goods, 
and  the  infant  supposed,  when  he  came  of  age,  and  until  after  the  firm's  dis- 
solution, that  the  checks,  which  were  duly  protested  for  non-payment,  were 
paid.  At  the  dissolution,  which  was  seven  weeks  after  the  infant  attained 
his  majority,  during  whicli  time  he  drew  money  from  tlie  firm  for  his  per- 
sonal use,  some  of  the  goods  were  unsold,  but  he  did  not  know  it,  and  his 
partners  agreed  with  him  to  assume  and  pay  all  the  firm  debts.  It  was  held 
that  these  facts  would  not  justify  a  finding  that  tliere  was  a  ratification  by 
the  infant  of  his  promise  to  pay  the  checks. 

Ratification  from  Failure  to  Disaffirm  within  Reasonable  Time 
AFTER  Reaching  Full  Age.  —  The  question  of  the  ratification  of  a  contract 
made  during  infancy  by  the  mere  failure  to  disaffirm  it  within  a  reasonable 
time  after  attaining  majority,  where  there  has  been  no  property  retained  or 
used,  and  no  other  act  of  affirmance,  has  already  been  fully  discussed,  and 
needs  no  further  consideration:  See  supra,  titles  "Disaffirmance  of  Contracts, 
in  General,  within  Reasonalde  Time  after  Reaching  Full  Ac^e,"  "Disaffirm- 
ance of  Deeds  witliin  Reasonable  Time  after  Reaching  Full  Age,"  and  "Dis- 
affirmance of  Deeds  of  Infant  Femes  Covert  after  Reaching  Full  Age." 

Ratification  by  Sale  or  Conveyance  of  Property  Purchased. — If 
an  infant  purchases  personal  property,  and  after  coming  of  age,  sells  the 
same,  such  an  act  of  ownership  will  very  evidently  amount  to  a  ratification. 
If  the  retention  or  use  of  property  ratifies  the  contract,  certainly  a  sale  of  it 
will  have  that  effect:  Cheshire  v.  Barrett,  4  McCord.  241;  17  Am.  Dec.  735; 
Lawson  v.  Lovejoy,  8  Me.  405;  23  Am.  Dec.  526;  Williams  v.  Brown,  34  Me. 
594;  Deason  v.  Boyd,  1  Dana,  45;  Rohinaon  v.  Hoskins,  14  Bush,  393;  Shrop- 
shire V.  Burns,  46  Ala.  108;-  Minork  v.  Shortridje,  21  Mich.  304;  compare 
Aldrich  v.  Grimes,  10  N.  H.  194,  198;  Counts  v.  Bates,  Harp.  L.  464.  And 
there  is  no  distinction,  in  this  respect,  between  personal  and  real  property. 
A  sale  and  conveyance  of  real  estate  purcliased  during  infancy  is  an  affirm- 
ance of  the  contract  of  purchase:  Hubbard  v.  Cummings,  1  Me.  11;  Dana  v. 
Coombs,  6  Me.  89;  19  Am.  Dec.  194;  Lynde  v.  Budd,  2  Paige,  191;  21  Am. 
Dec.  84:  Hemv  v.  Root,  33  N.  Y.  526;  Walsh  v.  •"  v„^rs,  43  N.  Y.  23,  26;  3 
Am.  Rep.  654,  655;  Williams  v.  Mabee,  7  N.  J.  L  ^  500;  Middleton  v.  Hoqe, 
5  Bush,  478;  Johnston  v.  Fiirnier,  69  Pa.  St.  449;  Tliomas  v.  Pullis,  56  Mo. 
211,  219;  Uecher  v.  Kothn,  21  Neb.  559;  59  Am.  Rep.  849;  Budianan  v.  Hub- 


April,  1890.]  Cbatg  v.  Van  Bebbeb.  719 

bard,  119  lud.  187.  But  if  an  infant  purcliases  real  estate,  and  agrees  as 
part  of  the  consideration  to  pay  oif  a  mortgajte  thereon,  and  subsequently, 
but  before  she  comes  of  age,  conveys  the  land  to  another,  the  retention  of 
the  fruits  of  the  sale  after  she  attains  her  majority  is  not  an  affirmance  of 
her  agreement  to  pay  ofiF  the  mortgage:  Walsh  v.  Powers,  43  N.  Y.  23;  3  Am. 
Rep.  C54;  see  also  Carrell  v.  Potter,  23  Mich.  377;  and  where  an  administra- 
tor, who  had  sold  the  land  of  an  infant  without  authority,  other  than  the 
latter 's  consent,  invested  part  of  the  purchase-money  in  another  tract  of 
land,  which  he  conveyed  to  the  infant,  and  the  infant,  on  arriving  at  age,  re- 
pudiated the  sale  by  the  administrator,  and  afterwards  conveyed  the  land 
purchased  with  the  proceeds  of  that  sale,  at  the  direction  of  the  administra- 
tor, without  in  any  way  profiting  thereby,  it  was  held  that  this  did  not 
operate  as  a  ratification  of  the  sale  by  the  administrator:  Davidson  v.  Young, 
38  111.  145. 

Ratification  by  Various  Miscellaneou.s  Acts. — There  are  a  number 
of  cases  of  a  miscellaneous  character  concerning  what  acts  or  conduct  will 
amount  to  a  ratification,  which  remain  to  be  noticed.  An  infant,  it  is  held, 
confirms  a  purchase  of  land  made  by  him,  the  title  to  which  was  taken  in  his 
mother's  name,  by  executing  and  recording  an  instrument,  after  attaining  his 
majority,  by  which  he  proclaimed  his  mother  to  be  the  true  and  only  owner 
of  the  land,  and  declared  himself  to  be  her  agent,  manager,  and  co-occu- 
pant only,  and  by  his  continued  use  of  the  land  as  her  property,  held  for  his 
benefit:  Middleton  v.  Hoge,  5  Bush,  478.  A  lease  by  an  infant  lessor  is  con- 
firmed by  him,  where  he,  after  reaching  full  age,  gives  a  receipt  to  the  lessee 
for  an  inst-dlment  of  rent,  and  indorses  on  the  lease  a  confirmation  thereof: 
Slalor  V.  l^imble,  14  Ir.  C.  L.  342.  And  a  ward  affirms  a  contract  with 
his  guardian  during  infancy  by  executing,  after  majority,  a  receipt  to  the 
guardian  for  the  property  received  under  the  contract:  Clark  v.  Van  Court, 
100  Ind,  113;  50  Am.  Rep.  774.  Where  a  minor  executes  a  deed  of  convey- 
ance, and,  on  arriving  at  age,  executes,  jointly  with  the  grantee,  a  mortgage 
of  the  same  premises  to  secure  a  debt  of  the  grantee,  this  is  an  affirmance  of 
the  deed,  the  mortgage  being  executed  in  conjunction  with  the  grantee  at 
his  instance  and  for  his  benefit:  Watkins  v.  Wassell,  15  Ark.  73;  and  where 
an  infant  mortgagor,  after  coming  of  age,  takes  no  steps  to  disaffirm  the 
mortgage,  but  procures  releases  of  portions  of  the  premises  from  the  mort- 
gagee, "such  conduct  was  utterly  inconsistent  with  the  claim  that  the 
mortgage  was  invalid,  and  was  a  distinct  recognition  of  its  validity  ":•  in&o?j 
v.  Darraijh,  28  N.  Y.  St.  Rep.  390;  and  also,  where  an  infant,  having  come 
of  age,  and  entered  into  partnership  with  third  persons,  took  a  lease  for  his 
firm  of  a  part  of  certain  property,  which  he  had  conveyed  during  infancy, 
from  the  person  to  whom  he  had  made  the  conveyance,  the  lease  is  proper  to 
go  the  jury,  in  an  action  by  the  infant  to  recover  other  parts  of  the  land  con- 
veyed, to  show  an  affirmance  of  his  deed  for  the  wliole;  and  with  such  evi- 
dence before  the  jury,  the  court  rightfully  refused  to  charge  that  the  evidence 
showed  no  affirmance:  Irvine  v.  Irvine,  9  Wall.  GI7.  A  redelivery  of  a  deed 
or  mortgage  by  an  infant,  after  coming  of  age,  amounts  to  a  ratification  of 
the  instrument:  Davidson  v.  Youmj,  3S  111.  145,  153;  Palmer  v.  Milter,  25 
Barb.  399;  and  see  Den  ex  dem.  Murray  v.  Shanklin,  4  Dev.  &  B.  289. 

An  infant,  after  coming  of  age,  ratifies  an  aw  ard  made  upon  a  submission 
by  his  guardian  that  the  ward  and  infant  heir  shall  pay  an  annuity  to  the 
widow  in  lieu  of  dower,  where  he  pays  part  of  the  money  then  due,  promises 
to  pay  the  rest  of  that  installment,  and  says  that  he  had  lodged  property  in 
his  brother's  hands  to  meet  an  annual  payment:  Barnaby  v.  Barnaly,  1  Pick. 


720  Craig  v.  Van  Bebber.  [Missouri, 

221.  If  an  infant  partner,  after  attaining  full  age,  transacts  the  business  of 
the  firm,  receives  its  monej's,  and  pays  its  debts,  these  acts,  unexplained, 
amount  to  a  confirmation  of  the  i)artnership,  and  make  him  liable  for  a  debt 
of  the  firm  contracted  during  his  infancy:  Miller  v.  Sims,  2  Hill  (S.  C.)  479; 
compare  CraUree  v.  May,  1  B.  Mon.  289.  An  infant  ratifies  a  contract  of 
service  by  continuing  in  the  service,  without  objection,  after  coming  of  age: 
Forsyth  v.  Hastiwjs,  27  Vt.  646;  Spicer  v.  Earl,  41  Mich.  191;  32  Am.  Rep. 
152,  155;  Cornwall  V.  Hatokim,  41  L.  J.  Uh.  435;  26  L.  T.  607;  20  Week.  Rep. 
653. 

Torts  of  Infants  Connected  with  Contracts.  — The  liability  of  infants 
for  torts  connected  with  their  contracts,  as  well  as  for  torts  in  general,  will 
be  found  discussed  in  the  note  to  HumpJirty  v.  Douglass,  33  Am.  Dec.  180;  and 
what  will  now  be  said  concerning  the  subject  will  be  somewhat  in  the  nature 
of  a  supplement  to  that  note. 

The  general  rule  is  elementary,  as  there  said,  that  infants  are  liable  for 
their  torts;  while,  as  has  been  seen,  they  are  not  liable,  with  certain  excep- 
tions, for  the  violation  of  their  contracts.  Even  the  contract  of  an  infant 
made  in  settlement  of  his  tort,  it  is  held,  stands  on  no  privileged  footing,  but 
is  voidable  by  him:  Shaw  v.  Coffin,  58  Me.  254,  256;  4  Am.  Rep.  290;  Hanka 
V.  Deal,  3  McCord,  257.  "It  must  require,"  says  the  court  in  the  last  case, 
"at  least  as  much  capacity  and  discretion  to  contract  about  a  tort  as  about 
the  ordinary  concerns  of  life."  But  the  contrary,  with  much  reason,  has  been 
held:  Ray  v.  Tuhbs,  50  Vt.  688;  28  Am.  Rep.  519.  If  the  tort  of  an  infant 
is  connected  with  his  contract,  it  is  a  question  of  considerable  dispute 
whether  he  should  be  held  responsible  because  he  is  liable  for  his  torts,  or 
whether  he  may  escape  responsibility  because  he  is  not  liable  on  his  contracts. 
"Two  principles,"  says  Chalmers,  J.,  in  Feryuson  v.  Bobo,  54  Miss.  121,  127, 
"  equally  ancient  and  equally  well  settled  with  respect  to  the  contracts  and 
liabilities  of  infants,  and  which,  as  abstractly  stated,  seem  not  antagonistic, 
have  been  found  in  practice  to  produce  two  conflicting  lines  of  decision,  which 
it  is  difficult  to  reconcile;  or  rather,  it  is  difficult  to  determine  satisfactorily 
where  one  ends  and  the  other  begins:  1.  The  contracts  of  infants,  except 
for  necessaries  with  which  they  have  not  been  supplied  by  their  guardians, 
impose  no  liability  upon  them  which  is  not  voidable  at  their  election.  2. 
Infancy  is  a  shield,  and  not  a  sword,  and  cannot  be  set  up  to  defeat  liability 
for  torts,  trespasses,  or  frauds,"  To  give  to  each  of  these  principles  its 
appropriate  force,  and  to  prevent  one  from  trenching  upon  the  other  is  some- 
times a  difficult  matter. 

It  has  been  seen  that  a  minor  is  not  estopped  at  law  from  setting  up  his 
infancy  as  a  defense  to  an  action  upon  his  contract  from  the  fact  that  he 
fraudulently  represented  himself  to  be  of  full  age  at  the  time  the  contract  was 
entered  into,  or  made  any  other  false  representations,  whereby  he  induced 
the  other  contracting  ]jarty  to  give  him  credit.  In  other  words,  his  false 
representations  as  to  his  age,  means  of  payment,  and  the  like,  will  not  render 
a  contract,  procured  on  their  faith,  binding  upon  him  at  law.  He  may,  how- 
ever, be  estopped  in  equity,  under  such  circumstances,  from  avoiding  his 
contract  on  the  ground  of  infancy.  See  ante,  title  "Infant's  Concealment  or 
Misrepresentation  as  to  Age,  etc."  It  is  an  entirely  different  question  where 
an  action  is  brought  against  the  infant,  not  upon  the  contiact,  but  sounding 
in  tort,  to  recover  damages  for  the  fraud:  See  the  observations  of  Chief  Jus- 
tice Parker  in  Burley  v.  Paissell,  10  N.  H.  184;  34  Am.  Dec.  146.  The  rule 
is  said  to  be  general,  that  where  the  substantial  ground  of  action  is  contract, 
a  party  cannot,  by  declaring  in  tort,  render  the  infant  liable,  when  he  would 


April,  1890,]  Cbaiq  v.  Van  Bebbeb.  721 

not  have  been  liable  on  the  coii<^  act.  And  it  has  been  maintained  that  tui 
infant  is  consequently  not  liable  in  an  action,  which  would  be,  at  common 
law,  an  action  on  the  case,  to  recover  damages  for  falsely  representing  him- 
self to  be  of  full  age,  whereby  the  plaintiff  was  induced  to  enter  into  a  con- 
tract with  him,  which  he  failed  or  refused  to  perform:  Johnson  v.  Pie,  1  Lev. 
169;  1  Keb.  905,  913;  1  Sid.  258;  Price  v.  Hewett,  8  Ex.  146,  148;  Bartlelf. 
V.  Wells,  1  Best  &  S.  836;  Broum  v.  McCune,  5  Sand.  224,  229;  Nash  v. 
Jewelt,  61  Vt.  501;  and  see  Merriam  v.  Cunningham,  11  Cash.  40;  Brown  v. 
Dunham,  1  Root,  272.  "  While  it  is  true,  as  a  general  proposition  of  law," 
says  the  court  in  Nash  v.  Jewett,  61  Vt.  501,  "  that  infants  are  liable  for  their 
torts,  yet  the  form  of  action  does  not  determine  their  liability,  and  they  can- 
not be  made  liable  when  the  cause  of  action  arises  from  a  contract,  although 
the  form  is  ex  delicto. " 

For  the  same  reason,  it  has  also  been  held  that  infancy  is  a  bar  to  an 
action  of  deceit  against  a  vendor  for  fraudulently  selling  property  as  his 
own,  when  it  belonged  to  another:  Orove  v.  Neville,  1  Keb.  778;  Doran  v. 
Smith,  49  Vt.  353;  Chief  Justice  Pierpont  saying  in  the  latter  case:  "The 
representations  alle£;ed  in  the  declaration  are  of  the  same  character  and 
stand  upon  the  same  principles  as  representations  as  to  the  quality  of  the 
property, — they  enter  into  and  constitute  an  element  of  the  contract  itself; 
it  is  that  that  makes  them  actionable.  The  contract  must  be  alleged  and 
proved,  or  there  can  be  no  recovery.  The  contract  is  the  basis  of  the  action; 
the  fraud  is  predicated  upon  the  contract."  And  it  has  likewise  been  held, 
as  intimated  in  the  last  quotation,  that  infancy  is  a  good  defense  to  an 
action  to  recover  damages  for  a  fraudulent  warranty,  representation,  or 
concealment,  on  the  sale  of  a  chattel,  as  to  its  condition  or  quality:  Oreen 
v.  Greenbank,  2  Marsh.  485;  West  v.  Moore^  14  Vt.  447;  39  Am.  Dec.  235; 
Gilson  V.  Spear,  38  Vt.  311;  88  Am.  Dec.  659;  Prescott  v.  Norris,  32  N.  H. 
101;  Hewitt  v.  Warren,  10  Hun,  560;  and  we  should  say  that  this  would  be 
particularly  true  where  the  action,  founded  upon  a  false  warranty,  is,  in 
form,  ex  contractu;  as  where  the  breach  of  warranty  is  pleaded  as  an  offset  to 
an  action  by  the  infant  on  promissory  notes:  Morrill  v.  Aden,  19  Vt.  505. 
"An  infant,"  says  the  court  in  Gilson  v.  Spear,  38  Vt.  311,  88  Am.  Dec. 
659,  "is  liable  in  an  action  ex  delicto  for  an  actual  and  willful  fraud  only  in 
cases  in  which  the  form  of  action  does  not  suppose  that  a  contract  has  ex- 
isted; but  where  the  gravamen  of  the  fraud  consists  in  a  transaction  which 
really  originated  in  contract,  the  plea  of  infancy  is  a  good  defense."  And  in 
Prescott  V.  Norris,  32  N.  H.  101,  Chief  Justice  Perley  observes:  "  If  the  tort 
or  fraud  of  an  infant  arises  from  a  breach  of  contract,  although  he  may  have 
•been  guilty  of  false  representations  or  concealments  respecting  the  subject- 
matter  of  the  contract,  he  cannot  be  charged  for  a  breach  of  his  promise  by 
changing  the  form  of  the  action.  In  this  case,  the  claim  of  the  plaintiffs 
arises  out  of  representations  made  on  the  sale,  which  were  substantially 
part  of  the  contract  of  sale.  And  false  representations  made  by  an  infant 
at  the  time  of  his  contract  are  regarded  as  so  far  part  of  it  that  he  may  set 
up  his  infancy  as  a  defense.  But  if  the  tort  is  subsequent  to  the  contract, 
and  not  a  mere  breach  of  it,  but  a  distinct,  willful,  and  positive  wrong 
of  itself,  then,  although  it  may  be  connected  with  a  contract,  the  infant  is 
liable." 

On  the  other  hand,  Johnson  v.  Pie,  1  Lev.  169,  1  Keb.  905,  913,  1  Sid.  258, 

which  is  the  pioneer  case  on  this  subject,  has  been  disapproved  by  some  authori-, 

ties  in  this  country;  and  it  has  been  held  that  where  an  infant  obtains  property 

on  the  faith  of  his  fraudulent  representations  that  he  is  of  full  age,  an  action 

Am.  St.  Kep.,  Vol.  XVIII. —  46 


722  Cbaio  v.  Van  Bebbeb.  [Missouri, 

for  the  damages  thereby  sustained  can  be  maintained  against  him:  Fitts  v. 
Hall,  9  N.  H.  441;  Echstein  v.  Frank,  1  Daly,  334;  Rice  v.  Boyer,  108  Ind.  472; 
58  Am.  Rep.  53;  and  see  Car'penter  v.  Carpenter,  45  Ind.  142;  Fergtison  v. 
Boho,  54  Miss.  127  131;  Yeagerv.  Knijld,  60  Miss.  730.  Chief  Justice  Parker, 
in  Fitis  v.  Hall,  9  N.  H.  441,  says  that  such  a  representation  was  not  a  part  of 
the  contract,  nor  did  it  grow  out  of  it,  or  in  any  way  result  from  it.  The  dis- 
tinction is  a  fine  one,  and  does  not  seem  to  be  fully  appreciated  by  some 
of  the  later  cases  which  reach  the  same  end.  The  rule  is  eminently  an 
equitable  one,  and  although  its  foundation  is  somewhat  shadowy,  there  is  an 
inclination  to  sustain  it  as  correct,  and  to  hold  it  distinguishable  from  the 
cases  where  an  infant  fraudulently  sells  property  as  his  own,  or  makes  a 
fraudulent  warranty  as  to  its  soundness  or  quality. 

In  Word  v.  Vance,  1  Nott  &  McC.  197,  it  was  even  held  that  an  action  of 
deceit  would  lie  against  an  infant  for  falsely  warranting  a  horse,  exchanged 
with  the  plaintiff,  to  be  sound;  but  the  case  stands  alone  in  this  ruling.  In 
Wallace  v.  Mocss,  5  Hill,  391,  it  was  held  that  an  infant  who  fraudulently 
obtains  goods  on  credit,  with  an  intention  not  to  pay  for  them,  was  liable  in 
tort  to  the  party  injured.  The  kind  of  action  in  tort  does  not  appear,  nor  is 
any  reason  given  for  the  decision;  but  it  might  be  suggested  in  explanation 
that  the  defrauded  party  could  have  himself  rescinded  the  sale  under  such 
circumstances,  and  have  maintained  trover  or  replevin.  See  also  Asldock  v. 
Vivell,  29  111.  App.  388.  It  is  also  true  that  if  goods  are  sold  to  a  minor 
for  cash,  and  he  fraudulently  obtains  possession  of  fchem  without  paying  the 
cash,  his  infancy  will  not  shield  him  from  liability  in  an  action  on  the  case 
or  in  trover;  Mathews  v.  Cowan,  59  111.  341;  the  fraud  is  really  independent 
of  the  contract.  It  has  been  further  held  that  an  infant  who  is  arrested  for 
fraud  in  obtaining  goods  cannot  be  discharged  from  arrest  on  the  ground 
that  he  is  an  infant:  Schunemanr^v.  Paradhe,  46  How.  Pr.  426;  and  that  a 
minor  may  be  prosecuted  criminally  for  obtaining  goods  under  false  pre- 
tenses, althovigh  he  might  not  be  liable  civilly  for  the  particular  fraud  com- 
mitted: People  V.  Kendall,  25  Wend.  399;  37  Am.  Dec.  240.  It  should  also 
be  noted  that  if  an  inant  avoids  his  contract  for  the  purchase  of  property, 
whether  the  contract  was  induced  by  fraud  or  not,  the  contract  being  thereby 
rescinded  on  both  sides,  the  vendor  may  maintain  an  action  against  the 
infant  to  recover  the  property  if  it  be  still  in  his  possession,  or  damages  for 
its  conversion  if  he  still  has  it  at  the  time  of  avoidance  of  the  contract, 
although,  we  should  say,  he  should  thereafter  consume,  destroy,  or  in  any 
manner  dispose  of  it:  See  the  authorities  cited  suprx,  title  "  Adult's  Right 
to  Recover  back  Consideration  from  Infant  on  Disaffirmance.' ' 

Again,  while  an  infant  who  hires  a  chattel  is  net  lia.  le  for  any  non-f'jas- 
ance,  or  want  of  or  failure  to  use  care  and  skdl,  so  long  as  he  keeps  within 
the  terms  of  the  bailment,  yet  if  he  departs  from  the  object  of  the  bailment, 
and  uses  the  article  for  a  different  purpose  than  that  for  nhich  it  was  hired, 
he  is  liable  as  for  a  conversion,  and  if  he  inj'ires  the  chattel  by  any  willful 
and  positive  act,  he  is  responsible  in  damages  for  the  injury:  Barnard  v. 
Haggis,  14  Com.  B.,  N.  S.,  45;  Walley  v.  Holt,  35  L.  T.  631;  Homer  v. 
Thwing,  3  Pick.  492;  Green  v.  Sperry,  16  Vt.  390;  42  Am.  Dec.  519;  Towne 
V.  Wiley,  23  Vt.  355;  56  Am.  Dec.  85;  Bay  v.  Tuobs,  50  Vt.  688;  -28  Am. 
Rep.  519;  E^iton  v.  Hll,  50  N.  H.  235;  9  Am.  Rep.  189;  Camphell  v.  Stakes, 
2  Wend.  137;  19  Am.  Dec.  561;  Fisli  v.  Fen-w,  5  Dr.er,  49;  Moore  v.  East- 
man, 1  Hun,  578;  4  Thomp.  &  C.  37.  In  Peunsyh  ania,  it  has,  however, 
been  denied  that  if  an  infant  hires  a  chattel,  as  a  horse,  for  one  purpose,  and 
uses  it  for  another,  and  it  is  injured  while  being  so  used,  trover  will  lie  to 


April,  1890.]  Cbaiq  v.  Van  Bebber.  723 

recover  damages  for  the  conversion,  on  the  ground  that  the  action  "is  an 
attempt  to  convert  a  suit,  originally  in  contract,  into  a  constructive  tort,  so 
as  to  charge  the  infant":  Penrose  v.  Curren,  3  Rawle,  351;  24  Am.  Dec.  356; 
Wilt  V.  Welsh,  6  Watts,  9.  These  cases  are  clearly  opposed  to  the  weight 
of  authority;  and  the  same  may  be  said  of  Jennings  v.  liawlall,  8  Term  Rep. 
335,  and  Schenk  \.  Stronrj,  4  N.  J.  L.  87,  so  far  as  they  hold  that  an  infant  is 
not  liable  in  any  form  of  action  for  willfully  and  maliciously  injuring  an 
article  of  personal  property  hired  by  him. 

Some  of  the  decisions  denying  the  infant's  liability  under  the  foregoing 
circumstances  seem  to  do  so,  to  a  partial  extent  at  least,  on  the  ground  that 
actions  on  the  case,  which  were  brought  against  the  infants,  could  not  be 
maintained.  And  in  Campbell  v.  Stakes,  2  Wend.  137,  19  Am.  Dec.  561,  it 
was  said:  "If  the  infant  was  liable  at  all,  trespass  was  thg  proper  form  of 
action.  An  action  on  the  case  necessarily  supposes  the  defenthint  to  have  a 
right  to  the  possession  of  the  p'-operty  under  the  contract  of  hiring  at  the 
time  the  injury  is  committed.  Independent  of  the  contract  of  hiring,  the 
defendant  would  have  no  right  to  the  posse-ision,  and  trespass  would  be  the 
proper  remedy.  If  the  plaintiff  declares  in  case,  he  affirms  the  contract  of 
hiring,  and  the  plea  of  infancy  is  a  good  defense  to  such  an  action;  for  he 
cannot  affirm  the  contract,  and  at  the  same  time,  by  alleging  a  tortious 
breach  thereof,  deprive  the  defendant  of  his  pl^a  of  infancy.  The  cases  of 
Jenainijs  v.  Haudall,  8  Term  Rep.  335,  and  Green  v.  Greenhnnk,  2  Marsh.  485, 
were  cases  of  that  description. "  But  this  technical  view  is  disregarded  by 
other  decisions,  and  in  Eaton  v.  Hill,  50  N.  H.  235,  9  Am.  Rep.  189,  it  was 
expressly,  and  we  think  correctly,  repudiated. 

It  has  also  been  otherwise  held  that  an  action  of  trover  may  be  maintained 
against  an  infant  for  the  convei'sion  of  goods  intrusted  to  his  care:  Vas^e  v. 
Sniitli,  6  Crancli,  226;  1  Am.  Lead  Cas.  *'l'ol;  Pehjne  v.  SutcVfe,  4  McCord, 
387;  17  Am.  Dec.  756;  so  detinue  will  lie  against  an  infant,  where  goods 
were  delivered  to  him  for  a  special  purpose  not  accomplished:  Mills  v.  Gra- 
ham,  1  Bos.  &  P.  N.  R.  40.  Infancy,  even,  is  no  bar  to  an  action  of  trover 
for  specie  and  bank-bills  deposited  by  the  plaintiff  with  the  infant  as  a  stake- 
holder, pursuant  to  an  illegal  contract  between  the  plaintiff  and  a  third  jjer- 
son:  Lewis  v.  Littlejield,  15  Me.  233;  17  Me.  40.  And  where  a  farm  was 
leased  to  an  infant,  the  lessor  reserving  the  property  in  the  crops  as  se- 
curity for  the  rent,  the  infancy  of  the  leesee  constitutes  no  defease  to  an 
action  of  trover  by  the  lessor  for  the  con',  ersiou  of  the  crops,  since  the  lia- 
bility of  ths  lessee  did  not  arise  from  any  breach  of  contract,  but  from  an 
unlawful  appropriation  to  his  own  use  of  the  lessor's  property:  Baxter  v. 
Busli,  29  Vt.  465;  70  Am.  Dec.  429.  So  an  infant  prevailing  on  a  plea  of 
infancy  in  an  action  on  a  note  given  by  him  for  a  chattel  which  he  obtained 
by  fraud  is  still  liable  to  an  action  of  tort  for  the  conversion  of  the  chattel: 
Walker  v.  Davis,  1  Gray,  506;  and  see  supra,  "Adult's  Right  to  Recover 
back  Consideration  from  Infant  on  DisafTirmance."  But  where  a  complaint 
alleged  an  agreement  between  the  parties,  by  which  the  defendant  was  to 
take  and  sell  goods  for  the  pliintiff,  and  account,  at  certain  prices,  for  all  ha 
should  sell,  and  return  the  goods  not  sold,  and  after  alleging  a  demand  of  the 
defendant  to  return  the  goods,  or  account  for  tlie  avails,  pursuant  to  the 
agreement,  alleged  as  a  breach  tliat  the  defendant  had  neglected  and  refused 
to  account,  but  there  was  no  allegation  of  a  conversion,  it  was  held  that  the 
action  was  upon  contract,  and  not  for  a  tort,  and  that  infancy,  therefore,  con- 
stituted a  good  defense:  Muwjer  v.  Hess,  28  Barb.  75. 

In  an  infant  has  embezzled  or  tortiously  or  criminally  taken  money,  or 


724  SoEDER  V.  St.  Louis  etc.  R'y  Co.       [Missouri, 

converted  into  money  property  acquired  in  such  a  manner,  he  ia  even  liable 
in  an  action  for  money  had  and  received:  Briston  v.  Eastman,  1  Esp.  172; 
PealioN.  P.  223;  Ehudlv.  Martin,  32  Vt.  217;  Shmo  v.  Coffin,  58  Me.  254;  4  Am. 
Rep.  290;  and  see  Pehjm  v.  SutcVfe,  4  McCord,  387;  17  Am.  Dec.  756.  "If," 
says  the  court  in  Shaw  v.  Coffin,  58  Me.  254,  4  Am.  Rep.  290,  "the  minor  ia 
liable  for  his  torts,  it  is  immaterial  to  him  in  what  form  of  action  recompense 
is  sought.  If  for  the  purposes  of  justice  the  tort  may  be  waived  in  the  case 
of  an  adult,  and  assumpsit  maintained,  it  can,  to  accomplish  the  same  great 
purpose,  be  equally  well  waived  as  to  the  minor." 


SoEDER  V.  St.  Louis,  Iron  Mountain,  and  South- 
ern Railway  Company. 

[100  Missouri,  673.] 

Evidence  that  Death  Resulted  from  Defective  Rail,  What  Sttffi- 
CIENT  TO  Go  TO  JuRY. —  In  an  action  against  a  railway  company  to 
recover  damages  for  the  death  of  a  brakeman,  evidence  showing  that 
the  deceased  was  engaged  at  night  in  switching  cars  of  the  defendant 
upon  a  track  in  which  there  was  a  defective  rail,  in  passing  over  which 
a  car  would  be  jolted;  that  when  last  seen  he  was  standing  on  the  top 
of  one  of  the  cars  in  the  discharge  of  his  duties;  and  that  his  dead  body 
was  found  in  a  condition  and  at  a  place  consistent  with  the  inference 
that  he  had  been  thrown  from  the  top  of  the  car  by  the  jolting  caused 
by  its  passing  over  the  defective  rail,  and  run  over  by  the  wheels  of  the 
car,  —  is  sufficient  to  authorize  the  submission  of  the  case  to  the  jury, 
although  no  one  witnessed  the  accident.  And  whether  there  was  a 
substantial  defect  in  the  track  caused  by  the  defective  rail,  and  whether 
the  deceased  was  familiar  with  the  track  in  question,  are  questions  for 
the  jury,  as  different  conclusions  might  be  drawn  from  the  evidence 
thereon. 

Knowledge  by  Employee  of  Unsafe  Condition  of  Appliance  does  not 
Defeat  Recovery  when. —  The  knowledge  of  a  brakeman  of  the  un- 
safe condition  of  the  railroad  track  upon  which  he  was  killed  will  not 
defeat  a  recovery  for  his  death,  if  it  was  not  so  dangerous  as  to  threaten 
immediate  injury,  or  if  he  might  have  reasonably  supposed  that  he  could 
safely  work  on  it  by  the  use  of  care  and  caution. 

Widow  Suing  for  Death  of  Husband  may  Testify  as  to  Number  of 
HKB  Infant  Children;  and  it  is  not  such  error  as  will  call  for  a  rever- 
sal to  permit  her  to  testify  that  she  has  an  infant  child  by  a  former  hus- 
band, where  there  is  nothing  in  the  amount  of  the  damages  assessed  to 
suggest  the  idea  that  it  ntay  have  been  affected  by  the  fact  that  she  had 
such  child. 

Action  to  recover  damages.     The  opinion  states  the  case. 

B.  Pike,  for  the  appellant. 

A.  R.  Taylor,  for  the  respondent. 

Brace,  J.     This  is  an  action  by  the  widow  of  William 
Soeder  for  damages  for  the  death  of  her  husband,  alleged  to 


CASES 

IN  THB 

SUPREME    COURT 

OP 

NORTH   CAROLINA. 


Alston  v.  Hawkins. 

[105  North  Carolina,  3.] 

Peesumption  op  Payment  Arising  from  Lapse  op  Time,  or  the  rebuttal 
of  such  presumption,  is  a  question  of  law,  which,  when  the  facts  are  es- 
tablished, the  court  must  determine,  and  not  leave  to  the  discretion  of 
the  jury. 

Payment,  Presumption  of.  —  When  insolvency  is  relied  upon  to  rebut  the 
presumption  of  payment  arising  from  lapse  of  time,  the  creditor  must 
show  that  it  existed  during  the  entire  statutory  period  next  after  the 
maturity  of  the  debt. 

Payment,  Rebutting  Presumption  of. — Non-residence  alone  is  not  suffi- 
cient to  rebut  the  presumption  of  payment  arising  from  lapse  of  time. 
It  is,  however,  competent,  when  connected  with  other  circumstances, 
such  as  insolvency,  as  tending  to  rebut  such  presumption. 

Presumption  of  Payment  —  Evidence  to  Rebut.  —  Where  the  presump- 
tion of  payment,  arising  from  lapse  of  time,  is  the  sole  ground  relied 
upon  by  the  defendant,  the  evidence  of  a  witness  interested  in  the  result 
of  the  action  is  inadmissible  to  rebut  the  presumption;  otherwise,  if  actual 
payment  is  relied  upon. 

Suit  on  a  note  dated  August  4,  1856,  on  which  credit  of  one 
hundred  dollars  was  indorsed  June  1,  1866.  Defendant  relied 
upon  the  presumption  of  payment.  Plaintiff  sought  to  rebut 
this  presumption  by  proof  of  defendant's  non-residence  since 
1857,  and  also  introduced,  over  objection,  the  following  letter 
from  defendant:  — 

"Caney  Post-office,  Matagorda  Co.,  Tex., 
"March  23,  1871. 

"  Dear  Charles,  —  I  received  your  letter  last  week  request- 
ing me  to  send  you  five  thousand  dollars,  which  is  impossible 
for  me  to  do.     All  my  crop  of  last  year  will  not  bring  more 

874 


Feb.  1890.]  Alston  v.  Hawkins.  875 

than  five  thousand  dollars.  I  have  not  paid  the  thousand 
dollars  I  borrowed  to  send  you.  I  promised  to  pay  it  out  of 
last  crop,  which  I  will  do.  I  owe  other  debts,  but  cannot  pay 
them  just  now.  I  have  had  my  property  so  fixed  my  cred- 
itors cannot  disturb  it;  but  I  will  pay  every  debt  I  owe  in  the 
world,  but  I  must  have  a  little  time  to  do  so.  When  I  sell  my 
sugar  I  will  send  you  all  the  money  I  can.  I  expected  to  get 
some  money  from  the  bank.  The  suit  has  not  been  decided 
in  the  supreme  court.  I  think  I  will  recover  half  after  a  while. 
I  have  a  full  supply  of  hands  this  year,  cultivating  all  the 

plantation.     Hope  to  make  a  good  crop  this  year 

"  Yours  truly,  James  B.  Hawkins." 

The  court  intimated  that  there  was  no  evidence  to  rebut  the 
presumption  of  payment.  Plaintiff  then  took  a  nonsuit,  and 
appealed. 

/.  B.  Batchelor  and  John  Devereux,  Jr.,  for  the  appellant. 
E.  C.  Smith,  for  the  respondent. 

Shepherd,  J.  "The  presumption  of  payment  arising  from 
lapse  of  time  under  the  statute  is  one  which  the  law  itself 
makes,  and  it  has  such  an  artificial  and  technical  weight 
that  whenever  the  facts  are  admitted  or  established,  the  court 
must  apply  it  as  an  inference  or  intendment  of  the  law;  and 
80,  too,  the  question  whether  that  presumption  has  been  re- 
butted is  one  of  law,  which,  when  the  facts  are  ascertained, 
the  court  must  determine,  and  not  leave  to  the  discretion  of 
the  jury":  Ruffin,  J.,  in  Grant  v.  Burgwyn,  84  N.  C.  5G0. 

It  is  well  settled  that  when  insolvency  is  relied  upon  to 
rebut  the  presumption,  the  creditor  must  show  that  it  existed 
during  the  entire  statutory  period  next  after  the  maturity  of 
the  debt:  Grant  v.  Burgwyn,  84  N.  C.  560;  McKinder  v.  Litile- 
john,  4  Ired.  198;    Walker  v.  Wright,  2  Jones,  156. 

Applying  these  principles  to  the  case  before  us,  it  is  clear 
that  the  plaintiff  has  failed  to  rebut  the  presumption  of  pay- 
ment arising  from  his  long  inaction.  Assuming  that  the 
statute  did  not  commence  to  run  until  the  1st  of  January, 
1870,  we  have  a  period  of  seventeen  years  in  which  the  plain- 
tiff has  made  no  effort  whatever  to  enforce  the  payment  of  his 
claim.  The  only  evidence  as  to  the  insolvency  of  the  defend- 
ant during  all  of  these  years  is  contained  in  a  letter  written 
by  him  on  March  28,  1871,  and  addressed  to  "  Dear  Charles." 
It  does  not  appear  that  this  person  is  in  any  way  connected 
with  this  debt,  nor  does  the  letter  bo  identify  the  indebtedness 


876  Alston  v.  Hawkins.  [N.  Carolina, 

therein  mentioned  with  the  bond  sued  upon  as  to  warrant  us 
in  holding  that  it  amounts  to  an  acknowledgment.  Treating 
it,  however,  either  as  an  acknowledgment,  or,  more  properly, 
as  evidence  merely  of  insolvency  at  its  date,  there  is  no  testi- 
mony as  to  the  continuance  of  such  insolvency  during  the 
succeeding  sixteen  years. 

It  needs  not  the  citation  of  authority  to  show  that  this 
proof  is  insufficient  to  repel  the  presumption  of  payment. 
The  learned  counsel,  however,  insist  that  the  non- residence 
of  the  defendant  should  have  been  submitted  to  the  jury. 
In  Kline  v.  Kline,  20  Pa.  St.  503,  Woodard,  J.,  in  speaking  of 
this  position,  says  that  "if  it  had  ever  been  held  to  be,  it 
might  be  doubted  whether  the  rule  ought  not  to  be  abrogated 
now,  since  the  facilities  of  intercou:iumnication  have  multi- 
plied so  wonderfully  in  all  directions.  But  such  a  rule  has 
never  been  established.  The  states  of  this  confederacy  are 
not  foreign  countries  in  respect  to  each  other.  We  have  a 
common  federative  head  and  a  common  constitution,  which 
secures  to  the  citizens  of  each  state  all  the  privileges  and  im- 
munities of  citizens  of  the  several  states.  The  tribunals  of 
Ohio  are  as  open  to  the  citizen  of  Pennsylvania  as  his  own 
courts,  and  if  he  will  not  avail  himself  of  his  privileges,  he 
may  not  take  advantage  of  his  own  inaction  to  rebut  a  statu- 
tory presumption  of  law." 

In  the  cases  cited  by  the  plaintifif  {Armjield  v.  Moore,  97 
N.  C.  34,  and  Lilly  v.  Wooley,  94  N.  C.  412),  there  are  sug- 
gestions as  to  the  hardship  of  requiring  a  creditor  to  resort  to 
a  distant  forum  in  order  to  collect  his  debt;  but  the  statute 
of  presumption  was  not  then  under  consideration,  and  the 
remarks  of  the  justices  who  delivered  the  opinions  cannot, 
therefore,  be  regarded  as  authority  upon  the  question  before 
as. 

Especially  is  this  true  when  we  consider  that  this  court  has 
several  times  emphatically  decided  that  non-residence  alone 
is  not  sufficient  to  rebut  the  presumption.  In  Campbell  v. 
Brown,  ^6  N.  G.  376,  '^X  Am.  Rep.  464,  Ruffin,  J.,  in  deliver- 
ing the  opinion  of  the  court,  said  that  the  presumption  of 
payment  is  one  "that  may  be  rebutted  by  proof  of  circum- 
stances which  raise  a  stronger  counter-presumption,  and,  as 
was  said  in  McKinder  v.  Littlejohn,  4  Ired.  198,  evidence  of  a 
change  of  residence,  or  even  distant  residence,  may  be  re- 
ceived for  this  purpose  in  aid  of  other  evidence,  such  as  the 
insolvency  and  general  destitution  of  the  debtor.      But  we 


Feb.  1890.]  Alston  v.  Hawkins.  877 

know  of  no  authority  proceeding  from  this  or  any  other  court 
for  saying  that  a  mere  change  of  residence  is  of  itself  suffi- 
cient wholly  to  prevent  the  presumption  which  the  law,  by 
an  intendment  of  its  own,  raises  from  the  lapse  of  the  pre- 
scribed number  of  years,  without  something  having  been  done 
on  the  part  of  the  creditor  to  enforce  the  satisfaction  of  his 
demand." 

Although  non-residence  is  competent,  when  connected  with 
other  circumstances  tending  to  rebut  the  presumption,  we 
cannot  hold  that  it  is  sufficient  when  the  only  circumstance 
with  which  it  is  to  be  consideredistheinsolvency  of  the  debtor 
for  only  the  second  year  of  the  statutory  period,  leaving  the 
preceding  year  and  the  succeeding  sixteen  years  wholly  un- 
accounted for. 

The  furthest  that  the  court  has  ever  gone  in  this  direction 
was  in  McKinder  v.  Littlejohn,  4  Ired.  198.  There  was  evidence 
of  the  continuous  insolvency  of  the  debtor  for  twenty-five  years, 
with  the  exception  of  eighteen  months  during  the  first  seven 
or  eight  years,  when  it  was  shown  that  the  defendant  had  prop- 
erty. During  this  time  he  was  a  non-resident  of  this  state. 
The  court  said  -that  "  the  circumstance  of  distance  between  the 
debtor  and  the  creditor  might,  we  think,  be  left  to  the  jury, 
with  the  fact  of  a  continuous  insolvency  during  the  residue  of 
the  twenty  years,  as  some  evidence  that  the  debtor  did  not  pay 

the  debt  during  that  small  space  of  time The  distance 

is  material  only  as  preventing  the  possession  of  property  by 
the  debtor  for  but  a  short  period  from  counteracting  the  effect 
of  insolvency  as  a  circumstance  repelling  the  presumption  of 
payment.  For  if  the  debtor,  living  more  than  a  thousand 
miles  from  the  creditor,  and  in  a  situation  between  which  and 
the  place  of  the  creditor's  residence  there  was  but  little  com- 
munication, should  have  had  in  possession  property  of  value 
to  pay  the  debt  but  for  a  very  short  time,  so  that  the  jury 
should  think  the  creditor  did  not  know  of  it,  and  could  not 
get  payment  out  of  that  property,  it  might  be  regarded  as  be- 
ing substantially  a  continued  insolvency,  especially  where,  as 
here,  the  debtor  seems  barely  to  have  had  possession  of  prop- 
erty without  its  appearing  how  he  got  it  and  whether  he  had 
paid  for  it."  It  will  be  observed  how  cautious  the  court  is  in 
giving  any  efficacy  to  such  evidence,  even  in  a  case  of  long  and 
continued  insolvency,  and  the  decision  is  put  upon  the  ground 
that,  owing  to  the  distance,  the  plaintifiTmight  not  have  known 
of  tho  possession  of  i^roperty  by  the  defendant. 


878  Alston  v.  Hawkins.  [N.  Carolina, 

How  different  is  the  case  before  us.  Here,  as  we  have  said, 
the  only  proof  of  insolvency  are  the  declarations  in  the  letter 
of  1871,  from  which  it  plainly  appears  that  the  debtor  is  in 
possession  of  considerable  landed  property,  on  which,  he  com- 
plains, there  was  only  raised  a  crop  of  five  thousand  dollars 
the  previous  year.  He  calls  it  "  my  property,"  and  frankly 
admits  that  he  has  had  it  so  "  fixed  "  that  his  creditors  cannot 
disturb  it.  He  has  a  suit  in  the  supreme  court,  and  thinks  that 
he  '*  will  recover  half  after  a  while."  He  has  "  a  full  supply 
of  hands  "  *'  cultivating  all  the  plantation,"  and  hopes  to  make 
a  good  crop.  He  is  giving  his  whole  attention  to  it.  Surely 
this  does  not  indicate  such  poverty  as  to  render  it  impossible 
for  the  defendant  to  pay,  nor  are  the  circumstances  of  such  a 
nature  as  to  discourage  the  plaintifi"  from  a  vigorous  efi'ort  to 
subject  the  property  to  the  payment  of  his  claim. 

In  McKinder's  case,  the  testimony,  as  we  have  remarked, 
was  considered,  because  it  was  improbable  that  the  creditor 
knew  of  his  debtor  possessing  property  for  the  short  period 
of  eighteen  months.  In  our  case,  the  creditor  is  actually  in- 
formed by  the  debtor  of  his  possession  of  a  large  property,  and 
of  his  effort  to  prevent  his  creditors  from  reaching  it,  thus 
furnishing  to  the  creditor  valuable  written  testimony  which  he 
could  use  in  subjecting  the  property  to  the  satisfaction  of  his 
claim.  It  would,  we  think,  be  stretching  the  principle  of  Mc- 
Kinder  v.  Littlejohn,  4  Ired.  198,  very  far,  to  hold  that  such 
testimony  is  legally  sufficient  to  go  to  the  jury. 

The  plaintifif  further  contends  that  the  statute  does  not  run 
during  the  absence  of  the  debtor  from  the  state,  and  for  this 
he  relies  upon  Summerlin  v.  Cowles,  101  N.  C.  473.  In  that 
case,  the  late  chief  justice  remarked  that  while  there  is  no 
saving  clause  in  the  statute  of  presumption  (Rev.  Code,  c.  65, 
sec.  9),  "yet  when  it  is  adopted  as  a  measure  of  time  in  which 
an  action  must  be  brought,  it  must,  by  reason  of  the  same  an- 
alogy, be  accompanied  with  the  qualification  attaching  to 
all  limitations,  and  mentioned  in  section  9,  preceding."  This 
suggestion  on  the  part  of  the  learned  chief  justice  was  unne- 
cessary to  the  decision  of  the  case,  as  it  will  be  observed  that 
the  defendant  relied  upon  the  statute  of  limitations.  This  will 
more  particularly  appear  by  an  examination  of  the  papers  on 
file  in  this  court. 

We  cannot  consider  the  suggestion  as  authority,  as  it  is 
entirely  opposed  to  many  cases  in  which  the  point  was 
directly  presented   and   distinctly  decided  to   the   contrary: 


Feb.  1890.]  Alston  v.  Hawkins.  879 

Headen  v.  Womacl,  88  N.  C.  468;  Houch  v.  Adams,  98  N.  C. 
619;  Hamlin  v.  Mebane^  1  Jones  Eq.  18;  Hodges  v.  Council^ 
86  N.  C.  181;  Campbell  v.  Brown,  86  N.  C.  376;  41  Am.  Rep. 
464.  His  honor  was  correct  in  ruling  that  the  testimony  of- 
fered was  not  legally  sufficient  to  rebut  the  presumption  of 
payment. 

We  are  also  of  opinion  that  Dr.  Willis  Alston  was  properly 
excluded  as  a  witness  for  the  plaintiff.  He  was  interested  in 
the  result  of  the  action,  and  falls  directly  within  the  inhibi- 
tion of  the  code,  section  580.  It  is  urged  that  this  section 
does  not  apply,  because  the  defendant  pleaded  both  the  statute 
and  actual  payment.  Where  actual  payment  is  pleaded  and 
*' relied  "  upon,  the  statutory  prohibition  has  no  application; 
but  merely  pleading  actual  payment  does  not  prevent  its 
operation.  Here  the  defendant  offered  no  testimony  what- 
ever, and  "relied  "  solely  on  the  presumption  of  payment  aris- 
ing from  the  lapse  of  time.  It  is  very  plain  that  our  case  is 
not  within  the  exception:  Brown  v.  Cooper,  89  N.  C.  238. 

Upon  a  review  of  the  whole  case,  we  are  unable  to  find  any 
error. 

Affirmed.  

Presumption  of  Payment  from  Lapse  of  Time.  —  Independently  of  the 
statute  of  limitations,  the  law  raises  a  presumption,  in  the  absence  of  explan- 
atory evidence,  that  a  debt  which  has  been  due  and  unclaimed,  and  without 
recognition  or  payment  of  interest  for  twenty  years,  has  been  paid.  This 
presumption  is  not  conclusive.  Still,  the  burden  of  proof  is  thrown  on  the 
creditor  to  show  that  payment  of  the  debt  has  not  been  made:  Bentley'a 
Appeal,  99  Pa.  St.  500;  Phillips  v.  Adanis,  78  Ala.  225;  Petei-'s  Appeal,  106 
Pa.  St.  340;  Lush  v.  Von  Neida,  109  Pa.  St.  207;  White  v.  Moore,  23  S.  C. 
456;  Didlake  v.  Kohh,  1  Woods,  680. 

In  Bentley'x  Appecd,  99  Pa.  St.  500,  the  court  said:  "  A  debt  which  has 
been  due  and  unclaimed,  and  without  recognition  for  twenty  years,  in  the  ab- 
sence of  explanatory  evidence,  is  presumed  to  have  been  paid.  This  pre- 
sumption, prima  facie,  obliterates  the  debt,  and  the  onus  of  proof  is  upon  the 
creditor,  not  to  establish  a  new  contract,  as  in  the  case  where  a  debt  is  barred 
by  the  statute  of  limitations,  but  to  show  that  payment  of  the  debt  has 
not  been  made."  To  the  same  effect,  Grejory  v.  Commomoealth,  121  Pa.  St. 
611,  6  Am.  St.  Rep.  804,  where  it  is  determined  that  all  debts  excepted  out 
of  the  statute  of  limitations,  unclaimed  and  unrecognized  for  tweaty  years, 
are  presumed  to  have  been  paid.  This  presumption  is  an  artificial  rule  of 
law,  is  not  a  bar  to  an  action  on  the  original  contract,  and  therefore  a  new 
promise  is  not  necessary  to  sustain  such  action. 

The  evidence  to  rebut  the  presumption  of  payment  after  twenty  years 
must  be  satisfactory  and  convincing,  especially  when  the  suit  is  not  brought 
nutil  after  the  death  of  the  debtor.  In  such  case  the  defendant  stands  upon 
a  presumption  of  law  binding  upon  both  court  and  jury,  until  overcome  by 
proof,  and  the  plaintiff  in  rebuttal  must  assume  the  burden  of  proof,  and  ad- 


880  Alston  v.  Hawkins.  [N.  Carolina, 

duce  evidence  sufficient,  if  believed,  to  counteract  the  presumption.  Whether 
the  evidence  is  true  is  a  question  of  fact  for  the  jury;  whether  it  legitimately 
gives  rise  to  the  inference  of  non-payment  is  a  question  of  law  for  the  court. 
This  case  is  followed  in  Porter  v.  Nelion,  121  Pa.  St.  628;  Brenemnn's  Appeal, 
121  Pa.  St.  641;  Runner'a  Appeal,  121  Pa.  St.  649;  and  in  accord  with  this  hold- 
ing is  that  in  Reed  v.  Reed,  46  Pa.  St.  239. 

The  rule  as  thus  stated  has  been  applied  to  all  sorts  of  indebtedness,  as,  for 
instance,  to  bonds:  Smith  v.  Benton,  15  Mo.  371;  Haskell  v.  Keen,  2Nott  &  McC. 
160;  Cottle  v.  Payne,  3  Day,  289;  Levy  v.  Hampton,  1  McCord,  145;  Durham 
V.  Greenly,  2  Harr.  (Del.)  124;  Tinsleyv.  Anderson,  3  Call,  329;  Boyd  v.  Har- 
ris, 2  Md.  Ch.  210;  Delany  v.  Robinson,  2  Whart.  503;  Denniston  v.  McKeen, 
2  McLean,  252;  Lowe  v.  Stowell,  4  Jones,  235;  Rogers  v.  Bishop,  5  Blackf. 
108;  Bird  v.  Inslee,  23  N.  J.  Eq.  363;  Morrison  v.  Funh,  23  Pa.  St.  421; 
Wellingham  v.  Chick,  14  S.  C.  93;  Shubrick  v.  Adams,  20  S.  C.  49;  Langston  v. 
Shands,  23  S.  C.  149.  It  is  a  well-settled  rule  of  law  that  a  bond  is  presumed 
to  have  been  paid  after  the  lapse  of  twenty  years  from  its  maturity.  But 
this  presumption  may  be  repelled  by  satisfactory  evidence.  If  less  than 
twenty  years  have  elapsed,  the  presumption  does  not  arise;  still,  even  then, 
lapse  of  time  may  be  relied  upon,  in  connection  with  other  circumstances, 
as  evidence  of  payment:  Booker  v.  Booker,  29  Gratt.  65;  Norvell  v.  Little, 
79  Va.  141.  The  presumption  that  a  bond  has  been  paid,  which  arises  after 
a  lapse  of  twenty  years,  is  not  a  legal  bar.  It  is  a  presumption  of  fact  which 
must  be  held  conclusive,  unless  rebutted  by  satisfactory  evidence  that  it  has 
not  been  paid,  or  showing  good  and  sufEcient  reasons  why  longer  forbear- 
ance has  been  given.  Thus  where  the  parties  reside  in  a  county  whose  condi. 
tion  was  such  during  the  civil  war  as  to  render  it  highly  improbable  that  debts 
would  or  could  be  collected  during  the  time  such  war  continued,  this  time  should 
not  be  considered  as  forming  part  of  the  time  whose  lapse  gives  rise  to  the 
presumption  of  payment.  If  it  is  shown  that  by  the  understanding  of  the 
parties  the  bond  was  not  to  be  paid  until  a  future  time,  the  time  which  elapsed 
from  the  giving  of  the  bond,  to  such  future  time,  should  not  be  considered  as 
forming  any  part  of  the  time  whose  lapse  gives  rise  to  the  presumption,  though 
the  bond  on  its  face  is  payable  on  demand:  Hale  v.  Pack,  10  W.  Va.  145. 
A  legal  presumption  of  the  payment  of  a  bond  given  to  secure  the  payment 
of  money  does  not  arise  from  mere  lapse  of  time,  where  the  bond  has  not 
been  due  for  twenty  years  before  the  commencement  of  suit  to  recover  on  it. 
If  a  shorter  period,  even  a  single  day  less  than  twenty  years,  has  elapsed, 
the  presumption  of  satisfaction  from  mere  lapse  of  time  does  not  arise;  and 
while  the  mere  lapse  of  such  time  afifords  no  presumption  of  law,  that  the 
debt  is  paid,  still,  payment  may  be  inferred  by  the  jury  from  circumstances 
though  the  lapse  of  time  is  short  of  the  period  of  twenty  years.  So  when 
an  action  is  brought  on  a  bond,  if  twenty  years  have  elapsed  between  the 
time  of  its  becoming  due  and  of  the  institution  of  the  suit,  the  defendant 
may,  without  pleading  the  statute  of  limitations,  rely  upon  the  presumption 
of  payment;  and  upon  issue  joined  or  plea  of  payment,  pajuiient  may  be  in- 
ferred from  circumstances,  coupled  with  lapse  of  time  short  of  a  period  of 
twenty  years:  Sadler  v.  Kennedy,  11  W.  \a..  187;  Calwell  v.  Prindle,  19  W. 
Va.  604.  The  payment  of  a  bond  or  covenant  will  not  be  presumed  from  the 
mere  lapse  of  fourteen  years  from  the  time  it  was  due:  Calwell  v.  Prindle,  11 
W.  Va.  307.  If  the  obligee  in  the  bond  is  an  infant  when  the  cause  of  action 
accrues,  payment  will  be  presumed  in  five  years  after  he  attains  full  age,  if 
that  is  twenty  years  from  the  accruing  of  the  action.  Payment  made  by 
heirs  or  devisees  on  the  bond  of  their  deceased  ancestor  will  not  destroy  the 


Feb.  1890.]  Alston  ti.  Hawkins.  881 

presumption  of  payment  as  against  the  estate  of  the  ancestor:  Gibson  W* 
Lowiide.%  28  S.  C.  285;  Bnrtlett  v.  Bartlett,  9  N.  H.  398. 

Tliesame  rule  is  applied  to  mortgages.  Thus  more  than  twenty  years  hav- 
ing elapsed  since  the  maturity  of  the  mortgage  debt,  the  law  will  presume 
the  mortgage  satisfied:  Agnew  v.  Reawich,  27  S.  C.  562;  Bowie  v.  Poor  Scliooi 
Socixly,  lb  Va.  300;  Pryor  v.  Wood,  31  Pa.  St.  142;  Inches  v.  Leonard,  12 
Mass.  379;  Jackson  v.  Wood,  12  Johns.  242;  Sweetser  v.  Lowell,  33  Me.  446. 
A  mortgage  is  presumed  to  be  satisfied,  if  no  claim  has  been  made  and  no 
interest  paid  upon  it  within  twenty  years  after  it  became  due,  and  no  cir- 
cumstances are  shown  to  explain  the  delay  and  rebut  the  presumption: 
Barned  v.  Barned,  21  N.  J.  Eq.  245;  Downs  v.  Sooy,  28  N.  J.  Eq.  55.  la 
Vermont,  the  presumption  of  payment  of  a  mortgage  arises  in  fifteen  years 
after  its  maturity:  Smith  v.  Niagara  Fire  Lis.  Co.,  60  Vt.  682;  6  Am.  St.  Rep. 
144.  A  presumption  of  payment  does  not  arise  from  the  fact  that  no  inter- 
est has  been  paid  on  the  mortgage  for  nineteen  years:  Boon  v.  Pierpont,  28 
N.  J.  Eq.  7.  In  Jarvis  v.  Alhro,  67  Me.  310,  the  mortgagor  remained  in  pos- 
session of  the  mortgaged  premises  for  more  than  twenty  years  after  the 
execution  of  the  mortgage,  and  during  that  time  there  was  no  evidence  that 
the  mortgagee  asserted  any  claim  under  the  mortgage,  nor  that  its  validity 
was  in  any  way  recognized  by  the  mortgagor;  and  the  court  said  that  "  upon 
these  facts  a  presumption  arises  that  the  mortgage  had  been  paid,  and 
ceased  to  be  a  subsisting  title.  This  rule  is  so  well  settled  that  no  citation 
of  authority  is  needed.  But  this  presumption  is  not  conclusive  upon  the 
mortgagee.  He  may  rebut  it  by  proof  that  the  mortgage  debt  had  not 
been  paid,  and  that  the  mortgage  had  not  been  extinguished."  The  pre- 
sumption, based  on  lapse  of  time,  that  a  mortgage  has  been  paid,  is  one  that 
can  be  rebutted  by  circumstances:  Baent  v.  Kennicutt,  57  Mich.  268.  But 
when  the  period  of  twenty  years  has  elapsed,  very  slight  evidence  will  sus- 
tain the  presumption  of  payment  arising  from  the  lapse  of  time:  Pattie  v. 
Wilson,  25  Kan.  326.  Still,  the  inference  of  payment  arising  from  mere 
lapse  of  time  is  not  sufficient  to  overcome  convincing  proof  of  non-payment: 
Delaney  v.  Brunette,  62  Wis.  615.  In  Tripe  v.  Marcy,  39  N.  H.  439-448, 
the  court  said:  "We  have  examined,  however,  a  question  that  has  beea 
argued  touching  this  point,  and  concur  with  the  views  of  counsel  for  the 
defendant  to  this  extent:  that  when  the  mortgagor  is  permitted  to  retain 
possession  of  the  land  for  twenty  years  without  interruption,  the  presump- 
tion is,  that  the  mortgage  debt  has  been  paid,  or  had  no  valid  existence, 
unless  this  presumption  is  repelled  by  the  payment  of  interest,  or  other 
act  recognizing  the  validity  of  the  mortgage.  This  M'e  conceive  is  estab- 
lished on  great  authority.  But  we  are  not  prepared  to  hold  that  this 
presumption  arises  short  of  twenty  years  from  the  time  the  mortgage  debt 
becomes  due.  Otherwise  we  might  be  asked  to  presume  a  debt  paid  before 
the  stipulated  time  of  payment  has  arrived.  This  presumption  arises  from 
the  long  delay  to  enforce  payment;  but  surely  no  such  delay  can  be  charged 
until  tlie  time  has  arriveil  when  the  creditor  is  entitled  to  demand  it.  In 
this  respect  the  presumption  accords  with  the  general  provisions  of  our 
limitation  laws,  which  limit  suits  to  the  time  prescribed  after  the  cause  of 
action  has  accrued.  When  the  mortgagee  is  in  possession,  the  right  of  the 
mortgagor  will  be  barred  in  twenty  years  from  the  entry  of  the  breach  of 
condition.  So  if  the  mortgagee  suifers  the  mortgagor  to  remain  in  posses- 
sion twenty  years  alter  breach  of  condition,  payment  is  presumed.  In  both 
cases  the  time  is  reckoned   from  the  breach  of  condition." 

The  unexplained  possession,  by  a  mortgagor,  of  premises  for  less  than  twenty 
Am.  St.  Kkp.,  N  01..  X\  lii.  —  56 


Sfc2  Alston  v.  Hawkins.  [N.  Carolina, 

years  may  be  left  to  the  jury,  in  connection  with  partial  pajnnents  of  the 
mcftgage  debt,  as  tending  to  show  the  debt  fully  paid:  Gould  v.  White,  26 
N.  H.  178. 

In  the  absence  of  proof  that  real  estate  decreed  to  be  sold  upon  foreclosure 
of  a  mortgage  in  185(3  was  ever  sold,  it  may  be  conclusively  presumed,  in  an 
action  of  ejectment  commenced  in  1883,  that  the  mortgage  debt  was  paid, 
and  that  the  property  was  never  sold:  Gage  v.  Downey,  79  Cal.  140. 

The  presumption  of  payment  also  arises  on  notes  or  other  evidence  of  in- 
debtedness not  under  seal,  and  not  paid  within  twenty  years  from  maturity. 
Thus  in  an  action  on  a  note  more  than  twenty  years  overdue,  although  the 
statute  of  limitations  may  not  be  a  bar  because  of  the  maker's  absence  from 
the  state,  still  there  is  a  presumption  of  payment;  and  evidence  that  the 
holder  was  poor  during  that  period  is  competent  to  fortify  the  presumption: 
Bean  v.  Tonnele,  94  N.  Y.  381;  46  Am.  Rep.  153.  The  presumption  of  pay- 
ment arising  from  lapse  of  time  is  the  same,  whether  the  debt  is  evidenced 
by  bond  or  note,  and  arises  after  the  lapse  of  twenty  years,  and  not  before,  in 
the  absence  of  evidence  rebutting  the  presumption.  But  the  presumption 
may  in  all  cases  be  rebutted:  Lash  v.  Von  Nekla,  109  Pa.  St.  207;  Clark  v. 
Clement,  33  N.  H,  563;  Gregory  v.  CommoniveaUh,  1-21  Pa.  St.  611;  6  Am. 
Rep.  804;  Boyce  v.  Lake,  17  S.  C.  481;  43  Am.  Rep.  618;  Dickson  v.  Gourdin, 
26  S.  C.  391.  The  burden  of  proof  is  on  the  maker  to  show  payment  within 
tw»aty  years,  or  facts  from  which  the  jury  may  properly  infer  paj^ment:  Mor- 
rison V.  Collins,  127  Pa.  St.  28;  14  Am.  St.  Rep.  827.  The  circumstance  that 
the  maker  was  able  to  pay  will  not  rebut  such  presumption;  still,  this  proof, 
tosrether  with  a  showing  that  the  holder  has  been  constantly  pressed  for 
money,  may  justify  the  finding  of  payment  within  the  twenty  years:  Morrison 
V.  Collins,  127  Pa.  St.  28;  14  Am.  St.  Rep.  827.  The  absence  of  the  debtor 
from  the  state  during  the  greater  part  of  the  period  relied  upon  to  create  the 
presumption  will  rebut  it,  but  the  fact  tliat  the  debtor  at  a  certain  time  dur- 
ing the  period  relied  upon  was  l)ankrupt  will  not  of  itself  have  this  effect: 
Daggett  v.  Tallman,  8  Conn.  168.  In  such  case,  the  presumption  may  be 
aided  or  rebutted  by  surroi;nding  circumstances  rendering  it  probable  that 
the  note  has  or  has  not  been  paid  within  a  period  short  of  the  twenty  years: 
Criss  V.  Criss,  28  W.  Va.  388.  In  calculating  whether  the  twenty  years  have 
elapsed  without  payment,  the  time  in  which  for  any  reason  the  creditor  has 
no  legal  right  to  bring  suit  on  the  note  must  be  excluded:  C7-iss  v.  Criss,  28 
W.  Va.  388;  Boyce  v.  Lake,  17  S.  C.  481,  43  Am.  Rep.  618;  Mason  v.  Spur- 
lock,  4  Baxt.  554. 

Judgment  against  one  of  the  obligors  on  a  joint  and  several  note  will  not 
rebut  the  presumption  of  payment  arising  in  favor  of  the  other  obligor  from 
the  lapse  of  time;  a  voluntary  paynaeut,  however,  by  one  of  such  obligors, 
within  the  twenty  years,  will  rebut  the  presumption  of  payment  by  the  other: 
Hall  V.  Woodward,  26  S.  C.  557.  Proof  that  the  surety  on  a  note  had  said 
that  the  payee  had  promised  him  not  to  push  him  for  payment  during  his, 
the  surety's,  lifetime  is  sufficient  to  rebut  the  presumption  of  payment: 
Fisher  v.  Phillips,  4  Baxt.  243.  Where  the  note  sued  on  was  due  in  1872,  and 
payments  thereon  were  made  as  late  as  1879,  the  maker  having  failed  be- 
tween that  time  and  1883,  when  suit  was  brouglit,  the  court  decided  that 
lapse  of  time  did  not  raise  a  presumption  that  the  note  was  paid,  and  was 
not  entitled  to  much  consideration:    Walker  v.  Russell,  73  Iowa,  340. 

Where,  in  an  action  on  a  note,  payment  by  the  execution  of  a  new  note  is 
pleaded  by  way  of  defense,  the  jury  may  consider,  with  other  circumstances, 
the  time  which  has  elapsed  since  the  time  of  the  alleged  payment,  as  the 


Feb.  1890.]  AlstOx\  v.  Hawkins.  883 

presumption  of  payment  arising  from  the  lapse  of  time  applies  as  well  where 
a  specific  manner  of  payment  is  pleaded  as  where  payment  is  alleged  in  a 
general  way:  Manning  v.  Meredith,  69  Iowa,  430.  Where  the  debt  is  payalile 
by  installments,  the  presumption  of  payment  arising  from  lapse  of  time  applies 
to  each  installment  as  it  falls  due:  67a<e  v.  Lobb,  3  Harr.  (Del.)  421.  If  a  bill 
is  filed  to  settle  an  account  which  accrued  more  than  twenty  years  prior 
thereto,  the  presumption  of  payment  will  prevail,  in  the  absence  of  proof  of 
the  justice  of  the  claim,  during  that  time:  Kinr/sland  v.  Roberts,  2  Paige,  193; 
Ellison  V.  Moffatt,  1  Johns.  Ch.  46. 

As  a  general  rule,  the  unexplained  lapse  of  twenty  years  from  the  time 
that  a  judgment  is  rendered  raises  a  legal  presumption  that  it  has  been  paid: 
Campbell  v.  Carey,  5  Harr.  (Del.)  427;  Burton  v.  Cannon,  5  Harr.  (Del.)  13; 
Clark  V.  Clement,  33  N.  H.  563;  Thomas  v.  Hunnicutt,  54  Ga.  337;  Willingham 
V.  Long,  47  Ga.  540;  Bird  v.  Jnslee,  23  N.  J.  Eq.  363;  IVmjer  v.  Mowry,  36 
Me.  287;  Chapman  v.  Loomis,  36  Conn.  459.  The  presumption  thus  arising 
is,  however,  always  rebuttable:  Knight  v.  McComber,  55  Me.  132;  Biddle  v. 
Girard  Nat.  Bank,  109  Pa.  St.  349;  Btcrt  v.  Casey,  10  Ga.  178;  Scott  v.  /Isaacs, 
85  Va.  712;  and  evidence  of  payments  on  the  judgment  within  that  time,  or 
admissions  that  it  is  due,  will  rebut  the  presumption:  Burton  v.  Cannon,  5 
Harr.  (Del.)  13;  Bissell  v.  Jaudon,  16  Ohio  St.  498.  Any  lapse  of  time  less 
than  twenty  years  will  not  generally,  per  se,  raise  the  presumption  of  payment: 
Murphy  V.  Philadelphia  Trust  Co.,  103  Pa.  St.  380;  Daby  v.  Erricsson,  45  N.  Y. 
786.  While  the  presumption  of  payment  of  a  claim  founded  on  a  judgment 
does  not  arise  until  twenty  years  after  its  rendition,  it  is  well  settled  that  a 
shorter  period  than  that,  aided  by  circumstances  which  contribute  to 
strengthen  the  presumption,  may  furnish  sufficient  grounds  to  justify  the 
jury  in  inferring  the  fact  of  payment:  Briggs's  Appeal,  93  Pa.  St.  485;  Aloore 
V.  Smith,  81  Pa.  St.  Ib3;  West  v.  BrLion,  99  Mo.  684.  In  an  early  case  in 
Arkansas,  the  court  determined  that  after  the  lapse  of  ten  j'ears  from  the  data 
of  a  judgment,  tlie  law  presumes  that  it  is  paid:  Woodruff  v.  Sanders,  15  Ark. 
143.  And  this  presumption  is  conclusive,  unless  the  plaintiff,  in  the  absence 
of  any  effort  to  enforce  payment  of  the  judgment,  shows  such  facts  and  cir- 
cumstances as  will  satisfy  the  jury  that  there  were  oJ;her  reasons  for  the  de- 
lay of  the  prosecution  of  the  claim  than  the  alleged  payment:  Rector  v.  More- 
houKC,  17  Ark.  131. 

In  Tennessee,  the  unexplained  lapse  of  sixteen  years  raises  a  rebuttable  pre- 
sumption that  a  judgment  has  been  paid:  Kilpatrick  v.  Brashear,  10  Heisk. 
372;  Bender  v.  Montgomery,  8  Lea,  586;  Anderson  v.  Settle,  5  Sneed,  202; 
McDaniel  v.  Gooda  I,  2  Cold.  391.  The  presumption  of  payment  of  a  judg- 
ment arising  from  lapse  of  time  is  a  general  one,  and  applies  as  well  between 
the  parties  to  the  judgment  as  between  the  plaintiff  and  subsequent  creditors. 
In  the  al)sence  of  count.>rvailing  proof,  it  is  a  good  defense  to  a  scire  facias  to 
revive  a  judgment:    Van  Loon  v.  Smith,  103  Pa.  St.  238. 

The  rules  applied  to  judgments  as  to  presumption  of  payment  from 
lapse  of  time  are  also  applied  to  the  payment  of  legacies  by  adminis- 
trators and  executors.  Thus  the  lapse  of  twenty  years  from  the  time  when 
a  legacy  becomes  payable,  witliout  claim  or  demand  by  the  legatee,  and  with- 
out recognition  of  the  right  by  the  executor  or  administrator,  creates  a  legal 
presumption  of  its  payment:  Bonner  v.  Young,  68  Ala.  35;  O'Brienv.  Holland, 
3  Blackf.  490;  Okeson's  Appeal,  2  Grant  Cas.  303;  Kerlee  v.  Corpening,  97 
N.  C.  330;  Bentley's  A]ypeal,  99  Pa.  St,  500;  Wingett's  Appeal,  122  Pa.  St.  486; 
Hooper  v.  Howell,  52  Ga.  315;  Ragland  v.  Morton,  41  Ala.  344.  And  a  court  of 
equity  will  not,  in  the  absence  of  peculiar  circumstances,  entertain  a  bill  to 


884  Alston  v.  Hawkins,  [N.  Carolina, 

compel  distribution  after  the  lapse  of  that  time:  Worley  v.  High,  40  Ala.  171. 
The  presumption  thus  arising  may  be  rebutted  by  satisfactory  evidence: 
Hayes  v.  Whitall,  13  N.  J.  Eq.  241;  the  burden  of  proof  being  on  the  legatee 
to  show  that  the  legacy  has  not  been  paid:  Bentlei/s  Appeal,  99  Pa.  St.  500; 
Foulh  V.  Brown,  2  Watts,  209.  Proof  of  the  death  of  a.  feme  covert  legatee, 
whose  husband  survived  her,  no  administration  having  been  talien  on  her 
estate,  will  not  repel  the  presumption  of  payment  of  a  legacy  arising  from 
lapse  of  time:  Foulk  v.  Brown,  2  Watts,  209.  Evidence  that  during  the  period 
the  administrator  has  said  to  a  stranger  that  he  would  not  pay  the  legacy, 
because  the  legatee  was  rich  enough  without  it,  is  insufficient  to  overcome  the 
presumption  of  payment:  Bentley's  Appeal,  99  Pa.  St.  500.  Nor  is  the  pre- 
sumption rebutted  by  proof  of  disability,  such  as  infancy  or  coverture  on  the 
part  of  the  legatee:  McCartney  v.  Bone,  40  Ala.  533.  But  where  an  execu- 
trix, having  a  discretion  as  to  the  payment  of  pecuniary  legacies,  notifies  the 
non-resident  legatees  that  she  has  the  money  on  hand  to  pay  them,  and 
makes  partial  payment,  this  is  a  recognition  of  an  express  trust,  and  no 
presumption  of  payment  arises,  as  against  the  legatees,  until  the  lapse  of 
twenty  years:  Girard  v.  FuUerer,  84  Ala.  323.  The  presumption  of  pay- 
ment of  a  legacy  does  not  arise  short  of  twenty  years,  unless  aided  by  evi- 
dence of  circumstances  which  raise  the  presumption.  Thus  the  payment 
of  a  legacy  will  not  be  presumed  in  seven  years:  StroJim's  Appeal,  23  Pa.  St. 
351. 

The  rule  of  presumption  of  payment  from  the  lapse  of  twenty  years  applies 
to  taxes.  In  Hoplcinton  v.  Spring^eld,  12  N.  H.  328,  330,  the  court  said: 
"A  presumption  of  payment  arises  in  relation  to  bonds,  mortgages,  judg- 
ments, etc.,  after  the  lapse  of  twenty  years,  if  there  is  no  evidence  to  repel 
it,  and  to  show  that  the  debt  is  still  unsatisfied.  Taxes  cannot  have  any 
higher  character  in  this  respect  than  debts  due  by  specialty,  and  of  record. 
The  assessment  is  in  the  nature  of  a  judgment,  and  the  warrant  for  the  collec- 
tion operates  like  an  execution.  There  is  no  reason,  that  we  can  discover, 
why  the  same  principle  should  not  be  applied  to  them."  The  same  doctrine 
is  announced  in  Dalton  v.  Bethlehem,  20  N.  H.  505;  Golehrook  v.  Stewartstown, 
28  N.  H.  75;  Andover  v.  Mei-rimach  County,  37  N.  H.  437.  This  presumption 
may  be  rebutted;  but  unless  this  is  done,  lapse  of  time,  aided  by  other  sir- 
cumstances,  will  raise  the  presumption  of  payment:  Elliott  v.  Williamson,  11 
Lea,  38. 

The  due  execution  of  a  trust  will  be  presumed  after  the  lapse  of  twenty 
years:  Drysdales  Appeal,  14  Pa.  St.  531;  and  though  a  continuing  trust 
may  be  presumed  to  be  paid  from  the  lapse  of  time,  still,  where  the  trust 
is  recognized  by  the  trustee  as  continuing,  the  presumption  of  payment, 
which  otherwise  would  arise  after  the  lapse  of  twenty  years,  is  avoided,  and 
an  informal  settlement  mads  by  him  in  the  probate  court,  in  which  he  charged 
himself  with  assets  received,  and  claimed  credits  for  disbursements,  operates 
as  such  recognition:  Werhorn  v.  Austin,  82  Ala.  498. 

Under  the  North  Carolina  statute  a  presumption  of  payment  of  bonds, 
notes,  or  other  evidences  of  indebtedness  arises  in  ten  years  from  maturity: 
Hall  V.  Gibbs,  87  N.  C.  4.  This  presumption  is  not  one  of  law,  but  of  fact, 
which  may  be  rebutted  by  proof  that  no  payment  has  been  made,  or  such 
other  facts  as  are  sufficient  in  law  to  remove  the  presumption:  Lonjv.  Clegg, 
94  N.  C.  763.  Thus  the  recognition  of  subsisting  indebtedness  by  the  personal 
representatives  of  the  obligee  in  a  bond,  and  a  promise  to  pay  the  same,  is 
sufficient  to  rebut  the  presumption  of  payment:  Tucker  v.  Baker,  94  N.  C. 
162.     So  payment  on  a  bond  within  ten  years  from  maturity  by  the  assignee 


i 


Feb.  1890.]  Alston  v.  Hawkins.  885 

in  bankruptcy  of  one  of  the  obligors  repels  the  presumption:  Belo  v.  Spach, 
85  N.  C.  122.  But  the  admission  of  one  obligor,  that  a  bond  has  not  been 
paid,  will  not  rebut  the  presumption  in  favor  of  his  co-obligor,  nor  will  the  mere 
admission  of  the  obligor  sought  to  be  charged  have  that  effect;  nor  is  the 
presumption  against  him  rebutted  by  the  recovery  of  judgment  by  default 
against  his  co-obligor  within  ten  years:  Bogers  v,  Clements,  98  N.  C  180. 

In  an  action  against  the  obligee  in  a  bond,  an  admission  that  neither  he  nor 
his  surety  has  paid  the  bond  is  sufficient  to  rebut  the  presumption  of  pay- 
ment, notliing  else  appearing:  Cariwriyht  v.  Kernian,  105  N.  C.  I.  But  the 
admission  of  his  administrator  that  he  has  not  paid  it  will  not  rebut  the  pre- 
sumption: Grant  v.  Gooch,  105  N.  C.  278.  The  proof  offered  to  repel  the  pre- 
sumption of  paj'ment  from  lapse  of  time  must,  in  order  to  be  efl'ectual,  run 
through  the  entire  period  next  after  the  maturity  of  the  debt:  Rowland  v. 
Wiudky,  86  N.  C.  36.  Thus  where  insolvency  of  the  obligor  is  relied  upon, 
it  must  be  shown  to  have  existed  during  the  entire  period,  thus  establishing 
the  inability  of  the  obligor  to  pay:  Grant  v.  Burgnnjn,  84  N.  0.  560. 

In  addition  to  what  has  already  been  said  while  treating  this  subject  with 
respect  to  the  different  kinds  of  indsbtedness  to  which  the  presumption  has 
been  applied,  it  may  be  here  stated,  as  a  general  rule,  that  though  the  law 
does  not  raise  a  presumption  of  payment  short  of  twenty  years  from  the  time 
when  the  indebtedness  falls  due,  still  there  is  no  doubt  that  a  shorter  period 
than  that,  aided  by  circumstances  which  contribute  to  strengthen  such  pre- 
sumption, may  furnish  sufficient  grounds  to  the  jury  for  inferring  the  fact  of 
payment:  Brigr/s's  Appeal,  93  Pa.  St.  485;  Davenport  v.  Lahnuve,  5  La.  Ann. 
140;  Copley  v.  Edwards,  5  La.  Ann.  647;  Wooten  v.  Harrison,  9  La.  Ann.  234; 
Fleming  V.  Emory,  5  Harr.  (Del.)  46;  Milledge  v.  Gardner,  33  Oa.  397;  Atkinson 
V.  Dance,  9  Yerg.  424;  Moore  v.  Pouge,  1  Dru.  327;  Bruhaker  v.  Taylor,  76  Pa. 
St.  83;  Webb  v.  Dean,  21  Pa.  St.  29;  Tilghman  v.  Fisher,  9  Watts,  441;  Wil- 
Uarns  v.  Sims,  1  Rich.  Eq.  53;  Blake  v.  Quash,  3  McCord,  205;  Gamier  v. 
Renner,  51  Ind.  372.  This  rule  was  applied  in  an  action  to  revive  a  judg- 
ment nineteen  years  after  it  was  rendered,  in  the  absence  of  proof  that  exe- 
cution had  ever  issued:  Diamond  v.  Tobias,  12  Pa.  St.  312;  where  the  court 
said;  "  The  rule  is  well  established  that  where  the  period  is  short  of  twenty 
years,  the  presumption  of  payment  may  be  aided  by  other  circumstances  be- 
sides the  mere  lapse  of  time.  But  exactly  what  these  circumstances  may  be 
never  has  been  and  never  will  be  defined  by  the  law.  There  must  be  some 
circumstances;  and  where  there  are  any,  it  is  safe  to  leave  them  to  the  jury." 
In  Moore  v.  Smith,  81  Pa.  St.  182,  more  than  sixteen  years  had  elapsed  since 
the  rendition  of  a  judgment,  and  the  same  doctrine  was  applied  in  an  action 
to  revive  it. 

In  King  v.  CouUer,  2  Grant  Cas.  77,  the  court  said:  "It  was  fifteen  years, 
four  months,  and  twenty-five  days  after  the  sealed  note  of  the  plaintiffs 
testator  matured  before  this  action  was  instituted  for  its  recovery.  No 
legal  presumption  of  payment  such  as,  nnrebutted,  the  court  would  be 
bound  to  declare  as  a  conclusion  of  law  arose  in  tiiat  time;  for  the  authori- 
ties all  agree  in  fixing  twenty  years  as  the  period  necessary  to  such  a  pre- 
sumption. But  the  question  is,  whether  the  time  that  did  elapse  was  compe- 
tent, in  connection  with  such  circumstances  as  were  offered,  to  go  to  tlie  jury 
as  ground  for  their  presuming  payment  of  the  note.  The  competency  of  such 
evidence  does  not  depend  on  a  particular  period  of  years,  though  its  effect 
will  be  proportioned  to  their  number.  The  presumption  strengthens  as  the 
time  approaches  to  twenty  years,  and  the  circumstances  needed  to  establish  it 
may  be  measured  by  a  diminishing  scale.     The  further  the  time  stops  short 


886  Alston  v.  Hawkins.  [N.  Carolina, 

of  twenty  years  the  more  cogent  and  decisive  must  be  the  circumstances  re- 
lied upon;  just  as  the  further  we  advance  beyond  twenty  years  we  require 
more  persuasive  circumstances  to  reljut  the  legal  presumption.  Twenty 
years  assumed  as  the  point  for  that  presumption,  the  scale  is  reversed  by 
which  we  measure  the  circumstances  that  tend  to  establish  or  countervail  it. 
In  both  instances  it  is  for  the  jury  to  apply  the  proofs  under  direction  of  the 
court.  If  evidence  be  offered  which  in  the  judgment  of  the  court  will,  in 
connection  with  the  lapse  of  time,  reasonably  tend  to  convince  the  jury  that 
the  debt  has  been  paid  short  of  twenty  years,  or  that  it  has  not  been  paid, 
notwithstanding  that  period,  it  is  the  duty  of  the  court  to  receive  it,  and  to 
submit  it  to  the  jury  with  such  instruction  as  shall  enable  them  to  estimate 
it  at  what  it  is  really  worth.  The  point  to  be  attained  is  moral  conviction  of 
the  fact;  and  whilst  it  is  not  to  be  founded  on  evidence  insufficient  to  con- 
vince reasonable  men,  we  are  not  to  exact  mathematical  certainty,  nor  to 
expect  more  than  moral  demonstration." 

This  rule  was  applied  in  Hughes  v.  Hughes,  54  Pa.  St.  240,  where  a  debt 
from  a  son  to  his  father  was  overdue  eighteen  years  and  three  fourths 
when  suit  was  brought,  and  had  been  due  over  fifteen  years  during  the  life- 
time of  the  obligor.  To  aid  the  presumption  of  payment  from  lapse  of  time, 
evidence  was  a<]mitted  to  show  the  needy  circumstances  of  the  obligee,  and 
the  easy  and  solvent  condition  of  the  obligor.  The  court  said:  "Slight  cir- 
cumstances may  be  given  in  evidence  for  that  purpose,  in  proportion  as  the 
presumption  strengthens  by  the  lapse  of  time;  but  still  they  must  be  such  as 
aid  the  presumption  arising  from  time.  They  must  be,  as  it  is  said,  per- 
suasive that  the  time  would  not  have  been  suffered  to  elapse  had  the  del)t 
remained  unpaid."  To  the  same  effect.  Wood  v.  Egan,  39  La.  Ann.  684. 
In  Phillips  V.  Adams,  78  Ala.  225,  it  was  determined  that  to  create  the  pre- 
sumption of  payment  by  lapse  of  time  short  of  twenty  years,  positive  evi- 
dence is  not  required.  It  may  be  established  by  circumstances  such  as  will 
satisfy  the  jury  that  the  continued  existence  of  the  debt  is  highly  improb- 
able, as  where  the  vendor,  though  in  necessitous  circumstances,  did  not  file 
his  bill  to  enforce  his  lien  on  land  until  nineteen  years  from  the  date  of  the 
contract,  and  fourteen  years  after  the  death  of  the  purchaser,  and  showed 
no  excuse  for  his  delay.  If  a  bill  is  filed  to  enforce  an  alleged  vendor's  lien 
on  land  against  a  subpurchaser  more  than  twelve  years  after  the  maturity 
of  the  debt,  the  complainant  admitting  that  she  and  her  husband,  since  de- 
ceased, well  knew  of  the  existence  of  the  lien,  but  took  no  steps  to  enforce 
it,  though  very  poor,  and  needing  the  money  to  supply  the  common  necessi- 
ties of  life,  and  also  knew  that  the  purchaser  became  insolvent  in  less  than 
one  year  from  the  date  of  the  contract,  but  interposed  no  objection  to  a  sale 
publicly  advertised,  these  facts  raise  a  strong  presumption  of  payment:  May 
V.  Wilkinwn,  76  Ala.  543.  Slight  circumstances  may  be  left  to  the  jury  on 
the  issue  of  payment  of  a  bond  when  sixteen  years  have  elapsed:  Blickbum 
V.  Squib,  Peck,  60.  And  the  lapse  of  fourteen  years  after  the  last  installment 
on  a  bond  and  mortgage  fell  due,  taken  in  connection  with  other  facts  tend- 
ing to  prove  payment,  is  sufficient  to  raise  the  presumption  of  payment: 
Bauder  v.  Snyder,  5  Barb.  63. 

In  Milledge  v.  Gardtier,'Jiii  Ga.  397,  a  period  of  over  nineteen  years  had 
elapsed  from  the  accrual  of  the  cause  of  action  on  a  note  to  the  bringing  of 
the  suit,  and  during  that  time  the  delator  was  solvent,  and  the  holder  in- 
solvent; and  besides,  the  holder  had  been  compelled  to  pay  a  debt  due  by 
the  debtor  as  his  security,  and  on  a  settlement,  the  debtor  had  given  his  and 
another's  note  to  a  third  person  for  the  balance,  which  note  had  been  reduced 


Feb.  1890.]  Alston  v.  Hawkins.  887 

to  judgment  by  such  holder.  The  court  considered  these  facts,  unexplained, 
as  sufficient  to  raise  the  presumption  of  payment. 

The  presumption  of  payment  arising  from  the  lapse  of  twenty  years,  or  a 
shorter  period  of  time,  may  be  rebutted  bj'  any  evidence  which  is  sufficient 
to  satisfj'  the  minds  of  the  jury  that  the  debt  has  not  in  fact  been  paid.  Aa 
acknowledgment  of  an  existing  indebtedness,  within  the  period  required  to 
raise  the  presumption,  is  sufficient  to  rebut  it.  More  than  twenty  years  had 
elapsed  after  a  Ijond  became  due,  a  settlement  took  place  between  the  re- 
spective parties  to  it,  and  tlie  obligor  then  acknowledged  the  bond  to  be  due 
and  unjiaid,  —  this  was  considered  sufficient  to  rebut  the  presumption  of  pay- 
ment: E'lj-/  V.  Ehy,  5  Pa.  St.  435.  So  an  admission  that  the  debt  lias  not  been 
paid,  with  a  positive  declaration  by  the  delator  that  he  does  not  intend  to  pay 
it,  rebuts  the  presumption:  Reed  v.  Reed,  46  Pa.  St.  239.  And  evidence  that 
demand  for  payment  was  made  where  the  obligor,  in  a  bond,  acknowledged 
that  it  was  unpaid,  and  gave  some  property  to  be  applied  in  payment, 
which  was  entered  as  a  credit  on  the  bond,-  is  sufficient,  with  other  circum- 
stances, to  rebut  the  presumption  of  payment:  White  v.  Beaman,  96  N.  C. 
122.  If  the  debtor  acknowledges  a  bond  as  a  subsisting  obligation  within 
thirteen  years  after  its  maturity,  the  currency  of  presumption  of  payment 
dates  only  from  the  acknowledgment:  Roberts  v.  Smith,  21  S.  C.  455.  So 
where  the  mortgagor  acknowledged,  in  writing,  that  his  mortgage,  on  which 
nothing  had  been  paid,  was  still  a  valid  security,  such  acknowledgment  de- 
stroys the  presumption  of  payment  from  lapse  of  time:  Murphy  v.  Coates,  33 
N.  J.  Eq.  424.  And  again,  where  judgment  is  rendered  on  a  claim  secured 
by  mortgage  of  the  judgment  debtor,  ami  where,  in  a  subsequent  action  to 
foreclose  the  same  within  fifteen  years  from  the  date  of  the  claim,  he  con- 
sents to  a  decree  ordering  the  sale  of  the  mortgaged  premises,  and  that  the 
proceeds  may  be  applied  to  discharge  the  amount  in  the  decree  found  to  be 
due  on  the  claim  embraced  in  such  judgment,  such  consent  is  an  acknowledg- 
ment of  an  existing  indebtedness  upon  the  judgment,  and  an  action  thereon 
will  not  be  barred  until  the  exi)iration  of  fifteen  years  from  the  date  of  tlie 
acknowledgment:  Bissell  v.  Jaiulon,  16  Ohio  St.  49S. 

Part  payment  of  the  debt  at  any  time  within  the  period  required  to  raise 
the  presumption  of  payment  will  rebut  it;  thus  payment  of  interest  on  a 
bond  by  the  principal  will  rebut  the  presumption  of  payment  as  well  to 
the  surety  as  to  himself:  Dickson  v.  Gourdin,  26  S.  C.  391;  29  S.  C.  343.  So 
payment  on  a  bond  within  the  time  required  to  raise  the  presumption  of 
payment  by  the  assignee  in  bankruptcy  of  one  of  the  obligors  repels  tlie  pre- 
sumption arising  from  lapse  of  time:  Belo  v.  Spacli,  85  N.  C.  122;  Hamlin  v. 
Hamlin,  3  Jones  Eq.  191. 

The  presumption  of  payment  arising  from  lapse  of  time  may  also  be 
rebutted  by  showing  the  inability  of  the  debtor  to  pay  the  debt  because  of 
his  insolvency  during  all,  or  nearly  all,  the  time  since  the  indebtudaess  be- 
came due.  In  Farmers'  Bank  v.  Leonard,  4  Hari\  (Del.)  536,  this  rule  was 
applied  to  the  payment  of  a  judgment,  and  the  coart  said  that  "  the  indigent 
circumstances  of  a  debtor,  his  hopeless  insolvency  and  inability  to  pay  his 
debts,  are  properly  admissible  in  evidence  for  the  purpose  of  repelling  pre- 
sumption of  payment  or  satisfaction,  arising  from  lapse  of  time."  To  the 
same  efi'ect,  McLellan  v.  Cro/ton,  6  Me,  307-334.  Where  the  insolvency  of 
the  debtor  is  shown  to  have  existed  during  the  greater  portion  of  the  time, 
proof  of  a  short  interval  of  solvency,  of  which  the  creditor  was  ignorant,  will 
not  affect  the  rebuttal  of  the  presumption  of  payment:  McKinder  v.  Little- 
john,  4  Ired.  198;  1  Ired.  66.     The  issuance  and  return  of  an  execution  nulla 


888  Alston  v.  Hawkins.  [N.  Carolina, 

bona  is  a  circumstance  rebutting  the  presumption  of  payment  of  a  judgment 
from  lapse  of  time:  Black  v.  Carpenter,  3  Baxt.  350. 

As  is  shown  by  the  principal  case,  insolvency  of  the  debtor  relied  upon  to 
rebut  the  presumption  of  payment  must  be  shown  in  North  Carolina  to  have 
existed  during  the  entire  statutory  period:  Grant  v.  Burgwyn,  84  N.  C.  560. 
The  insanity  of  the  debtor  will  rebut  the  presumption  of  payment  arising 
from  lapse  of  time:  McLellan  v.  Crofton,  6  Me.  334.  So  the  near  relation  of 
the  parties  may  repel  the  presumption;  thus  the  situation  of  the  parties,  the 
mortgagor  having  married  the  daughter  of  the  mortgagee,  and  had  issue,  is 
of  itself  sufficient  to  rebut  the  presumption.  In  other  words,  the  fact  that 
the  parties  interested  were  nearly  related,  and  the  collection  of  the  money 
might  have  occasioned  distress,  and  even  the  payment  of  interest  inconve- 
nience, taken  in  connection  with  the  fact  that  part  of  the  money  included  in 
the  mortgage  was  an  advancement,  and  not  to  be  repaid,  is  sufficient  to  repel 
the  presumption  of  payment  arising  from  the  lapse  of  twenty  years:  Wan- 
maker  V.  Van  Buskirk,  1  N.  J.  Eq.  685.  The  existence  of  war,  preventing 
the  creditor  from  maintaining  suit,  will  rebut  the  presumption.  Hence  if  the 
parties  to  a  bond  reside  in  a  country,  the  condition  of  which  during  v/ar  is 
such  as  to  render  it  highly  improbable  that  debts  could  or  would  be  collected 
during  that  time,  it  should  not  be  considered  as  forming  part  of  the  time 
whose  lapse  gives  rise  to  the  presumption  of  payment:  Hale  v.  Pack,  10 
W.  Va.  145;  Jackson  v.  Pierce,  10  Johns.  414;  Bailey  v.  Jackson,  16  Johns. 
210;  8  Am.  Dec.  309;  Dunlop  v.  Ball,  2  Cranch,  184.  So  the  intent  or  agree- 
ment of  the  parties  may  be  shown  to  rebut  the  presumption,  as  where  it  is 
proved  that  by  the  understanding  of  the  parties  by  whom  a  bond  was 
executed  that  it  was  not  to  be  paid  untd  a  future  time,  although  the 
bond  on  its  face  was  payable  on  demand,  the  time  which  elapsed  from  the 
giving  of  the  bond  to  such  future  time  should  not  be  considered  as  forming 
^ny  part  of  the  time  whose  lapse  gives  rise  to  the  presumption  of  payment: 
Hale  V.  Pack,  10  W.  Va.  145.  So  where  a  surety  on  a  note  against  which  a 
presumption  of  payment  from  lapse  of  time  was  asked  during  the  time  to 
sell  his  land  to  another,  but  replied  that  he  could  not,  as  his  creditor,  if  he 
did,  would  push  him  on  his  note,  which  he  had  promised  not  to  do  during 
his  lifetime, — this  will  rebut  the  presumption  of  payment:  Fisher  v.  Phillips, 
4  Baxt.  243.  A  deed  of  trust  was  made  and  recorded  in  1841;  afterwards 
there  were  repeated  sales  of  the  land  by  the  grantor  and  those  claiming  un- 
der him,  the  purchasers  having  no  actual  notice  of  the  deed  of  trust  until 
1876;  the  court  ruled  that  the  presumption  of  payment  was  rebutted  by  the 
circumstances  of  the  case:  Bowie  v.  Poor  School  Society,  75  Va.  300.  The 
presumption  of  payment  from  lapse  of  time  is  also  treated  in  the  note  to 
Husky  V.  Maples,  88  Am.  Dec.  590. 


AMERICAN  STATE  REPORTS. 


Vol,.    XIX,    Pages  2G3-29:. 
TYLER  c.   I-IERRING. 

[67  Mi&sissu'Pi,  169.] 

Sales  by  trustee. 


Oct.  1889.]  Tyler  v.  Herring.  263 

the  defendant  to  show  that  it  occurred  before  it  received  the 
goods  for  transportation.  That  is  the  only  material  question 
in  the  case. 

We  think  the  better  reason  and  policy,  and  the  greater 
number  of  cases  adjudged,  favor  the  rule  to  require  the  car- 
rier which  delivers  goods  damaged,  and  which  are  shown  to 
have  started  on  their  journey  over  connecting  lines  of  trans- 
portation in  good  condition,  to  exculpate  itself  from  liability 
by  showing  that  the  injury  did  not  occur  by  its  default. 

Affirmed.  

Carriers  —  Damaged  Freight  —  Burden  of  Proof.  —  The  presumption 
arises  that  perishable  goods  shipped  in  good  order  continue  in  that  condi- 
tion when  in  the  hands  of  a  connecting  carrier,  and  the  burden  of  proof  ia 
on  him  to  show  that  they  were  not  in  good  condition  when  received  by  him: 
Beard  v.  Illinois  C.  R'y  Co.,  79  Iowa,  518;  Shriver  v.  Sioux  City  etc.  E.  R.  Co., 
24  Minn.  506;  31  Am.  Rep.  353.  Prima  facie,  the  carrier  is  liable  for  goods 
upon  proof  of  acceptance  thereof  for  carriage,  a;id  of  loss  or  damage  thereto 
while  in  transportation:  Hall  v.  Chicaijo  etc.  R'y  Co.,  41  Minn.  510;  16  Am. 
St.  Rep.  722.  And  the  burden  of  proof  rests  upon  the  carrier  to  show  the 
absence  of  negligence  upon  its  part:  Lindsley  v.  Chicago  etc.  R'y  Co.,  36  Mina. 
639j  1  Am.  St.  Rep.  692,  and  note. 


Tyler  v.  Herring. 

[67  Mississippi,  169.J 

Trostee's  Sale  Conducted  by  his  Agent  —  Failure  of  Trustee  to  Take 
Possession. — Trustee's  Sale  is  not  Rendered  Invalid  by  the  fact 
that  the  sale  was  cried  by  a  person  selected  by  the  trustee,  whose  act  the 
trustee  afterwards  confirmed,  nor  by  the  latter's  failure  to  take  posses- 
sion of  the  land  before  the  sale,  though  the  trust  deed  declared  that  upon 
default  the  trustee  should  immediately  take  possession,  and  after  giving 
notice,  sell  the  land  therein  described. 

Trustee's  Sale.  —  The  Performance  of  the  Mere  Ministerial  Acts  of 
posting  the  notice  and  making  sale  by  agents  selected  by  the  trustee 
does  not  afifect  the  validity  of  the  sale. 

Trustke's  Sale,  Presumption  in  Support  of. — The  presumption  is  to  be 
indulged  that  a  trustee  did  those  acts  in  pais  which  were  conditions 
precedent  to  the  valid  execution  of  the  power  of  sale.  The  force  of  this 
presumption  may  be  overcome  by  any  competent  evidence  sufficient  to 
produce  an  equilibrium,  or  to  leave  the  preponderance  so  lightly  in  favor 
of  the  presumption  as  that  the  jury  do  not  believe  some  act  to  have  been 
done  which  was  essential  to  the  validity  of  the  sale. 

Evidence.  — Ti:u.stee'3  Deed  Which  Recites  that  the  sale  had  been  made 
after  giving  notice  as  required  by  the  deed  of  trust  establishes  "prima 
facie  that  proper  notice  has  i)een  given;  but  the  eflfect  of  the  deed  in  this 
respect  may  be  overcome  by  any  competent  evidence  which,  notwith- 
standing the  deed  and  its  recitals,  leaves  the  jury  unable  to  say  that  the 
notices  were  given. 


264  Tyler  v.  Herring.  [Miss. 

Action  of  ejectment.  The  plaintiff's  title  was  dependent 
upon  a  sale  made  by  a  trustee  acting  under  a  deed  of  trust 
given  to  secure  a  debt  due  the  plaintiff.  The  trustee  was,  on 
account  of  his  illness,  unable  to  attend  the  sale,  and  conduct 
it  in  person,  and  therefore  directed  his  brother  to  make  it  as 
his  agent.  All  the  acts  which  the  brother  did  were  ratified 
by  the  trustee.  The  trust  deed  provided  that  upon  default  in 
payment  of  the  debt  the  trustee  should  immediately  take 
possession,  and  after  giving  notice  of  sale,  sell  the  land  de- 
scribed in  the  deed.  After  the  default  in  the  payment  of  the 
debt,  the  trustee  demanded  possession  of  the  land,  but  being 
refused,  proceeded  to  sell  without  first  obtaining  such  posses- 
sion.   Judgment  in  favor  of  the  plaintiff.    Defendant  appealed. 

Haden  and  Dodd,  for  the  appellants. 

Monroe  McClurg,  and  Brame  and  Alexander,  for  the  appellee. 

Cooper,  J.  The  sale  under  the  deed  of  trust  was  not  in- 
valid either  because  the  trustee  did  not  take  possession  of  the 
land  before  the  sale,  or  for  the  reason  that,  the  trustee  being 
sick,  the  land  was  cried  off  by  a  person  selected  by  him,  whose 
act  he  afterwards  ratified  and  approved. 

The  provision  of  the  deed  of  trust,  that  "upon  default  of 
payment  of  the  debt  secured  the  trustee  shall  immediately 
take  possession,  and  having  given  notice,  sell  the  land  con- 
veyed," etc.,  was  intended  to  confer  upon  the  trustee  the  right 
of  possession,  but  did  not  make  such  taking  possession  a  con- 
dition precedent  to  the  power  of  sale:  Vaughn  v.  Powell,  65 
Miss.  402. 

The  performance  of  the  mere  ministerial  acts  of  posting  the 
notices  and  making  the  sale  by  agents  selected  by  the  trustee 
does  not  affect  the  validity  of  the  sale:  Jones  v.  Sergeant,  45 
Miss.  332. 

The  deed  from  the  trustee  to  the  purchaser,  Herring  (who 
was  beneficiary  in  the  deed  of  trust),  recites  that  the  sale  was 
made  after  notice  had  been  given  in  the  manner  prescribed 
by  the  deed.  This  was  by  posting  notices  in  three  public 
places  in  the  county  for  the  period  of  ten  days  preceding  the 
day  of  sale. 

The  trustee  was  introduced  as  a  witness  on  behalf  of  plain- 
tiffs, and  on  cross-examination  stated  that  he  did  not  person- 
ally post  any  one  of  the  notices,  and  only  knows  they  were 
posted  by  what  he  has  been  told.  Other  evidence  introduced 
by  plaintiflF  showed  that  one  of  the  notices  had  been  posted 


Oct.  1889.]  Tyler  v.  Herring.  265 

for  the  required  time;  as  to  the  other  two,  it  appears  that  the 
trustee  gave  them  to  an  agent,  and  directed  him  to  post  one 
at  Briscoe's  mill  and  the  other  at  Rickett's  mill,  these  being 
public  places  within  the  county.  It  was  then  proved  by  a 
certain  witness  that  some  time  before  the  sale  of  the  property 
he  saw  the  two  notices  at  the  above-named  places;  but  this 
witness  could  not  remember  whether  this  was  ten  days  before 
the  day  of  sale. 

In  this  condition  of  the  evidence,  the  court,  at  the  instance 
of  the  plaintiff,  charged  the  jury  as  follows:  "The  law  pre- 
sumes that  the  notices  were  posted  as  stated  in  the  trustee's 
deed,  and  if  the  defendants  deny  that  they  were,  they  must 
show  to  the  satisfaction  of  the  jury,  by  the  evidence,  that  they 
were  not  so  posted." 

The  first  instruction  for  the  defendants,  which  was  refused 
by  the  court,  was  this:  "The  burden  of  proof  is  upon  the 
plaintiff  to  satisfy  the  minds  of  the  jury  by  a  preponderance 
of  the  evidence  before  them  that  Monroe  McClurg,  trustee, 
posted  or  had  notices  posted  in  three  public  places  in  Attala 
County  of  the  sale  of  the  lands  in  controversy,  and  if  the  jury 
are  not  so  satisfied,  they  must  find  for  the  defendants." 

If  by  the  instruction  given  for  the  plaintiff  it  was  intended 
to  state  that  the  recitals  in  the  deed  of  the  trustee  that  the 
notices  had  been  posted  should  control  until  it  was  shown  by 
positive  and  direct  testimony  that  they  were  not  so  posted, 
then  the  instruction  was  too  rigid  against  the  defendants. 
The  presumption  is  to  be  indulged  that  the  trustee  did  those 
acts  in  pais,  which  were  conditions  precedent  to  a  valid  exer- 
cise of  the  power  of  sale,  as  held  in  Graham  v.  Fitts,  53  Miss. 
307,  and  in  the  absence  of  any  evidence  to  the  contrary,  such 
presumption  must  prevail.  But  it  is  not  required  of  the  de- 
fendant to  rebut  such  presumption  by  introducing  evidence 
sufficient  to  show  that  the  notices  were  not  in  fact  posted. 
The  presumption  is  not  a  conclusive  one;  its  force  and  effect 
may  be  impaired  by  any  competent  evidence,  and  when  op- 
posing evidence  is  introduced  sufTicient  to  produce  an  equilib- 
rium, or  to  leave  the  preponderance  so  slightly  in  favor  of  tlie 
presumption  arising  from  the  deed  as  that  the  jury  do  not 
believe  the  act  to  have  been  done,  then  the  defendants  are 
entitled  to  their  verdict. 

The  court,  by  refusing  the  instruction  asked  by  the  defend- 
ants, that  the  burden  of  proof  was  upon  the  plaintiff  to 
establish  the  fact  of  posting  the  notices,  imposed  upon  them, 


266  Tyler  v.  Herring.  [Miss. 

not  the  burden  of  meeting  a  prima  facie  case  made  by  the 
plaintiff's  evidence,  but  the  burden  of  producing  a  clear  and 
sufficient  preponderance  of  evidence  on  the  whole  case.  The 
true  view  is,  that  the  plaintiff  begins  and  ends  with  the  bur- 
den of  proof.  Introducing  the  trustee's  deed,  he  makes  a 
prima  facie  case;  it  then  devolves  upon  the  defendant  to  meet 
the  case  thus  made,  failing  in  which  the  plaintiff  is  entitled 
to  recover.  But  the  defendant  meets  the  case  made  by  the 
plaintiff  when  his  evidence  equals  in  value  and  weight  that 
of  the  plaintiff,  or  so  nearly  does  so  as  to  leave  the  plaintiff's 
evidence  insufficient  to  establish  the  fact  it  was  introduced 
to  prove. 

In  the  case  before  us,  if  the  jury,  on  the  whole  evidence, 
believed  the  notices  to  have  been  given  as  required  by  the 
deed  of  trust,  the  plaintiff  was  entitled  to  a  verdict;  if,  on 
the  other  hand,  on  the  whole  evidence,  they  were  unable  to 
say  that  the  notices  were  so  posted,  then  the  plaintiff  failed 
to  make  out  his  case,  and  the  verdict  should  have  been  for 
the  defendant. 

The  judgment  is  reversed  and  cause  remaaded. 


Sales  and  Conveyances  by  Trustees.  —  We  propose  in  this  note  to  treat 
of  sales  and  conveyances  by  trustees,  and  the  circumstances  under  which 
Buch  sales  and  conveyances  will  be  adjudged  either  void  or  voidable. 

In  some  instances,  property,  whether  real  or  personal,  is  held  in  trust 
without  the  instrument  vesting  title  in  the  trustee,  indicating  that  it  is  so  held. 
When  such  is  the  case,  the  trustee,  while  dealing  with  persons  who  have  no 
notice  of  the  trust,  has  the  same  power  as  if  he  were  the  holder  of  the  equi- 
table as  well  as  of  the  legal  title.  In  other  words,  a  purchaser  from  him  in 
good  faith  and  without  notice  of  the  trust  obtains  the  title  of  the  trustee, 
and  holds  it  discharged  of  the  trust,  and  free  from  all  obligation  to  account 
to  the  beneficiary:  Crocker  v.  Crocker,  31  N.  Y.  507;  88  Am.  Dec.  291;  Wyse 
V,  Dandridge,  35  Miss.  672;  72  Am.  Dec.  149;  Prevo  v.  Walters,  5  111.  35; 
Christmas  v.  Mit  hell,  3  Ired.  Eq.  535;  Thompson  v.  Gilliland,  Addis.  296; 
Bracken  v.  Miller,  4  Watts  &  S.  102;  Hudnal  v.  Wilder,  4  McCord,  294;  17 
Am.  Dec.  744;  Henderson  v.  Dodd,  1  Bail.  Eq.  138;  Ex  parte  Williams,  18 
S.  C.  209;  Perry  on  Trusts,  sec.  218. 

To  entitle  a  purchaser  from  a  trustee  to  hold  the  property  discharged  from 
the  trust,  it  is,  of  course,  necessary  that  he  be  an  innocent  purchaser  in  good 
faith.  We  shall  not  stop  to  consider  at  length  who  is  such  a  purchaser.  It 
BuflBces  our  present  purpose  to  state  that  he  must  be  a  purchaser  for  a  valu- 
able consideration,  and  such  consideration  must  have  been  paid  and  a  con- 
veyance of  the  legal  title  taken  before  receiving  notice  of  the  trust:  Paul  v. 
Fulton,  25  Mo.  156;  Freeman  on  Executions,  sec.  141;  Perry  on  Trusts,  sec. 
221.  Notice  of  a  trust  will  be  imputed  to  a  purchaser  when  there  is  any 
declaration  or  recital  in  the  deeds  through  which  he  must  deraign  title, 
either  asserting  the  existence  of  the  trust,  or  sufi5cient  to  incite  inquiry  in  a 
man  of  common  prudence,  where  such  inquiry,  if  pursued,  would  have  re« 


Oct.  1889.]  Tyler  v.  HERRiNa.  267 

vealefl  the  existence  of  the  trust:  Brannon  v.  May,  42  Ind.  92;  Howard  Ins, 
Co.  V.  Halsey,  8  N.  Y.  271;  59  Am.  Dec.  478;  Perry  on  Trusts,  sees.  222-224; 
Wilson  V.  McCullough,  23  Pa.  St.  440;  G2  Am.  Dec.  347;  note  to  Oale  v.  Men- 
sing,  64  Am.  Dec.  201.  Notice  of  a  trust  is  not,  however,  confined  to  the  re- 
citals in  the  deeds  through  which  the  trustee  acquires  title.  It  may  be 
acquired  in  any  of  the  various  modes  by  wliich  notice  may  be  given  in  other 
cases,  and  if  a  beneficiary  under  the  trust,  or  his  agents  or  lessees,  are  in 
possession,  that  fact  is  sufficient  to  put  an  intending  purchaser  on  inquiry, 
and  to  charge  him  with  notice  of  the  trust,  if  no  inquiry  is  made:  Prilchard 
V.  Brown,  4  N.  H.  397;  17  Am.  Dec.  434;  Pell  v.  McElroy,  36Cal.  268;  Perry 
on  Trusts,  sec.  223.  Contra,  Scott  v.  Oallajher,  14  Serg.  &  R.  333;  16  Am. 
Dec.  508. 

If  the  grantee  of  a  trustee  is  not  a  purchaser  for  a  valuable  consideration,  or 
if,  being  a  purcliaser  for  a  valuable  consideration,  he  purchased  with  notice  of 
the  trust,  actual  or  implied,  unless  the  sale  or  transfer  to  him  was  authorized, 
he,  if  he  acquires  any  title  whatever,  merely  takes  the  place  of  his  grantor,  and 
becomes  chargeable  with  the  execution  of  the  trust  to  the  same  extent  that 
such  grantor  was  chargeable  before  such  transfer:  Byan  v.  Doyle,  31  Iowa, 
53;  Sieioart  v.  Chadwlk,  8  Iowa,  4G3;  Jones  v.  Shaddock,  41  Ala.  262;  Wehxter 
V.  French,  11  III.  254;  Hcujthor'p  v.  Hook,  1  GUI  &  J.  270;  Murray  v.  Ballou, 
1  Johns.  Ch.  566;  Shepherd  v.  McErers,  4  Johns.  Ch.  136;  Pinsonv.  hey,  1  Yerg. 
296;  Heth  v.  Richmond  etc.  R.  R.  Co.,  4  Gratt.  482;  50  Am.  Dec.  88;  Lincoln  v, 
Purcell,  2  Head,  143;  73  Am.  Dec.  196;  Tohin  v.  Helm,  4  J.  J.  Marsh.  288; 
and  he  may  also  be  held  jointly  liable  with  the  original  trustee  for  the  breach 
of  the  trust:  Barksdale  v.  Finney,  14  Gratt.  338. 

Where  the  rules  of  a  law  upon  the  siiV)ject  have  not  been  modified  by  stat- 
ute, all  conveyances  by  a  trustee,  whether  to  an  innocent  purchaser  or  not, 
and  whether  in  contravention  of  the  trust  or  not,  operate  upon  the  legal  title 
and  vest  it  in  the  grantee.  This  conclusion  necessarily  followed  from  the  re- 
fusal of  the  common  law  to  recognize  trusts  or  equitable  titles,  for  unless  such 
trusts  or  titles  were  to  be  considered,  there  was  no  reason  why  the  trustee 
should  not  convey  to  whomsoever  he  pleased.  His  conveyance  was  therefore 
valid  at  law,  and  the  rights  of  the  beneficiary  could  be  protected  only  by  his 
seeking  redress  in  equity  and  compelling  the  grantee  to  respect  and  to  execute 
the  trust,  as  the  original  trustee  should  have  done:  Oale  v.  Mensing,  20  Mo. 
461;  64  Am.  Dec.  197,  and  note;  Taylor  v.  King,  6  Munf.  308;  8  Am.  Dec.  746; 
Koester  v.  Burke,  81  111.  436;  Wilson  v.  South  Park  Commissio7iers,  70  III.  46; 
Walton  V.  Follanshee,  131  111.  147;  Bank  of  U.  S.  v.  Benning,  4  Cranch  C.  C. 
81;  D'Oyley  v.  Loveland,  1  Strob.  45;  Reece  v.  Allen,  5Gilm.  236;  48  Am.  Dec. 
336;  Rowe  v.  Beckett,  30  Ind.  154.  An  exception  to  this  rule  exists  in  Penn- 
sylvania, probably  having  its  origin  in  the  blending,  in  that  state,  of  the  sys- 
tems of  law  and  equity.  It  is,  in  the  opinion  of  the  courts  of  that  state,  the 
duty  of  the  grantee  of  property  which  is  subject  to  a  trust  to  reconvey  to  the 
original  trustee;  and  they  will  presume  that  he  has  performed  this  duty,  and 
by  this  presumption  in  efifect  annul  the  conveyance  made  to  him  by  the  origi- 
nal trustee,  if  in  violation  of  the  trust:  Rife  v.  Oeyer,  59  Pa.  St.  393;  98  Am. 
Dec.  352.  In  California,  also,  it  was  determined  that  under  a  deed  to  a 
trustee  giving  him  authority  to  sell  his  estate  upon  the  approval  of  the- 
grantor  that  it  was  incumbent  upon  one  claiming  under  a  conveyance  from 
the  trustee  to  show  that  such  conveyance  was  made  with  the  assent  of  the 
trustor,  and  that  in  the  absence  of  such  assent  the  conveyance  must  be 
treated  as  inoperative:  Sprague  v.  Edtoards,  48  Cal.  239.  The  disposition  of 
the  case  before  the  court  was  doubtless  correct,  owing  to  the  provision  of  the 


268  Tyler  v.  Herrinq.  [Miss. 

statute  of  that  state  to  be  mentioned  in  a  subsequent  paragraph;  but  the  ac- 
tion of  the  court  was  taken  in  apparent  obliviousness  of  the  statute,  and  was 
professe  lly  based  upon  authorities  whose  pertinency  to  the  subject  under  con- 
sideration we  are  unable  to  perceive. 

A  trust  estate  may  be  vested  in  two  or  more  trustees,  and  a  conveyance 
may  be  made  by  one  or  by  some  number  less  than  the  whole  of  the  trustees. 
In  England  the  opinion  seems  to  be  entertained  that,  though  the  conveyance 
is  in  contravention  of  the  trust,  and  the  signatures  of  the  co-trustees  and  of 
the  cestui  que  trust,  whose  assent  is  requisite  to  a  sale,  are  all  forged,  still  that 
such  conveyance  ti'ansfers  the  legal  estate  of  the  trustee  who  executed  it: 
Boarsot  v.  Savage,  L.  R.  2  Eq.  134.  The  decisions  in  the  United  States  pro- 
ceed upon  the  theory  that  the  estate  of  trustees,  being  given  to  them 
to  accomplish  the  purposes  of  a  trust,  must  be  regarded  as  an  insev- 
erable unit,  and  a  conveyance  by  either  trustee  without  the  concurrence  of 
the  others  as  al)solutely  void:  Sincknr  v.  Jad'son,  8  Cow.  553-583;  Learned  v. 
Wellon,  40  Cal.  349;  Ridgdey  v,  Johnson,  11  Barb.  527;  Wilbur  v.  Almy,  12 
How.  180. 

The  statutes  of  New  York,  Michigan,  Wisconsin,  Minnesota,  Kansas,  Cali- 
fornia, and  Dakota  declare  that  when  a  trust  in  relation  to  real  property'  is 
expressed  in  the  instrument  creating  the  estate,  every  transfer  or  other  act 
of  tlie  trustees,  in  contravention  of  the  trust,  is  absolutely  void:  Cal.  Civ. 
Code,  sec.  870;  Stimson's  American  Statute  Law,  sec.  1725.  It  is  somewhat 
singular  that  these  statutes  have  escaped  judicial  interpretation  except  in 
the  first-named  state,  while  in  tliat  state  they  have  been  quite  frequently 
considered  by  its  courts.  The  doubts  most  likely  to  arise  concerning  the 
signification  of  these  statutes  are,  first,  do  they  mean  that  inhibited  convey- 
ances shall  be  deemed  void  in  law  as  well  as  in  equity  ?  and  second,  if  void 
both  at  law  and  in  equity,  are  they  also  void  when,  upon  their  face,  they 
appear  to  be  made  pursuant  to  the  authority  conferred  on  the  trustee  ?  And 
the  fact  of  their  being  in  contravention  of  the  trust  must  be  established  by 
extrinsic  evidence;  and  knowledge  of  this  fact  cannot  be  brought  home  to  the 
grantee  or  his  successors  in  interest.  With  respect  to  the  first  question,  there 
appears  to  be  no  doubt  that  an  inhibited  conveyance  is  void  at  law;  that  the 
legal  as  well  as  the  equitable  title  remains  in  the  trustee;  and  he  may  main- 
tain an  action  to  recover  the  property,  or  may  exercise  any  other  power,  or 
perform  any  other  duty,  as  if  such  conveyance  had  not  been  executed:  Zim- 
merman V.  Kinhlc,  108  N.  Y.  282;  Russell  v.  Russell,  36  K  Y.  581;  Fitzgerald 
V.  Topping,  48  N.  Y.  438;  Wetmore  v.  Porter,  92  N.  Y.  76.  By  these  statutes 
the  trust  estate  is  made  inalienable  and  indestructible,  except  by  transfers 
not  in  contravention  of  the  trust,  and  the  courts  have  no  power  to  authorize 
an  inhibited  convej'ance  to  be  made:  Douglas  v.  Cruger,  80  N.  Y.  15;  Gruger 
V.  Jones,  18  Barb.  467.  Nor  can  validity  be  imparted  to  a  conveyance  in 
contravention  of  a  trust  by  the  fact  that  it  appears  on  its  face  to  be  made 
pursuant  to  the  trust,  aiul  the  persons  claiming  under  it  have  no  notice  that 
the  facts  asserted  in  it  did  not  exist.  The  presence  of  the  facts  authorizing  a 
conveyance  are  regarded  as  conditions  precedent  to  the  exercise  of  the  power 
to  convey;  and  in  their  absence  the  power  does  not  exist,  and  the  conveyance 
is  as  if  a  stranger  to  the  title  had  made  it:  Griswold  v.  Perry,  7  Lans.  105; 
Swarthoutw.  Curtis,  5  N.  Y.  301;  55  Am.  Dec.  345.  The  leading  case  upon 
this  topic  is  that  of  Briggs  v.  Davis,  20  N.  Y.  15,  75  Am.  Dec.  363,  the  facts 
of  which  were  as  follows:  One  Masten,  being  the  owner  of  property,  executed 
a  conveyance  thereof  to  three  persons,  in  trust  to  sell  the  same  for  the  benefit 
of  his  creditors.     The  trustees  subsequently  executed  a  reconveyance  to  the 


Oct.  1889.]  Tyler  v.  Herring.  269 

grantor,  of  property  which  had  not  been  disposed  of  by  them,  and  in  their 
reconveyance  recited  that  the  object  of  the  trust  had  been  accomplished. 
Hasten,  to  whom  this  reconveyance  was  made,  thereafter  executed  a  mort- 
gage to  one  who  had  no  notice  that  the  trust  liad  not  been  fully  executed,  as 
recited  in  the  reconveyance.  An  action  was  afterwards  brought  in  the  inter- 
est of  creditors  of  Masten,  who  claimed  that  the  debts  due  to  them  from  him 
had  not  been  paid  at  the  time  of  the  reconveyance;  that  such  reconveyance 
was  in  contravention  of  the  trust;  and  they  therefore  asked  that  the  mortgage 
made  by  Masten  be  set  aside  and  canceled.  In  affirming  a  judgment  granting 
the  relief  prayed  for,  canceling  the  mortgage  and  enjoining  its  foreclosure, 
the  court  of  appeals  said:  "A  party  about  to  take  a  title  under  such  a  recon- 
veyance, with  a  knowledge  of  the  terras  of  the  trust,  would  know  that  it  was 
an  essential  prerequisite  to  the  validity  of  the  deed  that  the  trusts  should  have 
been  actually  performed.  There  is  no  principle  which  substitutes  the  decla- 
ration of  the  trustees,  however  solemnly  made,  in  place  of  the  fact  which 
could  alone  aiithorize  them  to  recouvey.  Tlie  purchaser,  if  he  would  be  safe, 
must  not  content  himself  with  the  recital  that  the  trusts  have  ceased,  but 
must  ascertain,  at  his  peril,  whether  such  is  tlie  case.  The  statute  avoids  all 
deeds  which  are,  in  truth,  in  contravention  of  the  trust,  and  there  is  no  ex- 
ception in  favor  of  such  as  are  fraudulently  made  to  appear  in  consonance 
with  it  by  means  of  untrue  statements  inserted  in  them.  We  have  been  re- 
ferred to  the  statutory  provision  declaring  that  the  title  taken  under  a  trustee 
authorized  to  sell  is  not  to  be  impeached  on  account  of  the  misapplication  of 
the  money  paid  for  such  title  by  the  trustees.  The  conveyances  here  upheld 
are  such  as  are  made  in  fact  and  in  form  in  pursuance  of  the  trust,  and  where 
the  only  fault  is  the  subsequent  misconduct  of  the  trustees  in  embezzling  or 
misapplying  the  money;  and  I  conceive  that  the  enactment  has  no  applica- 
tion to  a  case  like  the  present.'*  After  mentioning  authorities  which  iu  Eng- 
land maintain  that  a  bona  fide  purchaser  for  a  valuable  consideration,  who 
acquires  the  legal  title,  shall  be  protected  against  a  prior  equity,  of  which  he 
had  no  notice,  the  court  held  that  these  authorities  could  have  no  application 
because  the  statute  under  consideration  precludes  a  grantee  of  a  conveyance 
made  in  contravention  of  a  trust  from  obtaining  the  legal  title,  and  said  that 
the  title  did  not  pass,  because  the  trustees  "  could  not  legally  make  an  opera- 
tive conveyance,  except  in  the  execution  of  the  trust,  and  the  deed  to  Mastea 
was  not  in  the  execution  of  the  trust,  but  in  disaffirmance  of  it.  It  was  in  hos- 
tility to  it,  and  if  operative,  it  subverted  and  put  an  end  to  it,  though  ita 
objects  were  not  accomplished.  It  was  precisely  such  a  conveyance  as  the 
statute  referred  to  by  the  terms  'conveyances  in  contravention  of  the  trust.' 
The  mandate  of  the  statute  that  such  conveyances  shall  be  absolutely  void 
forbids  us  to  hold  that  they  shall  pass  the  legal  estate  which  was  vested  in 
the  trustees,  for  the  purpose  of  tacking  equitable  interests  to  it,  or  for  any 
other  purpose.  I  repeat,  therefore,  that  this  reconveyance,  upon  the  facta 
which  were  established  on  the  trial,  was  inoperative  as  agr.inst  the  creditora 
of  Masten,  and  that  they  were,  notwithstanding,  entitled  to  have  the  land 
embraced  in  it  subjected  to  sale  for  the  payment  of  their  debts." 

One  contemplating  a  purchase  from  a  trustee  must,  as  in  other  cases,  re- 
member that  no  grantor  can  transfer  an  estate  of  wliich  he  has  never  been 
seised:  Walton  v.  Follnnshee,  131  111.  147.  In  determining  whether  a  trustee 
has  an  estate,  and  if  so,  what  is  its  extent,  the  same  investigation  needs  to  be 
made  and  the  same  rules  to  be  observed  as  in  other  cases,  except  that  the 
estate  vested  in  him  may  be  determined  from  the  general  purposes  of  the 
trust,  though  not  otherwise  specially  described  or  limited  in  the  deed  by 


270  Tyler  v.  Herring.  [Miss. 

which  the  trust  was  created.  In  the  absence  of  any  statutory  modification 
of  the  common  law,  a  conveyance  does  not  vest  an  estate  of  inheritance  in 
the  grantee,  without  the  use  of  the  word  "heirs";  but  this  rule  is  not  always 
applicable  to  conveyances  of  trustees.  If  the  purposes  of  the  trust  are  dis- 
closed by  the  conveyance,  and  are  such  as  cannot  be  accomplished  unless  the 
trustee  acquires  a  fee,  then  an  estate  in  fee  vests  in  him,  though  the  word 
"  heirs  "  does  not  appear  in  the  deed:  Melick  v.  Pidcock,  44  N,  J.  Eq.  525;  6 
Am.  St.  Rep.  901;  Cleveland  v.  HallHf.,  6  Cush.  407;  Newhall  v.  Wheeler,  7 
Mass.  189;  Brooks  v.  Jones,  11  Met.  191;  Gould  v.  Lamb,  11  Met.  84;  45  Am. 
Dec.  187;  Sears  v.  Russell,  8  Gray,  86;  Fisher  v.  Fields,  10  Johns.  505;  Cham- 
berlain V.  Thompson,  10  Conn.  243;  26  Am.  Dec.  390;  Villiers  v.  Villins,  2  Atk. 
72;  Morton  v.  Barrett,  22  Me.  257;  39  Am.  Dec.  575.  "  The  extent  or  quan- 
tity of  the  estate  taken  by  the  trustee  is  determined,  not  by  the  circumstance 
that  words  of  inheritance  in  the  trustee  are  or  are  not  used  in  the  deed  or 
will,  but  by  the  intent  of  the  parties.  And  the  intent  of  the  parties  is  de- 
termined by  the  scope  and  extent  of  the  trust.  Therefore,  the  extent  of  the 
legal  interest  of  a  trustee  in  an  estate  given  to  him  in  trust  is  measured, 
not  by  words  of  inheritance  or  otherwise,  but  by  the  object  and  extent  of  the 
trust  npon  which  the  estate  is  given.  On  this  principle,  two  rules  of  con- 
struction have  been  adopted  by  courts:  first,  wherever  a  trust  is  created,  a 
legal  estate  sufficient  for  the  purpose  of  the  trust  shall,  if  possible,  be  im- 
plied in  the  trustee,  whatever  may  be  the  limitatioa  in  the  instrument, 
whether  to  him  and  his  heirs  or  not;  and  second,  although  a  legal  estate 
may  be  limited  to  a  trustee  to  the  fullest  extent,  as  to  him  and  his  heirs,  yet 
it  shall  not  be  carried  further  than  the  complete  execution  of  the  trust  neces- 
sarily requires":  Perry  on  Trusts,  sec.  312;  Ellia  v.  Fisher,  3  Sneed,  231:  65 
Am.  Dec.  52;  Neilson  v.  Lagow,  12  How.  98. 

Having  ascertained  that  the  trustee  has  such  an  estate  as  he  is  willing  to 
purchase,  the  next  inquiry  necessary  on  the  part  of  an  intending  purchaser 
is,  whether  the  trustee  has  power  to  sell.  This  power,  we  assume,  must  be 
found  in  the  instrument  vesting  the  estate  in  the  trustee,  or  in  some  other  in- 
strument executed  or  assented  to  by  him  and  declaring  the  purposes  of  the 
trust.  We  have  been  unable  to  discover  any  authority  determining  whether 
or  not  a  trustee  has  power  to  sell  when  the  trust  estate  is  vested  in  him 
without  any  declaration  being  anywhere  made  regarding  the  extent  of  his 
powers  or  the  purposes  of  the  trust.  In  a  case  in  one  of  the  supreme  courts 
of  New  York,  it  appeared  that  a  conveyance  had  been  made  to  one  McLean, 
"as  trustee  for  the  association  of  the  Open  Board  of  Stockbrokers  of  the 
city  of  New  York  ";  that  the  association  was  not  incorporated,  and  consisted 
of  about  four  hundred  persons;  that  McLean,  on  the  day  of  receiving  the 
deed,  conveyed  the  same  property  to  a  corporation  known  as  "The  Open 
Board  of  Stockbrokers'  Building  Company  of  the  City  of  New  York  ";  that  a 
receiver  was  subsequently  appointed  for  both  the  corporation  and  the  associa- 
tion, and  was  authorized  by  the  court  to  sell  the  same  property,  and  on  his 
making  the  sale,  the  title  was  objected  to,  on  the  ground  that  the  trust  to 
McLean  was  not  defined,  and  therefore  that  it  did  not  appear  that  he  was  au- 
thorized to  convey  as  he  had  done.  The  court  compelled  the  purchaser  to 
take  the  title,  saying  that  the  trustee,  under  the  statutes  of  the  state,  had 
power  to  convey,  except  in  contravention  of  the  trust,  and  that  as  there  was 
no  suggestion  that  his  conveyance  was  in  contravention  of  the  trust,  it  must 
be  adjudged  to  vest  a  perfect  title:  People  v.  Stockbrokers^  Building  Co.,  49 
Hun,  349.  The  circumstances  of  this  case  were,  however,  very  peculiar. 
The  receiver  who  had  made  the  sale  represented  the  trustee's  cestui  que  trust 


Oct.  1889.]  Tyler  v.  Herring.  271 

as  well  as  his  grantee,  and  it  was  certain  that  the  purchaser,  whether  the 
conveyance  by  the  trustee  was  authorized  or  not,  would  succeed  to  a  com- 
plete equity,  and  that  there  was  no  one  entitled  to  assail  the  conveyance  made 
by  the  trustee.  If  it  be  true  when  land  is  vested  in  one  person  as  the  trustee 
of  another,  and  the  purposes  of  the  trust  and  the  powers  of  the  trustees  are 
nowhere  stated,  that  all  transfers  by  the  trustee  are  valid  until  shown  to  be  in 
coutravention  of  the  trust,  then  every  transfer  by  him  must  be  held  effective, 
because,  as  the  trust  is  not  disclosed,  it  is  impossible  to  show  affirmatively  that 
anything  whatever  is  in  contravention  of  it.  We  apprehend,  though  we 
can  find  no  authority  upon  the  subject,  that  when  a  conveyance  is  made  to 
one  person  as  trustee  of  or  for  the  use  of  another,  unless  through  the  opera- 
tion of  the  statute  of  uses  the  legal  as  well  as  the  equitable  estate  is  thereby 
vested  in  the  beneficiary,  the  law  implies  that  the  trustee  shall  continue  to 
hold  the  property  for  the  use  and  benefit  of  the  beneficiary  until  Mie  latter 
or  his  successor  in  interest  demands  a  conveyance  thereof,  and  that  any  con- 
veyance by  the  trustee  is  in  contravention  of  this  implied  duty,  and  will 
therefore  be  vacated  in  equity. 

If  there  are  directions  in  the  instrument  creating  the  trust  showing  that 
the  property  is  to  be  retained  until  a  designated  time  for  the  purpose  of 
division,  or  of  being  turned  over  to  some  other  person,  or  for  any  other 
purpose,  the  power  of  the  trustee  to  sell  does  not  exist,  though  there  are 
other  provisions  which,  if  tliey  stood  alone,  would  confer  this  power.  If 
land  is  conveyed  in  trust,  first,  to  pay  the  debts  of  the  grantor  out  of  the 
rents  and  profits,  second,  for  the  support  of  himself,  his  wife  and  children, 
and  tliird,  at  his  death  to  be  divided  among  his  children,  the  trustee  has 
no  power  to  sell  for  the  payment  of  the  debts  of  the  grantor,  nor  for  any 
other  purpose,  however  urgent  the  necessities  for  such  sale  may  become: 
Miindy  v.  Vnwter,  3  Gratt.  518.  If  a  testator  devises  property  to  trustees,  with 
the  direction  that  they  manage  the  same  so  as  to  produce  income,  which  shall 
remain  in  their  hands  or  under  other  control  and  management  until  the 
eldest  child  of  his  daughter  shall  arrive  at  the  age  of  twenty-one  years,  or 
shall  marry,  and  shall  then  divide  the  original  property  among  the  children 
of  such  daughter  then  living,  any  power  to  sell  inferable  horn  the  direction 
to  manage  the  property  so  as  to  produce  an  income  is  annulled  by  the 
directions  to  divide  the  original  property  among  the  children  of  his  daughter 
after  the  oldest  becomes  of  age:  Blanton  v.  Mayea,  58  Tex.  422.  So  by 
expressly  giving  power  to  sell  a  portion  of  the  estate  devised  to  trustees,  and 
testator  manifests  his  intention  tliat  the  like  power  shall  not  be  exercised 
over  the  balance:  Anderson  v.  Anderson,  31  N.  J.  Eq.  560. 

On  the  other  hand,  it  is  quite  certain  that  a  power  of  sale  need  not  be 
conferred  on  a  trustee  in  direct  or  express  terms,  and  may  be  implied  from 
the  purposes  of  the  trust.  Whenever  a  trustee  is  directed  to  do  something, 
the  doing  of  which  cannot  be  accomplished  otherwise  than  by  a  sale,  then  a 
power  to  sell  is  implied.  Note  to  Rankin  v.  Rankin,  87  Am.  Dec.  216;  Perry 
on  Trusts,  sec.  766;  Curling  v.  Austin,  2  Drew.  &  S.  129;  Eids/orth  v. 
Armste.ad,  2  Kay  &  J.  333;  25  L.  J.  Ch.  237;  4  Week.  Rep.  279.  Thus  if  a  trust 
contemplates  that  the  trustee  will  pay  the  grantor's  debts:  Blatrh  v.  Wilder,  I 
Atk.  419;  Winston  v.  Jones,  6  Ala.  550;  Vallette  v.  Bennett,  69  111.  632;  Barker 
V.  Devonshire,  3  Mer.  310;  or  will,  if  necessary,  apply  the  body  of  the  estate 
for  the  benefit  or  support  of  persons  designated:  Amesv.  Ames,  15  R.  I.  12; 
or  will  distribute  the  estate  or  its  proceeds:  S<a<e  v.  Cincinnati,  16  Ohio  St. 
170;  a  power  of  sale  is  implied.  It  has  also  been  decided  that  where 
trustees   were  directed   to  divide   property  equally  among   seven   persons. 


272  Tyler  v.  Herring.  [Miss. 

and  the  property  tp  be  divided  consisted  chiefly  of  a  single  plantation  that 
the  grantor  could  not  have  intended  that  tliey  should  undertake  to  make  a 
partition  into  seven  equal  parts,  but  that  the  power  was  best  executed  by  a 
Bale  of  the  property  and  the  division  of  its  proceeds:  Wimton  v.  Jones,  6  Ala. 
650.  In  truth,  some  of  the  courts  have  deemed  trustees  vested  with  an 
implied  power  to  sell  in  instances  in  which  it  is  doubtful  whether  the 
grantor  ever  contemplated  the  existence  of  such  power.  Thus  in  Porter  v. 
Schofield,  55  Mo.  303,  the  purposes  of  the  trust  were  to  have  and  to  hold  real 
estate  forthe  purpose  of  receiving  and  collecting  the  rents,  issues,  and  profits, 
and  after  paying  taxes  and  necessary  expenses  of  repairing  the  same,  to  pay 
certain  mortgages  and  judgments  designated  in  the  deed  of  trust.  The 
trustee  having  sold  the  property  for  the  purpose  of  realizing  moneys  with 
which  to  pay  the  indebtedness  described  in  the  deed  of  trust,  the  validity  of 
the  sale  was  affirmed,  and  the  opinion  of  the  supreme  court  expressing  its 
views  upon  the  subject  was  stated  as  follows:  "  The  language  of  the  deed  does 
not,  in  express  words,  create  the  power  to  sell  for  the  payment  of  the  debts,  but 
it  is  manifestly  implied  from  the  fact  that  the  debts  were  charged  upon  the 
land,  and  the  trustee  was  directed  to  pay  them  out  of  the  rents  and  profits. 
As  the  rents  and  profits  were  wholly  insufficient  for  that  purpose,  they  must 
be  looked  upon  only  as  one  means  of  payment,  and  not  as  the  only  means. 
The  property  itself  being  bound  for  the  debts,  an  implied  power  exists  in  the 
trustee  to  make  the  sale  for  that  purpose,  without  resorting  to  the  tedious 
and  expensive  process  of  a  suit  in  chancery." 

In  the  United  States,  the  rule  generally  prevailing  is,  that  the  mere  charge 
of  the  debts  of  a  testator  upon  his  lands  by  his  will  does  not  vest  his 
executors  with  an  implied  power  of  sale.  The  only  effect  of  this  charge  is  to 
designate  the  portion  of  his  property  out  of  which  his  debts  are  to  be  paid. 
The  remedy  of  his  creditors  remains,  however,  to  be  sought  in  the  courts 
having  jurisdiction  of  his  estate,  to  which  application  must  be  made  for  the 
orders  of  sale  requisite  to  carry  out  the  intentions  of  the  testator:  Hill  v. 
Den,  54  Cal.  21;  Will  of  Fox,  52  N.  Y.  530;  11  Am.  Rep.  751;  Dunne  v.  Keeley, 
2  Dev.  484;  Wells  v.  Child,  12  Allen,  333;  Harrk  v.  Douglas,  64  III.  466; 
Cornish  v.   Wilson,  6  Gill,  315;  Clarlc  v.  Riddle,  11  Serg.  &  R.  311. 

Though  the  instrument  creating  the  trust  does  not  authorize  the  sale  of 
the  trust  property,  courts  of  equity  may,  upon  proper  cause  shown,  and 
after  bringing  all  of  the  parties  in  interest  before  them,  decree  a  sale.  And  if 
the  trust  is  brought  before  the  court  by  a  bill  filed  for  its  execution,  it  is 
said  that  the  power  of  the  trustee  to  make  a  sale  is  thereby  suspended,  and 
that  he  cannot  thereafter  sell  without  the  sanction  of  the  court:  Perry  on 
Trusts,  sees.  764,  770,  citing  Bu^h  v.  Bush,  2  Duvall,  269;  Walker  v.  Small- 
wood,  Amb.  676;  Raymond  v.  Webb,  Lofft.  66;  Drayson  v.  Pocock,  4  Sim.  283; 
Culpepper  v.  Aston,  2  Ch.  Cas.  116;  Reesidev.  Peter,  35  Md.  222. 

Though  the  instrument  creating  the  trust  may  not  have  authorized  the 
trustee  to  sell  the  trust  property,  such  authorization  may  have  been  at- 
tempted by  the  legislature.  There  is  a  very  great  difference  between  the 
authority  of  the  legislature  over  the  estate  of  a  trustee  and  its  authority  over 
that  of  the  cestui  que  trust.  Tiie  title  of  the  former  is  not  a  beneficial  or  vested 
interest.  He  holds  it  merely  that  he  may  perform  duties  imposed  by  the 
trust,  and  he  can  therefore  be  divested  of  it  without  being  divested  of  any 
valuable  or  vested  right  of  property.  The  legislature  may  therefore  author- 
ize a  new  trustee  to  be  appointed,  and  to  be  invested  with  the  legal  title,  sub- 
ject to  the  trust  upon  which  it  was  held  by  the  original  trustee:  Williamson 
V.  Suydam,  6  Wall.  723;  Cochran  v.   Van  Surlay,  20  Wend.  365;  32  Am.  Dec. 


I 


Oct.  1889.]  Tyler  v.  Herring.  273 

670.  Cestuis  que  trust,  on  the  other  hand,  have  a  beneficial  interest  in  the 
Bubject-mater  of  the  trust,  which  is,  in  general,  no  more  subject  to  legislative 
control  than  if  the  legal  estate  were  added  to  their  equitable  title,  and  the 
two  estates  united  in  one  person.  If  the  ces(ui,<i  que  trust  are  minors,  or  per- 
Bona  otherwise  not  competent  to  act  for  themselves,  the  legislature  may,  even 
by  a  special  statute,  authorize  the  sale  of  the  trust  property,  and  the  appli- 
cation of  the  proceeds  to  their  use  and  benefit:  Clarke  v.  Van  Surlay,  15  Wend, 
436;  Legrjett  v.  Hunter,  19  N.  Y.  445;  Cochran  v.  Van  Surlay,  20  Wend.  365; 
32  Am.  Dec.  570;  Williamson  v.  Berry,  8  How.  495.  Ordinarily,  the  legis- 
lature has  no  power  to  authorize  one  person  to  act  for  anotlier  who  is  com- 
petent to  act  for  himself;  and  a  special  statute  is  void  if  it  undertakes  to 
authorize  a  sale  of  the  property  of  one  person  by  another,  wliere  no  necessity  is 
shown  for  such  sale,  and  its  object  is  merely  to  promote  the  supposed  interest 
of  tho  owners  of  the  property  by  changing  the  form  of  investment:  Shoember' 
ger  v.  School  Directors,  32  Pa,  St.  34;  Brevoort  v.  Grace,  53  N.  Y,  245;  Bren- 
ham  V.  Stoi-y,  39  Cal.  179.  It  has  been  determined,  in  at  least  one  state,  that  a 
Bpecial  statute  authorizing  a  trustee  to  sell  land  for  the  purpose  of  converting 
into  money  and  dividing  the  proceeds  among  the  cestuis  que  trust  is  valid: 
Kerr  v.  Kitchen,  17  Pa.  St.  433.  We  think  this  decision  to  be  unsound  in 
principle,  and  that  the  proper  rule  is,  that  the  legislature  has  no  power,  as 
against  the  wish  of  the  beneficiaries  of  a  trust,  to  authorize  the  trustee  to  sell 
the  subject-matter  of  the  trust,  where  such  sale  is  not  necessary  to  accom- 
plish the  purpose  of  the  trust:  Powers  v,  Bergen,  6  N.  Y.  358. 

A  power  of  sale  does  not  authorize  a  trustee  to  transfer  the  title  for  some 
other  purpose.  If  his  estate  is  in  severalty,  it  will  not  justify  him  in  ex- 
changing the  subject  of  the  trust  for  other  lands  or  property:  Ringgold  v. 
Ringgold,  1  Har,  &  G.  11;  18  Am.  Dec.  250;  Mausers.  Dix,  8  De  Gex,  M,  & 
G,  703;  Fluke  v.  Fluke,  16  N,  J.  Eq.  478;  and  though  he  is  a  tenant  in  com- 
mon, his  power  of  sale  does  not  empower  him  to  convert  his  estate  into  an 
estate  in  severalty  by  a  voluntary  partition:  Brassey  v.  Chalmers,  4  De  Gex, 
M,  &  G.  528;  16  Beav.  223;  Bradshaw  v.  Fane,  3  Drew,  536.  Even  if  he 
holds  property  which  the  instrument  creating  the  trust  directs  to  be  divided 
among  certain  beneficiaries,  the  trustee  is  without  power  to  make  the  divis- 
ion: Naglee'a  Estate,  52  Pa,  St.  154, 

Though  a  trustee  was  originally  invested  with  a  power  to  sell,  that  power 
may  have  terminated,  and  if  so,  a  sale  by  him  is  inoperative.  We  have 
already  stated  that  the  estate  of  a  trustee  is  to  be  measured  by  the  purposes 
and  necessities  of  his  trust.  "  The  doctrine  is  well  settled,  that  whatever 
the  language  by  which  a  trust  estate  is  vested  in  the  trustee,  its  nature  and 
duration  are  governed  by  the  requirements  of  the  trust.  If  it  requires  a  fee- 
simple  estate  in  the  trustee,  that  will  be  created,  though  the  language  be  not 
apt  for  that  purpose.  If  the  language  conveys  to  the  trustee  and  his  heirs 
forever,  while  the  trust  requires  a  more  limited  estate  either  in  quantity  or 
duration,  only  the  latter  will  vest ":  Young  v.  Bradley,  101  U.  S.  782.  It 
therefore  follows  that  if  the  purposes  of  a  trust  have  already  been  fully 
accomplished,  the  trustee  can  make  no  further  sales  or  conveyances,  because 
his  estate  is  terminated  and  he  has  nothing  to  sell  or  convey.  In  the  case 
last  cited,  land  had  been  devised  to  trustees  to  hold,  —  1.  For  the  benefit  of 
testator's  widow  during  her  life;  2.  To  divide  the  property  among  certain 
of  his  heirs,  specified  in  the  will;  3.  To  hold  the  shares  of  his  daughters 
as  a  protection  against  their  husbands,  and  for  the  children  of  these  daugh- 
ters, until  the  youngest  of  such  children  should  attain  the  age  of  twenty-one 
years.  After  the  testator's  widow,  and  all  other  persona  who  could  possibly 
Am.  Bt.  Kb,p,.  Vol,  XIX.— IS 


274  Tyler  v.  Herring.  [Miss. 

acquire  any  interest  under  this  will,  except  the  children  of  his  son,  had  died, 
the  trustee  made  a  conveyance  of  the  trust  property,  and  such  conveyance 
was  declared  void,  because  tiie  estate  of  the  trustee  had  terminated  before  the 
conveyance  was  made.  This  termination  resulted  from  the  fact  tliat  the 
trustee  no  longer  had  any  duties  to  perform.  He  could  not  hold  the  prop- 
erty for  the  widow,  for  she  was  dead,  nor  to  protect  it  against  the  daughters 
husbands,  nor  for  the  benefit  of  the  daughters'  children,  for  both  the  daugh- 
ters and  their  children  were  also  dead,  nor  for  the  purposes  of  partition,  for 
all  the  property  had  become  vested  in  the  children  of  the  testator's  son,  over 
whose  interest  the  will  gave  the  trustees  no  control. 

If  a  trust  has  been  created  merely  for  the  purpose  of  securing  the  pay- 
ment of  a  debt,  and  the  power  of  sale  is  to  be  exercised  in  default  of  such 
payment,  the  weight  of  authorfty  favors  the  rule  that  the  continued  existence 
of  the  debt  is  essential  to  the  continuation  of  the  power  of  sale,  and  that  a 
sale  is  void  if  made  after  the  debt  has  been  paid:  Penny  v.  Cook,  19  Iowa,  538; 
Mills  V.  Tray  lor,  30  Tex.  7;  Murdoch  v.  Johnson,  7  Cold.  605;  or  after  a 
tender  of  payment  has  been  made;  Welch  v.  Greenalage,  2  Heisk.  209; 
It  is  impossible  for  an  intending  purchaser  to  know  with  certainty  whether 
or  not  a  debt,  to  secure  the  payment  of  which  a  trust  deed  has  been 
given,  is  fully  paid.  The  application  of  this  rule  is  attended  with  occa- 
sional hardships,  but  it  is  difficult  to  deny  that  the  rule  itself  follows 
as  an  inevitable  result  of  the  other  rule,  that  when  the  purposes  of  a 
trust  have  been  fully  accomplished  the  estate  of  the  trustee  ceases.  The 
rule  is  also,  in  many  instances,  the  logical  and  necessary  result  of  an- 
other rule,  to  the  effect  that  a  power  to  sell  upon  default  in  the  payment 
of  a  debt  or  other  obligation  makes  such  default  a  condition  precedent 
to  the  existence  of  the  power,  and  that  the  power  can  never  precede  the 
existence  of  such  condition.  Nevertheless,  there  are  cases  maintaining  that 
a  purchaser  in  good  faith  cannot  be  deprived  of  his  purchase  by  showing  that 
an  accounting  between  the  trustee  and  the  debtor  would  result  in  the  estab- 
lishment of  the  fact  that  the  debt  had  been  fully  paid;  Thompson  v.  McKay, 
41  Cal.  221. 

The  extinction  of  a  debt  by  payment  differs  very  substantially  from  the 
loss,  through  the  operation  of  the  statute  of  limitations,  of  legal  remedies  to 
enforce  it.  In  the  former  case  the  debt  no  longer  remains,  while  in  the  lat- 
ter it  continues,  though  resort  to  the  courts  to  coerce  its  payment  may  be 
unavailing.  If,  however,  real  or  personal  property  has  been  conveyed  to 
a  trustee,  and  he  has  been  given  power  to  sell  it,  and  to  apply  ths  proceeds 
of  the  sale  to  the  payment  of  a  debt,  the  debt  is  not  obliterated,  nor  are  the 
trust  and  its  attendant  power  terminated  by  the  debt  becoming  barred  by 
lapse  of  the  time  within  which,  under  the  statute,  an  action  can  be  main- 
tained thereon.  The  trustee  may  therefore  proceed  to  sell,  and  no  court  will 
restrain  the  exercise  of  his  power  on  the  ground  that  the  debt  is  barred: 
Whitmore  v.  San  Francisco  S.  U.,  50  Cal.  145;  Grant  v.  Burr,  54  Cal.  298. 

Trust  deeds,  the  sole  purpose  of  which  is  to  secure  the  payment  of  a  debt 
due  either  to  the  trustee  or  to  some  other  person  designated  therein,  and 
■which,  therefore,  are  in  most  respects  substitutes  for  mortgages,  except  that 
they  are  more  harsh  and  summary  in  their  operation,  are  sometimes  viewed 
with  both  legislative  and  judicial  aversion.  In  a  few  of  the  states,  sales 
by  trustees  acting  under  powers  conferred  in  deeds  are  not  permitted, 
and  a  foreclosure  in  the  courts  is  necessary:  Ingle  v.  Culbertson,  43  Iowa, 
265;  Campbell  v.  Johnston,  4  Dana,  178;  Samuel  v.  Holliday,  1  Woolw.  400. 
But  in  the  absence  of  any  controlling  statute,  a  trust  deed  differs  from  a 


Oct.  1889.]  Tyler  v.  Herring.  275 

mortgage  in  three  essential  particulars:  1.  It  vests  the  legal  title  in  the  trus- 
tee, while  in  many  of  the  states  a  mortgage  is  a  mere  lien,  the  legal  title 
remaining  in  the  mortgagor:  Baiemanv.  Burr,  57  Cal.  481;  2.  After  a  sale 
under  and  pursuant  to  a  trust  deed,  the  purchaser  is  immediately  vested 
with  a  complete  title,  and  the  debtor  has  no  opportunity  to  redeem:  Gillespie 
V.  Smith,  2!)  111.  473;  81  Am.  Dec.  328;  and  3.  There  is  not  only  no  necessity 
for  a  foreclosure,  but  the  remedy  by  foreclosure  does  not  exist,  and  therefore 
cannot  be  resorted  to  by  the  creditor  or  trustee:  Koch  v.  Br/gijs,  14  Cal.  256; 
73  Am.  Dec.  651;  Chant  v.  Burr,  54  Cal.  298;  Bateman  v.  Burr,  57  Cal.  481. 

If  trustees  are  directed  to  sell  within  a  time  specified,  the  lapse  of  that 
time  without  their  making  any  sale,  wbere  the  necessity  for  the  sale  con- 
tinues, appears  not  to  terminate  their  power  of  sale.  The  designation  of  the 
time  will,  in  most  cases,  be  treated  as  directory  merely,  and  a  sale  after  the 
time  named  will  be  held  valid:  Smith  v.  Kinney,  33  Tex.  283;  Shatters  Ap- 
peal, 4  Pa.  St.  83;  Pearce  v.  Gardiner,  10  Hare,  287;  1  Week.  Rep.  98.  If, 
on  the  other  hand,  a  trustee  is  directed  to  sell  after  a  specified  time,  or  upon 
the  happening  of  a  designated  event,  the  power  to  sell  is  not  in  being  until 
the  arrival  of  such  time  or  the  happening  of  such  event,  and  a  sale  made  by 
its  authority  is  withfmt  support:  Booraem  v.  Wells,  19  N.  J.  Eq.  87;  Isham 
V.  Delaware  etc.  R.  R.  Co.,  11  N.  J.  Eq.  227.  So  a  power  to  sell  may  be  made 
contingent  on  other  facts  than  the  mere  lapse  of  time,  as  where  a  trustee  is 
authorized  to  sell  only  when  it  becomes  necessary  to  do  so  to  pay  certain 
debts  or  charges,  or  to  supply  certain  deficiencies,  should  such  exist.  The 
existence  of  the  debts  or  charges,  or  the  deficiency  to  be  supplied,  is  regarded 
as  a  condition  precedent  to  the  existence  of  the  power  of  sale:  Perry  on 
Trusts,  sec.  785. 

If  there  are  two  or  more  trustees,  all  must  concur  in  the  execution  of  the 
trust:  Sloov.  Lmv,  3  Blatchf.  459;  Lipse  v.  Spear,  4  Hughes,  535;  Naylorv. 
Goodall,  47  L.  J.  Ch.  53;  37  L.  T.  422;  26  Week.  Rep.  162.  If  one,  or  any  less 
number  than  all,  undertake  to  make  a  conveyance,  it  is  void,  and  does  not 
even  pass  the  legal  title:  Ridijeley  v.  Johnson,  11  Barb.  527;  Ham  v.  Ham, 
58  N.  H.  70;  Learned  v.  Welton,  40  Cal.  349;  Van  Rensselaer  v.  Akin,  22 
Wend.  54.);  Sinclair  v.  Jackson,  8  Cow.  553;  Wilhur  v.  Ahny,  12  How. 
180.  Contra,  Perry  on  Trusts,  sec.  334;  Boiir.sot  v.  Savage,  L.  R.  2  Eq.  134. 
The  fact  that  the  deed  creating  the  trust  names  two  or  more  persons  as 
trustees  does  not  necessarily  make  them  such.  Some  of  them  may  renounce 
or  disclaim  the  trust.  "The  person  or  persons  thus  renouncing  thereafter 
stand  in  the  same  relation  to  tlie  estate  as  though  they  had  never  been 
named  as  trustees,  while  those  accepting  are  entitled  to  the  estate  in  the 
same  manner  and  to  the  same  extent  as  though  they  only  had  been  named 
in  the  grant  or  devise":  Freeman  on  Cotenancy  and  Partition,  sec.  45; 
Ze>4ich's  Lessee  V.  Smith,  3  Binn.  69;  5  Am.  Dec.  352;  Niks  v.  Steven.%  4  Denio, 
402;  Scull  V.  Reeves,  3  N.  J.  Eq.  84;  29  Am.  Dec.  694;  Flanders  v.  Clark,  1 
Ves.  435;  Adams  v.  Taunton,  5  Madd.  435;  Worlhinytonv.  Eoans,  1  Sim.  & 
S.  165. 

Where  an  estate  is  granted  or  devised  to  two  or  more,  to  hold  in  trust, 
there  is  no  doubt  that,  at  the  common  law,  they  take  as  joint  tenants  with 
the  benefit  of  survivorship,  and  when  one  of  them  dies,  that  those  surviving 
take  the  whole  estate,  and  with  it  the  power  to  execute  the  trust:  Freeman 
on  Cotenancy,  sec.  44;  Osgood  v.  Franklin,  2  Johns.  Ch.  20;  7  Am.  Dec.  513; 
Peter  v.  Beverly,  10  Pet.  564;  Burr  v.  Sim,  1  Whart.  266;  29  Am.  Dec.  48; 
Jones  V.  Price,  11  Sim.  557;  10  L.  J.,  N.  S.,  Ch.  195;  5  Jur.  719. 

In  the  United  States,  various  statutes  have  been  enacted  with   the  design 


276  Tylkb  v.  Herring.  [Miss. 

either  of  destroying  estates  in  joint  tenancy,  or  of  limiting  them  to  grants 
or  devises  in  which  it  is  expressly  stated  that  the  grantees  or  devisees  shall 
hold  as  joint  tenants.  Some  of  these  statutes  except  from  their  operation 
the  estates  of  trustees.  Independently  of  any  express  exception,  it  has  been 
generally,  though  not  universally,  decided  that  they  did  not  apply  to  estates 
held  in  trust,  and  therefore  that  the  trustees  surviving  are  always  competent 
to  execute  the  trust:  Freeman  on  Cotenancy,  sec.  43;  Parsons  v.  Boyd,  20 
Ala.  118;  Gray  v.  Lynch,  8  Gill,  423;  Philadelphia  &  R.  R.  R.  Co.  v.  Lehigh 
a  &  N.  Co.,  36  Pa.  St.  204;  Shortz  v.  Unangst,  3  Watts  &  S.  45;  Steioart  v. 
Pettus,  10  Mo.  755.  Contra,  Boston  F.  Co.  v.  Coirdit,  19  N.  J.  Eq.  398;  San- 
ders^s  Heirs  v.  Morrison's  Executors,  7  Mon.  54;  18  Am.  Dec.  161.  Of  course, 
the  general  rule  that  those  who  accept  a  trust  or  that  the  survivors  of  sev- 
eral trustees  may  execute  it  as  all  those  originally  named  might  have  done, 
had  all  qualified  or  all  survived,  is  inapplicable  when  the  instrument  creating 
the  trust  shows  that  in  the  event  of  death,  resignation,  or  refusal  to  act, 
the  vacancy  thus  occasioned  must  be  filled  before  any  further  action  is  taken; 
but  it  has  been  decided  that  where  surviving  trustees  have  power  to  fill  a 
vacancy,  a  sale  made  by  them,  without  first  supplying  such  vacancy,  is  valid: 
Belmont  v.  O'Brien,  12  N.  Y.  394;  Colder  v.  Bressler,  105  111.  419. 

Ordinarily,  the  deatli  of  the  person  wlio  created  the  trust  cannot  fiffect  it  in 
any  way.  In  Virginia,  however,  where  the  object  of  a  trust  deed  is  merely 
to  secure  the  payment  of  a  debt  owing  from  the  grantor,  it  is  thought  im- 
proper for  the  trustee  to  proceed  to  sell  after  the  death  of  the  grantor,  unless 
pursuant  to  an  order  of  court:  Spencer  v.  Lee,  19  W.  Va.  179.  If  a  person 
is  styled  a  trustee,  and  authorized  to  sell,  but  is  not  vested  with  the  legal 
title,  his  power  is  not  coupled  with  an  interest,  and  does  not  survive  the 
death  of  the  person  for  whom  he  was  authorized  to  act:  Gartland  v.  Dunn, 
11  Ark.  720. 

Where  a  conveyance,  whether  in  contravention  of  the  trust  or  not,  is 
deemed  valid  as  a  transfer  of  the  legal  title,  a  trustee  may  doubtless  convey 
by  his  attorney  in  fact:  May  v.  Frazee,  4  Litt.  391;  14  Am.  Dec.  159;  Gil- 
lespie V.  Smith,  29  111.  473;  81  Am.  Dec.  328;  Connolly  v.  Belt,  5  Cranch  C.  C. 
405.  There  is  nothing  in  the  mere  execution  of  such  a  conveyance  which 
requires  the  exercise  of  any  personal  trust  or  special  judgment  or  discretion, 
and  we  see  no  reason  why  a  conveyance  may  not  be  executed  by  a  trustee, 
acting  by  his  duly  authorized  agent,  as  well  as  in  person,  provided  the  gran- 
tee has  at  the  time  an  absolute  right  to  the  conveyance,  which  the  trustee 
has  no  discretion  to  refuse:  Haivley  v.  James,  5  Paige,  489.  If  trustees  liave 
sold  property  pursuant  to  the  terms  of  a  trust,  and  have  received  the  pur- 
chase price,  they  have  no  further  right  or  discretion  in  the  matter,  but  are 
under  the  duty  of  executing  a  conveyance  sufficient  to  vest  the  title  iu  their 
vendee,  and  if  they  fail  to  do  so,  a  court  of  equity  may  compel  the  perform- 
ance of  their  duty  in  this  respect:  Saitnders  v.  Schmaekle,  49  Cal.  59. 

Whenever  a  power  is  given,  whether  over  real  or  personal  estate,  and 
whether  coupled  with  an  interest  or  not,  so  far  as  it  reposes  a  personal  trust 
or  confidence  in  the  donee  of  it  to  exercise  his  own  judgment  or  discretion, 
he  cannot  execute  it  by  another:  Note  to  May  v.  Frazee,  14  Am.  Dec.  170; 
Saunders  v.   Webber,  39  Cal.  287. 

A  trustee  authorized  to  sell  property  under  an  instrument  which  does  not 
contain  any  special  directions  as  to  the  mode  or  time  of  sale  must  exercise 
his  own  judgment  in  determining  the  time  and  mode  of  sale,  the  notice  to  be 
given,  the  manner  of  conducting  the  sale,  and  whether  the  amount  oflfered 
shall  be  accepted  or  not,  or  whether  or  not  the  sale  shall  be  continued  to 


Oct.  1889.]  Tyler  v.  Herring.  277 

some  other  time  or  place.  He  cannot,  with  respect  to  any  of  these  matters, 
delegate  the  exercise  of  his  judgment  or  discretion  to  another:  Oraliam  v. 
King,  50  Mo.  22;  Hoxoard  v.  Thornton,  50  Mo.  291;  St.  Louk  v.  Priest,  88 
Mo.  612.  While  he  may  employ  agents  to  a  limited  extent,  their  employ- 
ment should  only  be  in  the  carrying  out  of  what  he  has  already  determined 
upon.  The  judgment  or  discretion  used  must  be  his,  though  in  accomplish- 
ing what  his  judgment  has  previously  approved  he  may  call  others  to  hia 
aid. 

If  a  personal  trust  or  confidence  is  reposed  in  two  or  more  as  trustees, 
neither  can  delegate  his  part  or  share  of  it  to  the  other.  Therefore,  if  one 
trustee  executes  a  power  of  attorney,  purporting  to  authorize  his  co-trustee 
to  sell  lands  which  are  subjects  of  the  trust,  upon  such  terms  and  conditions 
as  he  should  deem  expedient,  and  the  trustee  so  authorized  makes  an  agree- 
ment to  sell,  signed  by  himself  as  trustee,  and  by  him  as  attorney  in  fact  of 
the  other  trustee,  such  agreement  is  not  a  due  execution  of  the  power  to  sell 
vested  in  the  trustees,  and  cannot  be  enforced:  Berger  v.  Duff,  4  Johns.  Ch. 
367;  Crewe  v,  Diclceit,  4  Ves.  97. 

The  mere  mechanical  duties  connected  with  making  a  sale,  such  as  posting 
the  notices,  receiving  the  hids,  and  acting  as  auctioneer,  may  be  performed  by 
agents  of  the  trustee:  Gillespie  v.  Smith,  29  111.  47.3;  81  Am.  Dec.  328;  Ken- 
nedy V.  Duu)),  58  Cal.  339;  Johns  v.  Sergeant,  45  Miss.  3.32;  and  his  agents 
may  make  contingent  sales,  subject  to  his  subsequent  ratification:  Haivley  v. 
James,  5  Paige,  487.  So  if  the  instrument  prescribing  the  duties  of  the 
trustees  contains  directions  concerning  any  act  or  acts  to  be  done  at  or 
before  the  sale,  which  are  so  specific  that  the  trustee  has  no  discretion  to 
exercise  with  reference  to  them,  but  must  simply  comply  with  such  direc- 
tions, he  may  have  them  complied  with  by  his  agent,  with  like  effect  as  if 
done  by  himself:  Singleton  v.  Scott,  II  Iowa,  589;  Pearson  v.  Jamison,  3  Mc- 
Lean, 197. 

There  are  authorities  which  support  the  conclusion  that  even  though  the 
acts  done  by  an  agent  are  such  as  the  trustee  had  no  right  to  delegate  the 
doing  of  to  another,  yet  that  the  trustee  may  subsequently  ratify  them  by 
executing  conveyances  or  otheivvise,  and  that  thereafter  uo  sufficient  cause 
of  complaint  against  the  sale  exists.  Thus  wliere  a  trustee  had  a  discretion 
to  exercise  in  the  selection  of  the  day  of  sale  and  the  paper  in  which  the 
notice  of  sale  should  be  published,  and  another  exercised  this  discretion  for 
him,  but  he  attended  and  conducted  the  sale,  it  was  decided  that  he  thereby 
"adopted  the  selection  made  and  time  fixed,  and  the  case  must  stand  as  if 
he  had  acted  from  the  beginning  by  himself,  instead  of  through  another  ": 
Singleton  v.  Scott,  11  Iowa,  589.  The  correctness  of  this  decision  is  question- 
able. The  better  view  is  one  that  requires  the  trustee  to  exercise  in  ad- 
vance this  discretion  or  judgment  in  the  performance  of  the  trust  confided  to 
him,  and  does  not  leave  him  at  liberty  to  delegate  the  exercise  of  such  judg- 
ment and  discretion  to  an  agent,  with  the  power  to  make  the  acts  of  the 
agent  valid  merely  by  executing  a  deed,  or  otherwise  manifesting  his  assent 
to  what  the  agent  has  previously  done.  Thus  it  has  been  held  that  where  a 
trustee  was  not  present  at  a  .sale,  he  could  not  know  whether  or  not  it  was 
fairly  or  fraudulently  made,  and  the  sale  in  his  absence  was  therefore  set 
aside:  Taylor  v.  JJojikim*,  40  111.  442.  In  several  other  cases  a  like  conclu- 
sion was  reached,  that  the  trustee  must  be  present  during  the  entire  sale: 
Fuller  V.  O'Neal,  69  Tex.  349;  5  Am.  St.  Rep.  5;»;  Sptirlock  v.  Sproule,  72 
Mo.  503.  In  declaring  invalid  a  sale  made  by  an  auctioneer,  when  the  trus- 
tee was  present  just  before  the  sale,  and  also  just  after  it  was  completed. 


278  Tyler  v.  Herring.  [Miss. 

but  was  on  the  opposite  side  of  the  street  when  it  was  actually  made,  the 
supreme  court  of  Missouri  said:  "The  counsel  for  the  plaintiff  contends, 
however,  that  such  absence  from  the  place  of  sale  as  that  testified  to  by  the 
trustee  will  not  avoid  the  sale;  that  he  was  pi'esent  at  its  conclusion  to  do 
all  that  he  could  have  done  had  he  been  present  at  the  actual  crying  of  the 
sale.  In  this,  we  think,  the  learned  counsel  for  the  plaintiff  is  in  error.  It 
was  the  duty  of  the  trustee  to  be  present  during  the  crying  of  the  sale,  to 
observe  the  progress  thereof,  protect  the  interests  of  the  parties  concerned, 
to  reject  fraudulent  bids  made  to  frustrate  the  sale,  and,  if  necessary,  to 
adjourn  the  sale:  Graham  v.  King,  60  Mo.  22;  Bales  v.  Perry,  51  Mo.  452; 
Vail  V.  Jacobs,  62  Mo.  130;  Perry  on  Trusts,  sees.  779,  780;  Gray  v.  Veira, 
33  Md.  18.  If,  however,  the  auctioneer  may  lawfully  make  a  sale  in  the 
absence  of  the  trustee,  and  should,  during  his  absence,  accept  a  bill,  declare 
the  person  making  the  same  to  be  the  purchaser,  and  by  a  proper  memoran- 
dum in  writing  complete  the  sale,  it  would  be  out  of  the  power  of  the  trustee 
to  set  such  sale  aside:  White  v.  Watlcins,  23  Mo.  427.  And  in  this  way  the 
trustee  might  substitute  the  auctioneer  for  himself  in  the  exercise  of  that 
very  discretion  which  the  law  declares  is  a  personal  trust  and  cannot  be 
delegated  by  him.  The  trustee  himself  should  be  present  to  sanction  the 
acceptance  of  the  bid  by  the  auctioneer  before  any  binding  memorandum  of 
the  sale  is  made  ":  Brichnkam'p  v.  Rees,  69  Mo.  426.  In  New  York,  under 
a  statute  which  provided  that  upon  default  in  the  payment  of  certain  loans 
the  title  to  property  should  vest  in  the  loan  commissioners,  who  should  ad- 
vertise and  sell,  it  was  decided  that  both  of  the  commissioners  must  be 
present,  and  that  a  sale  made  by  one  of  them,  in  the  absence  of  the  other, 
though  after  due  notice,  was  not  a  valid  execution  of  their  power  of  sale; 
that  one  of  the  commissioners  could  not  authorize  the  other  to  represent  or 
act  for  him;  and  that  the  fact  that  both  commissioners  united  in  a  convey- 
ance purporting  to  be  made  in  pursuance  of  the  sale  could  not  endow  it  with 
validity:  Pmvell  v.  Tuttle,  3  N.  Y.  396. 

Whoever  acquires  title  from  a  trustee  when  the  instrument  creating  the 
trust  shows  the  purpose  for  which  the  trustee  holds  the  title,  and  the  terms 
and  conditions  upon  which  he  is  authorized  to  sell  and  convey,  must  take  no- 
tice of  such  terms  and  conditions,  and  can  never  maintain  a  claim  of  title, 
the  maintenance  of  which  is  based  upon  his  ignorance  thereof.  In  other 
words,  he  is  not  an  innocent  purchaser,  and  his  title  must  fail  if  it  is  shown 
that  the  contingency  upon  which  the  trustee  was  entitled  to  sell  and  convey 
has  never  occurred:  Hill  v.  Den,  54  Cal.  21;  Huse  v.  Den,  85  Cal.  399. 

The  creator  of  a  trust,  the  trustee  of  which  is  to  have  a  power  of  sale,  may 
impose  any  restraint  upon  such  power  which  he  may  consider  proper,  and 
unless  it  is  in  coutravention  of  law,  its  observance  is  essentia]  to  the  valid 
execution  of  the  power.  The  restraint  may  be  in  regard  either  to  the  cause 
of  sale  or  the  proceedings  to  be  pursued  when  a  cause  of  sale  exists.  Tlie 
power  to  sell  may  be  in  abeyance  until  the  happening  of  some  contingency, 
upon  which,  and  not  before,  the  grantor  of  the  trust  has  declared  it  may  or 
shall  be  exercised.  In  the  absence  of  the  contingency,  there  is  no  existing 
power  of  sale.  Thus  a  trustee  may  be  given  power  to  sell,  subject  to  the 
approval  of  the  person  who  created  the  trust,  or  with  the  assent  of  the  bene- 
ficiary, or  of  the  tenant  for  life,  or  of  some  other  person.  If  so,  the  power  is 
not  in  being  in  the  absence  of  such  approval  or  assent,  and  any  conveyance 
which  the  trustee  may  make  is  unwarranted:  Sjrrague  v.  Edwards,  48  Cal. 
239;  MortlockY.  Bidler,  10  Ves.  308;  Bateman  v.  Davis,  3  Madd.  98;  Wright 
y.   Wakeford,  17  Ves.  454;  Rickett's  Trust,  1  Johns.  &  H.  70. 


Oct.  1889.]  Tyler  v.  Herring.  279 

If  the  written  consent  of  the  beneficiary  is  required  by  the  deed  of  trust, 
it  must  be  obtained  before  making  a  sale:  Berrien  v.  Thomas,  65  Ga.  61.  But 
the  fact  that  the  cestui  que  trust  joins  in  a  convej'ance  of  trust  property  will 
not  validate  a  sale  made  by  a  trustee  before  the  arrival  of  the  time  or  the 
happening  of  the  contingency  on  which  he  was  authorized  to  sell:  Isham  v. 
Delaware  R.  R.  Co.,  11  N.  J.  Eq.  227.  Where  the  assent  of  the  cestui  que 
ti-ust  is  necessary,  it  may  be  manifested  by  his  joining  in  the  deed  made  by 
the  trustee:  Weltonv.  Palmer,  39  Cal.  456;  Qindrat  v.  Montgomery  Gas  Light 
Co.,  82  Ala.  596. 

If  the  person  whose  assent  to  a  trustee's  sale  is  required  dies  without  giv- 
ing such  assent,  the  power  of  sale  never  can  become  operative,  because  the 
assent  cannot  be  dispensed  with:  Kissam  v.  Dierhes,  49  N.  Y.  602;  Alley  v. 
Lawrence,  12  Gray,  373.  If,  however,  it  is  clear  that  a  sale  at  some  time  is 
necessary  to  accomplish  the  purposes  of  the  trust,  as  where  the  trustee  is  di- 
rected to  sell  the  trust  property  and  to  distribute  the  proceeds  among  the 
testator's  children,  and  the  children  of  his  deceased  children,  and  all  the  per- 
sons have  died  whose  assent  to  the  sale  was  required,  a  sale  by  the  trustee 
without  such  assent  is  within  his  power,  because  the  purposes  of  the  creator 
of  the  trust  will  not  be  permitted  to  be  thwarted  and  the  trust  to  become  un- 
availing by  the  accident  of  the  failure  of  the  persons  named  by  him,  in  their 
lifetime,  to  give  their  assent  to  the  sale  of  the  property:  Leeds  v.  Wakefield, 
10  Gray,  514;  SoMer  v.   Williams,  1  Curt.  479. 

If  a  time  is  designated,  on  the  arrival  of  which  the  trustees  are  directed  to 
sell,  as  where  a  sale  is  to  be  made  when  a  certain  beneficiary  reaches  the  age 
of  majority,  or  on  the  happening  of  some  other  event  in  his  life,  a  sale  in 
advance  of  that  time  is  unauthorized:  Styer  v.  Freas,  15  Pa.  St.  339;  Davis  v. 
Howcote,  1  Dev.  &  B.  460;  Jackson  v.  Lignan,  3  Leigh,  161;  Loomisv.  Mc- 
CUAtock,  10  Watts,  274. 

If  trustees  are  directed  to  sell  an  estate  situate  a  A,  and  if  its  proceeds 
prove  insufficient  to  pay  the  testator's  debts,  then  to  sell  his  estate  at  B,  it 
is  impossible  for  them  to  give  good  title  to  the  estate  at  B  until  the  estate  at 
A  has  been  sold,  and  the  fact  established  beyond  doubt  that  its  proceeds  are 
insufficient  to  pay  the  testator's  debts:  Pierce  v.  Scott,  1  Younge  &  C.  257;  4 
L.  J.,  N.  S. ,  Ex.  Eq.  36.  A  power  to  sell  after  redemption  from  certain  taxes 
has  been  made  cannot  exist  before  such  redemption:  Deiinney  v.  Reynolds,  1 
Watts  &  S.  332.  If  trustees  authorized  to  sell  to  raise  moneys  to  discharge 
obligations  of  a  testator  are  required,  before  selling,  to  make  oath  of  the 
amount  due,  this  requisition  creates  a  condition  precedent,  and  the  power  of 
sale  cannot  be  exercised  in  its  absence:  Mason  v.  Martin,  4  Md.  125.  It  has 
been  held,  in  Pennsylvania,  that  notwithstanding  directions  given  to  trus- 
tees to  sell  at  a  particular  time,  as  at  the  death  of  a  testator's  widow,  a  sale 
made  before  that  time  may  be  sustained,  where  it  is  evident  that  the  object  of 
postponing  the  time  of  sale  to  the  period  designated  was  to  benefit  a  partic- 
ular person,  and  that  person  has  assented  to  the  sale:  Ocust  v.  Porter,  13 
Pa.  St.  535;  Styer  v.  Freas,  15  Pa.  St.  339. 

With  respect  to  conditions  precedent  imposed  by  the  creator  of  a  trust,  and 
the  happening  of  which  gives  rise  to  a  cause  of  sale,  the  rule  of  caveat  emptor 
applies,  and  the  purchaser  must  therefore  ascertain  at  his  peril  whether  a 
cause  of  sale  exists  or  not:  Ounnellv.  Cockerill,  79  111.  79;  Gritwold  v.  Perry,  7 
Lans.  98;   Huntt  v.  Townsend,  31  Md.  33G;  100  Am.  Dec.  63. 

It  may  be  that  trustees  are  vested  by  the  terms  in  which  the  power  of  sale 
is  expressed  with  authority  to  determine  whether  or  not  a  condition  pre- 
cedent has  arisen.      If  so,  their  determination  is  conclusive,  unless  it  can  be 


280  Tyler  v.  Herring.  [Miss. 

shown  to  hare  been  made  in  bad  faith.  Thus  if  they  are  to  sell  when,  in 
their  opinion,  it  becomes  necessary  to  raise  funds  for  a  specified  purpose,  or 
when  they  deem  it  advisable,  and  in  all  other  cases  where  it  is  manifest  that 
they  have  been  given  discretion  and  judgment  to  be  exercised,  the  purchaser 
need  not  stop  to  inquire  whether  or  not  they  may  have  erred  in  the  conclusion 
which  they  have  reached  in  exercising  it;  for  the  creator  of  the  trust  has  not 
made  its  exercise  subject  to  review:  Barksdale  v.  Finney,  14  Gratt.  338; 
Rendleshan  v.  Meiix,  14  Sim.  249;  Bunner  v.  Storm,  1  Sand.  Ch.  357;  Champlin 
V.  Champlin,  3  Edw.  Ch.  571;  Greer  v.  McBeth,  12  Rich.  Eq.  254. 

A  devise  to  trustees  with  full  power  and  authority  at  any  and  all  times  to 
sell  and  dispose  of  the  testator's  estate  or  any  part  thereof,  as  they  shall 
deem  most  expedient  and  for  the  best  interests  of  all  the  legatees  men- 
tioned in  the  testator's  last  will  and  testament,  does  not  authorize  a  con- 
veyance to  be  made  to  one  of  the  legatees  of  a  portion  of  the  real  estate  of  the 
testator  in  payment  of  a  debt  due  to  him  from  such  legatee,  there  being  at 
the  time  sufficient  personal  property  for  the  payment  of  the  testator's  debts, 
without  calling  upon  his  real  estate  for  that  purpose:  Russell  v.  Rtissell,  36 
N.  Y.  5S1. 

Unless  it  is  clear  that  the  trustees  have  been  given  power  to  determine  the 
necessity  of  a  sale,  then  a  sale  not  needed  to  accomplish  the  purposes  of  a 
trust,  or  for  a  purpose  for  the  accomplishment  of  which  the  trustees  have 
not  been  given  power  to  sell,  is  invalid.  Thus  where  an  estate  was  devised 
to  the  testator's  wife  for  life,  and  if  not  sufficient  to  support  her  comfort- 
ably, then  with  power  to  sell  any  of  his  estate  for  that  purpose,  and  she 
afterwards  granted  certain  premises  in  fee,  it  was  held  that  evidence  was 
admissible  for  the  purpose  of  avoiding  this  deed;  that  there  was  a  sufficiency 
of  personal  estate  for  the  support  of  the  wido'.v  at  the  time  the  deed  was 
executed:  Minot  v.  Prescott,  14  Mass.  49.5. 

Though  a  cause  of  sale  exists,  it  may  happen  that  the  trustee,  in  pro- 
ceedings looking  to  the  making  of  the  sale,  fails  to  conform  to  the  directions 
contained  in  the  instrument  creating  the  trust.  Generally,  these  directions 
are  also  treated  as  conditions  precedent  to  the  proper  and  valid  execution  of 
the  power  of  sale.  "  Public  policy,  as  well  as  the  stability  of  rules  of  prop- 
erty, demands  that  sales  and  titles  founded  thereon  should  not  be  avoided 
for  slight  and  trivial  reasons;  but  where  a  power  has  not  been  executed  in 
accordance  with  essential  conditions,  the  sale  and  deed  will  be  held  to  be 
utterly  void,  both  at  law  and  in  equity  ":  Powers  v.  Kveckhoff,  41  Mo.  4'^5; 
97  Am.  Dec.  281;  Eiielgeorgev.  Mutual  B.  Ass'n,  69  Mo.  55.  "The  authority 
to  sell  being  derived  from  a  power,  it  follows  that  a  purchaser  is  bound  to 
look  for  and  to  understand  the  extent  of  such  power;  or,  as  elsewhere  ex- 
pressed, '  taking  under  the  power,  he  is  bound  to  see  that  these  terms  are 
complied  with.'  And  of  course  in  this,  as  in  all  other  contracts,  the  object 
and  design  of  the  parties  should  be  kept  strictly  in  view  in  ascertaining 
the  nature  and  extent  of  the  power.  The  authority  and  its  exercise  are 
matters  of  contract.  In  ascertaining  whether  the  authority  has  been  prop- 
erly exercised  or  followed,  it  is  not  a  question  of  jurisdiction,  as  in  judicial 
sales,  for  it  is  not  from  the  court  s,  but  from  the  contract  or  agreement  of  the 
parties,  that  the  power  is  derived":  Sears  v.  Livermore,  17  Iowa,  297;  85  Am. 
Dec.  564.  Hence,  in  the  case  last  cited,  it  was  held  that  under  a  trust  deed 
requiring  the  notice  of  sale  to  be  posted  on  the  front  door  of  a  certain  hotel, 
a  sale  made  under  a  notice  posted  not  on,  but  near  such  door  should  be  set 
aside,  though  it  appeared  that  the  proprietor  of  the  hotel  would  not  permit 
the  notice  to  be  posted  on  the  door.     If  the  trustor  directed  the  property  to 


Oct.  1889,]  Tyler  v.  Herring.  281 

be  sold  at  public  auction,  it  is  not  competent  for  the  trustee  to  establish  any 
other  mode,  though  by  so  doing  lie  may  promote  the  interests  of  those  for 
whom  he  acts:  Greenieafv.  Qwen,  1  Pet.  138.  If  a  trust  deed  gives  direc- 
tions concerning  the  notice  of  sale,  of  the  mode,  place,  or  length  of  time  of 
its  publication,  these  directions  must  be  substantially  complied  with,  or  the 
sale  will  be  unauthorized:  Thornhtirg  v.  Jones,  36  Mo.  514;  Reeside  v.  Peter^ 
33  Md;  129;  Young  v.  Van  Bcnthmjxen,  30  Tex;  762.  If  the  deed  authorizes 
a  sale  for  cash,  the  trustee  cannot  sell  upon  credit;  and  if  he  docs  so,  the 
sale  may  be  set  aside  as  void:  Cassell  v.  Ross,  S3  111.  244;  85  Am.  Dec.  270. 
But  a  prohibition  against  sales  on  credit  is  not  violated  by  a  sale  at  which 
the  vemlee  pays  partly  in  cash  and  partly  in  notes  given  to  the  holders  of 
liens,  who  accept  such  notes  as  cash:  Mead  v.  McLaugldin,  42  Mo.  198. 

The  general  statement,  which  we  have  frequently  made  herein,  that  a  sale 
for  a  purpose  not  authorized  by  the  instrument  creating  the  trust  is  not 
within  the  power  of  sale  vested  in  the  trustee,  and  can  therefore  derive  no 
support  from  such  power,  must  not  be  understood  as  referring  to  a  secret  pur- 
pose of  the  trustee,  existing  either  at  the  time  of  the  sale  or  subsequently, 
to  betray  his  trust,  and  to  misapply  or  convert  moneys  in  his  hands,  as  the 
result  of  sales  made  pursuant  to  the  trust.  If  the  purchaser  has  notice  of  or 
participates  in  any  misapplication  of  the  proceeds  of  the  sale,  this  fact  cer- 
tainly furnishes  suflScient  grounds  for  holding  the  purchaser  personally  liable 
to  the  beneficiaries  or  for  the  vacation  of  the  sale,  and  perhaps  for  declaring 
it  void:  Potter  v.  Oardner,  12  Wheat.  498;  Grinislei/  v.  Grimsley,  79  (^a.  397; 
Clyde  v.  Simpson,  4  Ohio  St.  445;  and  such  iiotice  may  be  inferred  if  the  pur- 
chaser contracts  to  pay  the  purchase  price  in  such  mode  that  it  may  not  be 
applied  to  the  purposes  of  the  trust:  Cardwell  v.  Cheatham,  2  Head,  14;  Rabb 
V.  Flenniken,  29  S.  C.  278. 

Indeed,  the  English,  and  perhaps  the  American,  decisions  make  it  incumbent 
upon  purchasers  from  trustees  to  see  to  the  application  of  the  purchase-money, 
if  the  instrument  creating  the  trust  shows  that  the  money  is  to  be  paid  im- 
mediately over  to  a  certain  person  or  persons,  and  no  investigation  or  discre- 
tion is  required  xipon  the  part  either  of  the  purchaser  or  of  the  trustee  to 
ascertain  who  such  person  or  persons  are,  or  the  amount  which  ought  to  be 
paid  to  each.  In  such  a  case,  the  persons  so  ascertainable  and  entitled  to 
immediate  payment  are  regarded  as  having  an  equitable  title  which  cannot 
be  divested  by  the  trustee  only,  ami  it  is  the  duty  of  the  purchaser  to  call 
for  their  receipts,  and  failing  to  do  so,  their  equitable  title  remains  unim- 
paired until  the  actual  payment  to  them  of  their  share  of  the  purchase-money, 
nnlesa  the  settlor  of  the  trust  has  in  express  terms  declared  that  the  receipts 
of  the  trustee  shall  be  a  sufficient  discharge  of  the  purchase-money,  or  used 
other  words  from  which  the  power  of  the  trustees  to  give  receipts  nnist  be 
implied:  Forbes  v.  Peacock,  12  Sim.  5^1;  Perry  on  Trusts,  sec.  790-793. 

Where,  on  the  other  hand,  a  purchaser  has  no  guilty  knowledge,  no  notice 
of  any  intended  wrong-doing  on  the  part  of  the  trustee,  and  the  trustee  is 
not  under  a  duty  to  make  immediate  payment  of  the  purchase-money  to  per- 
sona designated  in  the  instrument  creating  the  trust,  or  though,  where  under 
such  duty,  it  is  necessary  for  the  trustee  to  make  investigations,  perhaps  to 
take  accounts,  before  he  can  determine  to  whom  the  money  should  be  paid, 
then  the  purchaser  is  not  affected  by  any  misconduct  of  the  trustee  after  re- 
ceiving the  purchase-money.  This  rule  is  equally  applicable  whether  the 
duty  of  the  trustee  is  to  retain  the  proceeds  of  the  sale  for  the  use  of  the 
beneficiaries,  or  to  reinvest  them  in  other  property,  or  to  pay  debts  or  other 
obligations  not  specifically  enumerated  or  disclosed  in  the  instrument  creat- 


282  Tyler  v.  Herring.  [Miss. 

ing  the  trust,  or  to  improve  other  trust  property:  Keister  v.  Scott,  61  Md. 
570;  Paulding  v.  Marvin,  3  Redf.  365;  Hvglies  v,  Ta7)b,  78  Va.  313;  John  v. 
Barnes,  21  W.  Va.  498;  Webb  v.  Chisobn,  24  S.  C.  487;  Conovor  v.  Stothoff,  38 
N.  J.  Eq.  55;  Guillv.  Noi-thern,  68  Ga.  345;  Steele  v.  Livesay,  11  Gratt.  454; 
Carringion  v.  Gaden,  13  Gratt.  587;  Roper  v.  Hallifax,  8  Taunt.  845;  Frank- 
lin Sav.  Bank  v.  Taylor,  131  111.  376;  Pennsylvania  etc.  Ins.  Co.  v.  Austin,  42 
Pa.  St.  257;  Hunt  v.  State  Bank,  2  Dev.  60;  Redheimerv.  Pyron,  1  Speers  Eq. 
134;  Hauser  v.  Shore,  5  Ired.  Eq.  357;  Nicholls  v.  Peak,  12  N.  J.  Eq.  69; 
Gardner  V.  Armstrong,  31  Mo.  535;  Wormley  v.  Wormley,  8  Wheat.  421.  The 
application  of  the  purchase-money  in  these  cases  necessarily  cannot  be  con- 
temporaneous with  the  consummation  of  the  sale,  and  therefore  it  is  impossible 
for  the  purchaser  to  exercise  any  control  over  it.  It  becomes,  therefore,  a 
condition  subsequent  to  the  sale,  and  trustee's  sales  are  not,  as  a  general 
rule,  avoidable  for  breaches  of  conditions  subsequent  on  the  part  of  the 
trustees  of  which  the  purchasers  were  innocent.  "  When  the  trust  is  de- 
fined in  its  object,  and  the  purchase-money  is  to  be  reinvested  upon  trusts 
that  require  time  and  discretion,  or  the  acts  of  sale  and  reinvestment  are 
contemplated  to  be  at  a  distance  from  each  other,  the  purchaser  is  not  bound 
to  look  to  the  application  of  the  purchase- niouey;  for,  as  it  is  said,  'the  trus- 
tee is  clothed  with  discretion  in  the  management  of  the  trust  fund,  and  if 
any  persons  are  to  suffer  by  his  misconduct,  it  should  be  rather  those  who 
have  reposed  confidence  than  those  who  have  bought  under  an  apparently 
authorized  act'":  Norman  v.  Towne,  130  Mass.  52. 

As  already  suggested,  if  the  trust,  as  expressed  in  the  instrument  creating 
it,  shows  that  funds,  when  realized  froni  sales,  may  or  shall  remain  in  the 
hands  of  the  trustee,  to  be  by  him  used  or  paid  for  purposes  disclosed  by  the 
trust,  the  settler  must  be  regarded  as  having  confided  to  the  trustee  the  duty 
of  seeing  to  the  proper  application  of  such  funds,  and  therefore  to  h^ve  ex- 
onerated the  purchaser  from  exacting  receipts  from  the  beneficiaries,  or 
from  otherwise  protecting  their  interests.  If  lands  are  devised  to  a  trustee 
charged  with  the  payment  of  an  annuity,  first  to  testator's  son  for  life,  and 
at  his  death  then  to  and  among  his  child  or  children  during  the  life  or  lives 
of  the  survivor  of  them,  and  the  trustee  is  also  authorized  to  convey  any 
part  of  the  estate  devised,  the  purchaser  cannot  be  expected  to  see  that 
such  annuity  shall  be  paid  to  the  party  or  parties  from  time  to  time  enti- 
tled thereto;  and  therefore  his  title  cannot  be  impaired  by  the  fact  that, 
through  subsequent  investments  by  the  trustee,  or  from  unexpected  de- 
preciation in  values,  nothing  remains  in  the  hands  of  the  trustee  out  of 
which  to  pay  the  annuity.  In  determining  this  question  in  Hughes  v.  Tabb, 
78  Va.  313,  the  court  made  the  following  general  summary  of  the  law  re- 
garding the  duty  of  purchasers  in  connection  with  the  application  of  the 
proceeds  of  sales  of  trust  property:  "I'he  rule  is,  that  wherever  the  trust  is 
of  a  defined  or  limited  nature,  the  purchaser  nmst  himself  see  that  the  pur- 
chase-money is  applied  to  the  proper  discharge  of  the  trust;  but  wherever 
the  trust  is  general,  and  of  an  unlimited  nature,  he  need  not  see  to  it: 
2  Story's  Eq.  Jur.,  sec.  1131;  1  Lomax's  Digest,  302-304;  Potter  v.  Gardner, 
12  Wheat.  498.  There  is  much  reason  in  the  doctrine  that  where  the  trust  is 
defined  in  its  object,  and  the  purchase-money  is  to  be  reinvested  upon  trusts 
which  require  time  and  discretion,  or  the  acts  of  sale  and  reinvestment  are 
manifestly  contemplated  to  be  at  a  distance  from  each  other,  the  purchaser 
shall  not  be  bound  to  look  to  the  application  of  the  purchase-money;  for 
the  trustee  is  clothed  with  a  discretion  in  the  management  of  the  trust  fund, 
and  if  any  persons  are  to  suffer  by  his  misconduct,  it  should  rather  be  those 


Oct.  1889.]  Tyler  v.  Herring.  283 

who  reposed  confidence  than  those  who  have  hought  under  an  apparently  au- 
thorized act:  Opinion  of  Justice  Story  in  Wormley  v.  Wormlcy,  8  Wheat.  442; 
Sugden  on  Vendors,  c.  11,  sec.  1.  So  when  a  sale  is  made  hy  trustees  under 
a  power  to  sell  and  reinvest  upon  the  same  trusts,  it  has  been  held  in  Amer- 
ica that  the  purchaser  is  not  bound  to  see  to  the  application  of  the  pur- 
chase-money: 2  Story's  Eq.  Jur.,  sec.  1134,  and  authorities  there  cited.  If 
the  form  of  the  bequest  implies  a  confidence  reposed  in  the  trustee  in  regard 
to  the  application  of  the  purchase-money,  in  all  such  cases  it  is  unreasonable 
to  require  the  purchaser  to  look  to  the  application  of  the  purchase-money; 
and  this  is  a  principle  which  will  ultimately  mark  an  intelligible  distinc- 
tion among  the  cases  in  regard  to  the  question:  2  Story's  Eq.  Jur.,  sec. 
1134.  When  the  time  has  arrived  for  the  sale  of  the  real  estate,  and  the 
persons  entitled  to  the  money  are  infants  or  unicorn,  then  the  purchaser  is 
not  bound  to  see  to  the  application  of  the  purchase-money,  because  he  might 
thus  be  implicated  by  a  trust  of  long  duration;  13  Pick.  392;  5  Irod.  Eq. 
357;  10  Pa.  St.  2G7.  But  if  an  estate  is  charged  with  a  sum  of  money,  pay- 
able to  an  infant  at  his  majority,  then  the  purchaser  is  bound  to  see  the 
money  duly  paid;  there  the  person  is  named,  is  in  esse,  and  the  day  is  fixed 
and  designated,  the  trust  is  defined  and  limited;  while  if  a  sum  of  money  is 
to  be  paid  to  persons  yet  unborn,  and  from  year  to  year,  to  require  the 
purchaser  to  see  to  it,  at  his  personal  peril,  that  the  said  sum  of  money  is  paid 
to  the  proper  person  or  persons  in  esse,  and  that  may  be  hereafter  born,  and 
be  entitled  during  the  lifetime  of  each  and  all  until  all  are  dead,  would  be  to 
defeat  the  sale  in  such  a  case  altogether,  and  defeat  the  purposes  of  the  will. 
What  purcliaser  would  buy  land  if  he  had  to  guard  the  safety  of  the  invest- 
ment of  the  proceeds  for,  it  might  be,  a  hundred  years,  when  he,  and  possibly 
his  children,  should  be  dead?  And  if  he  did  so  buy,  and  such  were  his  duties, 
it  would  be  practically  to  substitute  him  to  the  duties,  cares,  and  responsi- 
bilties  of  the  trustee,  and  that  without  compensation.  These  are  some  of 
the  most  important  and  nice  distinctions  which  have  been  adopted  by  courts 
of  equity  upon  this  interesting  topic;  and  as  a  distinguisliod  author  has 
observed,  they  lead  strongly  to  the  conclusion  to  which  eminent  jurists  and 
also  eminent  judges  have  arrived,  that  it  would  have  been  far  better  to 
have  held  in  all  cases  that  the  party  having  the  right  to  sell  had  also  the 
right  to  receive  the  purchase- money,  without  any  further  responsibility  on 
the  part  of  the  purchaser  as  to  its  application:  2  Story's  Eq.  Jur.,  sec.  1135." 

"If  the  trust  is  to  pay  debts  generally,  the  purchaser  cannot  be  subject  to 
the  rule  that  he  shall  see  to  the  application  of  the  purchase-money;  or  if  the 
trust  is  to  pay  debts  and  legacies,  or  to  pay  a  particular  debt  and  all  other 
debts,  or  to  pay  legacies,  or  to  pay  debts,  and  to  apply  the  balance  to  the 
supp  Tt  of  some  one,  there  can  be  no  obligation  to  see  to  the  payment  of 
debts  and  legacies.  Such  a  trust  must  necessarily  require  time,  and  the 
investigation  of  long  accounts  and  vouchers;  the  purchaser  could  know 
neither  the  creditors  nor  the  amounts.  Where  debts  and  legacies  are  to  be 
paid,  the  debts  must  first  be  paid;  and  as  the  purchaser  can  be  under  no  ob- 
ligation to  examine  into  the  debts,  so  he  cannot  be  required  to  take  any  action 
in  regard  to  tlie  legacies;  and  if  one  debt  is  named,  but  is  cou[)led  with  otheia 
not  named,  the  same  considerations  apply.  In  such  trusts,  the  testator  must 
be  presumed  to  have  intended  that  his  trustee  should  have  the  full  power  to 
give  receipts  for  the  purchase-money,  in  order  to  apply  it  to  the  purposes 
pointed  out";  Perry  on  Trusts,  sec.  795. 

From  the  authorities  already  considered,  it  follows  that  the  duty  of  the 
purchaser  of  property  sold  by  virtue  of  a  power  of  sale  invested  in  a  trustee 


284  Tyler  v.  Herring.  [Miss, 

to  see  to  the  proper  application  of  the  purchase-money  ia  limited  to  those 
cases  in  which  it  is  the  duty  of  the  trustee  to  at  once  pay  a  specified  debt  or 
debts,  legacy  or  legacies,  or  to  distribute  such  proceeds  among  specified  bene- 
ficiaries, who  are  ascertainable  from  an  inspection  of  the  instrument  creating 
the  trust,  and  who  are  themselves  competent  to  receive  and  receipt  for  the 
sums  to  which  they  are  re?ipectively  entitled:  Andrews  v.  Sparhaivk,  13  Pick. 
393;  Elliott  v.  M"rnjman,\  Lead.  Cas.  Eq.,  4th  Am.  ed.,  74.  While  there  are 
cases  assuming  that  the  English  rule  upon  this  subject  prevails  in  the  United 
States:  Hmjhes  v.  Tahb,  78  Va.  313;  St.  Marys  Church  v.  Stockton,  8  N.  J.  Eq. 
520;  Wagner  v.  Blanchet.  27  N.  J.  Eq.  356;  Clyde  v.  Simpson,  4  Ohio  St.  445; 
yet  there  are  grave  doubts  of  its  applicability,  under  our  laws  regulating  the 
settlement  of  the  estates  of  decedents,  to  executors  to  whom  lands  have  been 
devised  in  trust,  with  power  to  sell:  Perry  on  Trusts,  sec.  798;  and  we  have 
been  unable  to  discover  any  American  case  in  which  a  purchaser  from  a 
trustee,  whether  an  executor  or  not,  having  power  to  sell,  has  either  lost  the 
benefit  of  his  purchase,  or  been  held  liable  to  any  beneficiary  under  the  trust, 
where  the  purchaser  has  been  himself  free  from  all  notice  of  and  all  compli- 
city in  the  trustee's  misapijlication  of  the  proceeds  of  the  sale;  and  we  feel 
that  when  a  case  shall  arise  in  which  the  question  is  necessarily  involved, 
and  the  purchaser  has  acted  in  entire  good  faith,  that  the  courts  will  hesitate 
to  apply  the  English  rule.  The  vice  of  that  rule  is,  that  it  makes  the  pur- 
chaser either  exercise  the  functions  of  the  trustee  or  become  answerable  for 
the  manner  in  which  the  latter  exercises  them.  In  many  instances,  trust 
deeds  are  made  to  perform  the  functions  of  mortgages.  Persons,  both  natural 
and  artificial,  having  moneys  to  loan,  select  other  persons  to  act  as  trustees, 
cause  the  legal  title  to  be  conveyed  to  them,  by  conveyances  in  which  they  are 
given  power  to  sell,  whenever  default  shall  be  made  in  payment  of  the  debt. 
These  trustees  have,  through  these  powers  of  sale,  means  to  coerce  the  debtor 
into  the  payment  to  them  of  the  debt  mentioned  in  the  trust  deed,  and  in  the 
absence  of  such  payment,  to  cause  a  sacrifice  of  the  property,  if  intending  pur- 
chasers are  not  encouraged  to  rely  upon  the  authority  of  the  trustees  without 
investigating  the  relations  between  the  creditors  and  their  trustees.  The 
trustees  are  selected  by  the  creditors,  and  ought  to  be  treated  as  their  agents, 
and  payments  made  to  them  either  by  the  purchaser  after  or  by  the  debtor 
before  a  sale  ought  to  be  treated  as  exonerating  the  purchaser  or  debtor 
from  all  further  liability  to  the  creditor. 

If  the  instrument  creating  a  trust  has  not  given  special  directions  as  to  the 
manner  in  which  the  trustee  is  to  act,  or  the  mode  or  means  by  which  or  the 
time  when  he  is  to  bring  about  a  sale,  he  must  exercise  his  best  judgment  for 
the  promotion  of  the  interests  of  the  beneficiaries  under  the  trust.  Anything 
which  tends  to  sacrifice  their  interests  is  manifestly  in  derogation  of  the  trust, 
and  a  sale  resulting  from  it  will  undoubtedly  be  set  aside  on  an  appropriate 
comjjlaint  preferred  by  the  parties  prejudiced  thereby.  The  trustee  must 
obtain  the  best  price  he  can,  and  any  contract  by  which  he  seeks  to  dispose 
of  the  trust  property,  or  any  part  thereof,  for  less  than  he  has  been  offered 
by  other  parties,  will  l)e  set  aside:  Hai-per  v.  Hayes,  2  Giff.  210;  6  Jur.,  N.  S., 
645;  8  Week.  Rep.  600. 

In  order  to  secure  the  best  price  obtainable,  the  trustee  may  defer  the  time 
of  sale,  and  he  is  not  bound  to  proceed  at  once  when  to  do  so  \<'ould  probably 
result  in  his  realizing  a  price  substantially  less  than  could  be  procured  by 
waiting  until  a  more  opportune  time:  Hawkins  v.  Alston,  4  Ired.  Eq.  137. 
Only  in  a  case  of  absolute  necessity  should  the  trustee  proceed  to  sell  when  it 
is  apparent  that  a  sacrifice  of  the  property  must  ensue:  HuiU  v.  Bass,  2  Dev. 


Oct.  1889.]  Tyler  v.  Herring.  285 

Eq.  291;  24  Am.  Dec.  274.  A  trustee  mnat  always  act  impartially,  and  as 
far  as  possible  for  the  advantage  of  all  the  parties  interested  in  the  sale,  and 
use  reasonable  efiforts  to  obtain  the  best  price  he  can:  Lirey  v.  Winston,  30 
W.  Va.  555;  Mnllfr'sAdmr  v.  Stone,  84  Va.  834;  10  Am.  St.  Rep.  889.  Where 
the  mode  and  time  of  his  action  are  not  regulated  by  the  instrument  creating 
the  trust,  all  that  can  be  said  in  the  way  of  prescribing  a  rule  for  his  govern- 
ment is,  that  he  shall  act  in  good  faith,  and  adopt  those  modes  of  proceeding 
which  will  render  the  sale  most  beneficial  to  the  debtor,  or  other  persons 
whose  interests  are  to  be  affected  thereby:  Talurii  v.  UolUday,  59  Mo.  422; 
Chesley  v.  Chcsley,  49  Ts\  o.  540. 

The  duty  of  a  trustee  to  act  impartially  between  all  the  parties  interested 
in  the  execution  of  the  trust,  and  not  to  needlessly  sacrifice  those  interests, 
may  often  require  him  to  take  some  affirmative  action  before  proceeding  with 
the  sale.  If  there  is  any  cloud  upon  the  title,  or  any  other  existing  cause, 
the  operation  of  which  might  be  such  as  to  prevent  competition  at  the  sale,  it 
is  his  duty,  where  he  can,  to  proceed  to  remove  such  cause,  as  by  application 
to  a  court  of  equity  to  clear  away  the  cloud  from  the  title,  or  to  remove  any 
other  impediment  which  may  exist  to  a  fair  and  reasonable  sale  of  the  prop- 
erty. "That  a  trustee  is  considered  as  the  agent  of  both  parties,  and  bound 
to  act  impartially  between  them,  that  it  is  his  duty  to  use  every  reasonable 
effort  to  sell  the  estate  to  the  best  advantage,  and  that  it  is  his  duty  to  apply 
to  a  court  of  equity  where  there  is  a  cloud  upon  the  title,  or  where  there  is 
doubt  or  uncertainty  as  to  the  amount  to  be  raised,  or  as  to  prior  encum- 
brances on  the  trust  subject,  or  where  there  is  a  conflict  between  the  credi- 
tors, or  in  any  case  in  which  the  aid  of  a  court  of  equity  is  necessary  to  remove 
impediments  in  the  way  of  a  fair  execution  of  his  trust,  are  propositions 
which  none  will  deny,  and  which  have  been  repeatedly  affirmed  by  this  court: 
1  Lomax's  Digest,  .323;  Lane  v.  Tidhall,  Gilm.  130;  Gay  w.  Hancock,  1  Rand. 
72;  Miller  v.  Argyle's  Exr,  5  Leigh,  460;  Wilkins  v.  Gordon,  11  Leigh,  547; 
Miller  V.  Trevilian,  2  Rob.  (Va.)  1;  Bryan  v.  Stump,  8  Graft.  241;  56  Am.  Dec. 
139;  Rosett  v.  Fisher,  11  Gratt.  492;  WJilte  v.  Mechanics'  Building  Fund  Ass^n, 
22  Gratt.  233;  Shurtz  v.  Johnson,  28  Gratt.  657;  2  Minor's  Institutes,  286;  1 
Barb.  Ch.  Pr.  447.  And  it  is  equally  well  settled  that  if  the  trustee  fails  in 
any  such  case  to  apply  to  a  court  of  equity,  the  party  injured  by  his  default 
may  do'so.  The  rule  is  well  stated  by  Judge  Burks  in  Shultz  v.  HmiRbroutjli,  33 
Gratt.  567,  as  follows:  'If  a  trustee  in  pais,  with  power  to  make  sale  of  rejil 
estate  for  the  paj'ment  of  debts,  attempts  to  make  such  sale  while  there  is  a 
cloud  resting  on  the  title  to  the  property,  or  there  is  any  doubt  or  uncer- 
tainty as  to  the  debts  secured  or  the  amounts  thereof,  or  a  dispute  or  con- 
flict among  the  creditors  as  to  their  respective  claims,  a  court  of  equity,  on  a 
bill  filed  by  the  debtor,  secured  creditor,  subsequent  encumbrancer,  or  other 
person  having  an  interest,  will  restrain  the  trustee  until  these  impediments 
to  a  fair  sale  have,  by  its  aid,  been  removed  as  far  as  it  is  practicable  to  do 
so'":  Mullcrs  Adnir  v.  Stone,  84  Va.  834;  10  Am.  St.  Rep.  889;  Byan  v. 
Stump,  8  Gratt.  241;  56  Am.  Dec.  140. 

Though  it  is  the  duty  of  the  trustee  not  to  sacrifice  the  property,  it  does 
not  follow  that  a  sale  is  either  necessarily  void  or  voidable  because  of  the  in- 
adequacy of  the  price  realized.  When  the  trustee  is  under  no  immediate 
necessity  of  selling,  and  there  is  no  other  object  in  the  sale  tlian  to  exercise  his 
discretion  of  changing  the  form  of  the  investment  from  real  estate  to  personal, 
the  fact  that  he  sold  it  at  a  palpably  inadequate  price  would,  no  doubt,  be 
very  persuasive  evidence  of  fraud,  such  as  would  induce  a  court  of  equity  to 
vacate  the  sale  on  prompt  application  by  the  parties  interested.     But  there 


286  Tyler  v.  Herring.  [Miss. 

are  many  cases  in  which  it  is  the  duty  of  the  trustee  to  make  sales  for  the 
purpose  of  discharging  the  claims  of  creditors  and  others  who  are  enti- 
tled to  immediate  payment,  and  where  it  may  be  the  duty  of  the  trustee  to 
proceed,  either  at  once  or  with  reasonable  celerity,  although  the  times  and 
circumstances  are  not  propitious  for  the  sale  of  the  subject-matter  of  the  trust. 
In  such  cases,  mere  inadequacy  of  price,  standing  alone,  is  not  a  sufficient 
ground  to  authorize  the  vacation  of  the  sale:  Cartel-  v.  Abshire,  48  Mo.  300; 
Clark  V.  St.  Louis,  Alton,  etc.  B.  R.  Co.,  58  How.  Pr.  21.  The  rule  with  respect 
to  vacating  trustee's  sales  for  inadequacy  of  price  is  very  similar  to  that  which 
the  courts  apply  to  judicial  sales,  and  is  substantially  as  follows:  that  mere 
inadequacy  alone,  unless  so  gross  as  to  indicate  unfairness  on  the  part  of  the 
purchaser,  or  misconduct  or  fraud  on  the  part  of  the  trustee,  does  not  warrant 
the  vacating  of  the  sale;  but  where  there  is  a  serious  inadequacy  in  the  price 
realized,  the  court  will  seize  upon  any  incident  of  surprise,  undue  advantage, 
irregularity,  or  other  equitable  circumstance  to  grant  relief:  Warefield  v. 
Boss,  38  Md.  85;  Horsey  v.  Hough,  38  Md.  130;  Meath  v.  Porter,  QHeisk. 
224. 

If  the  property  to  be  sold  consists  of  two  or  more  lots,  or  if  not  already 
divided  into  lots  it  can  be  so  divided,  then  the  trustee  must  exercise  his  dis- 
cretion to  sell  either  in  bulk  or  in  subdivisions,  as  may  best  promote  the  in- 
terests to  be  subserved  by  the  sale:  Gray  v.  Shaw,  14  Mo.  341;  Stall  v. 
Macalester,  9  Ohio,  19.  Under  ordinary  circumstances,  there  can  be  no  doubt 
that  such  interests  will  be  best  promoted  by  a  sale  in  parcels;  and  where  it 
appears  probable  that  they  have  been  sacrificed  by  a  sale  en  masse,  it  will  be 
vacated:  Chesley  v.  Cheshy,  54  Mo.  347;  Goode  v.  Comfort,  39  Mo.  313;  but  a 
sale  of  property  in  gross  is  not  necessarily,  nor  even  presumptively,  invalid. 
"While  it  is  true  that  sales  of  this  character  will  be  narrowly  watchedj  and 
every  possible  safeguard  thrown  around  the  interest  of  him  who  has  been 
truly  called  *a  servant  to  the  lender,'  yet  the  mere  fact  that  the  property 
conveyed  by  deed  of  trust  is  sold  in  gross  is  not,  per  se,  sufficient  to  avoid  the 
sale,  and  no  case  that  I  am  aware  of  has  gone  to  that  length.  There  must  be 
some  attendant  fraud,  unfair  dealing,  or  abuse  by  the  trustee  of  the  confi- 
dence reposed  in  him,  or  some  resulting  injury  from  a  sale  made  in  this  way, 
in  order  to  obtain  the  aid  of  a  court  of  equity  to  divest  a  title  thus  acquired  ": 
Banhendorf  V .  Vincenz,  52  Mo.  441.  A  sale  en  masse  is  neither  void  nor  void- 
able unless  its  operation  is  prejudicial  to  some  one.  "It  is  only  upon  the 
ground  of  fraud,  or  that  some  one  may  have  been  prejudiced  by  a  sale  of  real 
estate  en  masse,  that  the  sale  would,  be  set  aside  in  equity  because  the  prop- 
erty was  not  sold  in  separate  parcels  ":  Gillespie  v.  Smith,  29  111.  473;  81  Am. 
Dec.  328. 

To  prevent  the  sacrifice  of  property,  a  trustee  may  fix  a  reserve  price,  and 
refuse  to  accept  any  bid  of  a  less  sum:  In  re  Peyton,  8  Jur.,  N.  S.,  453;  31 
L.  J.  Ch.  440;  10  Week.  Rep.  515;  6  L.  T.,  N.  S.,  883;  30  Beav.  252.  If  a 
bid  has  been  made  under  a  misapprehension  of  the  terms  of  the  sale,  as  where 
the  bidder  supposed  his  bid  to  be  payable  in  currency,  and  the  trustee  was 
not  willing  nor  under  any  duty  to  receive  anything  but  gold,  the  trustee 
may  permit  such  bid  to  be  withdrawn,  and  may  subsequently  proceed  to  sell 
to  another  bidder:  Waterman  v.  Spaulding,  51  III.  425.  Nor  is  the  trustee, 
though  the  sale  is  at  public  auction,  bound  to  accept  every  bid  which  may 
be  offered.  He  has  the  discretion  to  refuse  any  bid  the  acceptance  of  which 
would  frustrate  the  purposes  of  the  sale:  Gray  v.  Veirs,  33  Md.  18. 

If  the  discretion  of  a  trustee  has  not  been  limited  by  the  instrument  creat- 
ing the  trust,  he  is  not  bound  to  give  any  notice  of  his  intention  to  sell,  but 


Oct.  1889.]  Tyler  v.  Herring.  287 

may  dispose  of  the  property  at  private  sale,  and  without  notice,  as  though 
he  were  selling  his  own  private  property:  Burr  v.  McEwen,  Baldw.  154; 
Mhmse  v.  Cox,  5  Johns.  Ch.  441;  9  Am.  Dec.  313;  Huger  v.  Huger,  9  Rich. 
Eq.  217;  Mallox  v.  Eherhart,  38  Ga.  581;  Crane  v.  Reeder,  22  Mich.  322; 
provided  that,  in  adopting  the  means  of  sale,  he  acts  in  good  faith,  and  not 
in  a  manner  obviously  prejudicial  to  the  beneficiaries  of  the  trust.  If,  on 
the  other  hand,  the  instrument  creating  the  trust  has  given  directions  con- 
cerning the  mode  of  sale,  they  must  be  substantially  pursued.  Any  direc- 
tion regarding  the  notice  of  sale  is  material,  and  the  trustee  is  not  at  liberty  to 
disobey  it.  His  sale,  made  without  complying  with  it,  will,  in  most  juris- 
dictions, be  regarded  as  either  absolutely  void,  or  as  liable  to  be  vacated 
upim  complaint  of  anj'  person  interested  in  the  execution  of  the  trust.  Con- 
ditions as  to  the  time  or  mode  of  publication  must  be  followed,  and  in  some 
courts,  at  least,  no  excuse  will  be  received  for  not  observing  them:  Sears  v. 
Livermore,  17  Iowa,  297;  85  Am.  Dec.  564.  If  a  trust  deed  exacts  thirty 
days'  notice  of  a  sale,  and  the  sale  does  not  take  place  at  the  time  specified  in 
the  notice,  it  has  been  held  that  if  it  is  adjourned  to  another  time,  thirty  days' 
notice  must  also  be  given  of  such  adjourned  sale:  Thornton  v.  Boyden,  31  111. 
200.  If  notice  to  a  grantor  of  the  time  and  place  of  a  sale  is  stipulated  for 
in  the  trust  deed,  the  giving  of  such  notice  is  a  condition  precedent  to  the 
validity  of  the  exercise  of  the  power  of  sale:  Henderson  v.  Galloway,  8  Humph. 
692. 

The  requirement  of  twenty  days'  previous  notice  of  the  time  and  place  of 
sale  is  not  satisfied  by  a  single  publication  made  twenty  days  before  3uch 
sale:  Stine  v.  Wilkson,  10  Mo.  75.  Publication  of  a  notice  of  sale  in  a 
weekly  newspaper  on  the  8th,  15th,  2'2d,  and  29th  of  April,  and  on  the  6th 
of  May.  the  sale  being  on  the  Sth  of  May,  complies  with  the  directions  in  a 
trust  deed  that  the  trustees  may  sell  after  "first  giving  thirty  days'  notice 
of  the  time,  place,  and  terms  of'the  sale,  and  of  the  property  to  be  sold,  by 
advertisement  in  some  newspaper  in  Burlington,  Iowa  territory,"  there  being 
no  paper  publisln-d  in  Burlington  oftener  than  once  a  week:  Leffler  v.  Arm- 
strong,  4  Iowa,  482;  68  Am.  Dec.  %12.  In  this  case,  it  will  be  observed  that 
there  were  less  than  thirty  days  between  the  first  and  the  last  publication, 
though  there  were  more  than  thirty  days  between  the  first  publication  and 
the  time  of  sale.  In  a  similar  case  it  was  held  that  publication  in  a  weekly 
newspaper  was  sufficient,  though  there  was  a  daily  edition  of  the  same  paper, 
in  which  no  publication  was  made:  Catnphell  v.  Tagge,  30  Iowa,  307;  and 
the  rule  seems  to  be  well  settled  that  publication  in  a  weekly  newspaper  is 
always  sufficient,  unless  the  trust  deed  has  expressly  required  a  publication 
at  more  frequent  intervals:  Johnson  v.  Dorsey,  7  Gill,  269.  Notices  of  sale 
are  not  required  to  be  published  on  Sunday.  Therefore,  if  notice  is  directed 
to  be  given  ten  days  before  the  sale,  the  publication  may  be  sufficient,  though 
owing  to  an  intervening  Sunday  it  was  published  only  nine  times:  Ciishman 
V.  Stone,  69  111.  516.  When  a  notice  of  sale  is  required  to  be  posted,  it  is  no 
objection  to  the  posting  that  it  was  in  a  place  where  the  notice  could  not  be 
seen  on  Sundays.  The  law  does  not  cojitemplate  that  notices  of  sale  shall 
be  exposed  on  those  days:  Oruham  v.  Fitts,  53  Miss.  307.  If  thirty  days' 
notice  of  the  time  and  place  of  sale  is  directed  to  be  given  by  posting,  and 
the  original  posting  is  correctly  made,  the  direction  is  fully  satisfied,  though 
it  appears  that  the  notice,  owing  to  no  fault  of  the  trustee  or  purchaser,  did 
not  remain  up  for  the  full  time:  Graham  v.  Fitts,  53  Miss.  307. 

If  a  trui^t  deed,  while  it  directs  notice  of  sale  to  be  given,  is  silent  with 
respect  to  tlie  newspaper  in  which  it  is  to  be  published,  the  trustee  has 


288  Tyler  v.  Herring.  [Miss. 

unlimited  discretion  in  the  selection  of  such  paper,  except  that  he  must  not 
yield  to  the  influence  of  fraud,  nor  of  any  othar  improper  motive:  Siivjleton 
V.  Scott,  11  Iowa,  589. 

Every  notice  of  sale  "  should  contain  such  facts  as  are  reasonably  to  ap- 
prise the  public  of  the  place,  time,  and  terms  of  the  sale,  and  of  the  prop- 
erty to  be  sold.  But  mere  omissions  or  inaccuracies  in  these  respects,  not 
calculated  to  mislead  and  work  prejudice,  will  not  be  regarded  ":  Powers  v. 
Kueckhoff,  41  Mo,  425;  97  Am.  Dec.  281;  Chesley  v.  Chesley,  49  Mo.  540; 
Stephenson  v.  Januai-y,  49  Mo.  465;  Beatty  v.  Butler,  21  Mo.  .S13;  64  Am. 
Dec.  234.  Though  a  statute  prescribes  the  form  of  a  notice,  failure  to  use 
the  precise  language  of  such  statute  will  not  invalidate  a  notice:  Boston 
Safe  Deposit  and  Trust  Co.  v.  Mixfer,  146  Mass.  100.  Misrecitals  in  a  notice 
of  acts  on  which  the  power  of  sale  does  not  depend,  and  which  are  not  re- 
quired to  be  recited,  are  immaterial:  Iii^h  v.  Antioch  College,  126  III.  474; 
9  Am.  St.  Rep.  638.  It  is  not  necessary  to  follow  any  prescribed  or  .stereo- 
typed form  in  giving  a  notice  of  sale:  Newman  v.  Jackson,  12  Wheat.  570. 
There  is  no  reason  why  the  amount  of  the  debt  should  be  stated,  when 
the  object  of  the  sale  is  to  raise  moneys  to  discharge  it:  Wiswall  v.  Boss,  4 
Port.  321.  A  notice  stating  that  a  sale  will  be  held  at  the  court-house  door 
of  a  designated  town,  but  not  naming  the  county,  nor  stating  that  the  sale 
will  be  at  public  auction,  is  sufficient,  where  the  notice  also  states  the  time 
of  sale  and  describes  the  property  to  be  sold:  Potoers  v.  Kueckhoff,  41  Mo. 
425;  97  Am.  Dec.  281.  A  notice  which  does  not  state  by  nor  to  whom  a  deed 
of  trust  was  executed,  nor  de.scribe  the  land  with  sufficient  particularity  to  ea- 
able  one  not  familiar  with  it  to  know  what  land  was  to  be  sold,  is  insufficient, 
and  a  sale  made  thereunder  will  be  vacated:  Reedskle  v.  Peter,  33  Md.  120. 

Manifestly  the  objects  to  be  accomplished  by  a  notice  of  sale  are  to  advise 
the  public  of  what  is  to  be  sold,  and  the  time  when,  the  place  where,  and 
the  terms  upon  which  it  may  be  bought;  and  the  essentials  of  a  notice  of  sale 
under  a  trust  deed  are  therefore  a  statement  of  the  time,  place,  and  terms  of 
sale,  and  such  a  description  of  the  property  to  be  sold  as,  if  read  by  persons 
familiar  with  the  neighborhood,  will  advise  them  of  what  is  to  be  sold, 
and  upon  what  terms  it  can  be  bought,  and  induce  them  to  attend  the  sale 
as  prospective  bidders,  should  they  feel  an  inclination  to  invest  in  the  prop- 
erty to  be  sold.  It  is  generally  advisable  to  state  the  authority  under  which 
the  sale  is  to  be  made,  that  intending  purchasers  may  know  whose  property 
is  to  be  sold,  and  by  what  right  the  trustees  claim  to  act,  so  that  such  pur- 
chasers may  have  opportunity  to  investigate  the  title  and  authority  of  the 
trustee,  and  determine  for  themselves  whether  the  sale  is  one  at  which  they 
can  safely  purchase.  If  the  terms  of  the  sale  are  different  from  those  im- 
plied by  law,  or  from  those  which  are  usual  in  like  sales  in  the  neighborhood, 
as  where  they  are  especially  advantageous  or  especially  onerous  to  pur- 
chasers, they  should  be  stated  also;  but  we  doubt  whether,  under  ordinary 
circumstances,  it  is  indispensable  in  a  notice  of  sale  to  set  forth  anything 
except  the  time  and  place  of  sale  and  a  correct  description  of  the  property 
to  be  sold. 

If  a  trustee  is  left  entirely  to  his  discretion  regarding  a  sale,  he  may  sell 
for  cash  or  upon  credit,  as  to  his  own  judgment  may  seem  best:  Rogers  v.  De 
Forest,  7  Paige,  273;  Hoffman  v.  Mackall,  5  Ohio,  124;  6i  Am.  Dec.  637;  but 
if  the  instrument  describing  his  duties  and  powers  gives  explicit  directions 
upon  this  subject,  he  must  not  disregard  them,  and  if  he  sells  upon  credit, 
when  he  is  commanded  to  sell  for  cash,  the  sale  may  be  set  aside:  Cassell  v. 
Ross,  33  111.  244;  85  Am.  Dec.  270. 


Oct.  1889.]  Tyler  v.  HERRiNa.  289 

The  trustee  himself  and  those  who  are  acting  in  his  interests  are  the  only 
persons  who  are  incompetent  to  purchase  property  at  a  trustee's  sale.  A 
beneficiary  under  the  trust  may  be  a  purchaser  at  the  sale  of  the  trust  prop- 
erty as  freely  as  if  he  were  a  strant^er  to  the  trust,  and  is  under  no  ol'liga- 
tiou  to  hold  the  property  so  purchased  for  the  benefit  of  his  fellow-beneficiaries, 
if  any  there  be:  Walker  v.  Bmngard,  13  Smedes  &  M.  723.  If  a  power  of 
sale  is  to  be  exercised  only  with  the  assent  of  the  tenant  for  life,  this  does 
not  disqualify  him  from  becoming  a  purchaser  at  a  sale  made  by  the  trustee: 
Dircomon  V.  Talbot,  19  Week.  Rep.  138;  Com.  L.  Ch.  32;  24  L.  T.  49. 

The  decisions  concerning  the  purchase  of  trust  property  by  or  in  the  inter- 
est of  the  trustee,  whose  duty  it  was  to  sell  it,  are  very  numerous,  and  not 
altogether  free  from  conflict.  The  vast  majority  of  them,  however,  sustain 
the  following  propositions:  1.  That  a  purchase  by  a  trustee,  or  in  his  inter- 
est, is  not  necessarily  or  absolutely  void:  Stephens  v.  Beall,  22  Wall.  329; 
Union  State  Property  v.  Tilton,  69  Me.  244;  Veaaey  v.  Graham,  17  Ga.  99; 
third  persons  cannot  question  it:  McNish  v.  Pope,  8  Rich.  Eq.  112;  nor  has  the 
trustee  a  right  to  treat  it  as  void;  it  is  binding  upon  him  until  the  cestui  que 
trust  chooses  to  avoid  it:  McClure  v.  Miller,  1  Bail.  Ch.  107;  21  Am.  Dec.  522; 
2.  That  a  trustee  has  no  right  to  purchase  trust  property  either  directly  or  by 
the  agency  of  a  third  person  acting  at  his  instigation  and  intending  to  hold  the 
purchase  for  his  benefit:  Michoud  v.  Oirod,  4  How.  503;  Campbell  v.  Johnston, 
1  Sand.  C'h.  148;  Boyd  v.  Hawkins,  2  Ired.  Eq.  304;  Mathews  v.  Dragaud,  3 
Desaus.  Ch.  25;  Thorp  v.  McCullutn,  6  111.  614;  Davis  v.  Simpson,  5  Har.  &  J. 
147;  9  Am.  Dec.  500;  Saltmarsh  v.  Beene,  4  Port.  283;  30  Am.  Dec.  525; 
Renew  v.  Butler,  30  Ga.  954;  Remick  v.  Butterjield,  31  N.  H.  70;  64  Am.  Dec. 
316;  Denv.  Wright,  31  N.  H.  175;  11  Am.  Dpc.  546;  Sheldon  v.  Sheldon,  13 
Johns.  220;  Ohert  v.  Hammel,  18  N.  J.  L.  73;  Bank  of  Orleans  v.  Torrey,  7 
Hill,  260;  and  3.  That  a  cestui  que  trust  may  within  a  reasonable  time  after 
discovering  that  trust  property  was  sold  to  a  trustee,  or  to  some  one  acting 
in  his  interest,  or  in  the  interest  of  his  wife,  or  to  a  corporation  or  association 
in  wliich  he  is  largely  interested,  elect  either  to  treat  the  sale  as  void  aad 
the  property  as  still  subject  to  the  trust,  or  to  have  an  accounting  and  pay- 
ment of  the  profits  realized  by  the  trustee  and  his  agents:  Bassett  v.  Shoe- 
maker,  46  N.  J.  Eq.  5S8;  post,  p.  435;  RohUns  v.  Butler,  24  111.  387;  Hunt 
V.  Biss,  2  Dev.  Eq.  292;  24  Am.  Dec.  274;  Jennison  v.  Hapgood,  7  Pick. 
1;  19  Am.  Dec.  258;  Herrs  Estate,  1  Grant  Cas.  272;  Rosenbergers  Appeal,  26 
Pa.  St.  67;  Smith  v.  Frost,  70  N.  Y.  65;  McNeil  v.  Gates,  41  Ark.  264.  Only 
when  a  sale  is  made  under  the  authority  of  the  court,  or  with  the  concur- 
rence of  a  cestui  que  trust,  and  the  purchase  by  or  in  the  interest  of  the 
trustee  is  known  to  the  court  confirming  or  the  beneficiary  approving  the 
sale,  or  when  the  trustee  is  one  of  the  persons  for  whose  debt  the  trust  deed 
was  given,  will  such  purchase  be  permitted  to  stand  as  against  an  objecting 
beneficiary:  Kennedy  v.  Dnnn,  58  Cal.  339;  Fancett  v.  Faucctt,  1  Bush,  511; 
89  Am.  Dec.  639;  Cnmherland  etc.  Co.  v.  Shcrnmn,  20  Md.  117;  Aynesx.  Port 
Huron  etc.  Co.,  11  Mich.  139;  83  Am.  Dec.  731;  Roberts  v.  Roberts,  65  N.  C. 
27.  It  has  also  been  held  that  a  trustee  cannot  as  an  agent  of  a  third  person 
purchase  the  trust  property,  for  tlie  obvious  reason  that  if  he  did  so  he  would 
undertake  to  discharge  conflicting  duties,  and  probably  sacrifice  the  inter- 
ests of  one  or  the  other  of  his  principals:  Hawley  v.  Cramer,  4  Cow.  717; 
Gould  V.  Gonhl,  36  Barb.  270.  Where  there  are  two  or  more  trustees,  each  is 
as  much  prohibited  from  purchasing  the  trust  property  as  if  he  were  sole 
trustee:  Ringgold  v.  Ringgold,  1  Har.  &  G.  11;  27  Am.  Dec.  250. 

If  a  cestui  que  triixt,  with  full  knowledge  of  a  purchase  by  or  in  the  inter- 
Am.  ST.  Kep.,  Vol.  XIX.  —19 


290  Tyler  v.  Herring.  [Miss. 

est  of  his  trustee,  and  of  his  right  to  disaffirm  it,  elects  to  ratify  such  purchase, 
he  is  irrevocably  concluded  by  such  ratification,  and  the  sale  is  thereafter  not 
subject  to  successful  assault  at  law  or  in  equity:  Boerum  v.  Schenck,  41  N.  Y. 
182;  Van  Dyke  v.  Johns,  1  Del.  Ch.  93;  12  Am.  Dec.  76. 

If  when  a  trustee  made  a  sale  he  had  no  interest  therein,  and  no  intention 
of  becoming  the  owner  of  the  property  in  his  own  right,  his  trust  relation  to 
it  ceases,  and  he  may  subsequently  deal  with  it  as  discharged  from  the  trust, 
and  may  therefore  purchase  it  from  its  owner  without  incurring  any  obliga- 
tion to  hold  it  subject  to  the  original  trust:  Creveling  v.  Fritts,  34  N.  J.  Eq. 
134;  RammeUherg  v.  Mitchell,  29  Ohio  St.  22,  If,  on  the  other  hand,  the 
original  sale  was  in  the  interest  of  the  trustee,  and  he,  after  selling  the  prop- 
erty to  innocent  purchasers,  who  might  have  held  it  discharged  from  th» 
trust,  acquires  their  title,  he  may  be  compelled  to  hold  it  for  the  benefit 
of  the  beneficiaries  of  the  trust:  Church  v.  Church,  25  Pa.  St.  278. 

While  the  authorities  often  state,  in  general  terms,  that  a  sale  to  the 
trustee  by  whom  the  power  of  sale  was  exercised  is  not  void,  but  voidable 
only,  they  must  be  understood  as  referring  only  to  sales  in  which  he  was  the 
real,  though  not  the  nominal,  purchaser.  If  a  sale  or  conveyance  appears  on 
its  face  to  be  made  by  a  trustee  to  himself,  it  must,  we  apprehend,  be 
treated  as  absolutely  void,  for  want  of  proper  contracting  parties.  "The 
deed  would  be  simply  void,  and  would  pass  nothing  or  make  no  change  in  the 
situation  and  relations  of  the  parties,  on  the  ground  that  no  man  can  con- 
tract with  himself,  or  make  a  deed  to  himself,  or  from  himself  in  one  capa- 
city to  himself  in  another  ":  Perry  on  Trusts,  sec.  602  w. 

When  an  executor  or  other  trustee  purchases  the  trust  property,  or  causes  a 
purchase  thereof  to  be  made  in  his  interest,  and  the  cestui  que  trust  elects  to  dis- 
affirm the  sale  within  a  reasonable  period  after  receiving  notice  of  the  trustee's 
interest  therein,  he  need  not  make  any  proof  of  fraud  or  unfairness  on  the 
part  of  the  trustee,  or  even  that  the  sale,  if  it  were  permitted  to  stand,  would 
be  unjust  to  the  complainant.  A  trustee  cannot  sustain  a  sale  and  hold  the 
property  free  of  the  trust  otherwise  than  by  proving  that  the  sale  was  made 
by  the  previous  assent  or  the  subsequent  '•atification  of  the  cestui  que  trust, 
given  with  a  full  knowledge  of  his  rights  and  of  the  circumstances  of  the  sale, 
and  of  the  trustee's  interest  therein.  If  the  latter  did  not  so  assent  to  or 
ratify  the  sale,  and  he  wishes  it  to  be  set  aside,  no  inquiry  will  be  made  re- 
specting its  fairness  or  its  unfairness.  He  has  an  absolute  right  to  have  the 
trustee  discharge  the  duties  of  the  trust  impartially  and  without  ever  placing 
himself  in  a  position  wliere  his  interests  and  those  of  his  beneficiary  may  come 
in  conflict:  Note  to  Van  Dyke  v.  Johns,  12  Am.  Dec.  85;  Scott  v.  Freeland,  7 
Smedes  &  M.  409;  45  Am.  Dec.  310;  Michoud  v.  Qirod,  4  How.  503. 

The  sale  must  be  made  by  the  trustee,  he  having,  as  we  have  seen,  no  power 
to  delegate  his  trust,  but  the  trustee  who  makes  the  sale  is  not  necessarily  the 
one  originally  designated  by  the  creator  of  the  trust.  A  new  trustee  may 
have  been  appointed  by  some  court  of  competent  jurisdiction,  in  which  case 
he  may  exercise  the  same  power  of  sale  possessed  by  the  former  trustee, 
though  the  order  making  the  appointment  is  silent  upon  that  subject:  LaJiey 
V.  Kortriijlit,  56  N.  Y.  Super.  Ct.  527.  One  or  more  of  the  original  trustees 
may  have  disclaimed,  died,  or  resigned,  in  whicli  event  the  survivor  becomes 
the  sole  trustee,  and  competent  to  act  as  if  no  other  trustee  had  ever  been 
joined  with  him. 

If  the  trust  estate  was  limited  to  the  trustee  and  his  heirs,  it  will  on 
his  death  vest  in  such  heirs,  but  cannot  vest  in  his  devisees  or  other 
assigns:   Perry  on  Trusts,  sec.  494.     If  it  was  limited  to  the   trustee,  his 


Oct.  1889.]  Tyler  v.  Herring.  291 

heirs  or  assigns,  it  may  be  devised,  and  the  devisees  may  execute  the  trust: 
Hall  V.  May,  .3  Kay  &  J.  585;  3  Jur.,  N.  S.,  907;  26  L.  J.  Ch.  791;  5  Week. 
Rep.  869;  Oshorne  v.  Rowle/f,  L.  R.  13  Ch.  Div.  774;  49  L.  J.  Ch  310;  42 
L.  T.  650;  28  Week.  Rep.  365.  Where  the  trust  is  a  matter  of  personal  con- 
fidence, while  the  estate  may,  on  the  death  of  the  trustee,  vest  in  his  heirs 
or  devisees,  and  be  by  them  held  subject  to  the  trust,  yet  they  are  not  re- 
garded as  competent  to  execute  it:  Rohnon  v.  Fli;jht,  4  De  Gex,  J.  &  S.  608; 
34  L.  J.  Ch.  226;  11  L.  T.,  N.  S.,  725;  Perry  on  Trusts,  sec.  496.  Resort  to 
a  court  of  equity,  therefore,  in  such  cases,  becomes  necessary  to  obtain  the 
appointment  of  proper  trustees  to  carry  out  the  trust. 

Though  a  trustee  has  given  notice  that  he  will  sell  the  trust  property  at  a 
designated  time  and  place,  he  may  reach  the  conclusion  that  a  sale  at  such 
time  or  place  is  not  for  the  best  interests  of  the  persons  to  be  affected  by  the 
sale,  or  that  from  some  other  cause  the  sale  ought  not  to  take  place  as  ad- 
vertised. "The  power  of  a  trustee  to  sell  at  public  auction,  after  a  certain 
publication  of  the  notice  of  the  time  and  place  of  sale,  includes  the  power 
regularly  to  adjourn  the  sale  to  a  different  time  and  place,  when,  in  his  dis- 
cretion, fairly  exorcised,  it  shall  seem  to  him  necessary  to  do  so  in  order  to 
obtain  a  fair  auction  price  for  the  property  ":  Ridiards  v.  Holmes,  18  How. 
143;  Jackf,on  v.  Clark,  7  Johns.  225;  Sai/les  v.  Smith,  12  Wend.  57;  note  to 
Bussell  V.  Richarils,  26  Am.  Dec.  537.  It  is  the  duty  of  a  trustee  to  exercise 
the  power  which  he  has  to  adjourn  sales  whenever,  from  the  small  attendance 
of  bidders  or  from  other  circumstances,  it  seems  apparent  that  a  sale  of  the 
property  is  likely  to  result  in  its  realizing  a  much  less  sum  than  if  the  sale 
were  adjourned  to  anotlier  time  or  place:  Judge  v.  Booije,  47  Mo.  544. 

While  the  right  and  the  duty  of  a  trustee  to  adjourn  a  sale  in  certain  con- 
tingencies are  well  established,  it  is  impossible  to  state  with  confidence  what 
notice,  if  any,  he  must  give  of  such  adjournment.  Undoubtedly  he  must  not 
postpone  a  sale  in  such  a  way  that  the  persons  interested  do  not  know  that  it 
has  been  adjourned,  nor  at  what  time  or  place  they  must  attend  to  protect 
their  interests:  Dana  v.  Farrington,  4  Minn.  433.  Perhaps  the  better  opinion 
is,  that  when  a  sale  is  adjourneil,  notice  of  the  time  and  place  to  which  it  is 
adjourned  must  be  given  in  the  same  manner  and  for  the  same  length  of  time 
as  if  the  sale  were  advertised  for  the  first  time.  The  result  of  this  is,  that  if 
any  adjournment  is  ordered,  it  must  be  for  a  time  sufficient  to  allow  notice  to 
be  given  for  the  length  of  time  stipulated  in  the  trust  deed  or  other  instru- 
ment regulating  the  time  and  manner  in  which  the  trustee  must  give  notice 
before  he  proceeds  to  sell  any  part  of  the  trust  estate:  Griffin  v.  Marine  Co., 
62  111.  130;  Thornton  v.  Boijden,  31  111.  200;  Montgnmery  v.  Barrow,  19  La. 
Ann.  169;  Enloe  v.  Miles,  12  Smedes  &  M.  147;  Patten  v.  Stewart,  26  Ind. 
395. 

If  the  bidder  to  whom  the  trustee  sells  property  at  public  auction  does  not 
comply  with  his  bid,  it  may  be  again  offered  for  sale,  but  under  ordinary  cir- 
cumstances, the  second  sale  must  be  preceded  by  notice  given  in  the  same 
manner  and  for  the  same  time  as  required  for  the  first:  Barnard  v.  Duncan, 
38  i\Io.  170;  90  Am.  Dec.  425;  Judge  v.  Bonge,  47  Mo.  544;  Oivan  v.  Doe,  5 
Blackf.  260;  Williams  v.  Barlow,  49  Ga.  530.  Certainly  this  nmst  be  so 
where  the  persons  in  attendance  at  the  sale,  or  any  considerable  portion  of 
them,  have  dispersed.  For  in  such  a  case  the  benefit  of  the  original  notice  is 
lost,  and  any  sale  of  the  property  will  almost  surely  be  for  a  price  dispropor- 
tionate to  its  value. 

Every  conveyance  by  a  trustee  must  possess  the  requisites  of  a  coiivc)  ance 
by  a  grantor  conveying  in  his  own  right.     Therefore,  it  nmst  name  or  de- 


292  Tyler  v.  Herring.  [Miss. 

scribe  the  grantee;  and  if  it  merely  purports  to  relinquish  the  interest  of  the 
trustee  without  stating  to  whom,  it  is  inoperative:  Dick  v.  PHchford,  1  Dev. 
&  B.  Eq.  480.  While  it  is  desirable  that  a  conveyance  executed  by  a  trustee 
in  the  exercise  of  a  power  of  disposition  vested  in  him  should  contain  re- 
citals from  which  it  is  apparent  that  he  executed  it  in  his  capacity  of  trustee, 
and  for  the  purpose  of  exercising  the  power  vested  in  him  as  such,  and  that 
the  circumstances  under  which  he  is  entitled  to  execute  the  power  in  fact 
exist,  still  it  cannot  be  said  that  any  of  these  recitals  are  aljsolutely  necessary. 
It  is  sufBcient  for  him  to  describe  himself  or  afiBx  his  signature  as  trustee: 
Potter  V.  Schofield,  55  Mo.  303.  He  need  not  recite  the  trusts  under  which  ha 
holds  the  property,  nor  state  that  his  conveyance  is  for  the  purpose  of  execut- 
ing those  trusts:  Brculstreet  v.  Clarke,  12  Wend.  602;  nor  need  he  affirm  the 
existence  of  debts  or  of  any  other  cause  making  his  sale  or  conveyance  neces- 
sary or  proper:  Flux  v.  Beri,  31  L.  T.,  N.  S.,  645;  23  Week.  Rep.  228.  If  the 
only  estate  or  interest  which  the  trustee  has  in  the  property  is  one  which  ha 
holds  in  trust,  and  he  makes  a  conveyance  which  describes  and  purports  to 
convey  property  which  is  subject  to  the  trust,  and  the  conveyance  must 
either  operate  to  convey  the  trust  estate  or  not  operate  at  all,  then  it  will  be 
construed  as  being  executed  in  the  exercise  of  the  power  vested  in  him  as  trus- 
tee, and  will  convey  the  trust  property  therein  described,  though  it  does  not  re- 
fer to  the  capacity  in  which  he  holds  such  property,  nor  to  his  intention  to 
execute  the  power  of  sale  vested  in  him  as  such  trustee:  Gindrat  v.  Mont- 
gomery Oas  Light  Co.,  82  Ala.  596;  60  Am.  Rep.  769;  Bishop  v.  Remple,  11  Ohio 
St.  277;  Hall  V.  Preble,  68  Me.  100;  Baird  v.  Bnwher,  60  Miss.  329;  South  v. 
South,  91  Ind.  221;  Campbell  v.  Johnson,  65  Mo.  439;  Funk  v.  Egglexton,  92  111. 
515;  Orr  v.  O'Brien,  55  Tex.  149.  "The  donee  of  a  power  may  execute  it  with- 
out expressly  referring  to  it,  or  taking  any  notice  of  it,  provided  that  it  is  ap- 
parent from  the  whole  instrument  that  it  was  intended  as  an  execution  of  the 
power.  The  execution  of  the  power,  however,  must  show  that  it  was  intended 
to  be  such  execution;  for  if  it  is  uncertain  whether  the  act  was  intended  to  be 
an  execution  of  the  power,  it  will  not  be  construed  as  an  execution.  The  inten- 
tion to  execute  a  power  will  sufficiently  appear,  —  1.  Wlien  there  is  soma 
reference  to  the  power  in  the  instrument  of  execution;  2.  Where  there  is  a 
reference  to  the  property  which  is  the  subject-matter  on  which  execution  of 
the  power  is  to  operate;  and  3.  Where  the  instrument  of  execution  would  have 
no  operation,  but  would  be  utterly  insensible  and  absurd,  if  it  was  not  the 
execution  of  a  power.  Thus  if  a  donee  of  a  power  to  sell  land  have  also  an 
interest  in  his  own  right  in  the  same  land,  his  deed  of  the  land,  making  no  ref- 
erence to  the  power,  will  convey  only  his  own  interest;  for  there  is  a  subject- 
matter  for  the  deed  to  operate  upon,  excluding  the  power,  and  therefore  as 
it  does  not  conclusively  appear  that  the  deed  was  intended  to  be  an  execu- 
tion of  the  power  as  well  as  a  conveyance  of  the  grantor's  interest  in  the 
land,  it  will  be  held  not  to  be  an  execution  of  the  power;  but  if  the  grantor 
has  no  interest  in  the  land,  his  deed  will  be  insensible,  and  a  mere  absurdity, 
if  not  intended  as  an  execution  of  the  power;  therefore  it  will  be  held  to  be 
an  execution  of  the  power  if  it  refers  to  the  subject-matter  of  the  power,  or 
describes  the  land  over  which  his  power  extends.  It  will  be  seen  that  this 
last  conclusion  is  a  presumption  of  law;  this  presumption  may  be  more  or  less 
strong,  according  to  all  the  circumstances  of  the  case  and  the  condition  of 
the  property.  If  all  the  words  of  a  deed  or  will  can  have  an  effect  given 
to  them,  and  an  operation  upon  property  or  rights,  without  being  taken  as 
the  execution  of  a  power,  they  wdl  not  be  an  execution  of  such  power.  If  a 
man  has  several  powers,  and  refers  to  some,  and  not  to  others,  the  execution 


Oct.  1889.]  Tyler  v.  Herring.  293 

will  exclude  those  not  referred  to":  Perry  on  Trusts,  sec.  511  c;  Terry  V. 
Rodahan,  79  Ga.  278;  11  Am.  St.  Rep.  420. 

While  a  conveyance  by  a  trustee  may  operate  as  a  valid  execution  of  a 
power  of  sale  vested  in  him,  though  it  contains  no  recitals,  and  does  not  dis- 
close the  capacity  in  which  he  conveys,  yet  a  careful  conveyancer,  in  draught- 
ing a  conveyance  for  a  trustee,  will  not  only  show  the  capacity  in  wliich  he 
executes  it,  but  will  also  recite  the  existing  facts  whicli  make  its  execution 
proper.  These  recitals  have  a  value  beyond  removing  any  doubt  which 
might  otherwise  exist  in  reference  to  the  object  of  the  deed  and  the  capacity 
in  which  its  grantor  is  acting.  They  are,  in  many  jurisdictions,  at  least 
prima  facie  evidence  of  the  truth  of  the  statements  therein  made,  and  there- 
fore may  be  of  great  assistance  to  the  grantee  and  his  successors  in  interest 
in  subsequent  legal  controversies  assailing  his  or  their  title  on  the  ground 
that  the  circumstances  did  not  exist  in  which  the  trustee  was  authorized  to 
make  the  conveyance  in  question:  Savings  and  Loan  Society  v.  Deeriny,  66 
Cal.  281;  Beat  v.  Blair,  3.3  Iowa,  318. 

The  effect  of  sales  irregularly,  improvidently,  or  fraudulently  made  by 
trustees  has  been  incidentally  considered  in  what  we  have  already  written, 
and  therefore  but  little  additional  space  will  here  be  given  to  this  topic.  We 
showed,  in  the  first  part  of  this  no:e,  that,  in  absence  of  statutes  7nodifying 
or  abrogating  the  common  law  upon  this  subject,  conveyances  by  trustees, 
whether  authorized  or  not,  operate  upon  the  legal  title  and  vest  it  in  their 
grantees.  Where  this  rule  still  prevails,  one  who  wishes  to  avoid  the  effect 
of  a  trustee's  conveyance  must  necessarily  resort  to  a  suit  in  equity  to  have 
such  conveyance  vacated  and  the  property  declared  to  be  still  subject  to  the 
trust.  It  is  part  of  the  peculiar  jurisdiction  of  courts  of  equity  to  superin- 
tend the  execution  of  trusts,  and  to  prevent  the  violation  by  the  trustee  of 
the  confidence  reposed  in  him.  A  trustee's  sale  may  be  vacated  in  equity, 
either  because  of  some  circumstance  or  element  of  fraud,  improvidence,  or 
unfairness  in  it,  whereby  the  interests  of  the  cestui  que  trust  have  been  sacri- 
ficed, or  because  of  the  failure  of  the  trustee  to  comply  with  the  directions 
of  the  trust  deed,  as  wliere  he  has  sold  when  not  authorized  to  do  so,  or 
although  authorized  to  sell,  has  not,  in  bringing  about  the  sale,  observed  the 
directions  of  the  trust  deed  regarding  the  time,  place,  or  mode  of  sale. 

Every  device  which  a  trustee  may  adopt  to  bring  about  a  sale  in  the  inter- 
est of  himself,  or  in  any  way  to  stifle  competition,  or  to  prevent  the  realiza- 
tion of  the  full  value  of  the  property,  is  fraudulent,  and  therefore  demands 
a  decree  setting  aside  the  sale:  Salttnarsh  v.  Bc.ene,  4  Port.  283;  30  Am. 
Dec.  525;  Towle  v.  Amis,  12.3  111.  410;  Caused  v.  Ross,  33  111.  244;  85  Am. 
Dec.  270;  Hazeltine  v.  Fourney,  120  111.  493.  Mere  inadequacy  or  price,  as 
we  have  seen,  is  not  a  sufficient  reason  for  vacating  a  sale,  unless  it  is  so 
gross  as  to  shock  the  conscience  or  create  a  presumption  of  fraud:  Clark  v. 
Truxt  Co.,  100  U.  S.  149;  Basnett  v.  Niijt/ins,  2  W.  Va.  485;  Booker  v.  Ander- 
son, 36  111.  66;  or  of  want  of  reasonable  judgment  and  discretion  on  the 
part  of  the  trustee:  Hiiitze  v.  Stiwjal,  1  Md.  Ch.  283;  Johnson  v.  Dorsey,  7 
Gdl,  269;  Oibbs  v.  Cunnimjhain,  1  Md.  Ch.  44;  but  any  circumstance  of 
fraud  or  irregularity  will  be  accepted  by  the  court  as  sufficient  ground  for 
setting  aside  a  sale  for  a  clearly  inadequate  price:  Sinjleton  v.  S'ott,  II 
Iowa,  589;  Franklin  v.  Osgood,  14  Johns.  527;  Iloppes  v.  Cheek,  21  Ark.  .")85. 
If  the  debtor,  or  other  person  interested  in  the  sale,  is,  by  any  device  or 
misrepresentation  on  the  part  of  the  trustee  or  purcliaser,  prevented  trom 
attending  the  sale,  or  taking  other  measures  necessary  for  the  protection  of 
his  interests,  equity  will  grant  him  relief:  Clarkson  v.  Creely,   35  Mo.  95; 


294  Tyler  v.  Herring.  [Miss. 

Hoppes  V.  Cheek,  21  Ark.  585.  While  a  sale  of  several  parcels  of  trust  prop- 
erty en  masse  is  not,  in  the  absence  of  fraud  or  prejudice  to  the  cestui  que 
trxist,  a  sufficient  cause  for  vacating  the  sale:  Gillespie  v.  Smith,  29  111.  473; 
81  Am.  Dec.  328;  yet  it  will  not  oe  permitted  to  stand  if  it  is  clearly  shown 
that  a  sale  in  separate  parcels  would  have  brought  a  much  higher  sum: 
Goode  V.  Comfort,  39  Mo.  313. 

As  illustrations  of  cases  in  which  a  trustee's  sales  ought  to  be  vacated,  dis- 
regarded, or  adjudged  invalid  in  equity,  either  because  he  had  no  power  to 
Bell  at  the  time  when  he  undertook  to  do  so,  or  because,  in  proceeding  to  bring 
about  a  sale,  he  disregarded  the  directions  of  the  instrument  creating  the 
trust,  or  the  mandates  of  the  law  regulating  his  duties  and  defining  hia 
powers,  may  be  mentioned  the  following:  A  sale  made  by  and  in  the  presence 
of  part  only  of  the  acting  trustees:  Powell  v.  Tutlle,  3  N.  Y.  396;  Spurlock 
V.  Sproule,  72  Mo.  503;  a  sale  made  under  a  trust  deed  before  default  had 
been  made  in  the  payment  of  the  debt,  upon  which  default  the  trustee  was 
authorized  to  sell:  Eitebjeorge  v.  Mutual  H.  B.  Ass'n,  69  Mo.  52;  a  sale  con- 
ducted by  an  auctioneer  at  which  the  sole  trustee  was  not  present:  Bicken- 
kamp  V.  Rees,  69  Mo.  426;  Vail  v.  Jacobs,  62  Mo.  130;  a  sale  made  without 
publishing  the  notice  of  sale  for  the  period  required  by  the  trust  deed:  Stine 
V.  Wilkson,  10  Mo.  75;  a  sale  made  without  the  consent  of  the  cestui  que  trust, 
or  other  person  whose  assent  was  exacted  by  the  trust  deed:  Berrien  v. 
Thomas,  65  Ga.  61;  Kissam  v.  Dierkes,  49  N.  Y.  602;  a  credit  sale,  when  the 
trustee  was  authorized  to  sell  for  cash  only:  Cassell  v.  Boss,  33  111  244;  85  Am, 
Dec.  270;  a  sale  made  without  posting  the  notice  thereof  at  the  place  desig- 
nated in  the  trust  deed:  Sears  v.  Lirerrnore,  17  Iowa,  297;  85  Am.  Dec.  564; 
a  sale  made  under  a  deed  of  trust,  after  the  debt  to  secure  which  such  deed 
was  given  had  been  paid:  Penny  v.  Cook,  19  Iowa,  538. 

When  suit  is  brought  in  equity  for  relief  from  a  trustee's  sale,  the  court 
will,  of  course,  be  governed  by  the  general  principles  of  equity  jurispru- 
dence, and  will  often,  because  of  those  principles,  deny  relief,  though  the 
sale  may  have  been  improper  or  unauthorized.  Thus  want  of  diligence  on 
the  part  of  the  complainaat  is  in  equity  frequently  fatal  to  his  cause.  This 
is  especially  true  when  he  is  endeavoring  to  annul  a  trustee's  sale.  Cestuis 
que  trust,  and  other  persons  for  whose  benefit  such  sales  are  made,  have  the 
right  to  let  them  stand  and  to  retain  whatever  advantage  may  result  to  them 
therefrom,  though  they  are  irregular,  unauthorized,  or  fraudulent;  and  if  such 
persons,  after  having  knowledge  of  circumstances  entitling  them  to  avoid 
such  sales,  delay  for  an  unreasonable  period  to  take  any  action  whatever, 
they  thereby  manifest  their  election  to  waive  such  fraud,  irregularity,  or  want 
of  authority,  and  once  having  elected  to  make  such  waiver,  their  election 
is  irrevocable:  Land)-um  v.  Union  Bank,  63  Mo.  48;  Connolly  v.  Hammond, 
51  Tex.  635;  Follanshe  v.  Kilbreth,  17  111.  522;  65  Am.  Dec.  m\;  Irish  v.  Antioch 
College,  126  111.  474;  9  Am.  St.  Rep.  638.  If  the  cause  urged  for  vacating 
a  sale  occurred  through  the  act  or  procurement  of  the  complainant,  or  if  he, 
though  not  guilty  of  bringing  about  such  cause,  knew  of  its  existence  at  or 
prior  to  the  sale,  and  being  present  at  the  sale,  neglected  to  disclose  the 
cause  of  complaint  or  to  make  any  objection  to  the  sale,  he  is  probably 
estopped  from  subsequently  urging  it  as  a  ground  for  vacating  the  sale:  Spen- 
cer  V.  Hawkins,  4  Ired.  Eq.  288;  Beebe  v.  De  Batin,  8  Ark.  510. 

It  is  a  well- settled  rule  of  equity  that  where  the  equities  are  equal,  the 
legal  title  prevails.  This  rule,  if  applied  in  favor  of  the  grantees  of  trustees, 
must  protect  them  from  all  causes  of  complaint,  of  which  they  were  inno- 
cently ignorant  at  the  time  of  paying  the  purchase  price  and  receiving  their 


Oct.  1889.]  Tyler  v.  Herring.  295 

conveyances;  and  we  have  no  doubt  that  it  should  be  applied  in  all  cases 
where  the  vice  in  the  trustee's  proceedings  is  one  which  the  purchaser  had 
no  reason  to  anticipate,  and  does  not  consist  of  an  act  or  omission  forbidden 
by  the  instrument  creating  the  trust:  Booraem  v.  Wells,  19  N.  J.  Eq.  87. 
Where  a  statute  forbade  the  enforcement  by  a  trustee  of  any  claim  purchased 
after  his  appointment,  it  was  held  that  a  trustee's  sale  could  not  be  avoided 
on  the  ground  that  at  the  time  of  the  sale  he  was  the  assignee  of  the  debt 
for  the  payment  of  which  the  sale  was  made,  there  being  no  claim  that  the 
purchaser  was  aware  of  such  assignment:  Carey  v.  Broivn,  62  Cal.  373.  So 
where  power  is  given  a  trustee  to  sell  property  to  pay  debts  of  the  trustor, 
without  specifying  to  whom  he  was  indebted,  a  bona  fide  purchaser  will  be 
protected  if  the  trust  is  abused  by  a  sale  when  there  were  no  debts  remaining 
to  be  paid:  Williams  v.  Otey,  8  Humph.  563;  47  Am.  Rep.  632;  Loii'Jun tiler  v. 
Harris,  2  Heisk.  559.  A  purchaser  at  a  trustee's  sale  cannot  be  prejudiced  by 
a  secret  agreement  between  the  trustee  and  the  debtor  that  a  part  of  the 
land  described  in  the  trust  deed  should  be  released  therefrom  on  certain  con- 
ditions which  had  been  complied  with  by  such  debtor:  Powers  v.  Ktteckiiofft 
41  Mo.  425;  97  Am.  Dec.  281. 

If,  as  already  stated,  an  irregular  or  fraudulent  trustee's  sale,  or  one  made 
without  authority,  is  valid  until  the  person  injured  thereby  elects  to  disap- 
prove it,  then,  in  all  actions  or  proceedings  in  which  the  title  to  the  property 
is  assailed,  it  must  follow  that  no  person  who  is  a  stranger  to  the  trust  can 
question  such  sale  and  the  conveyance  made  in  pursuance  thereof.  Hence, 
as  a  -general  rule,  a  stranger  to  a  deed  to  trustees  cannot  complain  of  infor- 
malities, irregularities,  or  frauds  in  the  execution  of  the  power  therein  con- 
ferred: Mar.ston  v.  Rowe,  43  Ala.  271;  Herbert  v.  Uenrick,  16  Ala.  581;  Garyv, 
Col'jin,  11  Ala.  514;  Larco  v.  Casaneuava,  30  Cal.  560.  These  decisions  can, 
however,  be  justified  only  by  the  assumption  that  the  trustee's  sale  and  con- 
veyance were  not  void;  for  if  void,  lie  who  claims  under  them  is  a  stranger  to 
the  title,  and  certainly  cannot  be  entitled  to  any  right  or  remedy,  even  as 
against  a  third  person,  to  which  he  would  not  be  entitled  had  such  sale  or 
conveyance  not  been  attempted  to  be  made.  In  those  states  the  statutes  of 
which  denounce  conveyances  in  contravention  of  a  trust  as  void,  it  may  be 
that  a  conveyance  executed  l)y  a  trustee  m;iy  be  attacked  collaterally,  in  any 
action  and  by  any  per-on,  on  the  ground  that  it  was  in  contravention  of  the 
trust,  and  is  therefore  without  any  effect,  legal  or  equitable:  See  aiite,  p.  268. 
Except  where  a  statute  of  this  kind  is  invoked,  we  apprehend  tliat  the  rule  best 
supported  by  principle  and  authority  is,  that  a  trustee's  deeil  is  not  subject  to 
attack  in  an  action  at  law,  and  that  no  evidence  need  be  ofiFered  in  its  sup- 
port, and  tliat  it  must  be  received  as  a  conveyance  of  the  legal  title,  and  that 
those  who  seek  to  controvert  it  must  do  so  by  alleging  and  establishing  some 
equitable  reason  why,  as  against  them,  it  should  not  prevail:  liowi'ii  v.  Lamb, 
4  G.  Greene.  468;  Reece  v.  Allen,  10  111.  236;  48  Am.  Dec.  336. 

Statements  made  in  various  decisions,  and  in  different  parts  of  this  note, 
that  a  conveyance  made  by  a  trustee  liav  ing  tlie  legal  title  and  the  power  to 
sell  and  convey  is  invalid  or  void,  for  designated  defects,  must  generally  be 
understood  to  mean  void  when  assailed  in  equity  by  some  appropriate  pro- 
ceedings, and  under  such  circumstances  that  there  is  no  equitable  reason  or 
impediment  requiring  the  denial  of  relief  to  the  complainant.  Ihere  are, 
however,  decisions  proceeding  upon  the  assumption  that  the  conveyances 
there  in  question  were  void  at  law.  Thus  in  Thornhunj  v.  Jones,  36  Mo.  514, 
a  complaint  against  a  trustee  to  recover  damages  from  him  for  selling  the 
trust   property    without    publishing    the  notice  of    sale   in  two  counties,  as 


296  Tyler  v.  Herring.  [Miss. 

required  by  the  trust  deed,  and  for  wrongful,  oppressive,  and  fraudulent 
conduct,  whereby  bidders  were  deterred  from  bidding,  was  adjudged  to  state 
no  cause  of  action,  for  the  reason  that  a  sale,  as  therein  alleged,  was  void, 
both  at  law  and  in  equity,  and  could  therefore  occasion  no  damages.  la 
Minot  V.  Prescott,  14  ilass.  496,  which  was  an  action  of  ejectment,  the  de- 
fendants claimed  under  a  conveyance  from  Mary  Betton,  to  whom  the  income 
of  the  property  in  controversy  had  been  devised  for  her  life,  with  power  to 
sell  such  property  if  the  income  was  not  sufficient  to  support  her  comfortably, 
it  was  decided  that  parol  evidence  was  admissible  to  defeat  her  conveyance 
by  proving  that  the  income  was  sufficient  for  her  support,  and  therefore 
that  the  condition  precedent,  giving  her  power  to  convey,  had  never  hap- 
pened. But  it  must  be  remembered  that  she  was  not  a  trustee;  that  the 
testator  did  not  devise  his  realty  to  her,  in  trust  or  otherwise;  and  that  when 
she  made  the  conveyance,  she  had  neither  an  estate  to  convey,  nor  a  power 
to  convey  the  estate  of  others. 

Trust  deeds  made  merely  for  the  purpose  of  securing  the  payment  of  debts 
due,  or  to  become  due,  from  the  trustee,  may,  with  much  reason,  be  regarded 
as  exceptional  in  their  character,  and  the  power  of  the  trustee  to  convey  even 
the  legal  title  as  being  dependent  on  his  substantial  compliance  with  the  con- 
ditions imposed  by  the  conveyance  to  him.  Thus  in  Texas  it  has  been  settled 
that  a  grantor  of  a  trust  deed  of  this  class  "holds  the  title  to  the  land,  i.  e., 
the  full  title,  legal  and  equital)le,  subject  to  the  lien  created  by  the  instru- 
ment for  the  payment  of  the  debt  ";  that  the  grantor  and  those  succeeding  to 
his  estate  have  a  right  to  the  possession,  and  for  most  purposes,  the  legal 
title;  that  a  conveyance  made  by  the  trustee  in  a  mode,  at  a  time,  or  under 
circumstances  not  authorized  by  the  trust  deed  is  inoperative  at  law  as  well 
as  in  equity:  Fuller-  v.  O'Neal,  69  Tex.  349;  5  Am.  St.  Rep.  59;  Duty  v.  Gra- 
ham,  12  Tex.  427;  62  Am.  Dec.  534;  Mills  v.  Tray  lor,  30  Tex.  11;  Young  v. 
Van  Benthuysen,  30  Tex.  762. 

The  courts  of  some  of  the  states  have  made  a  distinction  between  the 
original  purchaser  at  a  trustee's  sale  and  persons  subsequently  acquiring 
title  under  him.  Whatever  may  be  the  rules  in  those  states  as  to  the 
original  purchaser,  their  courts  hold  that  subsequent  purchasers  may  rely 
upon  the  recitals  in  the  trustee's  deed,  and  if  those  recitals  support  the 
authority  of  the  trustee  to  sell  and  convey,  they  are  conclusive  in  favor  of 
such  subsequent  purchasers,  unless  they  acquired  their  title  with  notice  of 
the  frauds  or  defects  complained  of:  Gunnell  v.  Cockrill,  79  111.  79;  Oassell  v. 
Boss,  33  111.  244;  85  Am.  Dec.  271;  Wilsoii  v.  i^outh  Park  Commissioners,  70 
111.  46;  Hamilton  v.  Lubukec,  51  111.  415;  Streitz  v.  Uartman,  26  Neb.  33. 
With  respect  to  the  original  purchasers,  the  above  cases  assume  that,  as 
against  them,  the  conveyances  under  consideration  would  have  been  set  aside 
in  equity,  though  such  assumption  was  not  necessary  to  the  determination  of 
any  of  the  cases.  There  are  other  cases  in  which  the  general  rule  is  stated 
to  be  that  the  original  ptirchasers  from  trustees  must  ascertain,  at  their 
peril,  the  existence  of  the  facts  authorizing  the  trustees  to  sell  and  convey,  and 
in  which  the  statement  is  something  more  than  a  dictum;  Sears  v.  Livermore, 
17  Iowa,  297;  85  Am.  Dec.  564.  So  far,  however,  as  these  cases  have  fallen 
within  our  observation,  the  original  purchasers  were  parties  for  whose  bene- 
fit, or  in  payment  of  whose  debt,  the  sale  was  made,  or  who  had  notice  at 
the  time  of  their  purchase  of  the  irregularity  complained  of.  Therefore  we 
hesitate  to  accept  the  rule  under  consideration  as  applicable  even  as  against 
the  original  purchasers  when  they  were  not  interested  in  the  sale  and  they 
purchased  in  good  faith,  while  innocently  ignorant  of  the  act  or  omission 


Oct.  1889.]  Ehrman  v.  Hoskins.  297 

of  the  trustee  •which  is  urged  to  invalidate  his  conveyance.  In  favor  of 
such  purchasers  we  think  the  equitable  maxim  must  be  applied,  that  where 
the  equities  are  equal,  the  legal  title  prevails. 

Respecting  the  presumptions  arising  for  or  against  one  claiming  under  a 
conveyance  from  a  trustee,  the  authorities  are  exceptionally  meager.  In  all 
those  jurisdictions  in  which  the  rule  prevails  that  such  a  conveyance  always 
operates  upon  the  legal  title,  no  question  could  arise  in  actions  at  law  regard- 
ing these  presumptions;  for  the  conveyance,  if  sufficient  in  form,  would  vest 
the  title  iu  the  grantee,  and  if  insufficient,  would  not  so  vest  it,  and  in  either 
event  there  would  be  nothing  for  or  against  which  any  presumption  could 
operate:  Kaesterv.  Burke,  81  111.  436;  Beecev.  Allen,  10  111.  236;  48  Am.  Dec. 
336.  So  far  as  the  courts  have  spoken  at  all  upon  this  topic,  what  they  have 
said  tends  to  sustain  the  rule  "  that  apresumption  is  to  be  indulged  that  the 
trustee  did  those  acts  in  pais  which  were  conditions  precedent  to  a  valid  sale 
by  him,  and  that  the  burden  of  showing  the  contrary  is  on  those  who  question 
the  validity  of  the  sale":  Oraham  v.  Fitts,  53  Miss.  307;  and  the  principal 
case.  The  deed  of  trust  may  declare  that  if  the  trustee  conveys,  the  recitals 
in  his  deed  shall  l>e  evidence  of  the  facts  therein  recited,  in  which  event  no 
doubt  such  recitals  as  he  may  make  pertinent  to  the  execution  of  his 
power  Sive  prima  facie  evidence  in  favor  of  the  purchaser:  Carter  v.  Ahshire, 
48  Mo.  300.  In  some  cases  it  seems  to  have  been  taken  for  granted  that 
because  a  deed  of  trust,  by  so  stipulating,  may  make  the  recitals  in  any  deed 
made  by  the  trustee  evidence  of  the  facts  therein  recited,  a  deed  without 
such  a  stipulation  leaves  the  trustee  without  authority  to  make  recitals 
which  shall  be  competent  evidence,  and  that  his  grantee  must  offer  other 
evidence  to  show  that  such  recitals  are  true:  Neilson  v.  County  of  Chariton, 
60  Mo.  386;  Vail  v.  Jacobs,  62  Mo.  130;  Wood  v.  Lake,  62  Ala.  489;  Gibson  v. 
Jones,  5  Leigh,  370.  This  is  certainly  a  mistaken  view.  The  recitals  made 
by  the  trustee  surely  must  be  taken  as  at  least  prima  facie  evidence  of  the 
existence  of  the  matters  therein  stated:  Savings  and  Loan  Soc  v.  Deering,  66 
CaL  281;  Beal  v.  Blair,  33  Iowa,  318. 


Ehrman  v.  Hoskins. 

[67  Mississippi,  192.] 

Wills.  — Parol  Evidence  is  not  Admissible  to  Prove  that  a  Testator 

Intended  to  devise  a  different  lot  from  that  described  in  his  will,  and 

that  his  intention  was  not  correctly  expressed  in  the  will,  owing  to  a 

misapprehension  of  the  draughtsman  as  to  the  lot  intended  to  be  described. 

Ejectment  to  recover  possession  of  a  house  and  lot  in 
Vicksburg.  Both  parties  claimed  title  under  H.  L.  Bond,  the 
defendant  as  his  devisee,  and  the  plaintiffs  as  successors  in 
interest  of  his  heirs.  The  will,  under  which  the  defendant 
claimed,  devised  to  her,  for  the  period  of  her  natural  life,  a  lot 
of  land  in  Vicksburg,  described  as  "  that  part  of  lot  56  in  square 
11,  on  the  original  plat  of  Vicksburg,  commencing  at  the 
southeast  corner  of  said  lot  on  Munroe  Street,  and  running 
thence  north  along  said  street  twenty  feet  and  ten  and  one 


AMERICAN  STATE  REPORTS. 

Vo[..    XXT,    Pages  481-.508. 

LADD  :'.  CTTY  OF  BOSTON. 

1 1.51  Massachusetts,  58o.] 

Covenants  restricting  use  of  land. 


June,  1890.]  Ladd  v.  City  of  Boston.  481 

Ladd  V.  City  of  Boston. 

fl51  Massachusetts,  585.] 

Easements.  — Right  to  have  Land  Built  upon  for  the  Benefit  or 
Light  and  Air  to  neighboring  land  may  by  deed  be  made  an  easement, 
and  may  be  created  by  words  of  covenant  as  well  as  by  words  of  grant. 

Easements.  —  In  Order  to  Attach  an  Easement  to  a  Dominant 
Estate,  it  is  not  necessary  that  it  shall  be  created  at  the  moment  when 
either  the  dominant  or  the  servient  estate  is  created,  if  the  purport  of 
the  deed  is  to  create  an  easeineut  for  the  benefit  of  the  dominant  estate. 

Easements  Restricting  the  Use  of  Lands.  — If  the  owners  of  lots  front- 
ing upon  a  square  of  land  in  a  city  mutually  agree  that  certain  places, 
avenues,  and  passage-ways,  as  laid  out  upon  a  phit,  shall  remain  open  as 
an  appurtenant  to  several  lots,  and  that  no  building  shall  be  erected  upon 
certain  lots  within  ten  feet  of  the  front  line  thereof,  unless  a  majority 
of  the  owners  shall  so  elect,  nor  shall  any  building  extend  above  a  speci- 
fied height,  such  agreement  entitles  each  of  the  owners  to  an  easement, 
and  if  a  city,  in  the  exercise  of  the  right  of  eminent  domain,  takes  a  lot 
which  is  subject  to  such  easement  in  favor  of  an  owner  of  another  lot,  it 
must  compensate  him  for  the  loss  of  his  easement. 

Petition  to  superior  court,  claiming  that  petitioner,  on  April 
20,  1886,  was  the  owner  of  land  known  as  lot  51,  together  with 
a  dwelling  thereon,  which  lot  formerly  belonged  to  J.  P. 
Thorndyke,  and  was  shown  on  a  plan  of  lots,  dated  October 
6,  1835,  situate  on  Pemberton  Square,  formerly  known  as 
Phillips  Place,  in  Boston,  and  that  petitioner  was  also,  as  the 
owner  of  such  lot,  entitled  to  rights  and  easements  in  lots  39, 
40,  and  41  of  division  4,  and  lots  56,  57,  58,  and  59  of  division 
6,  and  a  six-foot  passage-way  shown  on  the  same  plan; 
that  by  an  indenture  of  tlie  same  date  of  the  said  plan,  duly 
recorded,  and  by  another  indenture,  dated  November  7,  1837, 
also  recorded,  an  agreement  was  made  "  between  Patrick  T. 
Jackson,  his  heirs  and  assigns,  and  the  owners  of  the  balance 
of  said  sixty-four  lots,  their  heirs  and  assigns,  by  which  it 
was  mutually  agreed,  in  the  strongest  and  most  unmistakable 
terms,  that  the  place,  avenues,  and  passage-ways  as  laid  out 
on  said  plan  shall  forever  remain  open  and  unencumbered  as 
appurtenant  to  the  several  lots,  to  be  used  for  all  purposes  re- 
quisite for  the  usual  full  enjoyment  of  such  dwelling  and  ware- 
houses and  their  appurtenances  as  shall  be  erected  thereon, 
conformably  to  the  provisions  therein  contained,  and  that  no 
building  shall  be  erected  upon  lots  comprised  in  the  fourth 
division  within  ten  feet  from  the  line  thereof  on  Phillips 
Place,  unless  a  majority  of  the  owners  shall  elect  to  have 
Bwelled  or  circular  fronts,  in  which  case  the  swelled  or  circu- 

AM.  ST.  Kkp.,  Vol.  XXI.  -31 


482  Ladd  v.  City  of  Boston.  [Mass. 

lar  portions  may  extend  to  any  distance  within  seven  feet  of 
said  line;  nor  shall  any  building  extend  westerly  beyond 
sixty-five  feet  from  said  line  at  a  greater  height  than  ten 
feet  above  the  level  of  the  six-foot  passage-way  in  the  rear 
of  and  against  the  said  lots  respectively;  and  the  fact  is, 
that  said  owners,  by  a  majority  or  otherwise,  did  not  elect  to 
have  swelled  or  circular  fronts;  and  the  indentures  aforesaid 
further  provide  that  no  building  shall  be  erected  upon  the 
lots  comprised  in  division  numbered  7  extending  easterly 
beyond  the  distance  of  sixty-six  feet  from  Somerset  Street  at 
such  a  height  that  the  eaves  shall  be  above  the  floor  of  the 
first  or  principal  story,  excepting  upon  lot  numbered  65; 
provided,  however,  that  if,  at  any  time  thereafter,  the  owners  of 
the  said  lots,  or  a  majority  of  three  fourths  parts  of  them,  shall 
consent  to  the  waiver  or  discharge  of  any  or  either  of  the  con- 
ditions abovementioned,  then  the  same  shall  cease  and  deter- 
mine upon  the  execution  of  a  sealed  instrument  declaring  such 
assent,  and  the  recording  of  the  same  in  the  registry  of  deeds, 
and  the  several  lots  shall  thenceforth  be  held  by  their  respect- 
ive owners  free  and  released  from  all  the  conditions  so  in- 
tended to  be  released  and  discharged;  and  further,  that  a 
breach  of  any  of  the  conditions  above  specified  shall  not  work 
a  forfeiture  of  the  estate,  but  shall  give  to  the  said  Jackson, 
his  heirs  or  assigns,  or  the  owner  of  any  lot  interested  in  such 
breach,  full  power  and  authority  to  enter  upon  the  lot,  with 
servants  and  instruments,  and  take  down  and  remove  any 
building  that  may  have  been  erected  in  violation  of  such  con- 
dition." The  petition  also  alleged  that  no  release  of  the  above- 
mentioned  conditions  had  been  made  by  the  owners  of  lots; 
that  the  commissioners  for  the  erection  of  a  new  court-house 
in  Boston  had  taken  lots  39  to  41  inclusive,  and  lots  56  to  59 
inclusive,  and  the  six-foot  passage-way,  together  with  the  ease- 
ments and  privileges  of  the  petitioner;  that  the  street  com- 
missioners had  never  allowed  or  paid  petitioner  any  damages 
occasioned  to  him  by  such  taking;  that  petitioner  was  ag- 
grieved "  that  his  easements  and  privileges  of  light  and  air, 
and  especially  his  view  into  the  open  area  of  Pemberton 
Square,  and  also  an  easement  reserved  to  him  by  said  inden- 
ture, shall  have  been  taken  away  and  destroyed  and  no  compen- 
sation allowed  him.therefor  ";  and' he  asked  for  a  jury  to  assess 
his  damages.  The  respondent  moved  to  dismiss  the  petition, 
on  the  ground  that  the  petition  did  not  show  any  taking  of 
any  estate,  property,  or  land  of  the  petitioner  for  which  he 


June,  1890.]         Ladd  v.  City  op  Boston. 


483 


was  entitled  to  compensation  from  the  city.  The  motion  was 
granted,  and  the  petitioner  appealed.  The  following  plan 
shows  a  portion  of  the  plan  referred  to,  so  far  as  it  is  material 
to  the  present  controversy:  — 

Bomerset  Street. 


n        J^, 


C-      *^ 


5G 


7 


57 


68 


59 


Passageway. 

►d 

hi 

.^ 

s  ^ 

.H3 

H 

O      tH 

^     ^ 

«-i 

S    ^ 

o 

a     t^ 

t>5-      ^ 

pr 

(C 

o 

O 

o 

0 

ts 

B 

39 

40 

41 

PembertoD  Square 


7.  R.  Clark,  for  the  petitioner. 
T.  M.  Babson,  for  the  respondent. 

Holmes,  J.  The  ground  of  the  motion  to  dismiss  the  peti- 
tion is,  that  the  petition  does  not  show  any  taking  of  any 
estate  of  the  petitioner  for  which  the  city  of  Boston  is  liable, 
and  that  is  the  only  question  upon  which  we  pass.  It  may  be 
that  a  separate  petition  ouglit  to  have  been  filed  for  each 
estate  taken,  but  upon  that  we  express  no  opinion  at  this 
stage.  Neither  do  we  express  any  opinion  on  the  question 
of  parties,  or  upon  the  effect  of  a  previous  petition  liaving 
been  filed  in  respect  of  some  of  the  same  lots,  if  such  be  the 
fact. 

It  appears  that  the  petitioner's  predecessor  in  title  and  the 
then  owners  of  the  land  taken  by  the  city  for  the  new  court- 


484  Ladd  v.  City  of  Boston.  [Mass. 

house  were  parties  to  an  indenture  whereby  it  was  covenanted, 
among  other  things,  that  the  land  in  front  of  the  petitioner's 
lot  and  just  across  the  street  should  not  be  built  upon  beyond 
a  certain  line  on  what  is  now  Pemberton  Square,  and  should 
be  subject  to  some  other  similar  negative  restrictions.  This 
land  the  city  has  taken  free  of  these  restrictions.  If  the  plain- 
tiff has  an  easement,  the  city  must  pay  for  it. 

The  right  to  have  land  not  built  upon,  for  the  benefit  of  the 
h'ght,  air,  etc.,  of  neighboring  land,  maybe  made  an  easement, 
within  reasonable  limits,  by  deed:  Brooks  v.  Reynolds,  106 
Mass.  31.  And  such  an  easement  may  be  created  by  words 
of  covenant,  as  well  as  by  words  of  grant:  Hogan  v.  Barry, 
143  Mass.  538.  In  order  to  attach  the  easement  to  the  dom- 
inant estate,  it  is  not  necessary  that  it  should  be  created  at  the 
moment  when  either  the  dominant  or  the  servient  estate  is 
conveyed,  if  the  purport  of  the  deed  is  to  create  an  easement 
for  the  benefit  of  the  dominant  estate:  Louisville  and  Nashville 
R.  R.  Co.  V.  Koelle,  104  111.  455;  Wetherell  v.  Brobst,  23  Iowa, 
586,  591;  Gale  on  Easements,  6th  ed.,  59.  Of  course  it  does 
not  matter  that  by  the  same  deed  numerous  parties  grant 
similar  or  reciprocal  easements  over,  or  in  favor  of,  many  par- 
cels of  land:  Tobey  v.  Moore,  130  Mass.  448;  Beals  v.  Case, 
138  Mass.  138,  140.  Neither  is  it  material  that  the  indenture 
provides  that  a  majority  of  three  fourths  of  the  owners  of  the 
lots  concerned  may  terminate  the  rights  which  it  creates. 

If,  then,  we  are  to  assume  that  at  the  time  of  the  indenture 
the  owner  of  the  petitioner's  lot  was  a  different  person  from 
the  owner  of  the  opposite  lot  taken  by  the  city,  we  have  a 
plain  case  of  a  grant  of  easements  to  have  certain  parts  of  the 
latter  not  built  upon,  or  not  built  upon  above  a  certain  height. 
Such  would  seem  to  have  been  the  fact  from  the  plan,  re- 
ferred to  in  the  petition,  which  was  exhibited  to  us  at  the 
argument,  and  from  the  petition  itself,  which  states  that  the 
petitioner's  right  acquired  under  the  indenture  was  an  ease- 
ment. 

It  follows  that  we  need  not  consider  the  argument  for  the 
city,  that  owners  of  purely  equitable  restrictions  are  not  enti- 
tled to  maintain  a  petition  of  this  nature. 

Motion  overruled.  

Covenants  Restricting  the  Use  of  Land.  —  Among  the  numerons  at- 
tempts at  a  comprehensive  statement  of  the  legal  doctrine  on  this  subject,  we 
may  quote  that  of  Professor  Washburn:  "  It  is  now  generally  held  that  when 
land  ia  divided  up  by  the  owner  into  numerous  lots,  and  sold,  and  in  every  deed 


June,  1890.]  Ladd  v.  City  of  Boston.  485 

a  condition  or  restriction  is  inserted,  which  is  shown,  either  by  its  nature,  or 
position  of  the  property,  or  words  of  the  deed,  or  otlier  evidence,  to  be  inserted 
for  the  benefit  of  the  other  lots,  there  is  created  a  perpetual  servitude  upon 
the  land  in  favor  of  the  other  lots":  Washburn  on  Easomeuts,  4th  ed.,  115. 
The  following  statement  of  the  rule  was  made  by  Mr.  Justice  Soule,  in  a  case 
in  Massachusetts:  "It often  happens  that  owners  of  land,  which  they  de- 
sign to  put  into  the  market  in  lots  for  dwelling-houses,  insert  in  the  deeds  of 
the  several  lots  a  uniform  set  of  restrictions  as  to  the  purposes  for  which  the 
land  may  be  used,  and  as  to  the  portions  of  it  which  may  be  covered  by 
buildings.  So  far  as  these  restrictions  are  reasonable  in  their  character,  they 
are  upheld  and  enforced  by  courts  of  equity  in  favor  of  the  original  owner, 
so  long  as  he  continues  to  own  any  part  of  the  tract  for  the  benefit  of  which 
the  restrictions  were  created,  as  well  as  in  favor  of  the  owner  of  any  one  of 
the  lots  into  which  the  tract  was  divided,  and  against  the  owner  of  any  of 
the  lots  who  attempts  to  set  the  restrictions  at  naught":  Sanboiti  v.  Bice, 
129  Mass.  387,  .396.  "That  such  a  purpose  is  a  legitimate  one,  and  may  bo 
carried  out  consistently  with  the  rules  of  law,  by  reasonable  and  proper  cove- 
nants, conditions,  or  restrictions  cannot  be  doubted.  Every  owner  of  real 
property  has  the  right  so  to  deal  with  it  as  to  restrain  its  use  by  his  grantees 
within  such  limits  as  to  prevent  its  appropriation  to  purposes  wliich  will  im- 
pair the  value  or  diminish  the  pleasure  of  tlie  enjoyment  of  the  land  which 
he  retains.  The  only  restriction  on  this  right  is,  that  it  shall  be  exercised 
reasonably,  with  due  regard  to  public  policy,  and  without  creating  any 
unlawful  restraint  of  trade  ":  Whitney  v.  Union  R'y  Co.,  11  Gray,  359;  71 
Am.  Dec.  715.  Nor  can  there  be  any  doubt  that  in  whatever  form  a  re- 
straint is  placed  on  real  estate  by  the  terms  of  the  grant,  whether  it  is  in  the 
technical  form  of  a  condition  or  covenant,  or  of  a  reservation  or  exception 
in  the  deed,  or  by  words  which  give  to  the  acceptance  of  the  deed  by  the 
grantee  the  force  an<l  efi"ect  of  a  parol  agreement,  it  is  binding,  as  between 
the  grantor  and  tlie  immediate  grantee,  and  can  be  enforced  against  him  by 
suitable  process,  both  at  law  and  equity:  Whitney  v.  Union  R'y  Co.,  11  Gray, 
359;  71  Am.  Dec.  715. 

The  fact  that  the  deed  contains  a  condition  of  forfeiture  of  the  estate  and 
reverter  of  title  for  a  violation  of  the  covenant  does  not  oust  the  remedy  of 
the  covenantee  in  equity.  On  the  contrary,  the  remedy  in  equity,  being 
less  severe  to  the  vendor,  is  more  reasonable,  and  hence  to  be  preferred: 
Watrom  v.  Allen,  57  Mich.  362;  58  Am.  Rep.  363.  That  the  fact  that  a 
penalty  or  forfeiture  is  imposed  for  doing  a  prohibited  act  affords  no  objec- 
tion to  the  interposition  of  equity  to  enjoin  the  doing  of  the  act,  see  Colc-i  v. 
aimn,  Kay,  56;  Barrett  v.  Blaijrave,  5  Ves.  555;  Hardy  v.  Martin,  1  Cox,  26. 
On  analogous  grounds,  specific  performance  will  be  decreed,  notwithstanding 
the  contract  liquidates  the  damages:  Fox  v.  Scard,  33  Beav.  327;  Hoioardv. 
Woodward,  10  Jur.,  N.  S.,  112.3.  Equity  will  not  enforce  the  condition  of 
forfeiture,  because  equity  does  not  decree  forfeitures;  that  condition  is  en- 
forceable only  in  the  legal  forum:  Watrotis  V.  Allen,  57  Mich.  362;  58  Am. 
Rep.  363.  That  equity  will  not  enforce  forfeitures,  see  Crane  v.  Dwyer,  9 
Mich.  350;  SO  Am.  Dec.  87;  White  v.  Port  Huron  etc.  R.  R.  Co.,  13  Mich. 
356;  Wing  v.  Railey,  14  Mich.  83;  Horshurg  v.  Baker,  1  Pet.  232;  Livimj- 
stone  V.  Tompkins,  4  Johns.  Ch.  415;  8  Am.  Dec.  598;  Smith  v.  Jewett,  40 
N.  H.  530;    Warner  v.  Bennett,  31  Conn.  468. 

If  the  covenant  of  reservation  is  one  which  the  parties  have  the  right  to 
make,  the  original  covenantee  will  be  entitled  to  the  aid  of  a  court  of 
equity  to  restrain  its  violation  as  long  as  he  lives  and  remains  the  owner  of 


486  Ladd  v.  City  of  Boston.  [Mass. 

the  property,  although  it  may  be  a  covenant  personal  to  him  and  not  running 
with  the  land:  Parker  v.  Nv/Mngale,  6  Allen,  341;  83  Am.  Dec.  632;  WJdt- 
ney  v.  Union  R'y  Co.,  11  Gray,  359;  71  Am.  Dec.  715;  Badijerv.  Board- 
man,  16  Gray,  559;  Peck  v.  Comoay,  119  Mass.  54t3. 

There  is,  of  course,  no  doubt  that  as  between  the  covenantor  and  the  cove- 
nantee the  latter  may  maintain  an  action  for  damages  for  a  breach  of  the 
covenant;  and  it  is  equally  clear  that  he  may  have  an  injunction  to  restrain 
its  breach  without  showing  actual  damage:  Oerman  v.  Chapman,!  Ch.  Div. 
271;  Richards  V.  Revitt,  7  Ch,  Div.  226;  Hall  v.  Wesster,  7  Mo.  App.  56,  62. 
And  where  there  has  been  a  sale  of  a  large  tract  of  land  laid  off  into  lots  upon 
the  condition  of  certain  restrictions  in  the  use  of  every  one  of  the  lots,  which 
restrictions  are  inserted  in  every  one  of  the  deeds,  one  of  the  vendees,  it  has 
been  held,  is  equally  entitled  to  an  injunction  against  another  of  the  vendees 
to  restrain  him  from  violating  the  restrictions,  irrespective  of  the  question  of 
actual  damages:  Hall  v.   Wexster,  7  Mo.  App.  56,  62. 

Where  land  is  sold  subject  to  such  a  restrictive  covenant,  and  the  lan- 
guage of  the  deed  and  the  situation  of  the  land  with  reference  to  other 
land  of  the  grantor  retained  are  such  as  to  make  it  clear  that  the  restriction 
in  the  deed  upon  the  use  of  the  land  sold  was  intended  for  the  benefit  of  the 
land  retained,  this  is  held  to  create  a  negative  easement,  or,  as  the  courts 
sometimes  say,  an  equity  in  the  land  sold  for  the  benefit  of  the  land  retained, 
such  as  binds  all  the  successors  in  title  of  the  land  subject  to  the  easement, 
provided  they  have  notice  thereof,  express  or  constructive:  Tulk  v.  Moxhay, 
2  Phill.  Ch.  774;  Whatman  v.  Gibson,  9  Sim.  196,  207;  Mann  v.  Stephens,  15 
Sim.  377;  Coles  v.  Sims,  Kay,  56,  69;  Child  v.  Douglas,  Kay,  560,  571; 
Jeffries  v.  Jeffries,  117  Mass.  185;  Sanhoi-n  v.  Rice,  129  Mass.  396;  Parker  v. 
Nightingale,  6  Allen,  341;  S3  Am.  Dec.  632;  Peck  v.  Conway,  119  Mass.  546, 549; 
Whitney  V.  Union  R'y  Co.,  11  Gray,  359,  364;  71  Am.  Dec.  715;  Renalsv.  Cowli- 
shaw,d  Ch.  Div.  125,  129;  affirmed,  11  Ch.  Div.  866;  Clark  v.  Martin,  49 
Pa.  St.  289;  Western  v.  McDermott,  L.  R.  1  Eq.,  499,  504;  affirmed,  L.  R.  2 
Ch.  72;  Hills  v.  Miller,  3  Paige,  254;  24  Am.  Dec.  218;  Burrow  v.  Richard,  8 
Paige,  354;  Brouwer  v.  Jones,  23  Barb.  153;  Linzoe  v.  Mixer,  101  Mass.  512; 
Oilhert  v.  Peteler,  38  N.  Y.  165;  97  Am.  Dec.  785;  Atlantic  Dock  Co.  v.  Leav- 
itt,  54  N.  Y.  35;  Watrous  v.  Allen,  57  Mich,  362;  58  Am.  Rep.  363.  This 
doctrine  is  variously  expressed  in  judicial  opinions.  Such  a  restriction  has 
been  held  to  be  in  the  nature  of  a  servitude,  the  benefit  of  which  would  be- 
come attached  to  the  other  estates  retained  or  contemporaneously  or  subse- 
quently conveyed  by  the  grantor  as  a  legal  right  or  easement,  and  would 
pass  with  them  as  appurtenant:  Jeffries  v.  Jeffries,  117  Mass.  185.  To  the 
same  effect  are  Peck  v.  Conway,  119  Mass.  546,  549;  Whitney  v.  Union  R'y 
Co.,  11  Gray,  359,  364;  71  Am.  Dec.  715.  The  doctrine  has  been  expressed 
with  great  clearness  by  Bigelow,  J.,  in  the  case  last  cited,  which  may  per- 
haps be  regarded  as  the  leading  American  case  on  the  question.  The  doc- 
trine was  thus  expressed  by  Vice-Chancellor  Hall,  after  reviewing  .the 
previous  decisions  in  tlie  English  courts  of  chancery  on  the  subject:  "Any 
one  who  has  acquired  land,  being  one  of  several  lots  laid  out  for  sale  or 
building  plats,  where  the  court  is  satisfied  it  was  the  intention  that  each 
one  of  the  several  purchasers  should  be  bound  by,  and  should  as  against 
the  others  have  the  benefit  of,  the  covenants  entered  into  by  each  of  the 
purchasers,  is  entitled  to  the  benefit  of  the  covenant;  and  this  right, 
that  is,  the  benefit  of  the  covenant,  inures  to  the  assign  of  the  first  pur- 
chaser, —  in  other  words,  runs  with  the  land  of  such  purchaser This 

right,"  continued  he,   "exists  not  only  where  the  several  parties   execute 


June,  1890.]  Ladd  v.  City  of  Boston.  487 

a  mutual  covenant,  but  wherever  the  mutual  contract  can  be  sufficiently 
established.  A  purchaser  may  also  be  entitled  to  the  benefit  of  a  re- 
strictive covenant  entered  into  with  his  vendor,  upon  their  heirs,  where 
his  vendor  has  contracted  with  him  that  he  shall  be  the  assign  of  it;  that 
is,  of  the  benefit  of  the  covenant.  And  such  a  covenant  need  not  be  ex- 
pressed, but  may  be  collected  from  the  transaction  of  sale  and  purchase.  In 
considering  this,  the  expressed  or  otherwise  apparent  purpose  or  object  of 
the  covenant,  in  reference  to  its  being  intended  to  be  annexed  to  other  prop- 
erty, or  to  its  being  only  obtained  to  enable  the  covenantee  more  advanta- 
geously to  deal  with  his  property,  ia  important  to  be  attended  to.  Whether 
the  purchaser  is  the  purchaser  of  all  the  land  retained  by  his  vendor  when 
the  covenant  was  entered  into  is  also  important.  If  he  is  not,  it  may  be  im- 
portant to  take  into  consideration  whether  his  vendor  has  sold  ofiF  part  of  the 
land  so  retained,  and  if  he  has  done  so,  whether  or  not  he  has  so  sold  subject 
to  a  similar  covenant;  whether  the  purchaser  claiming  the  benefit  of  the  cove- 
nant has  entered  into  a  similar  covenant  may  not  be  so  important ":  Renals 
V.  Coiolishaw,  9  Ch.  Div.  125,  129.  This  decision  was  affirmed  on  appeal,  and 
one  of  the  lords  justices  (Baggallay)  went  so  far  as  to  adopt  entirely  the 
language  of  Vice-Chancellor  Hall,  above  quoted. 

It  is  not  to  be  supposed  from  the  foregoing  that  it  is  at  all  necessary,  in 
order  to  have  such  a  covenant  enforced  for  the  benefit  of  adjoining  or  adja- 
cent land,  that  it  should  be,  in  a  technical  sense,  a  covenant  running  with 
the  land  conveyed  by  the  deed  which  contains  the  covenant.  "The  precise 
form  or  nature  of  the  covenant  or  agreement  is  quite  immaterial.  It  is  not 
essential  that  it  should  run  with  the  land.  A  pergonal  covenant  or  agree- 
ment will  be  held  valid  and  binding  in  equity  on  a  purchaser  taking  the 
estate  with  notice.  It  is  not  binding  on  him  merely  because  he  stands  as  an 
assignee  of  the  party  who  made  the  agreement,  but  because  he  has  taken 
the  estate  with  notice  of  a  valid  agreement  concerning  it,  which  he  cannot 
equitably  refuse  to  perform":  Whitney  v.  Union  R'y  Co.,  11  Gray,  359,  3G4; 
71  Am.  Dec.  715,  718;  opinion  by  Bigelow,  J.  In  the  leading  English  case 
in  which  the  principle  upon  which  courts  of  equity  grant  relief  was  formu- 
lated and  applied  by  Lord-Chancellor  Cottenhain,  that  eminent  judge  said: 
"That  this  court  has  jurisdiction  to  enforce  a  contract  between  the  owner  of 
land  and  his  neiglibor  purchasing  a  part  of  it,  that  the  latter  shall  either  use 
or  abstain  from  using  the  land  in  a  particular  way,  is  what  I  never  knew  dis- 
puted. Besides  that,  the  covenant  being  one  whicli  does  not  run  with  the 
land,  this  court  cannot  enforce  it.  But  the  case  is,  not  whether  the  covenant 
runs  with  the  land,  but  whetlier  a  party  shall  be  permitted  to  use  the  land 
in  a  manner  inconsistent  with  the  contract  entered  into  by  the  vendor,  and 
with  notice  of  which  he  purchased.  Of  course  the  price  will  be  affected  by 
the  covenant."  And  again  he  said:  "Tiiat  the  question  does  not  depend 
upon  whether  the  covenant  runs  with  the  land  is  evident  from  this,  that  if 
there  was  a  mere  agreement,  and  no  covenant,  this  court  would  enforce  it 
against  a  party  purchasing  with  notice  of  it;  for  if  an  equity  is  attached  to 
the  property  by  the  owner,  no  one  purchasing  with  notice  of  that  equity  can 
Btand  in  a  different  situation  from  the  party  from  whom  he  purchased  ":  Talk 
Moxhay,  1  Phill.  Ch.  774,  777;  quoted  in  Kentes  v.  Lyon,  L.  R.  4  Ch.  222,  and 
recognized  in  Child  v.  Dongla-'i,  Kay,  560.  Quoting  this  language,  it  has  been 
added  by  Lord  Justice  Selwyn:  "The  questions  which  have  arisen  with  re- 
spect to  the  devolution  of  the  benefit  of  covenants  of  this  kind  have  been 
decided  upon  similar  principles,  and  equally  without  reference  to  any  tech- 
nical olijections  depending  upon  the  covenants  running  or  not  running  with 


488  Ladd  v.  City  of  Boston.  [Mass. 

the  land":  Rentes  v.  Lyon,  L.  R.  4  Ch.  223.  So  in  a  later  case,  it  is  said  by 
Vice-Chancellor  Hall:  "It  is  now  well  settled  that  the  burden  of  a  covenant 
entered  into  by  a  grantee,  in  fee,  for  himself,  his  heirs  and  assigns,  although 
not  running  with  the  land,  at  law,  so  as  to  give  a  legal  remedy  against  the 
owner  thereof  for  the  time  being,  is  binding  upon  the  owner  of  it  for  the  time 
being,  in  equity,  he  having  notice  thereof":  Renals  v.  CowlUhnw,  9  Ch.  Div. 
125,  129.  It  may  be  suggested,  though  not  with  absolute  confidence,  that 
the  only  distinction  under  this  head  is  this:  if  the  covenant  is  one  which  tech 
nically  runs  with  the  land,  it  n)ay  bind  the  successors  in  title  of  the  original 
covenantor,  irrespective  of  the  question  of  notice;  for  they  would  be  held  to 
take  the  land  subject  to  any  burdens  attaching  to  it  under  the  strict  rule-  of 
law,  whether  they  had  notice  of  such  burdens  or  not;  whereas  if  the  covenant 
does  not  run  with  the  land,  they  must  have  notice  of  it,  actual  or  construc- 
tive; otherwise  they  occupy  in  respect  of  it  the  attitude  of  bona  Jide  purchasers 
without  notice,  and  it  cannot  be  enforced  against  them  in  a  court  of  equity. 

Where  the  covenants  are  mutual,  there  is  no  difficulty  whatever  in  dealing 
with  this  question.  Thus  where  the  owner  of  a  particular  piece  of  land,  on 
which  a  row  of  houses  was  intended  to  be  built,  execvited  a  deed  reciting 
that  it  had  been  laid  out,  and  was  intended  to  be  dealt  with  in  a  particular 
manner,  and  declared  that  it  should  be  a  general  and  indispensable  condition 
of  the  sale  of  all  or  any  part  of  that  land  that  the  several  proprietors,  for  the 
time  being,  should  observe  and  abide  by  the  several  restrictions  and  stipula- 
tions therein  contained,  and  that  he  himself  would  at  all  times  observe  the 
like  restrictions  and  stipulations,  and  these  restrictions  and  stipulations  were 
also  enforced  by  mutual  covenants,  —  although  the  question  afterwards  arose 
between  subsequent  purchasers  of  different  portions  of  this  piece  of  land,  — 
it  was  held  the  owner  was  bound  by,  and  that  the  other  was  entitled  to  en- 
force, the  covenants:  Whatman  v.  Gibson,  9  Sim.  196;  decision  by  Vice-Chan- 
cellor Shadwell.  But  while,  in  the  absence  of  special  circumstances  rendering 
the  enforcement  of  such  a  covenant  inequitable,  which  will  be  spoken  of  here- 
after, the  fact  that  the  grantor  entered  into  similar  covenants  on  his  part  in 
respect  of  the  land  retained  places  the  right  of  a  successor  in  title  of  such 
land  to  equitable  relief  in  the  form  of  an  enforcement  of  the  covenant  or  of 
an  injunction  to  restrain  its  violation,  entirely  beyond  question,  yet  it  is  not 
to  be  inferred  from  this  that  it  is  at  all  necessary,  in  order  to  such  equitable 
relief,  that  there  should  be  a  mutuality  of  covenants.  This  is  made  very 
clear  by  the  opinion  of  Sir  W.  Page-Wood  (afterwards  Lord  Hatherley).  He 
ruled  that  the  objection  to  a  motion  for  a  restraining  order  that  there  were 
no  reciprocal  covenants  was  "no  real  objection."  "  It  only  amounts  to  this," 
said  he,  "  that  the  defendant,  Douglas,  has  covenanted  with  the  vendor  not  to 
perform  certain  acts,  and  has  not  thought  fit  to  make  the  vendor  ent«r  into 
a  covenant  with  him  to  take  similar  covenants  from  the  future  purchasers  of 
the  remaining  land.  The  reciprocal  advantage  he  reobtained  by  Douglas  is 
really  the  conveyance  of  the  land;  and  it  cannot  be  said  that  for  the  want 
of  a  reciprocal  benefit  which  he  did  not  stipulate  for  he  cannot  be  compelled 
to  perform  that  which  he  has  expressly  covenanted  to  do."  Further  on,  he 
said:  "I  have  felt  some  difficulty  throughout  in  seeing  how  reciprocity  could 
have  anything  to  do  with  the  question.  Where  a  part  of  the  remaining  prop- 
erty of  the  vendor  has  been  sold  to  another  person,  who  must  be  said  to  have 
bought  the  benefit  of  the  former  purchaser's  covenant,  and  more  especially 
when  the  subsequent  purchaser  has  entered  into  a  similar  covenant  on  his 
own  part,  he  must  be  said  to  have  done  this  in  consideration  of  those  bene- 
fits,  and  even  whether  he  actually  knew  or  was  ignorant  that  this  covenant 


June,  1890.]  Ladd  v.  City  of  Boston,  489 

vas  in  fact  inserted  in  the  other  purchaser's  deeds,  because  he  must  be  taken 
to  liave  bought  all  the  rights  connected  with  this  portion  of  the  land  ":  Child 
V.  DoiKjlas,  Kay,  5G0,  5(39-571. 

Wliere  an  owner  of  property  divides  it  and  sells  a  portion  of  it,  and  inserts 
in  the  deed  of  conveyance  a  restriction  as  to  the  use  of  tlie  portion  sold,  it  is 
very  easy  to  insert  in  the  deed  a  statement  that  this  restriction  is  intended  for 
the  benefit  of  the  land  retained;  for,  as  we  shall  see  hereafter,  this  will  not  be 
presumed  in  all  cases,  and  cases  are  found  in  the  books  where  the  absence  of 
such  a  statement  has  been  regarded  as  an  important  ingretlient  in  a  collection 
of  circumstances  influencing  the  court  in  its  determination  to  refuse  equi- 
table relief.  See,  for  instance,  lienaLf  v.  Coivlishmo,  9  Ch.  Div.  125;  affirmed, 
11  C'h.  Div.  S()6.  But  it  is  not  to  be  inferred  that  it  is  at  all  necessary  to 
equitable  relief  that  this  purpose  should  be  expressed  in  the  deed.  If  from 
the  situation  of  the  land  retained  with  reference  to  that  conveyed,  or  from 
other  attending  circumstances,  it  becomes  clear  that  it  was  the  intention  of 
the  parties  to  grant  a  negative  easement  in  the  land  sold  for  the  benefit  of 
the  land  retained,  it  does  not  make  any  difference  whatever  that  this  pur- 
pose is  not  expressed  in  tlie  deed;  and  indeed  in  most  of  the  cases  wliere 
equitable  relief  has  been  granted  the  purpose  was  not  so  expressed:  Mannv. 
Stephens,  15  Sim.  .379;  Putchijuj  v.  Dubbins,  Kay,  1;  2  Week.  Rep.  2;  McLean 
V.  McCay,  21  Week.  Rep.  798;  Peck  v.  Conwny,  119  Mass.  546;  Green  v. 
Crehjhton,  7  R.  I.  1;  Barrow  v.  Richard,  8  Paige,  351;  35  Am.  Dec.  713;  St. 
Andrew's  Church  Appeal,  67  Pa.  St.  512;  Clark  v.  Martin,  49  Pa.  St.  289. 
The  reason  is,  that  there  conld  be  no  object  in  so  stipulating  except  for  the 
benefit  of  the  land  affected  beneficially  by  the  stipulation.  As  was  said  by 
Sir  Montague  Smith,  in  giving  the  judgment  of  the  privy  council:  "There 
could  be  no  ol)ject  in  stipulating  that  it  [the  land]  should  be  left  open  for  the 
benefit  of  both  parties,  unless  it  meant  for  the  benefit  of  both  parties  as  own- 
ers of  the  lands  which  adjoin  the  plat.  Therefore  the  implication  is  natural 
and  irresistible,  that  when  the  parties  speak  of  leaving  this  piece  open  for 
the  common  benefit  of  both,  they  mean  for  the  common  benefit  of  both  as 
holders  of  the  adjoining  lands  ":  McLean  v.  McCay,  21  Week.  Rep.  798. 

According  to  a  holding  of  the  court  of  appeals  of  New  York,  it  is  not  even 
necessary  that  the  restrictive  agreement  should  be  put  in  any  deed  of  con- 
veyance, or  that  it  should  be  shown  by  any  writing.  In  that  case,  the  owner 
of  lots  on  both  sides  of  a  city  street  made  a  plan  exhibiting  a  street  as  wid- 
ened eight  feet  on  each  side,  and  represented  to  several  vendees  of  different 
lots  that  all  the  l)uildings  to  be  erected  on  the  lots  which  he  had  sold  and 
should  sell  shfiuld  stand  back  eight  feet  from  the  line  of  the  street.  The 
vendees  erected  buildings  in  conformity  with  this  plan,  none  of  them  being 
restricted  by  their  conveyances  or  bound  by  any  covenant  in  respect  to  the 
extent  or  the  mode  of  their  occupation.  It  was  hold  that  a  suljsequent  pur- 
chaser of  one  of  these  lots,  with  constructive  notice  of  the  facts,  was  not  en- 
titled, as  against  another  purchaser,  to  build  upon  the  eight  feet  adjoining 
the  street.  After  conceding  that  the  conclusion  of  the  court  could  not  bo 
supported  upon  the  principle  that  the  eight-foot  strip  had  been  dedicated  to 
public  use,  Sutherland,  J.,  in  giving  the  opinion  of  the  court,  said:  "From 
the  facts  found  by  the  judge  at  special  term,  it  appears  that  when  the  plain- 
tiff Maxwell  and  others  bought  lots  in  St.  Mark's  Place  of  Davis  they 
were  shown  the  map  or  plan  of  St.  Mark's  Place,  showing  that  the  houses  on 
both  sides  of  the  place  were  to  be  set  back  eight  feet  from  the  street,  and 
that  they  bought  on  the  assurance  of  Davis  that  that  plan  should  be  observed 
in  building  on  the  place;  that  the  strips  of  eight  feet  in  width  on  both  sides 


490  Ladd  v.  City  of  Boston.  [Mass. 

of  the  street  should  not  he  built  upon,  but  kept  open.  It  is  to  be  presumed 
that  they  would  not  have  bought  and  paid  their  money  except  upon  this  as- 
surance. It  is  to  be  presumed  that,  relying  upon  this  assurance,  they  paid  a 
larger  price  for  the  lots  than  otherwise  they  would  have  paid.  Selling  and 
conveying  the  lots  under  such  circumstances  and  with  such  assurances,  they 
therefore  bound  Davis,  in  equity  and  good  conscience,  to  use  and  dispose  of 
all  the  remaining  lots  so  that  the  assurances  upon  which  Maxwell  and  others 
had  bought  their  lots  would  be  kept  or  fulfilled.  This  equity  attached  to  the 
remaining  lots,  so  that  any  one  subsequently  purchasing  from  Davis  any  one 
or  more  of  the  remaining  lots,  with  notice  of  the  equity  as  between  Davis  and 
Maxwell  and  others,  the  prior  purchasers,  would  not  stand  in  a  different 
situation  from  Davis,  but  would  be  bound  by  that  equity  ":  Tallmadge  v.  East 
River  Bank,  26  N.  Y.  105,  107.  The  meaning  of  this,  of  course,  is,  that  such 
an  equity  or  negative  easement  in  land  for  the  benefit  of  adjacent  land 
may  be  created  by  a  parol  agreement  or  understanding  between  the  original 
owner  and  purchasers  of  different  parts  of  the  land,  and  that  notice  of  this 
agreement,  actual  or  constructive,  will  bind  a  subsequent  purchaser  of  one 
of  the  tracts  in  like  manner  as  it  would  have  bound  the  original  owner,  from 
whom  he  purchased.  This  case  stretches  the  doctrine  of  preceding  cases 
further  than  any  case  in  the  books  known  to  the  writer. 

It  has  been  held  to  be  sufficient  that  the  defendant  buys  with  notice 
that  it  is  claimed  that  there  are  restrictions  which  will  prevent  the  de- 
fendant from  acquiring  a  right,  as  purchaser  of  the  lots,  to  build  out- 
side of  a  prescribed  building  line.  It  has  been  also  said  that  the  uniformity 
of  the  position  of  all  the  houses  which  have  previously  been  built,  namely, 
the  fact  that  they  all  front  upon  one  line,  is  probably  sufficient  alone  to 
put  a  subsequent  purchaser  on  inquiry  as  to  the  existence  of  an  agree- 
ment for  a  building  line:  Tallmadije  v.  East  Hirer  Bank,  26  N.  Y.  105,  111. 
It  is  the  settled  law  that  in  order  to  sustain  a  proceeding  in  equity  to  re- 
strain the  violation  of  such  a  restriction  it  must  be  shown  that  the  defendant 
took  the  land  with  notice,  either  express  or  constructive,  that  the  restriction 
existed,  and  that  it  was  intended  for  the  benefit  of  the  plaintiff's  estate.  la 
declaring  this  principle,  it  has  been  added:  "It  is  vital  to  the  rights  of  the 
parties,  because,  as  the  case  stands,  the  plaintiff  is  not  entitled  to  avail  him- 
self of  the  equitable  principle  that  the  defendant  has  taken  his  estate  with 
notice  of  a  stipulation  for  the  benefit  of  the  estate  now  owned  by  the  plain- 
tiff which  in  equity,  by  accepting  the  grant,  the  defendant  would  be  bound 
to  observe":  Badtjerv.  Boardinan,  16  Gray,  559,  561;  citing  Whitney  v.  Union 
R'y  Co.,  11  Gray,  359;  71  Am.  Dec.  715.  In  conformity  with  this  view,  the 
general  rule  has  been  stated  to  be,  that  if  parties  purchase  land  with  notice 
of  a  covenant  concerning  it,  but  which  does  not  run  with  the  land,  equity 
will  not  permit  them  to  do  anything  contrary  to  the  true  meaning  of  that 
covenant:  Tulk  v.  Moxhay,  2  Phill.  Ch.  774;  Patching  v.  Dubbins,  Kay,  1. 
But  on  this  subject  it  has  been  ruled  that  the  owner  of  the  land  charged 
with  such  servitude  is  bound  by  the  covenants  in  the  deed  of  his  remote 
grantor  by  which  it  was  created,  although  it  is  not  mentioned  at  all  in  the 
deed  under  which  he  immediately  takes,  that  is,  in  the  deed  to  him,  and 
although  he  has  no  knowledge  of  it  in  fact;  for  as  he  derives  his  title  under 
a  deed  which  contains  the  covenant,  he  is  bound  to  take  notice  of  its  provisions: 
Peck  V.  Conway,  119  Mass.  546;  citing  to  this  point,  Whitney  v.  Union  R'yCo., 
11  Gray,  359;  71  Am.  Dec.  715.  Upon  the  question.  What  will  amount  to  evi- 
dence of  notice  in  a  particular  case  ?  it  has  been  ruled  that  where  land  had  been 
laid  out  for  building  a  row  of  houses  on  a  general  plan,  according  to  which  no 


1 


June,  1890  ]  Ladd  v.  City  of  Boston.  491 

Ijuilding  was  to  be  erected  within  six  feet  from  the  projected  road  in  front  of 
the  row,  a  purchaser  of  one  of  the  plats,  being  aware  of  the  general  scheme, 
anil  buying  suhject  to  the  terms  of  the  printed  form  of  contract  relating  to  the 
whole  estate,  which  restrained  him  from  building  within  six  feet  from  the 
road,  and  knowing  that  anotlier  plat  had  been  previously  sold  and  built  upoa 
according  to  the  general  scheme,  must  have  been  considered  to  have  known 
that  the  previous  purchaser  had  bought  subject  to  a  similar  restriction: 
Child  V.  Doui/la.1,'  Ka}',  565.  It  is  believed  that  in  respect  of  this  question  of 
notice  there  is  a  distinction  between  notice  of  the  fact  of  the  covenant  and 
notice  of  the  efifect  of  it.  The  distinction  is  believed  to  be  that  stated  above, 
that  the  owner  of  land  will  be  conclusively  presumed  to  have  notice  of  any 
covenant  in  a  deed  which  constitutes  his  chain  of  title,  and  tliat  in  so  far  as 
that  covenant  necessarily  burdens  his  land  he  takes  subject  to  it,  whether 
he  has  actual  notice  of  it  or  not.  This  seems  to  be  an  unavoidable  conclu- 
sion from  the  truism  that  a  grantee  takes  only  what  his  grantor  convej's. 
On  the  other  hand,  although  there  may  be  a  restrictive  covenant  in  his  chain 
of  title,  it  does  not  follow  that  he  will  have  notice  from  the  words  of  the 
covenant  themselves  that  the  effect  of  the  covenant  is  to  impose  a  servitude 
upon  his  land  for  the  benefit  of  adjoining  or  adjacent  land  belonging  to  some 
one  else;  the  language  of  the  deed  may  be  equally  consistent  with  a  purpose 
on  the  part  of  the  covenantee  to  impose  the  restriction  for  his  own  personal 
benefit  to  effect  some  present  or  collateral  purpose  of  his  own.  It  is  upon 
this  distinction  that  nearly  all  the  cases  separate. 

It  must  be  constantly  kept  in  mind  that  in  every  case  of  this  kind  the  ]iar- 
amount  and  controlling  question  to  be  determined  by  the  chancellor  upon 
an  interpretation  of  the  deed  containing  the  covenant,  in  connection  with 
the  surrounding  circumstances  and  other  applicatory  evidence,  is,  whether 
the  covenant  was  really  intended  for  the  benefit  of  the  land  retained,  or 
whether  it  was  intended  to  subserve  some  purpose  personal  to  the  covenantee, 
so  that  after  parting  with  the  land  retained  he  might  be  still  at  liberty  to 
release  the  covenant  at  his  pleasure.  As  a  general  rule,  such  a  covenant  will 
be  regarded  as  having  been  intended  for  the  benefit  of  other  land  retained  by 
the  covenantee,  since,  as  a  general  rule,  it  could  have  no  other  purpose.  Tiiis 
will  be  ol)vious  if  we  consider  the  case  of  an  owner  of  two  adjoining  city 
lots  selling  one  of  them  and  imposing  upon  it  a  restriction  as  to  the  manner 
in  which  it  shall  be  used;  prohibiting  its  use  for  a  livery-stable,  a  dram-shop, 
or  the  like;  or  prescriliing  a  building  line  within  a  given  distance  from  the 
line  of  the  street  on  which  it  fronts.  In  such  a  case  it  is  diliicult  to  under- 
stand that  the  covenant  could  have  had  any  other  purpose  than  to  benefit  the 
land  retained  by  prohibiting  uses  of  the  land  sold,  which,  though  not  unlaw- 
ful, would  work  more  or  less  annoyance  to  an  occupier  of  the  land  retained, 
and  further  diminish  its  value.  If  after  imposing  such  a  restriction  upon 
the  use  of  the  land  sold  for  the  benefit  of  the  latid  retained  the  owner  sub- 
sequently sells  the  land  retained'to  another  gra'itee,  it  is  undeniably  logical 
and  obvif)Usly  just  that  the  negative  easement  or  equity  which  he  has  created 
in  the  land  first  sold  for  the  benefit  of  the  land  afterwards  sold  passes  to  the 
second  grantee  and  to  his  successors  indefinitely.  At  least,  equity  will  so  re- 
gard it;  for  this  is  the  sense  and  substance  of  the  engagement.  In  giving 
the  opinion  of  the  supreme  court  of  Pennsylvania  bo  holding,  Lowrie,  C.  J., 
said:  "In  a  proceeding  in  the  common-law  form,  it  would  be  necessary  to 
inquire  into  the  form  in  which  the  right  is  reserved,  in  order  to  decide 
whether  it  should  be  sued  for  as  a  condition  or  a  covenant,  or  as  a  simplo 
contract.     But  in  the  equity  fomnof  proceeding  we  inquire  only  into  its  sub- 


492  Ladd  v.  City  op  Boston.  [Mass. 

stantial  elements,  —  What  does  it  assure,  and  to  whom?  Here  the  duty  of 
the  defendant  ia  so  plain  that  one  may  read  it  running;  it  is  clearly  inscribed 
on  every  link  of  the  chain  of  his  title  to  the  lot.  He  took  his  title  expressly 
on  the  terms  already  briefly  mentioned.  He  was  not  to  erect  on  the  back 
part  of  his  lot  any  building  higher  than  ten  feet,  afterwards  changed  to 
eleven.  To  whom,  then,  does  he  owe  the  duty?  No  one  doubts  that  it  is  to 
the  grantor,  who  reserved  or  imposed  the  duty,  and  to  his  heirs  and  assigns. 
But  did  the  grantor  reserve  this  duty  to  himself,  his  heirs  and  assigns,  as  a 
mere  personal  duty,  and  thus  retain  in  himself  or  them  the  vain  right  of 
saying:  'That  lot  is  not  mine,  but  the  owner  is  subject  to  my  pleasure  in 
the  mode  of  building  on  it '?     Common  sense  forbids  this,  and  the  law  would 

not  allow  itself  to  be  troubled  with  such  vain  engagements Common 

sense  cannot  doubt  its  purpose,  and  thus  it  becomes  plain  that  the  duty  cre- 
ated by  the  condition  and  restriction  is  a  duty  to  the  owner  of  the  adjoining 
lot,  whoever  he  might  be.  Very  plainly,  also,  it  ia  a  duty  that  admits  the 
right  of  the  owner  of  the  adjoining  lot  to  have  the  privilege  or  appurtenance 
of  light  and  air  over  the  defendant's  lot,  and  that  admits  this  to  be  so  far 
subject  or  servient  to  that,  that  the  buildings  on  this  must,  for  the  benefit  of 
that,  be  so  limited  in  height,  according  to  the  condition  of  the  deeds.  So 
such  stipulations  are  always  regarded  when  the  form  of  remedy  is  selected 
and  allowed,  which  can  admit  of  treating  the  case  according  to  the  very  sub- 
stance of  the  contract ":  Clark  v.  Martin,  49  Pa.  St.  289,  297. 

But  in  many  cases  the  courts  have  found  that  such  covenants  were  not  in- 
tended by  the  covenantee  for  the  benefit  of  any  land  retained  by  him.  In 
one  case.  Sir  C.  J.  Selwyn,  L.  J.,  answering  an  argument  that  such  was  ne- 
cessarily the  efifect  of  such  a  covenant,  said:  "  It  is  obvious  that  such  a  defini- 
tion does  not  meet  all  cases,  for  cases  may  be  put,  in  which  a  vendor  might 
lawfully  and  reasonably  insist  upon  such  covenants,  even  when  the  covenants 
comprised  the  whole  of  the  property  to  which  he  was  entitled  at  the  date  of 
the  covenant, —  as  in  the  case  of  the  purchase  and  sale  of  a  strip  of  land  adjoin- 
ing a  large  park  by  a  person  who  had  at  the  time  no  interest  in  the  park,  but 
who  hoped  to  inherit  or  purchase  it.  Assuming  the  vendor  of  the  strip  of  land 
to  purchase  or  inherit  the  park,  and  to  sue  the  piirchaser  for  breach  of  the 
covenant,  the  purchaser  of  the  strip  of  land  would,  in  a  court  of  eqviity,  be 
unable  to  justify  a  violation  of  the  covenant  by  reason  of  the  injury  sustained 
by  the  vendor  having  arisen  only  in  consequence  of  his  subsequent  acquisition 
of  the  park":  Keates  v.  Lyon,  L.  R.  4  Ch.  218,  227.  The  doctrine,  then,  is, 
that  an  owner  or  lessee  of  land  cannot  have  relief  in  equity  in  the  form  of  an 
enforcement  of  such  a  covenant,  or  have  an  injunction  against  its  violation, 
unless  the  court  can  infer  from  the  language  of  the  deed  in  which  the  covenant 
is  contained,  when  construed  in  reference  to  the  surrounding  circum_stances, 
an  intention,  on  the  part  of  the  parties  to  the  deed,  to  insert  the  covenant 
therein  for  the  benefit  of  the  particular  property  acquired  by  the  plain- 
tiff. Afiinning  this  principle,  it  has  been  said:  "Generally,  when  such  a 
right  or  privilege  ia  reserved,  the  purpose  intended  to  be  accomplished  by  it 
is  stated  in  the  conveyance,  or  can  be  gathered  from  a  plan  referred  to  therein, 
or  from  the  situation  of  the  property  with  reference  to  other  land  of  the 
grantor.  All  parties  then  take  with  notice  of  the  right  reserved  and  the 
burden  or  easement  imposed":  Badger  v.  Boardrnan,  16  Gray,  559,  560;  opin- 
ion by  Bi^elow,  C.  J.  In  another  case  the  doctrine  was  thus  stated  by  the 
same  learned  judge:  "It  ia  doubtless  true  that  such  may  be  the  efTect  of  a 
condition  in  a  class  of  cases  where  it  is  apparent  that  the  condition  was 
annexed  to  a  grant  for  the  purpose  of  improving  or  rendering  more  beneficial 


June,  1890.]  Ladd  v.  City  of  Boston.  -493 

and  advantageous  the  occupation  of  the  estate  granted,  when  it  should  become 
divided  into  separate  parcels;  and  be  owned  by  dififerent  individuals,  or  when 
the  manifest  object  of  a  restriction  on  the  use  of  an  estate  was  to  benefit  an- 
other tract  adjoining  to  or  in  the  vicinity  of  the  land  on  which  the  restriction 
is  imposed.  But  in  the  absence  of  any  fact  or  circumstance  to  show  such 
purpose  or  object,  a  condition  annexed  to  a  grant  can  have  no  effect  or  opera- 
tion either  at  law  or  in  equity  beyond  that  which  attaches  to  it  by  the  rules 
of  tiie  common  law.  The  benefit  of  the  condition  would  in  such  cases  inure 
only  to  the  grantor  and  his  heirs  or  devisees,  and  the  burden  of  it  would  rest 
on  the  estate  to  which  it  was  annexed,  and  on  those  who  held  it  or  any  part 
of  it  subject  to  the  condition.  Indeed,  no  restriction  on  the  use  of  land,  and 
no  condition  annexed  to  its  possession  and  enjoyment,  can  be  for  the  benefit 
of  the  grantee  or  those  holding  his  estate  in  the  granted  premises,  unle;ss  it 
be  as  a  consideration  of  some  restriction  on  other  land,  which  may  operate  as  an 
advantage  or  convenience  in  the  use  and  occupation  of  the  granted  premises. 
Inasmuch  as  a  grantee  can  restrict  the  use  of  land  of  which  he  is  the  owner 
according  to  his  own  will  and  pleasure,  it  is  clear  that  he  can  derive  no  bene- 
fit from  a  restriction  or  condition,  as  such,  imposed  on  its  use  or  enjoyment 
by  any  prior  grantor  ":  Jeivell  v.  Lee,  14  Allen,  145,  149;  92  Am.  Dec.  744. 

Wliere  the  covenant  is  by  the  vendor  himself,  the  rule  is,  that  the  restric- 
tion is  taken  most  strongly  against  him,  modified  by  the  necessity  of  giving 
efi"ect  to  every  portion  of  the  instrument,  so  far  as  it  can  reasonably  be  done. 
A  good  illustration  of  this  is  found  in  a  case  where  the  vendor  of  a  number 
of  buiUling  lots  in  a  terrace  inserted  in  each  deed  a  covenant,  on  his  paj-t 
unexplained  by  any  recital  in  the  deed,  that  no  building  should  be  erected  on 
any  ])art  of  the  land  of  the  vendor  lying  on  the  east  side  of  the  terrace,  and 
o]>}>osif,e  to  the  plat  of  land  thereby  conveyed.  It  was  held  by  Sir  W.  Page-Wood, 
V.  C.  (afterwards  Lord  Hatherley),  that  the  words  above  Italicized  were  not 
merely  descriptive  of  the  position  of  the  land,  but  that  they  restricted  the  gen- 
eral meaning  of  the  former  words;  and  that  the  covenant  applie<l  only  to  that 
part  of  the  land  which  lay  immediately  opposite  the  lot  of  the  covenantee  in  the 
particular  deed.  In  the  course  of  his  opinion,  he  said:  "There  is  no  recital 
in  tliis  deed  of  an  intention  of  any  kind,  and  therefore  the  question  is  nar- 
rowed to  the  very  words  of  the  covenant  itself.  I  had  at  first  an  inclina- 
tion of  opinion  that  if  the  words  were  doubtful,  and  it  could  be  construed  in 
favor  of  the  defendants,  the  general  rule  would  be  this:  that  it  being 
equivalent  to  a  grant  on  the  part  of  the  vendor,  the  construction  must  be 
taken  most  strongly  against  the  grantor.  But,  on  the  other  hand,  there  is 
aiiotlier  rule  of  construction  well  established,  namely,  that  it  is  right  to  give 
effect  to  every  word,  if  it  can  reasonably  atul  propeily  be  done.  I  do  not 
feel,  therefore,  at  lil)erty  to  say  that  it  is  doubtful  if  in  putting  one  construc- 
tion upon  this  covenant  I  give  complete  effect  to  all  the  words,  whereas  I  should 
be  leaving  a  portion  of  the  words  without  effect  in  giving  to  the  covenant  a 
contrary  construction.  If  I  take  the  construction  of  the  plaintiff,  I  sti  ike  the 
words  '  and  opposite  to  the  plat  of  land '  out  of  the  covenant;  that  is,  the  cove- 
nant would  be  just  as  intelligible  in  the  sense  of  the  plaintiff  without  those 
words  as  with  them,  or  indeed  nmch  clearer.  It  would  be  effective  if  it  were 
only  'any  part  of  the  land  lying  on  the  east  side  of  the  said  terrace.'  Those 
words  alone  would  have  given  the  plaintiff  the  right  for  which  he  now  contends. 
Am  I  at  liberty  to  say  that  the  other  words  are  superfluous,  and  wholly  inef- 
fective, and  are  merely  thrown  in  as  additional  description?  I  do  not  think 
that  would  be  a  sound  construction.  The  pliraseology  would  be  ill-selected. 
What  I  should  have  expected  would  have  been  '  lying  on  the  east  side  of  the 


494  Ladd  v.  City  of  Boston.  [Mass. 

terrace,'  or  '  opposite  to  the  terrace.*  I  do  not  see  why  the  definition  '  oppo- 
site '  should  be  confined  to  opposite  to  tlie  particular  piece  of  land  thereby  con- 
veyed, if  the  parties  were  stipulating  to  have  the  whole  of  the  land  unbuilt 
upon  opposite  the  terrace.  If  that  were  the  intention,  it  would  have  been 
clearly  expressed  on  both  sides,  and  there  would  not  have  been  a  distinct 
reference  to  the  particular  plat  of  land  conveyed.  The  construction,  there- 
fore, which  makes  every  word  operative  would  be,  that  there  should  be  no 
building  on  the  piece  of  land  lying  'to  the  east  of  the  terrace  and  also  oppo- 
site to  the  plat  conveyed;  and  then  the  word  'opposite '  becomes  more  definite, 
and  the  land  must  possess  both  the  qualities  of  being  on  the  east  side  and 
also  opposite.  The  scheme  was,  that  this  gentleman,  being  minded  to  make 
a  terrace,  and  to  give  every  person  some  land  opposite  to  his  house,  free  from 
buihlings,  makes  a  particular  covenant  with  each  person  in  the  terrace  that 
the  piece  of  land  opposite  his  house  should  not  be  built  upon;  and  if  the  ter- 
race had  been  completed,  each  party  would  have  had  his  house,  and  a  piece  of 
land  opposite  unbuilt  upon;  and  in  a  certain  sense,  though  very  inadequately, 
there  would  have  been  a  security  that  the  whole  land  should  not  be  built  upon. 
But  in  that  case  every  one  would  have  had  to  rely  upon  his  neighbor,  as 
either  of  them  might  have  released  his  covenant,  and  it  might  have  been  re- 
duced to  this,  that  one  might  be  left  with  only  a  strip  of  land  opposite  un- 
built upon  to  enable  him  to  look  from  his  own  windows  to  the  distant 
country,  and  to  obtain  light  and  air.  That  would  be  a  very  improhable 
agreement;  still,  it  is  not  a  benefit  to  be  altogether  despised,  or  so  utterly  im- 
probable a  contract  as  to  authorize  ine  to  give  a  more  extended  operat  on  to 
the  covenant.  I  am  therefore  compelled  to  come  to  the  conclusion,  look- 
ing to  the  absence  of  the  recital  of  an  intention  that  the  whole  of  the  land 
should  not  I)e  built  upon,  and  to  tlie  covenant  alone,  and  the  effect  which  I 
am  bound  to  give  to  every  word  if  it  can  have  a  distinct  legal  bearing  and 
is  not  mere  tautology,  —  I  am  reluctantly  compelled  to  decide  that  the 
meaning  is  such  as  I  have  described,  and  that  the  plaintiff  is  not  entitled  to 
relief":  Patching  v.  Duhhnis,  Kay,  1,  14. 

Where  the  covenant  is,  not  to  build  within  a  certain  distance  from  the 
street  on  which  the  land  is  bounded,  the  erection  of  a  bay-window,  which 
has  the  effect  of  carrying  the  front  Ime  of  the  building  forward  beyond  the 
building  line  so  agreed  upon,  and  to  that  extent  obstructing  the  lateral  view 
of  other  owners,  is  a  violation  of  the  covenant,  ami  will  be  enjoined  in  equity; 
and  this,  although  the  structure  does  not  rest  upon  the  ground,  but  is  ex- 
tende  I  out  from  the  house  at  a  distance  of  four  feet  above  the  ground,  and 
from  that  point  to  the  top  of  the  building.  In  so  holding,  the  court,  speak- 
ing through  Mr.  Justice  Soule,  said:  "We  cannot  regard  this  addition  as  an 
ordinary  projection  or  variation  in  detail  in  the  arrangement  and  ornamen- 
tation of  the  front  of  the  house,  which  the  parties  to  the  deed  from  the  city 
may  have  contemplated  as  being  proper  under  the  provisions  of  the  deed. 
The  addition  is,  in  substance  and  effect,  a  removal  of  the  front  line  of  the 
house  three  feet  and  three  inches  nearer  to  the  street  than  the  deed  permits. 
The  effect  on  the  adjoining  estates  is  substantially  the  same  as  if  the  addition 
were  supported  by  a  wall  rising  from  the  ground  perpendicularly  to  its  front 
line  instead  of  being  supported,  as  it  now  is":  Sanltorn  v.  Rice,  129  Mass.  .S87, 
397. 

The  deed  of  a  lot  of  ground  bounded  on  a  street  contained  a  condition 
that  "no  dwelling-house  or  other  building  shall  be  erected  on  the  rear  of 
said  lot."  The  deed  also  recited  that  the  building  then  on  the  land  conformed 
to  the  condition.     In  view  of  this  recital,  it  was  held  that  the  deed  presented 


June,  1890.]  Ladd  v.  City  of  Boston.  495 

no  ambiguity,  but  that  all  that  part  of  the  lot  described  in  the  deed  which 
lay  behind  the  house  was  to  be  regarded  as  "  the  rear  of  said  lot,"  within  tiie 
meaning  of  the  condition  under  consideration.  It  was  accordingly  held  tliat 
the  erection  of  an  L  in  the  rear  of  the  house,  which  originally  stood  on  the 
lot,  about  seventeen  feet  wide,  and  of  a  height  equal  to  the  height  of  the 
house,  was  a  violation  of  the  condition,  such  as  warranted  relief  by  injunc- 
tion: Sanborn  v.  Bice,  129  Mass.  387,  397. 

From  this  it  follows  that  where  the  covenant  is  intended  for  the  benefit  or 
land  retained  by  the  covenantee,  and  he  has  afterwards  parted  with  such 
land  to  anottier  vendee,  he  cannot  thereafter  release  the  covenant,  because 
he  cannot  do  anything  in  derogation  of  the  rights  of  his  subsequent  vendee. 
The  covenant  having  passed  witli  the  land  to  the  vendee,  and  inured  to  his 
benefit  as  an  easement  annexed  to  his  land,  and  as  there  is  a  reasonable  pre- 
sumption that  the  existence  of  the  easement  was  taken  into  consideration  in 
fixing  the  purchase  price  of  the  land,  the  original  vendor  cannot  release  it, 
or  otherwise  deprive  his  vendee  of  the  benefit  of  it,  any  more  than  he  could 
arbitrarily  reclaim  the  whole  property  from  his  vendee.     The  right  is  in  the 
nature  of  property;   it  has  been  purchased  and  paid  for;  it  is  vested;  it  is 
therefore  under  the  protection  of  the  law,  and  cannot  be  divested  by  the  mere 
act  of  the  vendor.     The  rule  is,  that  where  the  vendor  sells  a  portion  of  his 
land,  and  retains  a  portion,  and  makes  a  covenant  of  this  kind  with  his  ven- 
dee, and  requires  the  same  covenant  from  his  vendee,  these  covenants  create 
reciprocal  rights  and  obligations,  which  are  handed  down  from  successor  to 
successor,  indefinitely,  so  that  a  purchaser  who  receives  a  substantial  injury 
from  a  breach  of  such  a  covenant  is  entitled  to  the  aid  of  a  court  of  equity 
for  redress  by  injunction:    We.'itern  v.  McDerinot,  L.  R.  1  Eq.  499,  504.     And 
even  where  the  second  purchaser  did  not  actually  know  that  the  previous 
purcliaser  had  bought  subject  to  a  similar  restriction,  still,  where  he  had  pur- 
chased all  the  rights  of  his  vendors  relating  to  a  particular  plat  of  land,  it 
became  impossible  for  the  vendors,  from  the  time  of  his  purchase,  to  release 
the  former  piirchaser  from  his  covenant  not  to  build  within  six  feet  of  the 
road,  or  to  alter  in  any  respect  their  rights  against  him:    Child  v.  Douijbis, 
Kay,  575.     But  it  is  obvious  that  the  covenantee  can  at  any  time  release  the 
covenant,  so  far  as  his  own  personal  rights  are  concerned;  and  where  the 
covenants  are  not  reciprocal,  according  to  the  observation  of  Lord  Eldon,  if 
the  landlord  releases  some  of  the  tenants  from  their  covenants,  this,  as  against 
the  landlord  himself,  has  the  effect  of  releasing  all.      He  said:   "The  land- 
lord, in  such  a  case,  is  stipulating  not  only  for  his  own  lienetit,  but  for  the 
benefit  of  all  the  tenants  in  that  neighborhood.     If,  therefore,  the  landlord^ 
in  some  particular  instance,  lets  loose  some  of  his  tenants,  he  cannot  come 
into  equity  to  restrain  others  from  infringing  the  covenant,  to  whom  he  has 
not  given  such  a  license.     He  may  have  a  good  case  for  damages  at  law;  but 
if  he  thinks  it  right  to  take  away  the  benefit  of  his  general  plan  from  some 
of  his  tenants,  he  cannot  with  any  justice  come  into  equity  for  an  injunction 
against  those  tenants.     It  is  not  a  question  of  mere  acquiescence;  hut  in  every 
instance  in  which  the  grantor  sutlers  grantees  to  deviate  from  a  general  plan 
intended  for  tlie  benefit  of  all,  he  deprives  others  of  the  right  which  he  had 
given  them  to  have  the  general  plan  enforced  for  the  benefit  of  all.     In  such 
cases  I  have  always  understood  this  court  will  leave  the  parties  to  their  remedy 
at  law  ":   Ro'pf.r  \.    Williams,  Turn.  &  11.  18,  '22. 

It  is  obvious  that  tlie  original  covenantee  may  by  his  conduct  estop  himself 
from  enforcing  the  covenant,  although  he  may  never  have  formally  released 
it.     Such  a  case  arises  where  the  covenantee  himself  has  allowed  the  cove- 


496  Ladd  v.  City  op  Boston.  [Mass. 

nant  to  be  violated  by  the  owners  of  various  lots  in  the  scheme  of  improve- 
ment, vintil  the  character  of  the  property  has  become  so  changed  that  to  enforce 
against  some  of  tlie  lot-owners  an  obligation  which  has  been  released  as  to 
many  of  the  others  would  be  oppressive.  This  was  the  ground  on  which 
the  two  cases  just  cited  were  decided.  In  the  former  of  them,  the  Duke  of 
Bedford,  being  the  owner  of  all  the  property  in  the  neighborhood  of  the 
British  Museum,  for  the  protection  of  a  large  part  of  that  property  known  as 
Southampton  House,  took  a  covenant  from  the  persons  to  whom  he  sold  or 
let  other  parts  of  the  property,  restricting  them  from  building  upon  them 
otherwise  than  in  a  particular  way.  But  he  himself  afterwards  built  upon  a 
large  part  of  the  property  which  was  originally  intended  not  to  be  built  upon, 
and  having  so  built,  he  came  to  the  court  of  chancery,  asking  it  to  restrain 
persons  who  wanted  to  build  contrary  to  their  covenant  upon  an  adjoining 
part  of  the  property.  Lord  Eldon  held  that  this  would  not  be  done.  Be- 
cause the  complainant  had  so  altered  the  property  since  he  compelled  these 
persons  to  enter  into  the  covenants,  and  had  so  completely  changed  the  face 
of  it  by  building  houses  which  were  against  the  covenant,  and  which  the 
persons  to  whom  he  had  granted  building  leases  might  have  restrained  him 
from  building,  it  was  held  that  it  would  be  now  inequitable  to  give  him 
the  benefit  of  the  covenant  which  he  himself  had  treated  as  absolutely  void: 
Duke  of  Bedford  v.  Trustees  of  British  Museum,  2  Mylne  &  K.  552.  Another 
case,  decided  by  a  single  judge,  Mr.  Justice  Pearson,  presents  an  application 
of  the  same  principle.  A  building  estate  was  laid  out  in  lots,  which  were 
sold  by  the  owners  of  the  estate  to  different  purchasers,  each  of  whom  cove- 
nanted with  the  vendors,  and  with  the  owners  of  the  other  lots  entitled  to 
the  benefit  of  the  covenant,  not  to  build  a  shop  on  the  land,  or  to  use  his 
house  as  a  shop,  or  to  carry  on  any  trade  therein.  The  purchaser  of  one  of 
the  lots,  who  occupied  his  house  as  a  private  residence,  brought  an  action 
against  the  purchaser  of  another  lot,  who  was  using  his  house  as  a  beer-shop, 
to  restrain  him  from  breaking  his  covenant,  and  for  damages.  The  defendant 
had,  to  the  knowledge  of  the  plaintiflF,  so  used  his  house  for  three  years  be- 
fore the  action  was  commenced.  There  was  evidence  that  several  otlier 
houses  built  on  other  of  the  lots  (one  of  them  immediately  opposite  the  plain- 
tiff's house)  had  been  for  some  time  used  as  shops,  notwithstanding  the  cove- 
nants, and  that  many  of  the  houses  adjoining  the  plaintiff's  house  were 
occupied,  not  each  by  a  single  tenant,  but  each  by  two  families  at  equal 
rents.  It  was  held  that  the  character  of  the  property  had  become  so  changed 
that  the  original  purpose  —  of  keeping  all  the  estate  as  a  residence  property 
—  for  which  the  covenant  had  been  entered  into  had  failed,  and  that  it 
would,  under  the  circumstances,  be  inequitable  to  enforce  the  'specific  per- 
formance of  the  covenant:  Sayers  v.  Coilyer,  2i  Ch.  Div.  180.  This  is  in 
conformity  to  an  observation  of  Lord  Ehlon  in  dealing  with  such  a  case, 
where  the  plaintiff  was  the  vendor  and  original  covenantee:  "Every  relaxa- 
tion which  the  plaintiff  has  permitted  in  allowing  houses  to  be  built  in  viola, 
tion  of  the  covenant  amounts  pro  tanto  to  a  dispensation  of  the  obligation 
intended  to  be  contracted  by  the  defendant.  Very  little,  in  cases  of  this 
nature,  is  sufficient  to  show  acquiescence;  and  courts  of  equity  will  not  in- 
terfere unless  the  most  active  diligence  has  been  exercised  throughout  tha 

whole  proceeding In  every  case  of  this  sort,  the  party  injured  is  bound 

to  make  immediate  application  to  the  court  in  the  first  instance,  and  can- 
not permit  money  to  be  expended  by  a  person,  even  though  lie  had  notice  of 
the  covenant,  and  then  apply  for  an  injunction  ":  Jioper  v.  Williams,  Turn,  it 
R.  18,  22. 


June,  1890.]  Ladd  v.  City  of  Boston.  497 

A  good  illnstration  of  the  doctrine  that  the  original  covenantee  may  lose 
the  right  to  enforce  snch  a  covenant  in  respect  of  a  particular  lot  is  found  in 
a  decision  of  the  court  of  appeals  of  Kentucky,  in  the  case  of  Duncan  v. 
Central  Passenrier  R'y  Co.,  85  Ky.  525,  where  a  man  owning  certain  unim' 
proved  city  property  laid  it  out  on  a  plan  by  which  it  was  intended  to  be  sold 
for  residences  only.  He  sold  and  conveyed  several  of  the  lots  to  A,  with 
the  following  clause  in  the  deeds:  "It  is  hereby  agreed  between  the  first  and 
second  parties  that  no  business,  manufacturing,  or  other  than  dwelling  houses 
shall  be  built  upon  said  property,  and  no  alley  shall  run  through  said  prop- 
erty, and  no  building  of  any  kind  shall  be  put  thereon  fronting  any  other 
way  than  on  Highland  Avenue  or  the  said  twenty-foot  alley."  He  after- 
wards sold  other  lots  to  different  persons  without  any  restrictions  whatever, 
and  he  made  mortgages  of  the  rest  of  the  property  without  any  restrictions 
therein.  A  conveyed  the  lots  which  he  had  thus  purchased  to  a  street-rail- 
way company,  and  they  commenced  the  erection  thereon  of  a  stable  for  their 
horses.  It  was  held  that  the  original  vendor  was  not  entitled  to  have  the 
railway  company  enjoined  from  erecting  and  maintaining  their  stable,  since 
the  evidence  showed  such  an  abandonment  on  his  part  of  the  original  pur- 
poses in  respect  of  the  land  which  induced  him  to  insert  the  above  restric- 
tion, and  since  no  other  vendee  of  his  was  complaining.  This  decision  really 
goes  no  further  than  to  hold  that  the  original  vendee  may  by  his  conduct 
esto|)  himself  from  insisting  on  the  performance  of  such  a  covenant  or  agree- 
ment, but  it  does  not  touch  the  rights  of  his  other  vendees;  though  it 
would  seem  that  under  the  ctrcumstances  of  the  Kentucky  case  the  right  to 
relief  might  well  have  been  sustained  on  the  theory  that  he  represented 
them,  being  tlie  person  with  whom  the  covenant  had  been  made.  The  whole 
case  shows  that  one  of  the  purposes  of  the  covenant  was  to  keep  out  of  the 
improvement  the  kind  of  a  nuisance  which  was  put  there,  —  a  horse-car 
stable,  and  it  may  be  doubted  whether  the  case  was  well  decided. 

The  doctrine  of  the  preceding  paragraph  can  have  no  application  to  a  case 
where  the  original  vendor,  having  inserted  such  a  covenant  in  his  deed  for 
the  benefit  of  the  land  retained  by  him,  has  sold  such  land  to  another  ven- 
dee; in  such  a  case  he  may  estop  himself  by  his  laches,  but  he  cannot  estop 
his  subsequent  vendee.  Such  was  the  qualification  put  upon  this  case,  in  a 
subsequent  case,  by  Sir  W.  Page-Wood,  V.  C. :  "The  better  view  is,  that  a 
landlor<l  in  such  a  case  having  secured  from  the  purchaser  or  lessee  of  part 
a  particular  benefit  in  respect  of  the  land,  if  he  afterwards  sell  the  rest  of 
the  land,  he  must  be  taken  to  sell  the  benefit  of  that  covenant  also  ":  Child 
v.  Douglas,  Kay,  560,  572.  But  it  is  equally  clear  that  such  subsequent 
vendee  may  estop  himself  by  his  laches  or  acquiescence  from  claiming 
equitable  relief  against  a  violation  of  the  covenant.  In  a  ca^^e  where  this 
principle  was  clearly  recognized,  it  was  held  that  the  mere  fact  that  the  plain- 
tiflf  in  a  suit  in  equity  has  acquiesced  in  other  breaches  of  the  same  covenant 
by  other  assigns  of  the  original  vendor,  or  even  that  he  has  broken  them  him- 
self in  unimportant  and  harndess  particulars,  will  not  debar  him  from  the 
right  to  relief  in  equity  against  a  substantial  and  harniful  violation  of  it. 
Thus  where  the  covenant  was  against  building  in  the  garden  attached  to  the 
house  built  on  the  ground  originally  conveyed,  and  also  against  allowing 
trees  to  grow  in  the  garden  above  the  height  of  eight  feet,  the  plaintiff  might 
restrain  his  neighl)or  from  violating  the  covenant  as  to  building,  although  he 
had  permitted  trees  to  grow  in  the  gardens  of  others  subject  to  the  cove- 
nants, higher  than  eight  feet,  without  making  objection,  and  although  he  even 
Am.  St.  Kep.,  Vou  XXI.  —  o2 


498  Ladd  v.  City  of  Boston.  [Mass. 

allowed  such  trees  to  grow  in  his  own  garden:  Western  v.  McDermot,  L.  R,  1 
Eq.  499,  507;  affirmed,  L.  R.  2  Ch.  72.' 

A  covenant,  condition,  or  agreement  in  a  deed  of  conveyance  will  not  be 
enforced  in  equity,  where  such  changes  have  taken  place,  since  the  deed  was 
executed,  as  to  render  specific  performance  of  the  covenant  inequitable. 
This  is  perhaps  referable  to  the  general  maxim,  Lex  non  cogii  ad  vana  seu  im,' 
possibilia.  It  is  a  branch  of  the  general  doctrine  relating  to  relief  in  equity, 
in  the  form  of  the  specific  performance  of  agreements,  that  such  relief  will  be 
withheld  where,  by  reason  of  changes  of  circumstances,  more  injustice  will  be 
worked  by  decreeing  than  by  refusing  a  specific  performance;  in  which  cases 
the  parties  are  left  to  their  remedies  at  law.  This  doctrine  was  well  stated, 
with  reference  to  the  subject  under  consideration,  by  Dan  forth,  J.,  in  a  case  in 
the  court  of  appeals  of  New  York:  "  It  certainly  is  not  the  doctrine  of  courts  of 
equity  to  enforce  by  its  peculiar  mandate  every  contract,  in  all  cases,  even 
where  specific  execution  is  found  to  be  its  legal  intention  aud  effect.  It  gives 
or  withholds  such  decree  according  to  its  discretion,  in  view  of  the  circum- 
Btances  of  the  case;  and  the  plaintiff's  prayer  for  relief  is  not  answered,  where, 
under  those  circumstances,  the  relief  he  seeks  would  be  inequitable  (citing 
Peters  y.  Delaplaine,  49  N.  Y.  362;  Margraffy.  Muir,  57  N.  Y.  155;  Mathews  v. 
Terivilliger,  3  Barb.  61;  RadcUffe  v.  Warrington,  12  Ves.  331).  If  for  any 
reason,  therefore,  not  referable  to  the  defendant,  an  enforcement  of  the 
covenant  would  defeat  either  the  ends  contemplated  by  the  parties,  a  court 
of  equity  might  well  refuse  to  inquire;  or  if  in  fact  the  condition  of  the  prop- 
erty by  which  the  premises  are  surrounded  has  been  so  altered  'that  the 
terms  and  restrictions '  of  the  covenant  are  no  longer  applicable  to  the  existing 
Btateof  things  (citing  1  Story's  Eq.  Jur.,  10th  ed.,  sec.  750);  and  so,  though  the 
con  tract  was  fair  and  just  when  made,  the  interference  of  the  court  should  be  de- 
nied if  subsequent  events  have  made  performance  by  the  defendant  so  onerous 
that  its  enforcement  would  impose  great  hardship  upon  him,  and  cause  little 
or  no  benefit  to  the  plaintiff":  Trustees  of  Columbia  College  v.  Thaclier,  87 
N.  Y.  311,  317;  41  Am.  Rep.  365;  citing  to  the  last  proposition,  Thomson 
V.  Harcmirt,  2  Brown  Pari.  Rep.  415;  Davis  v.  Hone,  2  Schoales  &  L.  340; 
Baily  V.  De  Crespigny,  L.  R.  4  Q.  B.  180;  Clarke  v.  Rochester  etc.  R.  R.  Co., 
18  Barb.  350.  When,  therefore,  the  deed  recited  that  the  object  which  the 
parties  to  the  covenant  had  in  view  was  "to  provide  for  the  better  improve- 
ment of  the  lands,  and  to  secure  their  permanent  value,"  and  the  parties 
mutually  covenanted  for  themselves,  their  heirs  and  assigns,  that  only  dwell- 
ing-houses should  be  erected  upon  their  respective  premises,  and  that  neither 
would  permit  or  carry  on  "any  stable,  school-house,  engine-house,  tenement, 
or  community  house,  or  any  kind  of  manufactory,  trade,  or  business,"  on,any 
part  of  said  lands,  and  it  appeared  that  at  the  time  of  the  hearing  of  the 
suit  in  equity  to  enforce  the  covenant  the  neighborhood  had  become  so 
changed  by  the  growth  and  extension  of  business  houses,  and  by  the  erection 
of  an  elevated  railroad  running  opposite  the  second-story  windows  of  the 
houses,  as  to  render  it  undesirable  for  residence  purposes,  but  nevertheless 
valuable  for  business  purposes,  it  was  held  that,  the  entire  purpose  for 
which  the  covenant  was  inserted  in  the  deed  having  failed,  equity  would  not 
decree  enforcement  of  the  covenant,  but  would  leave  the  plaintiffs  to  their 
remedy  at  law:  Trustees  of  Columbia  College  v.  Thacher,  87  N.  Y.  311;  47 
Am.  Rep.  365;  on  former  appeal,  sub  nom.  Trustees  qf  Columbia  College  v. 
Lynch,  70  N.  Y.  440;  26  Am.  Rep.  615. 

Evidence  of  the  Intent.  —  The  question  whether  such  an  easement  is  a 
personal  right,  or  is  to  be  construed  to  be  appurtenant  to  some  other  estate. 


June,  1890.]  Ladd  v.  City  of  Boston.  499 

must  be  determined  by  the  fair  interpretation  of  the  grant  or  reservation 
creating  the  easement,  aided,  if  necessary,  by  the  situation  of  the  property 
and  the  surrounding  circum stances:  Peck  v.  Comcai/,  119  Mass.  546. 

The  importance  of  restraining  the  evidence  which  is  heard  upon  the  qaes- 
tiou  of  the  intent  of  the  parties  to  the  language  of  the  deed  itself,  at  least 
when  interpreted  by  the  immediately  surrounding  circumstances,  is  shown 
by  several  cases,  which  lay  stress  upon  the  consideration  that  subsequent 
grantees  who  take  with  such  restrictive  covenants  in  their  deeds  liave  ordi- 
narily no  other  means  of  knowing  the  purpose  of  the  parties  to  the  deed  in 
which  the  covenant  was  first  inserted,  — whether  or  not  it  was  intended  to 
create  a  negative  easement  in  favor  of  a  particular  piece  of  land  which  the 
original  covenantee  retained  for  himself,  and  perhaps  subsequently  sold.  In 
a  case  where  the  action  was  at  law  to  recover  damages  for  the  breach  of  such 
a  covenant,  the  court,  speaking  through  Morton,  J.,  said:  "The  mere  fact, 
which  plaintiffs  ofifered  to  prove,  that  Willis  Buchnam,  at  the  time  when  he 
conveyed  to  Monroe  and  others,  was  the  owner  of  land  separated  from  the 
estate  granted  by  the  Woburn  Branch  raiIroa<l,  is  not  sufficient  to  show  that 
the  object  of  the  restriction  was  to  benefit  the  land.  In  the  absence  of  any 
words  in  the  deed  to  this  effect,  or  any  reference  to  a  plan  showing  a  general 
scheme  of  improvement,  the  grantees  took  their  estate  witliout  any  notice, 
express  or  constructive,  that  the  restriction  was  intended  for  the  benefit  of 
the  adjoining  estate.  For  anything  that  appears,  it  may  have  been  intended 
only  for  the  benefit  of  the  grantor,  and  for  his  personal  convenience  ":  Skin- 
ner v.  Shepard,  130  Mass.  180,  181;  citing  Jeffries  v.  Jeffries,  117  Mass.  184; 
Jewell  V.  Lee,  14  Allen,  145;  92  Am.  Dec.  744;  Badger  v.  Boardman,  16  Gray, 
659. 

It  is  with  reference  to  this  principle  that  evidence  that  the  restriction 
contained  in  a  particular  deed  was  a  part  of  a  general  plan  becomes  of  the 
greatest  importance,  and  in  many  cases  controlling.  But  it  ought  to  be 
carefully  added  that  the  fact  that  there  is  no  evidence  that  a  particular  re- 
striction was  a  part  of  a  general  plan  does  not  negative  the  conclusion  that 
it  was  intended  for  the  benefit  of  a  particular  adjacent  estate.  The  situa- 
tion of  the  two  parcels  of  land  in  respect  of  each  other  may  be  such  as  to 
render  such  a  conclusion  unavoidable,  as,  for  instance,  where  a  vendor  sells 
one  adjoining  parcel  with  an  agreement  not  to  build  upon  the  other,  in 
which  case  the  conclusion  is  unavoidable  that  he  annexes  to  the  parcel  sold 
an  easement  of  light,  air,  and  view  in  respect  of  the  parcel  retained;  but 
where  the  restriction  is  no  part  of  a  general  plan,  and  there  is  nothing  in 
the  language  of  the  deed,  when  interpreted  by  surrounding  circumstances, 
from  which  it  can  be  fairly  inferred  that  the  restriction  was  intended  for 
the  benefit  of  any  particular  piece  of  land  retained  by  the  vendor,  the  cove- 
nant cannot  be  enforced  by  one  who  subsequently  acquires  from  the  vendor 
the  particular  piece  of  land,  nor  by  the  vendor  for  the  exclusive  benefit  of 
such  subsequent  purchaser:  Dana  v.  Wenttvcrrth,  111  Mass.  291. 

In  determining  whether  such  a  restriction  was  intended  for  the  benefit  of 
particular  adjacent  lots  or  parcels  of  ground,  an  important  evidentiary  cir- 
cumstance is,  that  similar  restrictions  were  inserted  in  other  deeds  conveying 
such  other  lots  or  parcels,  or  that  the  deeds  conveying  such  other  lots  or  par- 
cels contained  references  to  the  restrictive  clause  in  the  particular  deed: 
Badger  v.  Boardman,  16  Gray,  559. 

It  may  be  extracted  from  the  decision  of  Vice-Chancellor  Shadwell  that  in 
case  of  a  reversion  the  vendor  will  take  the  land  back  free  from  the  restrict- 
ive covenants:  Schreiber  v.  Creed,  10  Sim.  9.     This  is  illustrated  by  a  later 


500  Ladd  v.  City  of  Boston.  [Mass. 

case  in  that  country,  where  A  soLl  a  part  of  an  estate  to  B,  who  entered  into 
restrictive  covenants  for  himself,  his  heirs  and  assigns,  with  A,  his  heirs,  execu- 
tors, and  administrators,  as  to  buildings  on  the  property  so  sold,  but  did  not 
enter  into  any  as  to  the  laud  retained.  After  this  transaction,  A  sold  to  other 
persons  various  lots  of  the  land  retained,  but  nothing  appeared  as  to  other 
conveyances,  nor  was  there  any  evidence  that  they  were  informed  of  the 
covenants  entered  into  by  B.  After  this,  A  bought  back  from  B  what  he  had 
sold  to  him.  It  was  held  by  the  court  of  appeal  that  the  benefits  of  B's  cove- 
nants did  not  in  equity  pass  to  the  subsequent  purchasers  of  other  parts  of 
the  estate  from  A,  and  that  A,  after  the  repurchase,  could  make  a  title  to 
the  repurchased  land  discharged  from  the  covenants:  Keeles  v.  Lyon,  L.  R.  4 
Ch.  218. 

In  one  of  the  cases  cited  in  the  preceding  paragraphs,  where  the  covenant 
established  a  building  line,  and  the  prohibited  distance  had  been  by  accident 
left  blank  in  the  former  purchaser's  covenant,  without  knowledge  of  the 
vendors,  and  they  had  a  right  to  have  the  deed  rectified,  the  second  pur- 
chaser was  held  entitled  to  an  injunction  to  restrain  a  breach  of  the  covenant 
by  the  former  purchaser;  and  it  was  held  that  as  this  right  was  entirely 
equitable,  and  might,  if  the  covenant  had  been  perfect,  have  been  enforced 
in  the  absence  of  the  original  covenanting  parties,  an  injunction  might  be 
granted  without  having  the  deed  rectified,  and  without  making  the  cove- 
nantee a  party  to  the  suit:  Child  v.  Douglas,  Kay,  575.  Where  the  covenantor 
has  built  in  violation  of  the  covenant,  the  court  will  exercise  its  jurisdiction 
by  a  mandatory  injunction  to  require  him  to  tear  it  down  in  so  far  as  it  vio- 
lates the  covenant,  without  regard  to  the  hardship  of  the  case:  Mannerft  v. 
Johnson,  1  Ch.  Div.  673.  And  such  also  was  the  relief  adjudged  in  Hall  v. 
Wesster,  7  Mo.  App.  56. 

The  covenants  in  deeds  usually  run  to  the  covenantee,  "his  heirs  and  as- 
signs." Suppose,  then,  that  the  covenantee  conveys  some  of  the  land  and 
retains  some  of  it.  The  covenant  runs  with  the  parcel  conveyed,  and  passes 
to  that  "assign,"  so  as  to  give  him  a  right  to  file  a  bill  in  equity  for  an  in- 
junction against  its  violation:  Manners  v.  Johnson,  1  Ch.  Div.  673,  681.  It 
also  continues  to  inure  to  the  benefit  of  the  original  covenantee,  in  respect  of 
so  much  of  the  land  as  he  retains:  Manners  v.  Johnson,  1  Ch.  Div.  673,  681. 
It  follows  that,  under  the  practice  in  chancery  where  parties  having  a  com- 
mon though  not  a  joint  interest  are  allowed  to  join  in  the  bill,  both  the  ori- 
ginal covenantee  and  his  assign  may  join  in  the  bill  for  such  an  injunction: 
Manners  v.  Johnson,  1  Ch.  Div.  673,  681.  But  as  the  interest  of  the  respect- 
ive lot-owners  is  common,  and'not  joint,  and  may  be  even  different  in  degree, 
BO  that  some  may  be  willing  to  assist  in  defraying  the  expense  of  the  litigation 
to  vindicate  their  rights  under  it,  while  others  may  not,  it  is  not  necessary 
that  all  owners  having  a  right  to  the  same  redress  should  join  as  plaintiffs  in 
the  action,  or  that  failing  to  do  so,  they  should  be  made  defendants:  Western 
V.  McDermot,  L.  R.  1  Eq.  498;  affirmed,  L.  R.  2  Ch.  72. 

An  adequate  insight  into  this  subject  cannot  be  obtained  without  a  care- 
ful  examination  of  several  illustrative  cases  in  which  relief  was  granted  and 
refused.  In  one  such  case.  A,  the  owner  of  a  large  tract  of  land,  conveyed  a 
triangular  portion  of  it  to  B,  who  owned  the  next  adjoining  lot  beyond,  with 
the  reservation  in  the  deed,  "that  no  building  is  to  be  erected  by  the  said  B, 
his  heirs  or  assigns,  upon  the  land  herein  conveyed."  A  retained  the  rest  of 
the  lot  as  his  homestead,  and  owned  no  other  land  in  the  vicinity.  He  after- 
wards sold  the  homestead  lot  to  C,  by  a  deed  describing  the  land  by  metes 
and  bounds,  but  making  no  mention  of  the  reservation  in  the  deed  to  B,  or 


June,  1890.]  Ladd  v.  City  of  Boston.  601 

of  privileges  and  appurtenances.  B  afterwards  sold  to  D,  by  a  deed  making  no 
reference  to  the  reservation,  and  D  had  no  knowledge  of  it.  All  the  deeds 
were  duly  recorded.  It  was  held  that  it  was  to  be  inferred  tliat  A  and  B  in- 
tended to  create  an  easement  in  the  granted  land  for  the  benefit  of  the  ad- 
joining estate  of  A;  that  this  easement  passed  as  appurtenant  to  the  land  by 
the  conveyance  of  C;  and  that  he  could  maintain  a  suit  in  equity  to  prevent 
D  from  building  on  his  land,  though  the  proposed  building  would  do 
no  appreciable  injury  to  the  land  of  C:  Peck  v.  Conway,  119  Mass.  546. 
In  giving  the  opinion  of  the  court,  Morton,  J.,  said:  *  In  this  case  the 
triangular  piece  of  land  affected  by  the  easement  was  a  part  of  a  large 
lot  owned  by  Ensign  [A].  He  retained  the  remainder  of  the  large  lot 
for  his  homestead.  There  is  no  suggestion  that  he  had  other  land  in  the 
vicinity  which  could  be  benefited  by  the  restriction.  It  is  diflScult  to  see 
how  he  would  have  any  interest  in  restricting  the  use  of  the  land  sold,  ex- 
cept as  owner  of  the  house  lot  which  he  retained.  The  nature  of  the  restric- 
tion also  implies  that  it  was  intended  for  the  benefit  of  this  lot.  A  prohibition 
against  building  on  the  land  sold  would  be  obviously  useful  and  beneficial  to 
this  lot,  giving  it  the  benefit  of  better  light  and  air  and  prospect.  This  is  its 
apparent  purpose,  while  it  would  be  of  no  appreciable  advantage  for  any 
other  purpose.  The  fair  inference  is,  that  the  parties  intended  to  create  this 
easement  or  servitude  for  the  benefit  of  the  adjoining  estate.  We  are  there- 
fore of  opinion  that  it  was  not  a  mere  personal  right  in  Ensign,  but  was  an 
easement  appurtenant  to  the  estate  which  he  conveyed  to  the  plaintiff":  Peck 
V.  ComoiT/,  119  Mass.  546;  citing  Dennis  v.  Wii^on,  107  Mass.  591;  Steams  v. 
Mullen,  4  Gray,  151.  It  should  seem  that  this  case  might  well  have  been  de- 
cided the  other  way,  on  the  ground  tliat  the  enforcement  of  a  covenant  not 
to  build  at  all,  where  to  buihl  would  cause  no  appreciable  injury  to  the  ad- 
joining lot,  would  be  unreasonable.  But  the  court  disposed  of  this  question 
in  this  way:  "  Nor  can  the  fact  found  by  the  master,  that  the  erection  of  the 
building  contemplated  by  the  defendants  'would  be  no  appreciable  damage  or 
injury  to  the  plaintiff's  premises,'  affect  the  rights  of  the  parties.  Such  an 
act  of  the  defendants  would  be  against  the  restriction  by  which  they  are 
bound,  and  a  violation  of  the  rights  of  the  plaintiff,  of  which  she  cannot  be  de- 
prived because  in  the  judgment  of  otliers  it  is  of  little  or  no  damage  ":  Peck 
V.  Conway,  119  Mass.  54G.  In  Green  v.  Cre'ujhton,  7  R.  I.  1,  9,  several  ten- 
ants in  common  of  a  tract  of  land  laid  it  off,  and  by  a  deed  dedicated  a  strip  of 
land  to  be  used  as  a  highway,  so  that  their  lots  sliould  front  upon  both  sides 
thereof.  In  their  deed  by  which  they  made  this  dedication,  they  inserted  the 
following  covenant:  "It  is  hereby  expressly  understood,  covenanted,  and 
agreed  by  the  grantors,  for  themselves  and  their  heirs  and  assigns  respectively 
forever,  that  no  building  of  any  description  shall,  at  any  time  hereafter,  be 
erected,  placed,  or  put  within  eight  feet  of  Halsey  Street,  on  either  side 
thereof."  Tliis  covenant  was  construed  "  as  a  grant  in  fee  to  each  of  a  negative 
easement  in  the  land  of  all,  and,  as  such,  capable,  upon  the  disturbance  of  the 
easement,  of  being  enforced  by  the  proper  remedies  at  law  and  in  equity." 
In  Barrow  v.  Richard,  8  Paige,  351,  35  Am.  Dec.  713,  there  was  a  provision 
in  the  deed  that  the  covenants  should  be  void  if  there  should  be  at  any  time 
erected  certain  offensive  establishments  on  the  land  conveyed.  The  lot  con- 
veyed was  one  of  thirty-nine  building  lots  into  which  the  grantor  had  suh- 
divided  a  larger  tract.  All  of  the  lots  which  he  had  sold  out  of  this  tract 
were  conveyed  by  deeds  containing  the  same  covenant.  It  was  held  by  Chan- 
cellor Walworth  (affirming  Vice-Chancellor  McCouu)  that  the  covenant  of 
each  of  these  deeds  was  intended  for  the  benefit  of  the  other  lots,  and  to  ea- 


502  Ladd  v.  City  op  Boston.  [Mass. 

haiice  their  value;  and  that  although  the  previous  purchaser  of  one  of  the 
lots  from  the  original  owner  could  not  sue  at  law  a  subsequent  purchaser 
whose  deed  contained  this  covenant,  yet  equity  would,  at  the  suit  of  a  pre- 
vious purchaser,  restrain  the  prior  purchaser  from  violating  the  covenant. 
So  an  agreement  between  a  vendor  and  a  vendee,  in  a  conveyance  of  land, 
"  that  any  distance  which  may  remain  westwardly  to  J  Street  shall  never 
be  hereafter  sold,  but  left  for  the  common  benefit  of  both  parties  and  their 
successors,"  has  been  held  to  create  an  equity  on  the  successor  of  the  es- 
tate of  the  vendor;  so  that  a  person  who  had  acquired  the  estate  from  the 
original  vendee  was  entitled  to  come  into  a  court  of  equity  to  obtain  the  re- 
moval of  a  structure  placed  upon  the  land:  McLean  v.  McCay,  21  Week.  Rep. 
798.  On  the  sale  of  a  number  of  contiguous  lots,  the  grantor  and  grantees 
covenanted  with  each  other  that  all  the  lots  should  be  subject  to  a  restric- 
tion that  '*  no  building  shall  be  built  upon  either  of  the  several  lots  of  ground, 
to  be  used  for  purposes  other  than  and  as  for  a  private  dwelling-house,  pri- 
vate or  necessary  house,  coach-house,  or  stable."  It  was  held  that  this 
covenant  ran  with  the  land  and  bound  the  successors  of  the  parties,  and  that 
equity  would  enforce  it  by  restraining  its  breach,  unless  some  good  ground 
be  shown  to  the  contrary.  And  the  court  accordingly  restrained  the  build- 
ing of  a  church  upon  one  of  the  lots:  St.  Andrew's  Church  Appeal,  67  Pa.  St. 
612. 

In  a  case  where  this  principle  was  declared  and  applied,  it  appeared  that 
D.,  being  the  owner  of  several  parcels  of  land,  which  were  described  upon  a 
plan  which  had  been  recorded  in  the  registry  of  deeds,  conveyed  to  the  de- 
fendant in  fee'simple  a  certain  parcel  numbered  3  on  the  plan,  with  the 
building  thereon,  by  metes  and  bounds,  and  "subject  to  the  following  restric- 
tion: that  no  out-buildings  or  shed  shall  ever  be  erected  westwardly  of  the 
main  building  of  a  greater  height  than  those  now  standing  thereon,"  and 
that  thereafter  D.  conveyed  the  parcel  or  lot  numbered  4  on  the  plan  to 
R.,  with  all  the  rights,  easements,  privileges,  and  appurtenances  thereunto 
belonging,  which  afterwards  came  by  mesne  cons  eyanoes  to  the  plaintiff.  It 
was  held  that  the  plaintiff  was  not  entitled  to  the  aid  of  equity  to  enforce 
against  the  defendant  the  restriction  contained  in  the  deed  of  D.  to  the  de- 
fendant. The  court,  speaking  through  Bigelow,  C.  J.,  said:  "The  infirmity 
of  the  plaintiff" 's  case  is,  that  there  is  nothing  from  which  the  court  can  infer 
that  the  restriction  in  the  deed  from  Downing  [from  D.  to  the  defendant] 
was  inserted  for  the  benefit  of  the  estate  now  owned  by  the  plaintiff.  If  it 
appeared  that  the  parties  to  that  conveyance  intended  to  create  or  reserve  a 
right  in  the  nature  of  a  servitude  or  easement  in  the  estate  granted  which 
should  be  attached  to  and  be  deemed  an  appurtenance  of  the  whole  of  the 
remaining  parcel  belonging  to  the  grantor,  of  which  the  plaintiff's  land 
forms  a  part,  then  it  is  clear,  on  the  principles  declared  in  the  recent 
decision  of  Whitney  v.  Union  R'y  Co.,  11  Gray,  359,  71  Am.  Dec.  715,  that  the 
plaintiff  would  be  entitled  to  insist  on  its  enjoyment,  and  to  enforce  his  rights 
by  a  remedy  in  equity.  But  there  is  an  entire  absence  of  any  language  in  the 
deeds  under  which  the  parties  claimed  from  which  it  can  be  fairly  inferred  that 
the  restriction  in  the  deed  to  the  defendant  against  erecting  his  building  above 
a  certain  height  was  intended  to  inure  to  the  benefit  of  the  estate  now  owned 
by  the  plaintiff.  The  restriction  is  in  the  most  general  terms,  and  no  words 
are  used  which  indicate  the  object  of  the  grantor  in  inserting  it  in  the  deed; 
nor  is  there  any  language  in  the  deeds  under  which  the  plaintiffs  claim  title 
which  refers  specifically  to  this  restriction,  or  from  which  any  intent  is  shown 
to  annex  the  benefit  of  this  particular  restriction  to  the  plaintiff 's  estate. 


June,  1890.]  Ladd  v.  City  of  Boston.  603 

Generally,  when  such  a  right  or  privilef^e  is  reserved,  the  purpose  intended 
to  be  accomplislied  by  it  is  stated  in  the  conveyance,  or  can  be  gathered 
from  a  plan  referred  to  therein,  or  from  the  situation  of  the  property  with 
reference  to  other"  land  of  the  grantor.  All  parties  then  take  with  notice  of 
the  right  reserved  and  the  burden  or  easement  imposed.  But  the  convey- 
ances in  the  i)resent  case  contain  no  such  clause,  nor  is  there  anything  in 
the  terms  of  the  grant,  or  in  the  circumstances  surroumling  the  parties  when 
it  was  made,  to  lead  to  an  inference  in  favor  of  the  claim  set  up  by  tlie  plain- 
tiff. For  aught  that  appears,  it  may  have  been  intended  by  the  parties  for 
the  benefit  of  the  grantor  only  so  long  as  he  remained  the  owner  of  any  of 
the  land  of  which  that  conveyed  to  the  plaintiff  originally  formed  a  part": 
Badijer  v.  Boardman,  1 6  Gray,  559. 

In  another  such  case  it  appeared  that  in  1834  the  plaintiff  conveyed  to 
one  Nudd  a  certain  parcel  of  land,  upon  condition  "that  the  grantee,  nor  hia 
heirs  or  assigns,  will  not  at  any  time  build,  or  permit  to  be  built,  any  build- 
ing upon  said  lot,  nearer  to  either  of  said  streets  [the  boundary  streets] 
than  eight  feet,"  etc.  Afterwards  this  parcel  was  divided  into  three  lots, 
each  fronting  on  Auburn  Street.  Long  afterwards,  Mrs.  Niles  became  owner 
by  mesne  conveyances  of  one  of  these  lots,  by  a  deed  of  release  which  con- 
tained the  proviso  "that  no  building  shall  ever  be  erected  or  suffered  to 
stand  upon  the  afore-described  piece  of  land,  or  any  parcel  thereof,  contrary 
to  the  provisions  of  said  condition;  but  a  breach  of  this  prohibition  shall  in 
no  case  work  a  forfeiture,  but  shall  be  conclusively  deemed  a  nuisance,  for 
which  I,  my  heirs  or  devisees,  shall  be  entitled  to  enter  and  abate  without 
process  of  law,  and  shall  likewise  be  entitled  to  damages  against  the  party 
or  parties  offending,  but  against  no  others,  and  also  to  any  and  all  other 
remedies  at  law  or  in  equity."  This  deed  was  recorded.  Still  later,  Wiiit- 
ney  became  possessed  by  mense  conveyances  of  another  of  the  three  lots, 
and  conveyed  it  to  the  defendant.  At  the  time  of  the  conveyance  to  Mrs. 
Niles,  the  then  owner  of  the  defendant's  lot  did  not  know  of  the  first  deed  above 
spoken  of,  and  neither  he  nor  any  of  those  succeeding  him  in  the  ownership  of 
the  lot  had  ever  consented  thereto.  It  was  held  that  the  plaintiff,  the  origi- 
nal covenantee,  could  not  maintain  a  suit  in  equity  to  restrain  the  defendant 
from  building  on  his  lot  within  eight  feet  of  Auburn  Street.  In  giving  the 
opinion  of  the  court,  Mr.  Justice  Gray  said:  "There  is  nothing  in  the  case  to 
show  that  the  restriction  in  the  deed  from  the  plaintiff  to  Nudd  was  part  of 
a  general  plan  for  the  benefit  of  the  land  thereby  granted,  and  other  estates 
on  tlie  same  street,  or  was  inserted  in  the  plaintiff's  deed  for  the  benefit  of 
the  grantee  or  h;s  assigns,  or  was  repeated  in  any  grant  or  covenant  executed 
by  him  or  them,  or  either  of  them.  Under  these  circumstances,  a  purchaser 
from  Nudd  of  part  of  the  land  so  granted  to  him  has  no  more  right  in  equity 
than  at  law  to  enforce  the  restriction  against  the  purchaser  of  another  lot  of 
the  same  land":  Dana  v.  Woitworlli,  111  Mass.  29),  293.  The  court  cite 
Jewell  V.  Lee,  14  Allen,  145;  92  Am.  Dec.  744;  Keates  v.  Lj/on,  L.  R.  4  Ch. 
218.  They  also  say:  "The  jmlgment  of  the  cliancellor  of  New  Jersey,  in 
Wiiijlcld  V,  Hennimj,  21  N.  J.  Eq.  188,  is  inconsistent  with  the  decisions  in 
this  commonwealth  and  in  p]ni;laiid." 

In  another  case,  it  appeared  that  the  owner  of  land  lying  on  both  sides  of 
a  street  granted  the  portion  on  one  side  which  bordered  upon  the  ocean, 
subject  to  the  condition  that  the  same  should  be  used  only  for  bathing  and 
boating  from  the  beach,  and  that  only  low  bathing-houses  should  be  built 
thereon.  It  did  not  appear  that  he  then  intended  that  the  land  so  granted 
should  be  subsequently  divided,  and  held  by  different  owners.     This,  how- 


604  Ladd  v.  City  of  Boston.  [Mass. 

ever,  was  done,  and  deeds  of  conveyance  were  made  subject  to  the  condi- 
tion. The  purchaser  of  one  end  of  the  land  also  purchased  from  a  stranger  a 
lot  opposite  thereto,  on  the  other  side  of  the  street.  It  was  held  that  such 
purchaser  could  not  maintain  a  bill  in  equity  against  the  purchaser  of  an. 
other  portion  of  the  land  to  restrain  the  latter  from  violating  the  condition. 
The  court  proceeded  upon  the  view  stated  in  the  preceding  paragraph;  and 
in  the  course  of  its  opinion,  given  by  Bigelow,  C.  J.,  it  also  said:  "There  is 
nothing  in  the  case  before  us  which  in  any  degree  tends  to  show  that  there 
was  any  intent  on  the  part  of  the  grantor  or  grantee  in  the  original  deed  by 
which  the  condition  was  annexed  to  that  grant  that  the  land  now  owned  by 
the  parties  to  this  suit  to  give  any  other  or  different  effect  to  the  condition 
than  that  which  would  result  froni  it  at  common  law.  It  does  not  appear 
that  the  original  grantor  had  in  contemplation  the  division  of  the  land  into 
separate  lots  or  parcels  which  would  be  held  by  different  owners,  or  that  the 
condition  was  inserted  in  the  grant  for  the  purpose  of  creating  a  restriction  on 
the  use  of  the  land  as  between  subsequent  grantees  of  different  lots  or  parcels 
thereof.  And  this  constitutes  the  precise  distinction  between  the  case  at 
bar  and  that  of  Parker  v.  Nlghivigale,  6  Allen,  341,  83  Am.  Dec.  632,  on 
which  the  plaintiff  mainly  relies  in  support  of  his  case.  There  it  was  made 
to  appear  that  a  condition  annexed  to  a  grant  of  an  estate  was  imposed  in 
order  to  render  the  occupation  of  adjacent  estates  more  convenient  and  ad- 
vantageous, and  that  the  existence  of  such  condition  entered  into  and  formed 
part  of  the  consideration  of  the  grant  of  estates  which  were  intended  to  be 
benefited  thereby.  So  far  as  we  are  able  to  see,  there  is  nothing  to  indicate 
that  the  original  grantor  of  the  premises,  in  annexing  the  condition,  had  any 
intent  to  regulate  or  control  the  possession  or  enjoyment  of  the  premises  for 
the  benefit  of  subsequent  owners  or  grantees  of  the  estate,  or  any  part  of  it, 
but  that  it  was  imposed  by  him  solely  for  his  own  private  and  personal 
benefit,  as  the  owner  of  other  lots  in  the  vicinity,  in  which  the  present  plaintiff 
has  no  interest  whatever  ":  Jewell  v.  Lee,  14  Allen,  145,  150;  92  Am.  Dec. 
744. 

In  another  case  in  Massachusetts,  J.  S.,  the  owner  of  a  tract  of  land,  laid  it 
out  in  lots,  and  recorded  in  the  registry  of  deeds  a  plan,  showing  the  streets  and 
lots,  with  their  dimensions.  On  the  north  side  of  one  of  the  streets  were 
five  lots,  numbered  consecutively  from  6  to  10,  and  on  the  south  side  a 
large  lot.  J.  S.  conveyed  this  large  lot  without  restriction,  and  built  a 
house  on  lot  10,  standing  twenty  feet  back  from  the  street.  He  then  con- 
veyed lot  8  and  part  of  lot  7  to  the  plaintiff 's  grantor,  by  deeds  contain- 
ing a  provision  that  for  fifteen  years  no  building  should  be  placed  on 
the  granted  premises  within  twenty  feet  of  the  street,  and  that  no  trade 
offensive  to  dwelling-houses  in  that  neighborhood  should  be  carried  on,  and 
that  a  violation  of  either  of  these  restrictions  should  not  work  a  forfeiture, 
but  that  J.  S.,  his  heirs  or  devisees,  might  enter  upon  the  land  and  remove 
anything  violating  the  restrictions.  J.  S.  afterwards  conveyed  the  rest  of  lot 
7  and  also  lot  6  to  the  defendant,  by  deeds  containing  the  same  pro- 
vision. The  court  held  that  the  plaintiff  could  not  maintain  a  bill  in  equity 
to  restrain  the  defendant  from  erecting  a  building  on  lot  6  within  twenty 
feet  of  the  street.  It  was  not  claimed  that  in  regard  to  any  of  the  lots 
there  was  any  written  covenant  by  the  grantor,  and  it  did  not  appear  that 
there  was  any  express  stipulation  or  direct  assurance  on  his  part  that  any 
person  who  should  purchase  a  lot  on  the  north  side  of  the  street  should  have 
the  benefit  of  a  restriction  binding  all  the  other  purchasers  to  leave  an  open 
space  between  their  dwelling-houses  and  the  street.     The  court,  speaking 


June,  1890,]  Ladd  v.  City  of  Boston.  605 

through  Ames,  J.,  said:  "The  only  ground  upon  which  the  plaintiff  can  rest 
her  claim  that  the  restriction  in  question  was  intended  to  operate  for  the  benefit 
of  all  the  purchasers,  and  to  establish  a  general  plan  of  building  by  which 
eacii  one  would  acquire  a  right  in  the  nature  of  an  easement  in  the  land  pur- 
cliased  by  the  others,  is  to  be  found  in  the  fact  that  in  his  transactions  with 
two  separate  and  independent  purchasers  the  grantor  conveyed  a  portion  of  the 
land  in  each  case  subject  to  the  terms  and  conditions  set  forth  in  the  bill  of 
complaint.  It  is  true  that  of  these  conditions  the  one  prohibiting  the  prose- 
cution of  any  ofiFensive  trade  or  manufacture  upon  the  premises,  or  the  using' 
of  them  for  the  keeping  of  swine,  or  of  a  livery-stable,  would  in  practice  be 
benelicial  to  the  neighborhood  generally.  But  it  is  to  be  remembered  that 
the  grantor  had  himself  built  a  dwelling-house  in  that  immediate  neighbor- 
hood, and  a  provision  which  he  made  for  the  prevention  of  nuisances  may 
have  been  intended  for  the  benefit  of  that  particular  house.  It  is  undoubt- 
edly true,  and  has  often  been  decided,  that  Mhere  a  tract  of  land  is  sub- 
divided into  lots,  and  those  lots  are  conveyed  to  separate  purchasers,  subject 
to  conditions  that  are  of  a  nature  to  operate  as  an  inducement  to  the  purchase 
to  give  to  each  purchaser  the  benefit  of  a  general  plan  of  building  or  occupation, 
80  that  each  shall  have  attached  to  his  own  lot  a  right  in  the  nature  of  an  ease- 
ment or  incorporeal  hereditament  in  the  lots  of  the  others,  a  right  is  thereby 
acquired  by  each  grantee  which  he  may  enforce  against  any  other  grantee. 
But  in  the  case  at  bar  there  is  nothing  from  which  the  court  can  infer  that 
the  restriction  contained  in  the  deed  from  Heath  to  the  defendant  was  intended 
for  the  benefit  of  the  estate  now  owned  by  the  plaintiff.  No  such  purpose 
can  be  gathered  from  the  plan,  or  from  the  situation  of  the  property  with 
reference  to  other  land  of  the  grantor.  It  purports  to  be  a  condition 
imposed  by  the  grantor,  and  the  deed  points  out  the  mode  in  which 
he,  his  heirs  or  devisees,  may  enforce  it.  Neither  of  the  deeds  under 
which  these  parties  respectively  claim  purports  to  give  to  the  grantee 
any  such  right  against  any  other  grantee.  For  aught  that  appears,  the  con- 
dition may  have  been  intended  for  the  benefit  of  the  grantor  or  his  family,  as 
long  as  they  continued  to  own  the  dwelling-house.  The  burden  of  proof  ia 
upon  the  plaintiff,  if  she  insists  upon  giving  to  that  condition  any  wider  ap- 
plication, and  this  burden  we  do  not  find  that  she  has  sustained  ":  Sharp  v. 
Ro-pes,  110  Mass.  .S8I,  385. 

Another  illustration  of  the  foregoing  principle  is  found  in  a  case  decided 
by  Vice-Chancellor  Shadwell  in  18.'i9,  where  a  deed  dated  in  1827,  made  be- 
tween J.  Pitt,  of  the  one  part,  and  the  other  persons  who  had  executed  the 
deed,  of  the  other  part,  recited  that  Pitt,  being  seised  in  fee  of  the  lands  de- 
lineated in  the  plan  annexed  (being  a  plan  of  a  town  called  Pittville),  and 
having  in  contemplation  to  establish  a  spa  at  or  near  the  north  end  of  the 
lands,  and  to  erect  a  pump-room  at  or  near  the  spot  marked  on  the  plan,  and 
to  lay  out  the  rest  of  the  lands  for  buildings,  pleasure-grounds,  roads,  etc., 
had  caused  the  plan  to  be  drawn,  whereby  the  mode  in  which  the  lands  were 
intended  to  be  laid  out,  and  the  purposes  for  which  they  were  intended  to  be 
converted  and  used,  were  described,  in  order  that  the  beauty  and  regularity 
of  the  whole  design  might  be  forever  thereafter  preserved,  subject  only  to 
such  alterations  as  should  be  made  or  approved  of  by  Pitt,  his  heirs  or  as- 
signs, and  as  should  not  destroy  the  general  beauty  of  the  same  design,  and 
that  each  of  the  other  parties  to  the  deed  had  purchased,  or  agreed  to  pup- 
chase,  one  or  more  of  the  pieces  of  land  described  in  the  plan,  as  set  out  for 
building.  The  deed  then  contained  covenants  by  Pitt,  his  heirs  and  assigns, 
to  build  the  pleasure-grounds,  roads,  etc.,  and  to  keep  them  in  repair,  and 


606  Ladd  v.  City  op  Boston.  [Mass. 

other  covenants  prescribing  the  manner  in  which  the  pleasure-grounds,  roads, 
etc.,  should  be  enjoyed  and  used  by  the  occupiers  of  the  houses  to  be  erected 
on  the  building-ground,  and  that  Pitt,  his  heirs  or  assigns,  would,  in  every 
agreement  which  should  he  entered  into  by  him  or  them  for  the  sale  of  any 
part  of  the  said  ground,  require  the  purchaser  to  covenant  with  him,  his  heirs 
and  assigns,  not  to  erect  any  messuage  on  any  part  of  the  ground  which 
might  lessen  in  value  any  other  of  the  messuages  erected  or  to  be  erected  at 
Pittville.     Thereafter,  in  1833,  Pitt  agreed  to  sell  lots  2,  3,  4,  and  5  of  the 
building-ground  to  Stokes,  and  Stokes  agreed  with  Pitt  to  erect  three  houses 
on  those  lots,  and  agreed  with  him  that  each  house  should  stand  back  twenty- 
five  feet  from  the  western  boundary  of  the  lots,  and  that  he  (Stokes),  his  heirs 
or  assigns,  would  not  do  or  sufiFer  to  be  done  on  the  lots,  or  in  any  building  to 
be  erected  thereon,  any  act,  deed,  etc.,  which  might  be  deemed  a  nuisance, 
injury,  or  annoyance,  or  which  might  lessen  in  value  any  adjoining  or  neigh- 
boring lands  or  property,  or  any  houses  to  be  erected  thereon.     Stokes  built 
two  houses  on  lots  2  and  3,  and  in  1833  Pitt  conveyed  these  lots  to  hiui,  and 
Stokes,  for  himself,  his  heirs  and  assigns,  entered  into  a  covenant  with  Pitt, 
his  heirs  and  assigns,  with  respect  to  these  lots  and  the  houses  thereon,  sim- 
ilar to  the  last-mentioned  stipulation  in  the  agreement.     Stokes  subsequently 
gave  up  to  Pitt  lots  4  and  5,  of  which  he  had  the  contract  of  purchase,  as 
already  stated,  and  abandoned  his  contract  of  purchase  as  to  them,  and  then 
sold  his  house  on  lot  3  to  the  plaintiff.     Pitt  afterwards  agreed  to  sell  lots  4 
and  5  to  Creed.     The  agreement  between  Pitt  and  Creed  stipulated  that  the 
house  to  be  erected  on  those  lots  should  stand  back,  not  twenty-five  but 
ten  feet  at  least  from  the  western  boundary  thereof,  and  it  also  contained  a 
stipulation  for  protecting  the  adjoining  property  from  injury,  etc.,  similar  to 
that  in  the  agreement  with  Stokes.     Both  Stokes  and  Creed  executed  the 
deed  of  1827.     Creed  began  to  build  a  house  on  his  lots  thirteen  feet  distant 
from  the  western  boundary,  which  was  twelve  feet  in  advance  of  tlie  plain- 
tiff's house,  and  which  the  plaintiff  alleged  would  be  a  nuisance  or  an  annoy- 
ance to  him,  and  would  lessen  the  value  of  his  house,  and  consequently  would 
be  a  violation  of  the  covenant  in  the  deed  of  1827,  and  of  the  agreement  of 
1833.     The  vice-chancellor  held  that  the  plan  annexed  to  the  deed  of  1827 
was  merely  a  general  plan,  and  was  not  intended  to  be  strictly  adliered  to, 
but  that  its  details  might  be  varied  by  Pitt,  and,  with  his  sanction,  by  the 
purchasers  from  him,  and  that  the  plaintiff  was  not  entitled  to  avail  himself, 
as  against  either  Creed  or  Pitt,  of  the  covenants  of  1827  or  of  the  agreement 
of  1883  for  the  purpose  of  preventing  the  completion  of  Creed's  house  in  the 
manner  intended,  or  the  performance  by  Pitt  of  the  agreement  with  Creed. 
Tlie  foregoing  statement  is  transcribed  from  the  syllabus  of  the  case.     The 
report  of  the  case,  and  also  the  opinion  of  the  vice-chancellor,  are  long  and 
tedious.      The   vice-chancellor   placed   his   judgment   substantially   on   the 
ground  that  in  the  agreement  of  1833  the  purchaser,  Stokes,  was  not  cove- 
nanting as  to  the  mode  of  using  lots  2  and  3  so  as  to  affect  lots  4  and  5,  or 
as  to  the  mode  of  using  lots  4  and  5  so  as  to  affect  lots  2  and  3.     He  said: 
"  If  he  was  the  purchaser  of  the  whole,  it  would  be  absurd  to  say  that  he 
should  1)6  restricted  in  tlie  use  of  a  part,  so  as  not  to  injure  the  remainder; 
for,  being  the  owner  of  the  whole,  he  would  not,  of  course,  use  one  part  so  as 
to  injure  the  remainder.     In  my  opinion,  therefore,  no  part  of  this  covenant 
in  the  agreement  of  April,  1833,  is  capable  of  being  made  to  bear  on  the  ques- 
tion."    Secondly,  he  took  the  view  that  Stokes  having  failed  to  carry  out 
his  agreement  of  purchase  as  to  lots  4  and  5,  which  Pitt  afterwards  sold  to 
the  defendant  Creed,  the  covenants  of  1833  in  respect  of  those  lots  lapsed. 


June,  1890.]  Ladd  v.  City  of  Boston.  607 

and  fell  back  into  the  hands  of  Creed,  and  the  case  became  exactly  as  though 
such  covenants  had  never  been  entered  into;  and  thirdly,  that  inasmuch  as 
the  plaintiff  could  claim  only  under  Stokes,  and  as  Stokes  had  not  taken  any 
stipulation  from  Pitt  for  enforcing  against  Pitt  the  stipulation  which  Pitt 
might  have  enforced  against  Stokes,  the  whole  matter  was  left  at  large: 
Schreiber  v.  Creed,  10  Sim.  9. 

A  case  was  decided  in  the  English  court  of  appeal  in  1876  on  the  follow- 
ing  state  of  facts:  The   owner  of  an  estate   granted   a   lease  of  a  plat  of 
ground  to  A,  who  covenanted  that  he,  his  executors,  administrators,  and  as- 
signs, would  not,  during  the  term,  do  on  the  premises  anything  which  should 
be  an  annoyance  to  the  neighborhood  or  to  the  lessor  or  his  tenants,  or  which 
should  diminish  the  value  of  the  adjoining  property,  and  that  he  would  not 
build,  or  allow  to  be  built,  on  the  ground  any  building  or  erection,  without 
first  submitting  the  plans  to  the  lessor   and  obtaining  his  approval.     Some 
years  later,  the  landlord  granted  a  lease  of  an  adjoining  plat  to  B,  who  en- 
tered  into   a  similar  restrictive   covenant.     Within   twenty  years,  A  com- 
menced, with  the  approval  of  the  lessor,  to  build  upon  his  ground,  so  as  to 
darken  the  windows  of  B's  house.     B  thereupon  brought  the  present  bill  in 
equity  to  restrain  A  from  erecting,  and  also  to  restrain  the  lessor  from  ap- 
proving, the  building  which  A  was  about  to  erect.     The  court  held  that  B 
was  not  entitled  to  relief,  either  on  the  principle  that  the  lessor  could  not 
derogate  from  his  grant,  or  on  the  ground  that  the  restrictive  covenants  in 
A's  lease  inured  to  the  benefit  of  B.     In  giving  his  judgment,  James,  L.  J., 
said:  "The  defendants,  the  Crystal  Palace  Hotel  Company,  are  owners  of  a 
property  under  the  demise  of  a  term  of  years,  and  are  erecting  on  it  a  build- 
ing which  may  lawfully  be  erected,  unless  they  have  put  themselves  under 
an  obligation  not  to  do  so.     The  plaintiff  is  the  owner  of  an  adjoining  prop- 
erty under  another  demise  for  a  term  of  years  from  the  same  lessors,  of  later 
date  than  that  of  the  defendants.     He  therefore  cannot  have  acquired  any 
rights  against  them,  except  under  some  grant  which  could  lawfully  be  made. 
Now,  the  lessors  could  not  grant  anything  so  as  to  derogate  from  the  rights 
of  their  prior  grantee.     The  respondent  therefore  was  obliged  to  rest    his 
case  on  the  covenants  entered  into  by  the  defendant's  predecessor  entitled 
with  the  grantor;  and  the  question  is,  whether  those  covenants  bring  the  case 
within  the  rule  which  says  that  the  owner  of  two  tenements  who  grants  one 
of  them  cannot  derogate  from  his  own  grant  by  anything  he  does  on  the 
property  which  he  reserves,  the  property  granted  becoming  entitled  to  ease- 
ments known  as  easements  derived  by  the  disposition  of  the  owner  of  two 
tenements.     The  plaintiff  contends  that  though  the  grantor,  when  he  made 
the  grant  under  which  plaintiff  claims,  had  ceased  to  I  e  the  owner  of  the  de- 
fendant's tenement,  he  had  a  right  which  he  could  have  used  in  such  a  way 
as  to  prevent  the  plaintiff's  enjoyment  of  his  property  being  interfered  with 
in  any  way  in  which  the  grantor  would  not  have  been  allowed  to  interfere 
with  it  if  he  had  retained  the  defendant's  property,  and  that  this  interest 
brings  the  case  within  the  rule  as  to  the  owner  of  two  tenements.     It  would 
be  a  novel  extension  of  that  doctrine  to  hold  that  not  only  the  grantor  can- 
not do  anything  to  derogate  from  his  own  grant,  but  that  he  is  obliged  to  take 
active  steps  to  prevent  other  persons  from  doing  what  he  miglit  not  himself 
do.     It  cannot,  in  my  opinion,  be  said  that  a  right  under  a  covenant  is  prop- 
erly within   the  meaning  of  this  rule.     Then  the  plaintiff  says:   '  You,   my 
lessor,  could,  under  the  covenants  entered  into  with  you  by  your  other  lessee, 
have  prevented  this  erection;  you  had  and  have  that  right;  you  have  granted 
me  a  piece  of  ground  with  a  house  on  it,  and   you  ought  to  enforce  those 


508  Jepson  v.  Killian.  [Mass 

covenants  for  my  benefit.'  Now,  when  the  plaintiff  took  his  lease  he  had  no 
knowledge  of  the  nature  of  the  title  in  the  adjoining  property;  all  he  knew 
was,  that  the  piece  of  property  adjoining  his  had  once  been  part  of  the  same 
estate;  he  knew  nothing  of  the  covenant;  the  grant  to  him  contains  no  no- 
tice of  it;  and  it  would  be  strange  to  say  that  a  man  who  has  taken  a  cove- 
nant for  his  own  benefit  can  be  prevented  from  dealing  with  it  for  his  own 
benefit  because  he  has  granted  parcels  of  land  to  other  people.  The  cove- 
nant is  not  mentioned  in  the  plaintiff's  lease,  and  it  cannot  have  been  the 
intention  of  the  parties  thus  to  restrict  the  use  of  a  covenant  which  was 
entered  into,  not  for  the  benefit  of  the  owner  of  the  estate,  that  he  might  be 
able  to  make  the  most  of  it.  It  would  be  too  great  an  extension  of  the  doc- 
trine of  implied  obligation  to  raise  by  implication  a  right  in  the  nature  of  an 
equitable  assignment  of  the  benefit  of  the  covenant.  There  was  no  bargain 
as  to  enforcing  the  covenant  for  the  benefit  of  the  plaintifif,  and  we  cannot 
imply  one  ":  Master  v.  Hansard,  4  Ch.  Div.  718.  The  other  lorda  justices 
concurred,  in  separate  opinions. 


Jepson  v.  Killian. 

[151  Massachusetts,  693.] 
Deceased  Contractor  —  Right  to  Share  in  Profits.  —  If  several  persons 
secure  and  enter  into  a  contract  for  the  doing  of  work,  and  commence 
its  performance,  and  then  one  of  them  dies,  and  the  others  perform  the 
contract,  they  must  account  to  the  representatives  of  their  deceased 
fellow-contractor  for  his  share  of  the  profits. 

J.  H.  Butler,  for  the  defendants. 

H.  E.  Ware,  for  the  plaintiflFi 

Holmes,  J.  This  is  a  bill  in  equity  for  an  account,  brought 
by  the  administrator  of  one  Putterill,  seeking  to  recover  a 
share  of  the  profits  arising  from  the  performance  of  a  contract 
by  which  the  deceased  and  the  defendants  undertook  to  put 
in  a  brick  conduit  and  to  make  certain  excavations  for  the 
Boston  Heating  Company.  The  answer  admits  the  contract, 
and  the  master  finds  that  the  deceased  rendered  some  ser- 
vices in  securing  and  in  performing  it.  But  he  died  very 
shortly  after  it  was  made,  and  the  defendants  went  on  and 
did  nearly  all  the  work  without  his  aid. 

The  main  contention  of  the  defendants  is,  that  Putterill'a 
death  put  an  end  to  his  interest  in  the  contract,  and  that  his 
administrator  is  not  entitled  to  any  part  of  the  profits.  But 
nothing  appears  in  the  pleadings  or  in  the  master's  report  to 
take  the  contract  with  the  heating  company  out  of  the  gen- 
eral rule  that  the  survivors  must  account  with  the  representa- 
tive of  their  deceased  fellow-contractor  for  his  interest.    It  does 


xMERICAN  STATE  REPORTS 

A'ot..   XXII,    Pages  s0r-«15. 

CHAMBERLAIN  :-.   DUNLOP. 

|l'^(i  Xkw  York,  4^.] 

Contracts  which  bind  executors. 


March,  1891.]        Chamberlain  v.  Dunlop.  807 

sihly  is,  an  exception  to  that  rule,  resting  upon  its  own  pecu- 
liar reasons,  in  a  case  where  the  defendant  is  not,  as  here,  a 
domestic  corporation  formed  under  our  law,  and  so  entitled 
to  the  benefit  of  our  remedial  limitations,  but  is  a  corporation 
of  the  state  within  whose  jurisdiction  the  cause  of  action  arose, 
and  by  whose  law  no  restriction  upon  the  amount  of  damages 
is  permitted  or  enacted.  We  do  not  decide  that  question; 
but  the  same  reasoning  which  would  expose  such  a  corpora- 
tion to  the  law  of  its  own  jurisdiction  would  serve  equally  to 
justify  the  right  of  the  domestic  corporation  to  be  protected 
by  the  remedial  limitations  of  its  jurisdiction.  The  difference 
between  the  two  statutes,  therefore,  does  not  strictly  affect  the 
rule  of  damages,  but  rather  the  extent  of  damages;  and  that 
extent,  as  limited  or  unlimited,  does  not  enter  into  any  defini- 
tion of  the  right  enforced  or  the  cause  of  action  permitted  to  be 
prosecuted.  And  so  the  causes  of  action  in  the  two  forums  are 
not  thereby  made  dissimilar.  These  views  lead  to  an  affirm- 
ance of  the  interlocutory  judgment. 

The  judgment  should  be  affirmed,  with  costs,  but  with  leave 
to  the  defendant  to  withdraw  the  demurrer  and  plead  anew 
within  twenty  days  after  service  of  a  copy  of  the  judgment 
entered  upon  filing  the  remittitur,  and  upon  payment  of  the 
costs  of  the  action  from  the  interposition  of  the  demurrer  to 
that  date. 

Judgment  accordingly. 

Actions  in  One  Statu  to  Enforce  Causes  of  Action  Created  bt 
THE  Statute  of  Another:  See  note  to  Attrill  v.  Huntington,  14  Am.  St. 
Rep.  350-355;  Ash  v.  BaUirruyre  etc  R.  R.  Co.,  T2  Md.  144;  20  Am.  St.  Rep. 
461,  and  note;  U.sher  v.  West  Jersey  R.  R.  Co.,  126  Pa.  St  206;  12  Am.  St 
Rep.  863,  and  note. 


Chamberlain-  v.  Dunlop. 

[1.6  New  York,  45.] 
Notice,  when  Sufficient  to  Extend  Term  of  Lease.  —  Where  a  lease 
for  a  term  of  five  years  contains  a  provision  for  an  extension  thereof  for 
two  years,  upon  the  le.ssee's  giving  written  notice  to  the  lessor  three 
months  before  the  expiration  of  the  original  term  of  his  desire  to  so  ex- 
pend it.  a  written  notice  served  by  the  lessee  as  prescribed,  and  stating, 
in  addition,  that  if  the  lessor  chooses  they  would  regard  the  lease  as  ex- 
tended two  years  and  a  half,  to  which  the  lessor  replies  acknowledging 
the  lessee's  right  to  au  extension  for  two  years,  but  refusing  to  grant  the 
extension  for  the  extra  six  mouths,  is  sufficient  to  extend  the  term  for 
the  two  years. 


803  Chamberlain  v.  Dunlop.  [New  York, 

Surrender  of  Lease,  What  is  Not.  —  An  original  lease  is  not  surrea- 
dered  by  the  delivery  to  the  lessee  of  a  new  lease  of  the  same  premises, 
which  does  not  give  to  him  the  interest  for  which  he  contracted  and 
which  he  thought  he  was  acquiring,  and  where  no  entry  is  ever  made 
under  the  new  lease,  the  property  thereby  demised  having  been  de- 
stroyed by  fire  before  the  time  arrived  at  which  by  its  terma  it  was  to 
become  operative. 

Party  Making  Contract  is  Presumed  to  Intend  to  Bind  his  Ex- 
ECUTORS  AND  ADMINISTRATORS,  unless  it  is  of  such  a  nature  as  to  call  for 
some  personal  quality  of  the  testator,  or  is  so  worded  as  to  plainly  nega* 
tive  such  a  presumption.  Where,  therefore,  a  testator  covenants  to 
rebuild  premises  leased  by  him,  in  case  of  their  destruction  by  fire,  hia 
executor  will  have  power  to  perform  such  covenant;  and  in  an  action 
against  the  executor  to  recover  damages  for  the  breach  of  such  covenant, 
a  motion  for  a  nonsuit  on  the  ground  that  the  executor  had  no  power  to 
rebuild,  and  no  control  over  the  heirs  at  law  to  make  them  rebuild,  is 
properly  denied.  In  such  a  case,  whether  the  land  is  devised  or  descends 
to  the  heir,  the  executor  is  liable  upon  the  covenant,  and  must  pay  tb« 
damages,  if  he  have  assets. 

Lessee  may  Testify  as  to  Value  of  Lease  when.  —  A  lessee  suing  to 
recover  damages  for  the  breach  of  a  covenant  to  rebuild,  contained  ia 
his  lease,  may  testify  as  to  the  value  of  the  lease  for  the  time  he  would 
have  been  in  possession  after  the  premises  were  rebuilt  and  before  th* 
lease  expired. 

Architect  may  Testify  as  to  Time  in  Which  Buildujo  could  be  Re- 
built without  dangerous  haste. 

Action  to  recover  damages  for  an  alleged  breach  of  con- 
tract to  rebuild,  contained  in  a  lease  executed  to  the  plaintiff 
by  Robert  Dunlop,  the  defendant's  testator.  The  facts  are 
sufficiently  stated  in  the  opinion. 

E.  H.  Burdick,  for  the  appellant. 

Isaac  Lawson,  for  the  respondent. 

Peckham,  J.  None  of  the  grounds  argued  by  the  counsel 
for  defendant  is  sufficient  to  call  for  a  reversal  of  this  judg- 
ment. 

1.  The  lease  was  properly  extended  in  the  manner  provided 
for  by  its  terms,  and  was  recognized  as  a  valid  and  existing 
lease  up  to  the  death  of  the  testator,  at  which  time  nearly  one 
half  of  the  extended  period  had  expired.  The  lease  provided 
for  an  extension  of  its  term  by  two  years,  provided  the  lessee, 
three  months  before  the  expiration  of  the  original  five  years, 
gave  a  written  notice  to  the  lessor  of  his  desire  to  extend  'the 
lease  for  that  further  period.  This  the  lessee  did.  Because 
he  made  a  suggestion  in  that  notice  that  if  the  lessor  chose 
they  would  regard  the  lease  as  extended  two  years  and  a  half 
had  no  bearing  upon  the  sufficiency  of  the  written  notice,  and 


i 


March,  1891.]        Chamberlain  v.  Dunlop.  809 

the  refusal  of  the  lessor  to  grant  the  extra  six  months'  exten- 
sion acknowledged  the  right  of  the  lessee  to  the  two  years 
provided  for  by  the  lease  itself. 

2.  The  lessee  of  the  original  lease  never,  either  in  fact  or  in 
law,  surrendered  it  by  reason  of  what  took  place  in  regard  to 
the  execution  of  the  lease  by  Wallace  on  the  part  of  the  heirs 
at  law.  The  facts  show  there  were  a  widow  and  several  heirs 
at  law,  and  that  the  widow  had  a  right  of  dower  in  the  prem- 
ises, and  that  one  of  the  heirs  at  law,  at  the  time  of  the  exe- 
cution of  the  lease  by  Wallace  as  the  agent  of  the  heirs,  was 
an  infant.  The  lease  purported  to  grant  the  interest  of  the 
heirs  in  the  premises  from  the  1st  of  the  coming  May  for 
five  years.  The  evidence  is  uncontradicted  that  the  agree- 
ment between  plaintiff  and  Mr.  Wallace  was,  that  the  plaintiff 
should  have  all  the  interest  of  all  the  parties  in  the  premises 
for  the  five  years,  and  that  when  the  plaintiff  executed  the 
lease  he  had  no  personal  knowledge  as  to  who  succeeded  to  the 
interest  of  Robert  Dunlop,  and  he  supposed  that  the  lease 
covered  the  interest  of  all  parties  having  an  interest  in  the 
premises.  It  is  also  in  proof  and  found  by  the  referee  that 
the  widow  had  a  right  of  dower  in  the  premises.  She  did  not 
sign  the  lease,  and  neither  her  interest  nor  the  interest  of  the 
infant  passed  under  it.  The  very  day  the  lease  was  received, 
signed  by  Wallace  as  agent,  the  fire  occurred.  It  is  obvious 
that  the  plaintiff  did  not  secure  by  the  lease  the  interest 
which  he  had  provided  for  by  his  agreement  with  Mr.  Wal- 
lace. The  dower  of  the  widow  was  outstanding,  and  the  inter- 
est of  the  infant  was  not  affected  by  the  lease.  The  original 
lease  was  not  surrendered,  for  the  reason  that  the  new  one  did 
not  give  plaintiff  the  interest  he  contracted  for,  and  which  he 
thought  he  was  acquiring.  Under  such  facts,  the  cases  hold 
there  is  no  surrender:  Whitney  w.  Meyers,  1  Duer,  271;  Schieffe- 
lin  V.  Carpenter,  15  Wend.  405;  Coe  v.  Hobby,  72  N.  Y.  146; 
28  Am.  Rep.  120. 

This  is  not  the  case  of  a  lease  by  one  tenant  in  common  to 
a  stranger,  purporting  to  convey  the  whole  interest  in  the  land, 
and  an  entry  by  the  lessee  under  it,  and  an  acquiescence  by 
all  the  other  tenants  in  common.  There  was  never  a  valid 
acceptance  of  the  new  lease.  The  agreement  provided  for  the 
conveyance  of  the  whole  interest  to  the  plaintiff,  and  the  par- 
ties failed  to  convey  all  of  such  interest,  and  the  plaii.tiff 
never  accepted  such  lease  with  knowledge  that  it  did  not  ful- 
fill the  terms  of  the  agreement,  and  there  was  never  any  entry 


810  Chamberlain  v.  Dunlop.  [New  York, 

under  the  lease,  and  before  the  time  arrived  at  which  the  lease, 
by  its  terms,  was  to  become  operative,  the  property  was  not  in 
existence,  having  been  destroyed  by  fire.  Hence  the  original 
lease  remained  in  full  force. 

3.  The  defendant  moved  for  a  nonsuit  upon  the  grounds, 
among  others,  that  the  executor  had  no  power  to  rebuild,  and 
no  control  over  the  heirs  at  law  to  make  them  rebuild;  and 
also  because  on  the  death  of  the  lessor  the  plaintiff  paid  rent 
to  and  held  under  the  heirs  at  law,  and  not  under  the  defend- 
ant executor.  There  is  no  finding  by  the  referee  as  to  the 
last  alleged  fact,  and  the  evidence  does  not  show  that  such  is 
necessarily  the  fact.  It  rather  shows  the  contrary.  As  to  the 
first  ground,  that  the  executor  had  no  power  to  rebuild,  I  think 
the  authorities  are  clearly  the  other  way. 

The  presumption  is,  that  the  party  making  a  contract  in- 
tends to  bind  his  executors  and  administrators,  unless  the 
contract  is  of  that  nature  which  calls  for  some  personal  qual- 
ity of  the  testator,  or  the  words  of  the  contract  are  such  that 
it  is  plain  no  presumption  of  the  kind  can  be  indulged  in: 
Tremeere  v.  Morison,  1  Bing.  N.  C.  89;  Reid  v.  Tenterden,  4 
Tyrw.  Ill;  Kernochan  v.  Murray,  111  N.  Y.  306;  7  Am.  St. 
Rep.  744. 

Where  a  party  has  entered  into  a  contract  to  purchase  real 
estate,  and  dies  before  it  is  conveyed  to  him,  and  before  he  has 
paid  for  it,  his  heir  or  devisee  is  entitled  to  have  his  execu- 
tor pay  for  the  realty  out  of  the  personal  estate:  Broome  v. 
Monck,  10  Ves,  596,  611;  reargued,  619;  Livingston  y.  Newkirkj 
3  Johns.  Ch.  312;  Wright  v.  Holbrook,  32  N.  Y.  587;  1  Sugden 
on  Powers,  8th  Am.  ed.,  293;  3  Redfield  on  Wills,  2d  ed.,  302, 
sec.  11. 

The  executor  is  not  permitted  to  violate  the  contract  of  his 
testator  after  the  latter's  death:  Wentworth  v.  Cock,  10  Ad.  & 
E.  42;  Siboni  v.  Kirkman,  1  Mees.  &  W.  419,  remarks  of 
Parke,  B. 

In  Quick  v.  Ludhurrow,  3  Bulst.  30,  Lord  Coke  said  that  if 
a  man  be  bound  to  build  a  house  for  another  before  such  a 
time,  and  he  which  is  bound  dies  before  the  time,  his  execu- 
tors are  bound  to  perform  this.  To  same  effect,  Tilney  v.Nor- 
ris,  1  Ld.  Raym.  553;  Tremeere  v.  Morison,  1  Bing.  N.  C.  89; 
and  Reid  v.  Tenterden,  4  Tyrw.  111. 

If  the  testator  devise  his  land  to  other  parties,  the  executor 
still  remains  liable  on  the  covenant  of  his  testator.  If  the 
devisees  do  not  permit  the  executor  to  build,  the  covenant  is 


I 


March,  1801.]        Chamberlain  v.  Dunlop.  811 

broken,  and  it  is  the  act  of  the  devisor  in  devising  his  prop- 
erty thus  that  prevents  the  executor  from  fulfilling. 

If  the  land  descended  to  the  heir,  then  the  covenant  still 
remains  in  force;  and  if  it  should  be  that  the  executor  could 
not  force  the  heir  to  permit  the  building,  still  the  estate  is 
liable  on  the  covenant,  and  the  executor  must  pay  the  dam- 
ages if  he  have  assets.  The  judgment  here  is  only  against  him 
as  executor,  and  is  fully  warranted  in  law. 

4.  The  exceptions  to  the  rulings  of  the  referee  in  the  admis- 
sion or  rejection  of  evidence  are  not  tenable.  The  value  of 
the  lease  for  the  time  the  plaintiff  would  have  been  in  posses- 
sion after  the  premises  were  rebuilt,  and  before  the  lease  had 
expired,  was  properly  testified  to  by  the  plaintiff.  It  was  a 
matter  of  opinion  to  some  extent,  based  upon  facts,  all  of 
which  he  had  testified  to,  and  his  experience  and  knowledge 
were  more  than  that  of  any  other  person  in  regard  to  the  very 
question  which  was  asked.  The  evidence  of  Fleischman  was 
properly  admitted.  He  was  an  architect,  and  to  some  extent, 
therefore,  familiar  with  building  and  the  time  it  should  take 
to  do  certain  work,  and  with  the  fact  whether  the  work  could 
be  done  in  a  certain  time  without  dangerous  haste. 

We  are  unable  to  find  any  fair  reason  for  disturbing  this 
judgment,  and  it  should  be  affirmed,  with  costs. 


Where  and  how  Contract  Continues  Obligatort  and  Enforceable 
AFTER  Death  of  Contractor.  —  It  is  a  general  rule  of  law  that  contrapta 
bind,  not  only  the  parties  thereto,  but  also  their  executors  or  administra- 
tors. The  law  presumes  that  the  parties  to  a  contract  intend  to  bind  their 
personal  representatives,  even  when  they  are  not  named  in  the  contract. 
Contracts  are  therefore,  generally  speakins^,  enforceable  against  the  personal 
representatives  of  deceased  parties  thereto,  to  the  extent  of  the  assets  which 
have  come  to  their  hands:  2  Parsons  on  Contracts,  531;  Chitty  on  Con- 
tracts, 101;  1  Addison  on  Contracts,  sec.  451;  3  Redfield  on  Wills,  302; 
Rawle  on  Covenants,  sec.  312;  Broome  v.  Monck.  10  Ves.  596;  Treineere  v. 
Moriton,  1  Bing.  N.  C.  89;  Rdd  v.  Tenterden,  4  Tyrw.  Ill;  Wentworth  v. 
Cock,  10  Ad.  &  E.  42;  Sihoni  v.  Kirhnan,  1  Mees.  &  W.  419;  Farrow  v.  Wil- 
son, L.  R.  ICom.  P.  744;  Smith  v.  Wilminr/ton  etc.  Co.,  83  111.  498;  T<n/lor  v. 
Taylor,  3  Bradf.  54;  Ferrin  v.  Myrirk,  41  N.  Y.  315;  Kernochan  v.  Murray, 
111  N.  Y.  306;  7  Am.  St.  Rep.  744;  McClurev.  Gamble,  27  Pa.  St.  288; 
Stumpf's  A-ppeal,  116  Pa.  St.  33.  A  testator,  by  including  his  heirs,  does 
not  exclude  his  executors.  The  personal  representatives  are  liable,  even 
when  the  heirs  are  mentioned  and  when  they  are  not  mentioned:  1  Addison 
on  Contracts,  sec.  451;  McChire  v.  Oaml'lr,  27  Pa.  St.  288.  At  common  law, 
the  heir  was  liable,  in  common  with  the  personal  representative,  to  the  ex- 
tent of  the  assets  which  had  come  to  him  by  descent,  upon  all  covenants 
under  seal  entered  into  by  his  ancestor,  in  which  he  was  expressly  named; 
but  unless  so  named,  he  was  not  liable:    1   Addison  on  Contracts,  sec.  447; 


812  Chamberlain  v.  Dunlop.  [New  York, 

Rawle  on  Covenants,  sec.  309;  2  Wait's  Actions  and  Defenses,  398;  Tichnor 
V.  Harris,  14  N.  H.  272;  40  Am.  Dec.  186. 

No  Distinction  between  Liability  for  BaKACHES  op  Decedent's  Con- 
tracts BEFORE  AND  AFTER  HIS  Death.  —  The  personal  representatives  of  a 
decedent  are  liable  in  damages  for  all  breaches  of  his  contracts  occurring 
prior  to  his  death,  and  for  all  such  breaches  that  occur  subsequent  to  his 
death,  except  in  those  cases  where  his  personal  skill  or  taste  is  required  in 
the  execution  of  the  contract:  1  Addison  on  Contracts,  sec.  451;  Chitty  on 
Contracts,  101;  2  Parsons  on  Contracts,  533;  Rawle  on  Covenants,  sec.  312; 
2  Wau's  Actions  and  Defenses,  398;  Welh  v.  Fydell,  10  East,  315;  Siboni  v. 
Kirhnan,  1  Mees.  &  W.  419;  Williams  v.  Burrell,  1  Com.  B.  402;  Smith 
V.  Wilmington  etc.  Co.,  83  111.  498;  Hovey  v.  Neivton,  11  Pick.  421;  McClurer. 
Gamble,  27  Pa.  St.  288;  Stump/'s  Appeal,  116  Pa.  St.  33. 

Personal  Representative  Bound  to  Complete  Decedent's  Contracts. 

—  If  a  purchaser  who  has  ordered  goods  dies  before  the  time  for  their  delir* 
cry,  the  executor  or  administrator  must  receive  and  pay  for  the  goods,  or  ha 
will  be  liable,  to  the  extent  of  the  assets  in  his  hands,  for  the  damages  that 
may  be  sustained  by  reason  of  his  refusal  to  complete  the  contract  of  the  de- 
ceased: 1  Addison  on  Contracts,  sec.  453;  Wentworth  v.  Cock,  10  Ad.  &  E.  42; 
Cooper  V.  Jarman,  L.  R.  3  Eq.  98.  And  if  a  person  contracts  to  build  a  house 
for  another  before  a  certain  day,  and  dies  before  that  day,  his  personal  repre- 
sentatives must  go  on  and  finish  the  house,  or  they  will  be  liable  in  damages 
for  not  completing  the  decedent's  contract:  Quick  v.  Ludhurrow,  3  Bulst.  30; 
Marshall  v.  Broadhurst,  1  Cromp.  &  J.  405;  CoUinson  v.  Lister,  20  Beav.  356. 
And  where  a  person  contracts  with  a  builder  to  erect  a  house  on  land  be- 
longing to  him,  and  dies  before  the  house  is  finished,  his  representative  must 
have  the  house  completed  out  of  the  personal  estate  of  the  deceased  in  the 
first  instance:  Cooper  v.  Jarman,  L.  R.  3  Eq.  98;  Biblettr.  Wallis,  1  Daly,  360; 
Taylor  v.  Taylor,  3  Bradf.  54.  The  personal  representative  of  a  deceased 
lessee  is,  in  contemplation  of  law,  the  assignee  of  the  term,  and  is  liable  as 
such  upon  all  covenants  running  with  the  land,  such  as  covenants  to  repair, 
t6  the  extent  of  the  assets  in  his  hands;  and  it  is  no  plea  to  an  action  on  such 
a  covenant  that  the  premises  yield  no  profit:  1  Addison  on  Contracts,  sec. 
448;  Tilney  v.  Norris,  1  Ld.  Raym.  553;  Tremeere  v.  Morison,  1  Bing.  N.  C. 
89;  licid  v.  Tenterden,  4  Tyrw.  111.  But  unless  authorized  by  the  will,  a 
testator  cannot  carry  on  the  trade  of  the  testator,  except  to  wind  it  up:  CoU 
linson  v.  Lister,  20  Beav.  356.  The  rights  and  liabilities  of  the  heir  and  the 
personal  representatives  of  a  person  deceased,  in  respect  to  any  contracts  en- 
tered into  by  him  for  the  purchase  or  sale  of  real  estate,  are  to  be  determined 
solely  by  the  rights  and  liabilities  of  the  contracting  party  as  those  questions 
stood  at  the  time  of  his  death:  3  Redfield  on  Wills,  302;  Brooms  v.  Monck, 
10  Ves.  596.  ^ 

Contracts  of  Personal  Nature  Determined  by  Death  of  Contractor, 

—  Where  an  executory  contract  is  of  a  strictly  personal  nature,  the  death  of 
the  contractor  absolutely  determines  the  contract.  In  contracts  of  this  kind 
it  is  an  implied  condition  that  the  death  of  either  party  shall  dissolve  the 
contract.  Examples  of  contracts  of  this  class  are:  Contracts  of  authors 
to  write  books,  of  attorneys  to  render  professional  services,  of  physicians  to 
cure  particular  diseases,  of  teachers  to  instruct  pupils,  and  of  masters  to  teach 
apprentices  a  trade  or  calling:  1  Parsons  on  Contracts,  131;  1  Addison 
on  Contracts,  sec.  396;  Marshall  v.  Broadhurst,  1  Cromp.  &  J.  405;  CoUinson 
T.  Lister,    20  Beav.  356;  Farrow  v.  Wilson,  L.  R.  4  Com.  P.  744;   Hmoe 


1 


March,  1891.]        Chamberlain  v.  Dunlop.  813 

S.  M.  Co.  y.  Rosemfed,  24  Fed.  Rep.  583;  Smith  v.  Wilmimjton  efc.  Co.,  83  HI. 
498;  McGiU  v.  McGill,  2  Met.  (Ky.)  258;  Blalce  v.  Niles,  13  N.  H.  459;  38 
Am.  Dec.  606;  Kernochan  v.  Murray,  111  N.  Y.  306;  7  Am.  St.  Rep.  744; 
Dickinson  v.  Calahan,  19  Pa.  St.  227;  Wk'de  v.  Commonwealth,  39  Pa.  St  167; 
Stiimp/'s  Appeal,  116  Pa.  St.  33. 

But  where  the  contract  with  the  deceased  is  executory,  and  the  personal 
representative  can  fairly  and  fully  execute  it  as  well  as  the  deceased  himself 
could  have  done,  he  may  do  so,  and  enforce  the  contract.  And  on  the  other 
hand,  the  personal  representative  is  bound  to  complete  such  a  contract,  and 
if  he  fails  to  do  so,  he  may  be  compelled  to  pay  damages  out  of  the  assets  ia 
his  hands:  1  Parsons  on  Contracts,  131;  Saboniv.  Kirhnan,  1  Mees.  &  W. 
418;  Wenttoorth  v.  Cock,  10  Ad.  &  E.  42;  Janin  v.  Brovme,  59  Cal.  37;  Smith 
V.  Wilmington  etc.  Co.,  83  111.  498;  White  v.  Commonwealth,  39  Pa.  St.  167; 
Billings's  Appeal,  106  Pa.  St.  558.  In  the  case  of  Jayiin  v.  Browne,  59  CaL 
45,  the  majority  of  the  court  said:  "In  construing  contracts  it  is  permissible 
for  a  court  to  place  itself  as  near  as  may  be  in  the  position  of  the  parties. 
The  complaint  alleges  that  the  deceased  was  the  owner  of  a  large  tract  of 
land  adjacent  to  and  surrounding  the  land  of  plaintiff  on  which  the  house 
was  erected,  'and  was  desirous  of  improving  and  building  up  said  neighbor- 
hood, for  the  purpose  of  attracting  purchasers  for  his  said  land.'  With  this 
inducement  he  agreed  to  improve  the  lands  of  plaintiff,  to  superintend  the 
house  erected  by  the  expenditure  of  plaintiff's  money,  and  to  guarantee  him 
a  certain  profit  upon  the  investment.  All  that  required  any  peculiar  skill, 
taste,  or  judgment  was  done  by  deceased  in  his  lifetime.  We  are  of  opinion 
that  the  contract  and  right  of  action  upon  it  survived." 

It  must  be  confessed  that  the  line  of  demarkation  between  the  two  kinds  of 
contracts  under  consideration  is  not  very  clearly  marked  in  some  instances. 
And  no  doubt  the  facts  and  circumstances  of  each  particular  case  will  be  taken 
into  account  in  determining  whether  the  contract  was  purely  personal  in  ita 
nature,  and  therefore  determined  by  the  death  of  the  party,  or  one  which  the 
personal  representative  could  complete  as  well  as  the  deceased  could  have 
done.  Thus  in  the  case  of  Dickinson  v.  Calahan,  19  Pa.  St.  227,  one  of  the 
parties  to  the  contract  agreed  to  sell  to  the  other  all  the  lumber  to  be  sawed 
at  his  mill  during  the  next  five  years,  to  average  three  hundred  thousand  feet 
a  year,  but  not  stipulating  for  any  particular  quantity  in  any  one  year,  the 
lumber  to  be  paid  for  as  delivered,  the  heirs  or  representatives  of  the  parties 
not  being  mentioned,  it  was  held  that  this  contract  was  merely  a  personal 
relation,  which  was  dissolved  by  the  death  of  either  party  thereto,  and  that 
the  administrator  was  not  bound  to  complete  it,  nor  for  any  breach  thereof 
occurring  after  the  contractors  death;  while  in  the  later  case  of  Billings's 
Appeal,  106  Pa.  St.  558,  it  was  held  that  a  contract  for  the  cutting  of  timber, 
which  does  not  necessarily  involve  the  personal  skill  or  expert  knowledge 
of  the  contractor,  which,  by  its  terms,  is  extendeil  to  the  heirs,  executors, 
and  administrators  of  the  parties,  and  which  can  be  completed  within  a 
reasonable  time,  survived  the  death  of  both  parties,  and  bound  their  per- 
sonal representatives.  The  fact  that  such  a  contract  can  be  completed  within 
a  reasonable  time  is  doubtless  important  in  such  cases.  For  an  executor, 
unless  expressly  authorized  by  the  will,  cannot  carry  on  the  trade  of  the  tes- 
tator, except  to  wind  it  up:  ColUnson  v.  Lister,  20  Beav.  356. 

Contract  to  Marry  Extinguished  by  Death  of  Promlsob.  —  A  con- 
tract to  marry  is  regarded  as  personal  in  its  nature,  and  is  extinguished  by 
the  death  of  the  promisor,  and  an  action  for  the  breach  of  such  a  contract 
cannot  be  maintained  against  his  personal  representative.     Nor  is  the  prom- 


814  Chamberlain  v.  Dunlop.  [New  York, 

isee  a  creditor  of  the  promisor  to  whom  administration  can  be  granted:  1 
Parsons  on  Contracts,  130;  3  Wait's  Actions  and  Defeases,  251;  Chainherlainy. 
Williamson,  2  Maule  &  S.  408;  Stebhins  v.  Palmer,  1  Pick.  71;  11  Am.  Dec. 
146;  Smith  v.  Sherman,  4  Cush.  408.  Contra,  Shiiler  v.  Milknps,  71  N.  C.  297, 
under  a  statute  of  that  state.  In  delivering  the  opinion  of  the  court  in  Steb- 
bins  V.  Palmer,  1  Pick.  71,  11  Am.  Dec.  146,  Wilde,  J.,  said:  "An  action  for 
the  breach  of  a  promise  of  marriage  would  not  survive,  for  it  is  a  contract 
merely  personal;  at  least  it  does  not  necessarily  aifect  property.  The  prin- 
cipal ground  of  damages  is  disappointed  hope;  the  injury  complained  of  is 
violated  faith,  more  resembling,  in  substance,  deceit  and  fraud,  than  a  mere 
common  breach  of  promise." 

But  an  agreement  to  support  a  bastard  child  survives  the  death  of  the 
promisor,  and  may  be  enforced  against  his  personal  representative:  Stump/'a 
Appeal,  116  Pa.  St.  33. 

Contract  of  Guakanty  not  Terminated  by  Death  of  Guarantor. — 
There  are  cases  which  hold  that  a  continuing  guaranty,  where  each  new 
advance  constitutes  a  fresh  consideration,  is,  in  the  absence  of  any  express 
provision  to  the  contrary,  revoked,  as  to  subsequent  advances,  by  the  death 
of  the  guarantor:  Harriss  v.  Fawcett,  L.  E,.  15  Eq.  Cas.  311;  Coulthart  v. 
Clementson,  L.  R.  5  Q.  B.  D.  42.  But  where  a  guaranty  creates  a  continuing 
pecuniary  obligation,  the  consideration  for  which  is  entire  and  given  once  for 
all,  the  contract  is  not  terminated  by  the  death  of  the  guarantor,  unless  the 
intention  that  it  shall  so  terminate  is  clearly  expressed  in  the  guaranty  itself. 
And  this  is  particularly  the  case  where  the  guaranty  is  one  which  the  guar- 
antor could  not  have  determined  in  his  lifetime:  Lloyd's  v.  Harper,  L.  R.  16 
Ch.  D.  290;  Estate  of  Rapp  v.  Phanix  Ins.  Co.,  113  III.  390;  55  Am.  Rep.  427; 
Menard  v.  Scudder,  7  La.  Ann.  385;  56  Am.  Dec.  610;  Kernochan  v.  Murray, 
111  N.  Y.  .306;  7  Am.  St.  Rep.  744.  But  see,  contra,  Jordan  v.  Dobbins,  122 
Mass.  1 68,  23  Am.  Rep.  305,  where  it  was  held  that  a  guaranty  of  the  payment 
for  goods  to  be  sold  to  another,  not  founded  upon  any  present  consideration 
passing  to  the  guarantor,  and  providing  that  it  should  continue  until  written 
notice  should  be  given  of  its  termination,  is  revoked  by  the  death  of  the 
guarantor. 

Contract  of  Suretyship  not  Terminated  by  Death  of  Surety.  — The 
death  of  a  surety  on  a  bond  conditioned  to  perform  an  act  within  a  certain 
definite  period,  or  before  notice  to  the  obligee  of  withdrawal  therefrom,  does 
not  terminate  his  liability,  and  his  personal  representatives  will  be  respon- 
sible, especially  where  the  surety  binds  himself,  his  heirs,  executors,  and 
administrators:  Heclit  \.  Weaver,  34  Fed.  Rep.  Ill;  Moore  y.  Wallis,  18  Ala. 
458;  Hightower  v.  Moore,  46  Ala.  387;  Boyal  Ins.  Co.  v.  Dacies,  40  Iowa,  469; 
20  Am.  Rep.  581;  Oreenv.  Young,  8  Greenl.  14;  22  Am.  Dec.  218. 

In  Hunt's  Appeal,  105  Pa.  St.  128,  it  was  held  that  a  covenant  to  be  re- 
sponsible for  and  guarantee  payment  of  the  interest  on  a  mortgage  until  the 
mortgaged  premises  should  be  so  improved  as  to  constitute  adequate  security 
for  the  debt  survives  the  death  of  the  covenantor.  In  Browne  v.  McDonald, 
129  Mass.  66,  it  was  decided  that  a  contract,  the  duration  of  which  is  not 
fixed,  to  pay  a  reasonable  compensation  for  the  board,  tuition,  and  clothing 
of  a  person  whom  the  promisor  is  not  bound  to  support,  terminates  with 
the  death  of  the  promisor. 

Contract  of  Joint  Obligor  Terminated  by  his  Death.  —  It  is  a  well- 
settled  rule  of  law  that  if  one  of  two  or  more  joint  obligors  dies,  his  personal 
representatives  are,  at  law,  discharged  from  liability,  and  the  survivor  or  sur- 


March,  1891.]        Chamberlain  v.  Dunlop.  815 

vivors  alone  can  be  sueil  on  the  obligation:  Towers  v.  Moor,  2  Vern.  98; 
Simpson  V.  Vaur/hnn,  2  Atk.  31;  Pickers'jill  v.  Lahens,  15  Wall.  140;  Bradley 
V.  Hunvell,  3  Denio,  61;  Getty  v,  Binsse,  49  N.  Y.  3S5;  10  Am.  Rep.  379; 
Wood  V.  Fish,  63  N.  Y.  245.  And  the  same  rule  is  applied  in  equity,  unless 
the  obligation  was,  by  fraud  or  mistake,  made  joint,  instead  of  being  made 
joint  and  several:  1  Story's  Eq.  Jur.,  sees.  162-164;  Simpson  v.  Field,  2  Cas. 
Ch.  22;  Sumner  v.  Poioell,  2  Mer.  355;  1  Turn.  &  R.  423;  Wilmer  v.  Currey, 
2  De  Gex  &  S.  347;  Other  v.  Iveson,  3  Drew.  177;  Jones  v.  Beach,  2  DeGex, 
M.  &  G.  886;  Richardson  v.  Horton,  G  Beav.  185;  Harrison  v.  Field,  2  Wash. 
(Va.)  136;  Carpenter  v.  Provoost,  2  Sand.  537;  Getty  v.  Binsse,  49  N.  Y.  385; 
10  Am.  Rep.  379;  Wood  v.  Fisk,  63  N.  Y.  245;  20  Am.  Rep.  528.  In  United 
States  V.  Price,  9  How.  92,  a  joint  and  several  bond  had  been  given  to  the 
United  States  for  certain  duties,  but  the  United  States  had  recovered  judg- 
ment against  all  the  obligors  jointly,  and  it  was  held  that  the  plaintiff,  hav- 
ing thus  elected  to  hold  them  as  joint  debtors,  could  not  proceed  in  equity 
against  the  estate  of  one  of  them  who  had  died. 

It  is  not  a  principle  of  equity  that  every  joint  contract  ia  to  be  considered 
as  if  it  were  joint  and  several:  Sumner  v.  Poivell,  2  Mer.  30;  1  Turn.  &  R.  423; 
Jones  v.  Beach,  2  De  Gex,  M.  &  G.  886.  When  the  obligation  exists  only  by 
virtue  of  the  covenant,  its  extent  is  to  be  measured  only  by  the  words  of  the 
covenant:  Sumner  v.  Poivell,  2  Mer.  30;  1  Turn.  &  R.  423.  But  where  it  is 
clearly  shown  that  an  obligation  intended  to  be  made  joint  and  several  has, 
by  fraud  or  mistake,  been  made  joint  only,  equity  will  grant  relief  against  the 
fraud  or  mistake,  and  will  hold  the  representatives  of  the  deceased  obligor 
responsible:  1  Story's  Eq.  Jur.,  sec.  162;  Simpson  v.  Vaughan,  2  Atk.  31. 
Where  two  or  more  persons  become  sureties  for  another  in  a  joint  obligation, 
there  is  an  implied  agreement  among  the  sureties,  arising  at  the  time  when 
they  execute  the  principal  contract,  that,  as  between  themselves,  they  will 
contribute  ratably  towards  discharging  any  liability  which  they  may  incur 
in  consequence  of  becoming  such  sureties;  and  such  agreement  is  binding 
upon  the  representatives  of  any  of  them  who  may  die:  Bradley  v.  Burwell,  3 
Denio,  61. 

Personal  Representatives  not  Bound  by  Proposals  of  Decedent.  — 
A  mere  offer  or  proposal  made  by  a  person  in  his  lifetime,  but  not  accepted 
before  his  death,  will  not  bind  his  personal  representatives:  Grand  Lodge 
L  0.  G.  T.  V.  Farnham,  70  CaL  158;  PraU  v.  Trustees  of  Baptist  Society  of  Elgin, 
93  111.  475;  34  Am.  Rep.  187;  Walhce  v.  Townsend,  43  Ohio  St.  537;  54  Am. 
Rep.  829;  Phi'pps  v.  Jones,  20  Pa.  St.  260;  59  Am.  Dec.  708;  Helfenstein's  Estate, 
77  Pa.  St.  328;  18  Am.  Rep.  449.  An  administrator  has  no  right  to  make 
an  invalid  contract  of  his  intestate  binding  upon  his  estate:  Smith  v.  Breu' 
nan,  62  Mich.  349;  4  Am.  St.  Rep.  867. 


AMERICAN  STATE  REPORTS. 

Vol.   XXIir,    Pagf:s  05-119. 

MORRILL  V.  MORRILL 

[20  Okegon,  9B.j 

Collateral  attacks  on  judgments. 


Nov.  1890.]  Morrill  v.  Morrill.  95 


Morrill  v.  Morrill. 

120  Oregon,  96.] 

Judgment  —  What  is  Collateral  Attack.  —  A  collateral  attack  on  a 
judgment  or  decree  is  any  proceeding  which  is  not  instituted  for  the  ex» 
press  purpose  of  annulling,  ci>rrecting,  or  modifying  it.  The  fact  that 
the  parties  are  the  same,  and  that  plaintiff  seeks  to  attack  the  decree  by 
allegations  in  the  reply  to  the  answer,  does  not  change  the  rule,  or  make 
the  attack  any  the  less  a  collateral  one. 

Co-tenancy—  Possession  of  One  Co-tenant  is  Possession  of  the  Other. 
—  The  possession  of  land  ususally  follows  the  legal  title,  where  no  ad- 
verse possession  is  shown,  and  the  possession  of  one  co-tenant,  in  the 
absence  of  an  ouster,  will  inure  to  the  benefit  of  his  co-tenant. 

Judgment  —  Conclusiveness  of. — A  judgment  of  a  court  having  jurisdic- 
tion is  binding  on  the  parties,  no  matter  how  erroneous  it  may  be,  until 
reversed  or  annulled. 

Judgment  cannot  be  Collaterally  Attacked  for  Errors.  — When  a 
court  has  jurisdiction  of  the  subject-matter  and  of  the  parties,  its  judg- 
ment cannot  be  impeached  collaterally  for  errors  of  law  or  irregularities 
in  practice. 

PRAcriCE  —  Pleading.  —  A  party  cannot  aid  his  complaint  by  departing  from 
the  cause  of  action  stated  therein,  and  alleging  another  and  diflferent  one 
in  his  reply  to  the  answer. 

Judgment  —  When  Binding  in  Collateral  Proceedings. — When  a 
party  has  an  opportunity  to  present  his  defense  and  neglects  to  do 
so,  the  judgment  or  decree  against  him  is  binding  in  a  collateral  pro- 
ceeding. 

Judgment  in  Partition  —  Conclusiveness  of. — A  decree  in  partition  is 
conclusive  between  the  parties,  as  to  the  title  to  the  land,  and  the  fact 
that  they  are  tenants  in  common.  Each  of  them  is  thereby  estopped 
from  attempting  to  show  in  another  proceeding  that  he  was  holding  the 
premises  adversely  to  his  co-tenant,  or  that  he  had  no  interest  therein  at 
the  date  of  the  rendition  of  the  decree  in  partition. 

Judgment  cannot  be  Collaterally  Attacked  for  Fraud. — A  domestic 
judgment  of  a  court  having  jurisdiction  of  the  subject-matter  and  of  the 
parties  cannot  be  questioned  collaterally  for  fraud  aliunde  the  record,  by 
the  parties  or  privies. 

Judgment  in  Partition — Collateral  Attack. — When  a  decree  in  par- 
tition  is  made  by  one  referee,  instead  of  three  as  provided  by  statute, 
the  irregularity  cannot  be  inquired  into  in  a  collateral  proceeding. 

Action  to  quiet  title  to  lot  3,  block  HG,  in  the  city  of  Port- 
land. Plaintiff  claimed  to  own  the  land  in  fee,  and  to  be  in 
possession  of  said  lot.  The  only  fact  necessary  to  an  under- 
standing of  the  opinion,  and  not  given  therein,  is  the  following 
agreement:  — 

"In  consequence  of  mutual  agreement  with  Mrs.  Ida  Mor- 
rill, I  declare  under  oath  that  I  withdraw  my  individual  right 
of  the  title  of  an  individual  one-third  interest  in  lot  3,  block 


96  Morrill  v.  Morrill,  [Oregon, 

116,  in  the  city  of  Portland,  allowed  to  me  by  law  of  the 
court. 

[Signed]  "Eli  Morrill, 

"Portland,  Or.,  August  9,  1879." 

Judgment  for  the  plaintifiF,  and  defendants  appeal. 

J.  W.  Whalley,  for  the  appellant. 

A.  H.  Tanner  and  R.  R.  Giltner,  for  the  respondent. 

Bean,  J.  It  is  conceded  by  respondent  that  if  the  decree 
in  the  partition  suit  of  Morrill  v.  Morrill  is  valid  and  binding 
on  her,  this  case  should  be  reversed.  Briefly,  the  facts  con- 
cerning the  partition  suit  are  these:  In  August,  1882,  the  de- 
fendant herein,  Eli  Morrill,  commenced  a  suit  for  partition  in 
the  circuit  court  for  Multnomah  County,  Oregon,  against  the 
plaintiff  in  this  suit.  The  complaint  was  in  the  usual  form, 
alleging  that  he  and  plaintiff  were  tenants  in  common  and  in 
possession  of  lot  3  in  block  116  in  the  city  of  Portland,  setting 
out  the  interests  of  the  respective  parties,  and  praying  a  par- 
tition thereof.  A  summons  being  duly  issued  and  served,  the 
plaintiff  appeared  by  her  counsel,  and  filed  an  answer,  in  which 
she  denied  the  possession  of  the  premises  by  herself  and  de- 
fendant, and  alleged  as  a  defense  that  she  was  then,  and  had 
been  since  the  first  day  of  March,  1878,  in  the  actual  and  ex- 
clusive possession  of  all  the  property,  and  that  her  possession 
was  not  joint  with  that  of  plaintiff  or  any  other  person. 

A  reply  being  filed  denying  the  new  matter  alleged  in  the 
answer,  the  cause  was  referred  to  a  referee  to  report  the  facts 
and  the  law  to  the  court.  In  January,  1883,  the  parties,  by 
their  respective  attorneys,  appeared  before  the  referee  for  the 
purpose  of  taking  testimony.  The  plaintiflf  offered  in  evi- 
dence a  certified  copy  of  the  judgment  roll  in  the  divorce  case 
of  Morrill  v.  Morrill,  and  the  following  stipulation  of  the 
parties  was  entered  into:  "It  is  hereby  stipulated  by  the  par- 
ties, that  up  till  the  4th  of  February,  1882,  both  plaintiff  and 
defendant  occupied  the  premises  described  in  the  complaint;^ 
that  since  that  time  the  defendant  has  been  in  the  actual,  ex- 
clusive occupancy  of  all  of  said  premises,  and  has  lived  there 
as  a  home,  and  that  neither  the  defendant  nor  any  person  for 
him  has  actually  occupied  said  premises,  or  any  part  thereof, 
since  February  4,  1882,  as  a  home  or  otherwise;  that  both  be- 
fore and  since  February  4,  1882,  and  up  to  the  present  time,, 
both  plaintiff  and  defendant  have  paid  taxes  and  street  im- 


Nov.  1890.]  Morrill  v.  Morrill.  97 

provements  according  to  their  respective  interests.  It  is 
understood  that  this  stipulation  shall  not  be  so  construed  as 
to  affect  the  rights  of  either  party  as  a  tenant  in  common.  It 
is  further  agreed  that  the  referee  may  make  personal  inspec- 
tion and  investigation  of  the  premises  in  question,  and  from 
the  facts  thus  obtained  report  to  the  court  (if  this  suit  can  be 
maintained),  —  1.  Whether  the  property  can  be  divided;  2.  If 
it  can,  then  how  division  shall  be  made;  3.  If  it  cannot  be 
divided,  then  recommend  a  sale." 

On  May  4,  1883,  the  referee  filed  his  report,  the  findings  of 
fact  and  conclusions  of  law  being  in  favor  of  defendant;  and 
he  also  reported  that,  pursuant  to  the  stipulation  of  the  par- 
ties, he  had  made  personal  inspection  of  the  premises,  and 
found  that  they  could  be  divided  without  injury  to  the  rights 
of  either.  The  report  recommended  that  the  north  nineteen 
feet  of  the  lot  be  set  off  to  defendant,  and  the  south  thirty- 
one  feet  to  plaintiff,  each  portion  being  particularly  described 
in  the  report.  Motions  were  made  to  confirm  and  set  aside 
this  report  by  the  respective  parties  to  the  suit. 

On  June  7,  1883,  the  court  being  fully  advised,  and  the 
counsel  of  the  respective  parties  consenting  thereto  in  open 
court,  a  decree  was  entered  confirming  said  report;  and  it 
was  adjudged  and  decreed  that  plaintifif  and  defendant  were 
tenants  in  common,  and  in  possession  of  the  property;  that 
plaintiff  was  the  owner  of  an  undivided  two  thirds  thereof, 
and  defendant  of  the  remaining  one  third;  that  the  premises 
could  be  partitioned  according  to  the  respective  interests  of 
the  parties,  without  prejudice  to  the  rights  of  either,  and  con- 
firming the  partition  as  made  by  the  referee,  particularly  de- 
scribing in  said  decree  the  portion  set  off  to  the  respective 
parties.  It  is  argued  on  behalf  of  respondent  here  that  the 
decree  in  the  partition  suit  of  Morrill  v.  Morrill  is  void,  — 
1.  Because  defendant  was  not  in  possession  of  the  land  sought 
to  be  partitioned  at  the  commencement  of  the  suit,  and  such 
fact,  it  is  claimed,  appears  from  the  record  thereof;  2.  That 
the  stipulation  entered  into  by  her  attorney  was  without  her 
knowledge  and  against  her  instructions,  and  was  done  for  the 
purpose  of  defrauding  her;  3.  That  no  referees  were  appointed 
to  partition  the  land  as  by  law  required. 

It  is  first  important  to  determine  whether  this  is  a  direct  or 
collateral  attack  on  this  decree.  The  contention  of  respondent 
is,  that  it  is  a  direct  attack,  and  therefore  no  presumptions  are 
to  be  invoked  in  order  to  sustain  it.     The  complaint  contains 

Am.  St.  Kep.,  Vol.  XXIII.  —  7 


98  Morrill  v.  Morrill.  [Oregon, 

no  allegations  concerning  this  decree,  but  the  first  mention 
thereof  is  in  the  answer,  where  defendant  pleads  it  as  an  estop- 
pel. The  plaintiff  then  seeks  to  avoid  its  effect  by  averring 
in  the  reply  matters  which  she  claims  are  sufficient  to  invali- 
date it.  This  is  undoubtedly  a  collateral  attack.  It  is  an  at- 
tempt to  impeach  the  decree  in  a  proceeding  not  instituted  for 
the  express  purpose  of  annulling,  correcting,  or  modifying  the 
decree.  A  collateral  attack  on  a  judgment  is  any  proceeding 
which  is  not  instituted  for  the  express  purpose  of  annulling, 
correcting,  or  modifying  such  decree:  12  Am.  &  Eng.  Ency.  of 
Law,  147  j.  The  fact  that  the  parties  are  the  same,  and  that 
the  plaintiflF  seeks  to  attack  the  decree  by  the  allegation  of  the 
reply,  cannot  change  the  rule,  or  make  the  attack  any  the  less 
a  collateral  one.  The  first  objection  to  the  validity  of  this  de- 
cree is  based  upon  the  stipulations  of  the  attorney,  "that  the 
defendant  in  the  partition  suit  has,  since  February  4,  1882, 
been  in  the  actual,  exclusive  occupancy  of  all  of  said  premises, 
and  has  lived  there  as  a  home,  and  that  neither  the  defendant 
nor  any  person  for  him  has  actually  occupied  said  premises 
or  any  part  thereof  since  February  4,  1882,  as  a  home  or 
otherwise." 

The  contention  is,  that  a  plaintiff,  in  order  to  maintain  a  suit 
for  partition,  must  not  only  be  a  tenant  in  common,  but  in  the 
possession  of  the  land  sought  to  be  partitioned.  If  he  has  been 
ousted  or  disseised,  and  his  co-tenant  is  holding  adversely  to 
him,  the  suit  cannot  be  maintained,  and  many  authorities  are 
cited  to  that  effect.  It  is  urged  that  this  stipulation  shows 
that  defendant  was  not  in  possession  of  these  premises  at  the 
time  he  commenced  this  suit,  but  had  been  ousted  by  the 
plaintiff  long  prior  thereto.  It  may  be  doubted  whether  such 
a  construction  can  be  put  upon  the  language  of  the  stipulation, 
eince  possession  usually  follows  the  legal  title,  where  no  ad- 
verse possession  is  shown,  and  the  possession  of  one  tenant  in 
common  of  the  land,  in  the  absence  of  an  ouster,  will  inure 
to  the  benefit  of  his  co-tenant:  Freeman  on  Cotenancy  and 
Partition,  sec.  167.  "Actual,  exclusive  occupancy"  by  the 
defendant  in  the  partition  suit  may  not  have  been  inconsistent 
with  the  title  of  her  co-tenant;  but  however  that  may  be,  it 
was  a  question  for  the  court  before  whom  the  suit  was  pending, 
and  its  decision,  however  erroneous  it  may  have  been,  is  bind- 
ing on  the  parties  until  reversed  or  annulled  in  some  proper 
proceeding:  Atkins  v.  Kinnan,  20  Wend.  241;  32  Am.  Dec.  534; 
Voorhees  v.  United  States  Bank,  35  U.  S.  449;  Dolph  v.  Barney^ 


Nov.  1890.]  Morrill  v.  Morrill.  99 

5  Or.  191;  Woodward  v.  Baker,  10  Or.  491;  Norton  v.  Harding, 
3  Or.  361;  Hill  v.  Cooper,  8  Or.  254.  After  a  court  has  ac- 
quired jurisdiction,  it  has  a  right  to  decide  every  question 
arising  in  the  case,  and  however  erroneous  its  decision  may 
be,  it  is  binding  on  the  parties  until  reversed  or  annulled* 
Here  we  have  a  competent  court  with  admitted  jurisdiction  of 
the  subject-matter  and  the  parties,  with  full  power  and  author- 
ity to  decide  all  questions  arising  in  the  case,  and  it  is  sought 
to  impeach  the  validity  of  its  decree  because,  forsooth,  it  was 
mistaken,  either  as  to  the  law  applicable  to  the  facts  before  it 
or  to  the  facts  themselves.  Baldwin,  J.,  in  the  case  of  Voorhees 
V.  United  States  Bank,  35  U.  S.  449,  speaking  on  this  subject,  says: 
"  The  error  of  the  court,  however  apparent,  can  be  examined  only 
by  an  appellate  power;  and  by  the  laws  of  every  country  a  time 
is  fixed  for  such  examination,  whether  in  rendering  judgment, 
issuing  execution,  or  enforcing  it  by  process  of  sale  or  impris- 
onment. No  rule  can  be  made  more  reasonable  than  that  the 
person  who  complains  of  an  injury  done  him  should  avail  him- 
self of  his  legal  remedy  in  a  reasonable  time,  or  that  that  time 
should  be  limited  by  law.  This  has  wisely  been  done  by  acts 
of  limitations  on  writs  of  error  and  appeals.  If  that  time 
elapses,  common  justice  requires  that  what  a  defendant  can- 
not directly  do  in  the  mode  pointed  out  by  law,  he  shall  not 
be  permitted  to  do  collaterally  by  evasion.  A  judgment  irre- 
versible by  a  superior  court  cannot  be  declared  a  nullity  by 
any  authority  of  law.  If  after  its  rendition  it  is  declared  void 
for  any  matter  which  can  be  assigned  for  error,  only  on  a  writ 
of  error  or  appeal,  then  said  court  not  only  usurps  the  juris- 
diction of  an  appellate  court,  but  collaterally  nullifies  what 
such  court  is  prohibited  by  express  statute  law  from  even  re- 
versing. If  the  principle  once  prevails  that  any  proceedings 
of  a  court  of  competent  jurisdiction  can  be  declared  to  be  a 
nullity  by  any  court  after  a  writ  of  error  or  appeal  is  barred 
by  limitation,  every  county  court  or  justice  of  the  peace  in  the 
Union  may  exercise  the  same  right,  from  which  our  own  judg- 
ments or  process  would  not  be  exempt."  We  need  not  pursue 
the  examination  of  this  question  any  further,  for  the  principle 
is  so  well  settled  that  it  is  said  to  be  an  axiom  of  the  law,  that 
when  a  court  has  jurisdiction  of  the  subject-matter  and  the 
parties,  its  judgments  cannot  be  impeached  collaterally  for 
errors  of  law  or  irregularity  in  practice:  Cooper  v.  Reynolds,  10 
Wall.  308;  Sibley  v.  Waffle,  16  N.  Y.  180. 

On  the  argument  of  this  case  much  stress  was  laid  upon 


100  Morrill  v.  Morrill.  [Oregon, 

the  effect  of  the  alleged  agreement  of  defendant  concerning 
the  property  in  dispute,  made  in  August,  1879;  and  it  was 
claimed  that  by  virtue  of  that  agreement  plaintiff  became 
the  equitable  owner  of  this  property.  There  are  two  reasons, 
either  of  them  sufficient,  in  our  opinion,  why  plaintiff  can 
claim  nothing  by  virtue  of  this  agreement  in  this  suit.  The 
first  is,  such  agreement  is  not  alleged  in  the  complaint  or  in 
any  way  referred  to  therein.  If  plaintiff  intended  to  rely 
upon  this  agreement,  she  should  have  so  averred  in  her  com- 
plaint; not  having  done  so,  she  cannot  aid  the  complaint  by 
departing  from  the  cause  of  suit  stated  therein,  and  alleging 
another  and  different  one  in  her  reply.  In  her  complaint, 
plaintiff  seeks  to  prevail  by  virtue  of  a  purely  legal  title. 
This  agreement,  if  executed  by  defendant,  only  gave  her  an 
equitable  title  at  best.  The  other  is,  that  this  writing  was 
executed,  if  at  all,  long  prior  to  the  commencement  of  the 
partition  suit,  and  plaintiff  should  have  availed  herself  of 
any  rights  it  gave  her  in  that  suit:  Neil  v.  Tolman,  12  Or.  289. 
If  she  neglected  or  failed,  without  some  reasonable  excuse,  to 
produce  all  the  evidence  in  her  possession  in  that  suit,  it  is 
now  too  late  for  her  to  be  heard  to  complain.  There  must  be 
an  end  to  litigation,  and  where  a  party  has  an  opportunity  to 
present  his  defense  and  neglects  to  do  so,  the  demands  of  the 
law  require  that  he  should  take  the  consequences,  when  the 
judgment  or  decree  is  sought  to  be  enforced  against  him  in  a 
collateral  proceeding.  The  decree  in  the  partition  suit  is  con- 
clusive between  the  parties  as  to  the  title  to  the  land,  and  is 
a  solemn  adjudication  that  they  were  tenants  in  common 
therein:  Edson  v.  Munsell,  12  Allen,  600;  Hancock  v.  Lopez,  53 
Cal.  862;  Freeman  on  Cotenancy  and  Partition,  sec.  530.  The 
plaintiff  is  estopped  by  that  decree  from  showing  or  attempt- 
ing to  show  that  she  was  holding  the  premises  adversely  to 
the  defendant,  or  that  he  had  no  interest  therein  at  the  date 
of  its  rendition. 

The  next  question  in  this  case  is,  Can  the  decree  in  the  par- 
tition suit  be  impeached  for  fraud?  It  is  claimed  by  respond- 
ent that  the  evidence  and  findings  of  the  referee  show  that  the 
decree  was  obtained  by  fraud  and  collusion  between  her  at- 
torney in  that  suit  and  the  defendant  here.  It  is  argued  with 
much  force  and  learning,  that  since  defendants  rely  upon 
the  particular  decree  as  one  of  the  muniments  of  their  title, 
plaintiff  should  be  permitted  to  show,  if  the  facts  are  with  her, 
that  such  decree  was  obtained  by  fraud  and  collusion  between 


Nov.  1890.]  Morrill  v.  Mourill.  101 

her  attorney  and  adversary;  that  since  fraud  vitiates  every 
transaction,  even  a  judgment,  she  ought  to  be  permitted  to 
treat  this  decree  as  invalid,  when  sought  to  be  enforced  or  re- 
lied upon  even  in  a  collateral  proceeding.  This  we  believe  is 
tiie  first  time  this  question  has  ever  been  before  this  court  for 
decision.  In  the  case  of  Murray  v.  Murray,  6  Or.  17,  the  court 
held  that  a  judgment  of  a  sister  state  could  be  attacked  col- 
laterally for  fraud  by  a  party  when  offered  in  evidence  in  the 
courts  of  this  state,  for  the  reason  that  the  party  sought  to  be 
affected  thereby  has  no  opportunity  to  attack  it  in  our  own 
courts  by  a  direct  proceeding,  and  should  not  be  required  to 
go  into  a  foreign  state  to  do  so.  As  we  have  already  said,  this 
cannot  be  considered  a  direct  attack  upon  this  judgment.  No 
reference  is  made  to  the  judgment  in  the  complaint.  No  facts 
are  alleged  upon  which  a  court  could  base  a  decree  annulling 
the  decree  or  judgment.  The  plaintiff,  in  her  complaint, 
claims  title  by  good  and  sufhcient  mesne  conveyances  from 
the  government  of  the  United  States,  and  by  virtue  of  the 
statute  of  limitations.  This  is  not  sufficient  to  entitle  her  to 
attack  this  judgment:  United  States  v.  Flint,  4  Saw.  42;  Mayor 
V.  Brady,  115  N.  Y.  599;  United  States  v.  Throckmorton,  98  U.  S. 
61. 

It  is  a  general  rule  at  common  law,  that  parties  and  privies 
to  a  judgment  may  not  attack  it  collaterally  for  fraud.  After 
a  party  has  been  duly  served  with  process,  it  is  his  duty  to  see 
that  such  a  judgment  is  not  obtained  against  him,  and  if  it  is, 
he  must  take  some  proper  proceedings  to  have  it  annulled. 
As  long  as  it  remains  in  full  force  and  effect,  the  parties  can- 
not treat  it  as  invalid  unless  such  invalidity  appears  upon  the 
face  of  the  judgment.  It  is  true,  fraud  vitiates  every  trans- 
action into  which  it  enters,  even  a  judgment;  but  such  fraud 
must  be  made  to  appear  in  some  appropriate  proceeding 
known  to  the  law.  The  statute  points  out  ample  methods  by 
which  a  party  may  be  relieved  from  such  a  judgment,  —  such 
as  a  new  trial,  review  for  error  of  law,  an  application  to  be 
relieved  therefrom.  And  beyond  the  methods  provided  by 
statute,  courts  possess  inherent  powers,  as  has  been  said,  "  to 
an  almost  unlimited  extent,  to  redress  wrongs  by  modifying 
or  setting  aside  judgments  obtained  by  fraud  or  mistake." 
These  methods,  however,  must  be  resorted  to.  They  give  no 
countenance  to  the  idea  that  a  judgment  wrongfully  obtained 
may  be  completely  ignored,  and  the  rights  of  the  parties  again 
inquired  into  in  a  collateral  proceeding:  Freeman  on  Judg- 


102  Morrill  v.  Morrill.  [Oregon, 

ments,  sec.  334;  Davis  v.  Davis,  61  Me.  395;  Murray  v.  WhitCf 
68  Vt.  45;  Granger  v.  Clark,  22  Me.  128;  Boston  &.  W.  Corp. 
V.  Sparhaivk,  1  Allen,  448;  79  Am.  Dec.  750;  Demerit  v.  Lyfordy 
27  N.  H.  541;  KreMer  v.  Ritter,  62  N.  Y.  372;  Weiss  v.  Gwen- 
neatt,  109  Ind.  438;  Callahan  v.  Griswold,  9  Mo.  775;  Mason 
V.  Messenger,  17  Iowa,  261.  From  these  and  many  other  au- 
thorities that  could  be  cited,  we  take  the  law  to  be,  that  a 
judgment  of  a  court  of  this  state,  having  jurisdiction  over  the 
subject-matter  and  the  parties,  cannot  be  questioned  collater- 
ally for  fraud  aliunde  the  record,  by  the  parties  or  privies. 

The  case  relied  upon  by  the  respondent  as  announcing  a 
contrary  doctrine  is  Mandeville  v.  Reynolds,  68  N.  Y.  528. 
This  was  an  action  on  a  judgment,  the  defense  to  which  was 
based  upon  a  satisfaction  of  the  judgment  of  record,  and  upon 
an  order  of  court  ratifying  that  satisfaction.  The  plaintiff 
offered  to  show  that  the  entry  upon  the  docket  and  the  order 
was  obtained  by  fraud  and  collusion.  The  court  held  that 
such  evidence  was  competent,  and  in  the  opinion  there  aro 
statements  to  the  effect  that  a  judgment  obtained  by  fraud 
could  be  attacked  collaterally.  This  decision  was  made  un- 
der the  reform  code  of  procedure  of  the  state  of  New  York, 
which  permits  equitable  defenses  to  be  pleaded  in  actions  at 
law,  and  the  court  says:  "The  court  acts  upon  the  matters 
involved  in  the  action,  now,  in  a  double  capacity:  as  a  court 
of  law  and  a  court  of  equity.  As  a  court  of  equity,  it  meets 
the  questions  of  the  validity  of  the  judgment,  not  as  one  of 
law,  but  as  of  equity,  and  takes  hold  of  tlie  facts  offered  to  it, 
not  as  a  collateral  attack  upon  the  judgment,  but  as  a  direct 
assault,  which,  by  the  changing  nature  of  the  suit  and  trial, 
has  become  the  main  question,  and  legitimately  before  it  for 
trial."  In  this  state,  the  distinction  between  proceedings  at 
law  and  in  equity  is  still  maintained:  Burrage  v.  Bonanza  G. 
&  Q.  M.  Co.,  12  Or.  169.  Authorities  under  the  reform  codes 
of  procedure  are  therefore  not  applicable  here. 

We  have  so  far  treated  this  question  on  the  theory  that  the 
evidence  shows  the  decree  to  have  been  obtained  by  fraud, 
and  our  views  as  to  the  law  render  it  unnecessary  to  examine 
the  evidence;  but  in  passing,  we  deem  it  proper  to  say  that 
we  cannot  agree  with  counsel  for  respondent  in  their  construc- 
tion of  the  testimony.  We  think  the  evidence  signally  fails 
to  show  that  the  decree  was  obtained  by  fraud  or  collusion. 
It  is  also  claimed  that  the  stipulation  in  the  partition  suit 
was  entered  into  by  plaintiff's  attorney  without  her  knowledge 


Nov.  1890.J  Morrill  v.  Morrill.  103 

or  consent.  This  claim  is  not  sustained  by  the  testimony. 
It  is  true,  plaintiff  says  she  knew  nothing  about  the  proceed- 
ings in  the  suit;  but  the  attorney  who  appeared  for  her  testi- 
fies that  she  was  informed  of  and  consented  to  every  step 
taken  therein,  and  the  referee  who  made  the  partition  says 
that  she  was  present  when  he  was  examining  the  premises 
for  the  purpose  of  partitioning  the  same,  that  she  knew  what 
he  was  doing,  and  was  consulted  about  the  matter. 

It  is  also  claimed  the  decree  is  void  because  the  partition 
was  made  by  only  one  referee,  and  not  three,  as  provided  by 
statute.  At  most  this  was  but  an  irregularity,  and  cannot  be 
inquired  into  in  this  suit:  Cole  v.  Hall,  2  Hill,  625;  Kinnier  v. 
Kinnier,  45  N.  Y.  535;  6  Am.  Rep.  132. 

It  follows,  therefore,  that  the  decree  of  the  court  below  must 
be  reversed,  and  a  decree  entered  here  in  favor  of  defendants. 


Judgment  —  Conclttsiveness  of.  —  A  domestic  judgment  of  a  court  of 
general  jurisdiction,  upon  a  subject-matter  within  the  scope  of  its  power,  is 
BO  conclusive  that  evidence  aliunde  will  not  be  admitted  to  contradict  it: 
Wilkerson  v.  Schoonmaker,  77  Tex.  615;  19  Am.  St.  Rep,  803,  and  note.  A 
judgment  of  a  court  of  general  jurisdiction  is  conclusive  upon  every  other 
court  until  reversed:  Haines  v.  Flinn,  26  Neb.  380;  18  Am.  St.  Rep.  785,  and 
note;  Turner  v.  Staples,  86  Va.  300;  National  Bank  v.  Lester,  73  Tex.  542; 
Sabrinos  v.  Chamberlain,  76  Tex.  625. 

Judgment  —  Collateral  Attack  fob  Error. — A  judgment  cannot  be 
collaterally  attacked  because  of  error  ui  issuing  an  execution  thereon:  Estate 
qf  Hanika,  138  Pa.  St.  3.30;  21  Am.  St.  Rep.  907,  and  note.  All  irregulari- 
ties in  the  exercise  of  a  court  of  general  jurisdiction  are  cured  by  final  judg- 
ment, and  it  cannot  i)e  collaterally  attacked:  Apel  v.  Kelsey,  52  Ark.  341;  20 
Am.  St.  Rep.  183,  and  note;  Fischer  v.  Holmes,  123  Ind.  525. 

Judgment  —  When  Conclu.sive  in  a  Collateral  Proceeding.  —  A  judg- 
ment is  conclusive  on  all  defenses  which  couM  have  been  presented  by  the 
exercise  of  due  ddigence:  Hobby  v.  Bunch,  83  Ga.  1;  20  Am.  St.  Rep.  301, 
and  note. 

Judgment  —  Collateral  Attack  for  Fraud.  — A  sheriffs  return,  though 
false,  cannot  be  impeached  in  a  collateral  proceeding  to  avoid  a  judgment 
authorized  thereby:  Thomas  v.  Ireland,  88  Ky.  581;  21  Am.  St.  Rep.  350,  and 
note.  In  a  collateral  attack  on  a  judgment,  evidence  of  fraud  not  found  on 
the  judgment  roll  will  not  be  received  to  avoid  the  judgment,  though  the 
fraud  was  in  obtaining  jurisdiction:  Williams  v.  Haynes,  "il  Tex.  283;  19  Am. 
St.  Rep.  752,  and  note.  A  sentence  or  decree  is  conclusive  upon  all  parties, 
unless  fraud  or  mistake  be  proved:  Tehan  v.  Malay,  45  N.  J.  Eq.  68. 

Co-tenancy  —  Effect  of  Po.ssfssion  by  One  Co-tenant.  —  The  possession 
of  one  co-tenant  is  the  possession  of  all:  Page  v.  Branch,  97  N.  C.  97;  2  Am. 
St.  Rep.  281,  and  note;  McOce  v.  Hall,  26  S.  C.  179;  Bene/ield  v.  Albert,  1.32 
111.  eiio;  McClure  v.  Colyear,  80  Cal.  378.  Entry  of  one  co-tenant  is  entry  of 
all:  Hudson  v.  Coe,  79  Me.  83;  1  Am.  St.  Rep.  288,  and  note. 


104  Morrill  v.  Morrill.  [Oregon, 

Collateral  Attacks  upon  Judgments.  — The  definition  of  a  collateral 
attack  given  in  the  principal  case,  while  it  is  not,  so  far  as  we  are  aware,  sup- 
ported by  any  authority,  may,  we  think,  be  accepted  as  being  as  nearly  cor- 
rect as  a  general  definition  can  be;  but,  like  many  other  general  definitions, 
it  is  of  little  or  no  aid  in  determining  such  special  cases  as  are  involved  in 
doubt  suflScient  to  require  particular  consideration.  It  seems  too  obvious 
to  require  mention,  that  a  proceeding  to  annul,  modify,  or  correct  a  judgment 
is  a  direct  proceeding.  It  is  pointed  directly  at  a  judgment,  and  if  it  is 
•uccessfuUy  maintained,  the  judgment,  or  some  part  of  it,  must  succumb  to 
the  attack  and  cease  to  exist.  But  there  have  been  many  attempts  to  annul, 
modify,  or  correct  judgments  which  have  failed,  and  must  again  fail,  if  made 
under  like  circumstances,  and  many  collateral  attacks  which  have  succeeded, 
and  must  again  succeed,  under  similar  conditions.  Therefore,  the  question 
most  worthy  of  attention  is  not,  Wliat  is  a  collateral  attack?  but  is.  When 
may  an  attack,  though  collateral,  be  made  with  success  7 

When  a  judgment  of  a  court  of  record  is  oflFered  in  evidence,  it  may  ap- 
pear, either  from  the  judgment  itself,  or  from  the  record  of  which  it  is  a 
part,  that  the  court  did  not  have  jurisdiction  of  the  subject-matter  of  the 
action,  or  of  the  person  of  the  defendant,  or  was  without  power  to  grant  the 
relief  which  it  undertook  to  grant,  and  therefore  the  judgment  must  either 
be  denied  all  effect,  or  denied  effect  as  to  such  portion  of  it  as  the  court  had 
no  power  to  render:  Freeman  on  Judgments,  sees.  117,  120.  The  same  re- 
sult follows  when  a  judoment  of  a  court  of  special  or  limited  jurisdiction  is 
offered  in  evidence,  and  the  subject-matter  was  not  within  the  jurisdiction  of 
the  court,  or  it  does  not  affirmatively  appear  that  the  court  acquired  jurisdic- 
tion over  the  parties  against  whom  it  rendered  judgment:  Freeman  on  Judg- 
ments, sec.  517;  Palmer  v.  Oaliey,  2  Doug.  433;  47  Am.  Dec.  41;  Horan  v, 
Wahrenberger,  9  Tex.  313;  58  Am.  Dec.  145;  Cooler  y.  Sunderland,  3  Iowa, 
114;  66  Am.  Dec.  52;  People's  S.  B.  v.  Wilcox,  15  R.  I.  258;  2  Am.  St.  Rep. 
894.  In  these  cases  there  is  no  attack  upon  the  judgment,  either  direct  or 
collateral.  That  which  was  offered  as  a  judgment  appears,  on  inspection,  not 
to  be  what  it  was  claimed  to  be,  and  no  necessity  arises  for  attacking  it  in 
any  manner. 

A  motion  to  set  aside  a  judgment  falls  within  the  definition  given  in  the 
principal  case  of  a  direct  attack,  but  the  rules  by  which  it  is  to  be  determined 
are  sometimes  those  applicable  to  direct,  and  other  times  those  applicable  to 
collateral,  attacks.  If  the  motion  is  made  during  the  term  at  which  the 
judgment  was  rendered,  the  judge  may  grant  it  for  any  reason  and  upon  any 
evidence  which  to  him  seems  sufficient,  and  his  action  will  not  be  reviewed 
by  the  appellate  court:  Freeman  on  Judgments,  sec.  90;  Bolton  y.  McKin- 
ley,  22  111.  203;  In  re  Marquis,  85  Mo.  615;  Undei-wood  v.  Sledge,  27  Ark, 
295;  Volland  v.  Wilcox,  17  Neb.  46;  Fraley  v.  Feather,  46  N.  J.  L.  429; 
Suae  v.  Sowders,  42  Kan.  312;  Blum  v.  WeUermark,  58  Tex.  125.  If,  on  the 
other  hand,  the  motion  is  made  under  a  statute  authorizing  it  to  be  granted, 
if  made  within  a  time  and  for  a  cause  specified  in  such  statute,  it  may  well 
be  regarded  as  a  direct  attack  if  made  within  such  time  and  for  one  of  such 
causes.  Therefore  the  moving  party  is  not  bound  by  the  record,  and,  not- 
withstanding its  assertions  to  the  contrary,  may  establish  by  competent  ex- 
trinsic evidence  the  truth  of  the  facts  on  which  he  bases  his  claim  to  relief: 
Freeman  on  Judgments,  sec.  109;  McKinley  v.  Tuttle,  34  Cal.  235;  Mo»- 
teatix  V.  Brigham,  19  Vt.  457;  Oay  v.  Grant,  101  N.  C.  206.  With  respect  to 
mere  errors   and   irregularities  of  proceeding   or  decision  not    specified  in 


Nov.  1890.]  Morrill  v.  Morrill.  105 

the  statute  as  gronnds  for  relief,  the  motion  is  doubtless  controlled  by  the 
rules  applicable  to  collateral  attacks,  and  such  errors  and  irregularitie* 
should  be  regarded  as  no  longer  open  to  consideration. 

If  a  motion  to  set  aside  a  judgment  is  not  made  during  the  term  at  which 
it  was  rendered,  nor  within  the  time  and  upon  a  ground  specified  by  statute, 
the  attack  is  still  direct,  if  it  be  true  that  all  proceedings  instituted  for  the 
express  purpose  of  annulling  a  judgment  are  direct  attacks  upon  it;  but  the 
authorities  do  not  agree  as  to  whether  the  moving  party  is  subject  to  the 
rules  governing  direct  attacks  or  not.  If  the  motion  is  upon  the  ground  that 
the  judgment  is  void,  it  may  be  entertained  irrespective  of  the  lapse  of 
time;  and  if,  from  an  inspection  of  the  judgment  roll,  it  appears  that  the 
judgment  is  a  nullity,  all  courts  agree  that  it  should  be  set  aside  on  the 
ground  that  it  is  not,  in  contemplation  of  law,  a  judgment,  and  that  to  per- 
mit it  to  stand  on  the  records  of  the  court  as  a  judgment  is  liable  to  result  in 
an  abuse  of  the  process  of  the  court,  and  to  occasion  innocent  persons  to 
place  a  delusive  reliance  upon  it:  Freeman  on  Judgments,  sec.  98;  Wirvilow 
V,  Anderson,  3  Dev.  &  B.  9;  32  Am.  Dec.  651;  Pantall  v.  Didey,  123  Pa.  St. 
431;  Peofde  v.  Greene,  74  Cal.  400;  6  Am.  St.  Rep.  448;  Obieij  v.  Hai-vey,  50 
111.  463;  99  Am.  Dec.  530;  Ladd  v.  Mason,  10  Or.  308;  3Iills  v.  Dickson,  6 
Rich.  487;  Hanson  v.  WolccU,  19  Kan.  207;  Baker  v.  Bardift,  76  Ala.  414. 
As  to  when  a  judgment  is  void  in  this  extreme  sense  is  a  question  upon 
which  the  courts  cannot  agree.  The  better  rule,  upon  principle,  is,  we  think, 
that  the  nullity  of  a  judgment  of  a  court  of  record,  from  whatever  ground  it 
may  arise,  should  be  apparent  from  an  inspection  of  the  judgment  roll.  If 
not  confined  to  evidence  found  in  such  roll,  the  motion  to  vacate  the  judg- 
ment should  at  least  not  be  granted  upon  oral  or  other  testimony  not  upon 
file  in  the  action,  and  of  the  evidence  of  which  an  examination  of  all  the 
records,  files,  and  official  memoranda  connected  with  the  cause  imparts  no 
notice:  People  v.  Harrison,  84  Oal.  607;  People  v.  Goodhue,  80  Cal.  199;  Peltua 
V.  McClannahan,  52  Ark.  55.  But  the  majority  of  the  decisions,  as  we  un- 
derstand them,  are  in  conflict  with  this  rule,  and  permit  a  motion  to  vacate 
a  judgment  as  void  for  want  of  jurisdiction  to  be  entertained  and  granted  at 
any  time,  if  it  appears  to  the  court,  from  the  evidence  offered  to  it,  though 
not  found  in  the  record,  that  the  court  did  not  acquire  jurisdiction  over  the 
defendant,  either  because  he  was  not  served  with  process  and  did  not  appear 
in  the  action:  Shvford  v.  Cain,  1  Abb.  302;  In  re  College  Street,  11  K  I.  472; 
Cotton  V.  McGehee,  54  Miss.  621;  Pettw^  v.  McClanrudtan,  52  Ala.  55;  or,  if  his 
appearance  was  entered,  tliat  such  entry  was  made  by  an  attorney  acting 
without  authority:  Yates  v.  Horaiison,  7  Rob.  (N.  Y.)  12;  McKelway  v.  Jones, 
17  N.  J.  L.  345;  Kenyon  v.  Schreck,  52  111.  382;  Latimer  v.  Latimer,  22  S.  C. 
257;  Vilas  v.  Platlshurj,  123  N.  Y.  440;  20  Am.  St.  Rep.  771;  Bradley  v. 
Welch,  100  Mo.  258;  Winters  v.  Means,  25  Neb.  274;  13  Am.  St.  Rep.  489; 
and  it  has  been  held  that  on  such  a  motion  the  return  of  the  proper  officer 
showing  the  service  of  process  on  the  defendant  may  be  contradicted  and 
disproved:  Hanson  v.  Wolcott,  19  Kan.  208;  Caj-r  v.  Commercial  Bank,  16 
.Wis.  50;  Heffner  v.  Gunz,  29  Minn.  108;  iSlandll  v.  Gay,  92  N.  C.  455;  Par- 
ker v.  Spencer,  61  Tex.  155;  Vilaa  v.  Plaltsburgh,  123  N.  Y.  40;  20  Am.  St. 
Rep.  771. 

So  far  aa  the  cases,  or  any  of  them,  affirm  that  a  motion  to  vacate  a  judg- 
ment interposed  after  the  time  specified  by  statute  is  a  direct  attack  thereon, 
»nd  may  therefore  be  supported  by  evidence  not  admissible  on  a  collateral 
attack,  we  think  them  erroneous.  In  some  of  the  states  there  is  no  doubt 
that  a  judgment,  whenever  and  wherever  relied  upon,  may  be  met  and  over« 


106  Morrill  v.  Morrill.  [Oregon, 

come  by  extrinsic  evidence  showing  to  the  satisfaction  of  the  court  that  the 
tribunal  pronouncing  such  judgment  was  without  jurisdiction  so  to  do,  and 
that  the  judgment  must,  therefore,  be  disregarded  and  void.  Where  such 
is  the  law,  it  may  be  that  a  motion  to  vacate  a  judgment  as  void  for  want  of 
jurisdiction,  made  at  any  time,  may  be  sustained  by  extrinsic  evidence;  but 
even  in  these  states,  it  would  seem  to  be  safer  to  leave  the  question  of  jurisdic- 
tion, where  it  is  to  be  determined  upon  such  evidence,  to  be  decided  in  some 
action  or  proceeding  the  trial  of  which  may  be  more  formal,  and  the  means 
of  ascertaining  the  truth  uiore  adequate,  than  upon  the  hearing  of  a  motion. 
But  where  the  general  policy  of  the  law  is  to  protect  judicial  proceedings 
from  collateral  assault,  and  to  assure  innocent  purchasers  that  they  may 
rely  thereon,  unless  jurisdictional  vices  and  infirmities  appear  from  an  exam- 
ination of  the  record,  it  seems  strange  that  a  party  should,  by  a  mere  motion, 
without  any  formal  pleadings  and  without  a  regular  trial,  be  able,  after  fail- 
ing to  resort  to  the  remedies  provided  by  statute,  to  have  a  judgment 
against  him  vacated,  and  the  titles  resting  thereupon  left  without  support. 
Conceding  that  the  case  is  one  in  which  the  judgment  ought  to  have  been  set 
aside  as  between  the  parties  upon  a  reasonably  prompt  application,  and  that 
the  moving  party  ought  still  to  be  granted  relief,  the  circumstances  may  be, 
and  often  are,  such  that  equitable  terms  should  be  imposed  upon  him;  and 
such  terms  can  be  better  regulated  and  enforced  by  an  independent  equitable 
action  than  upon  proceedings  by  motion.  Notwithstanding  these  considera- 
tions, there  are,  as  we  have  already  stated,  courts  which  deem  their  author- 
ity to  vacate  judgments  on  motion  as  being  inexhaustible,  and  which  treat 
such  motion,  whenever  made,  as  a  direct  proceeding  in  the  hearing  and  deter- 
mining of  which  evidence  outside  of  the  record  is  received  and  acted  upon. 

Irregularity  is  always  a  ground  upon  which  a  judgment  may  be  attacked 
by  motion  to  set  it  aside,  and  it  has  been  said  that  a  judgment  is  irregular 
whenever  it  is  not  entered  in  accordance  with  the  practice  and  course  of  pro- 
ceeding where  it  was  rendered:  Dick  v.  McLaurin,  63  N.  C.  185;  Davis  v. 
Shaver,  1  Phill.  (N.  C.)  18;  91  Am.  Dec.  92;  Graff  w.  M.  &  M.  Tram.  Co.,  18 
Md.  364;  Mailhouse  v.  Inloes,  18  Md.  329;  Browning  v.  Roane,  9  Ark.  354;  50 
Am.  Dec.  218;  Walters  v.  Walters,  132  111.  467;  Knott  v.  Taylor,  99  N.  C. 
511;  6  Am.  St.  Rep.  547;  KnoxCo.  Bankv.  Doty,  9  Ohio  St.  506;  75  Am.  Dec. 
479;  Bowen  v.  Toi-y  Mill  Co.,  31  Iowa,  460.  But  generally  courts  will  not 
vacate  their  judgments  on  account  of  irregularities  unless  the  application  is 
promptly  made,  and  the  irregularity  appears  to  have  been  prejudicial  to  the 
applicant:  StanciUv.  Gay,  92  N.  C.  455;  Jone^  v.  S.  F.  S.  Co.,  14  Nev.  172; 
Robertsv.  Allman,  106  N.  C.  391;  Freeman  on  Judgments,  sec.  97.  In  many 
of  the  states  a  judgment  may  be  attacked  upon  motion  to  vacate  it,  for 
fraud  in  its  procurement,  though  the  application  is  made  after  the  lapse  of 
the  term,  and  is  based  solely  on  extriasic  evidence:  Mcintosh  v.  Commission' 
ers,  13  Kan.  171;  In  re  Fisher,  15  Wis.  511;  Dial  v.  Farrow,  1  McMuU.  292; 
36  Am.  Dec  267;  Taylor  v.  Sindall,  34  Md.  38;  PyHt  v.  Hatfield,  15  Lea, 
473;  Olmsteadv.  Olmstead,  41  Minn.  297;  Allen  v.  McClellan,  12  Pa.  St.  328; 
51  Am.  Dec.  608;  Edson  v.  Edson,  108  Mass.  590;  11  Am.  Rep.  393.  But  we. 
judge  the  safer  practice  is  to  require  relief  to  be  sought  by  a  suit  in  equity: 
Syuie  V.  Trice,  96  N.  C.  243;  Sharp  v.  Danville,  M.  dh  S.  W.  R.  R.,  106  N.  C. 
308;  19  Am.  St.  Rep.  533.  In  chancery  the  power  of  the  court  to  discharge 
the  enrollment  and  open  the  decree  never  terminated,  unless  there  had  been 
a  regular  trial  on  the  merits.  A  decree  may,  therefore,  where  the  chancery 
practice  prevails,  be,  in  effect,  attacked  and  set  aside,  by  showing  by  any  com- 
petent evidence  that  it  was  not  based  on  a  trial  on  the  merits,  that  it  iM 


Nov.  1890.]  Morrill  v.  Morrill.  107 

inequitable,  and  that  the  party  was  prevented  from  having  such  trial  by  soma 
cause  ordinarily  regarded  as  sufficient  to  warrant  the  interposition  of  equity; 
such,  for  instance,  as  fraud,  accident,  mistake,  or  surprise:  Cawley  v.  Leon- 
ard, 28  N.  J.  Eq.  467;  Herbert  v.  Bowles,  30  Md.  271;  Freeman  on  Judg- 
ments, 4th  ed.,  sec.  100;  Hargrave  v.  Hargrave,  9  El.  &  E.  14;  Kemp  v. 
Squires,  1  Ves.  Sr.  205.  The  rules  applicable  to  motions  to  vacate  judgments, 
in  England  and  in  Maryland  and  Michigan,  seem  to  be  as  liberal  as  those  of 
the  courts  of  chancery  in  like  proceedings  against  decrees:  Hail  v.  Holmes, 
30  Mil.  558;  Loree  v.  Beeves,  2  Mich.  133;  Hurlburt  v.  Reed,  5  Mich.  30;  Can- 
nan  V.  Reynolds,  5  El.  &  B.  .301;  1  Jur.,  N.  S.,  873;  26  L.  J.  Q.  B.  62.  See  also 
Freeman  on  Judgments,  sec.  101  b.  An  error  of  court,  whether  at  law  or  in 
equity,  either  in  reaching  an  incorrect  conclusion  from  the  evidence  oflFered, 
or  in  admitting  or  rejecting  such  evidence,  or  any  other  error  of  law,  cannot, 
after  the  lapse  of  the  term,  sustain  a  motion  to  vacate  a  judgment  or  decree 
procured  after  a  hearing  on  the  merits:  Chnrman  v.  Charman,  16  Ves.  115; 
Green  v.  Hamilton,  16  Md.  317;  77  Am.  Dec.  295;  McBride  v.  Wright,  75 
Wis.  306;  Brett  v.  Myers,  65  Iowa.  274;  8/nie  v.  Horton,  89  N.  C.  581. 

Writs  of  error  coram  nobis  and  coram  vobis  were  formerly  employed  for  the 
purpose  of  obtaining  relief  from  judgments.  They  were  not,  however,  avail- 
able to  correct  or  set  aside  any  action  or  decision  of  the  court,  unless  it  had 
been  taken  and  made  upon  facts  presumed  by  the  court  to  exist,  such  pre- 
sumption not  being  in  harmony  with  the  truth,  as  where  a  court  acted  upon 
the  presumption  that  a  party  was  living,  and  competent  to  appear  as  a  liti- 
gant and  to  protect  his  interest,  when  in  fact  such  party  was  dead,  or  was 
an  infant,  a  lunatic,  or  a  married  woman:  Freeman  on  Judgments,  sec.  94. 
The  grounds  upon  which  eitiier  of  these  writs  was  sustainable  were  such  as 
rarely  or  never  appeared  by  the  record,  and  hence  they  must  have  been  sup- 
ported by  extrinsic  evidence.  As  these  writs  are  generally  superseded  by 
the  remedy  by  motion  to  set  aside  a  judgment,  it  has  been  held  that  when, 
ever  the  moving  party  would  have  been  entitled  to  relief  by  them  at  the 
common  law  he  should  now  be  conceded  relief  upon  motion,  and  therefore 
that  a  judgment  may  be  set  aside  on  motion,  on  the  ground  that  the  person 
against  whom  it  was  pronounced  was  an  infant,  and  that  fact  was  unknown 
to  the  court:  Powell  v.  Oott,  13  Mo.  458;  53  Am.  Dec.  153;  Townsend  v.  Cox, 
45  Mo.  401;  Levy  v.    Williams,  4  S.  C.  515. 

The  proceeding  by  writ  of  audita  querela  may  also  be  regarded  as  a  direct 
attack  on  a  judgment  in  all  cases  to  wliich  it  can  be  properly  applied.  The 
original  purpose  of  the  writ,  and  the  one  to  which  it  is  generally  confined,  is 
that  of  relieving  a  party  from  a  wrongful  act  of  his  adversary,  and  of  permit- 
ting him  to  show  any  matter  of  discharge  which  may  have  occurred  since  the 
rendition  of  the  judgment,  or  where  a  defense,  though  existing  prior  to  the 
judgment,  was  not  brought  to  the  attention  of  the  court  on  account  of  the 
fraud  or  collusion  of  the  prevailing  party:  Freeman  on  Judgments,  sec.  95. 
It  is  in  the  nature  of  a  bill  in  equity,  and  relief  cannot  be  obtained  under  it 
on  account  of  errors  of  the  court  in  matters  of  law  or  of  fact,  which  might 
have  been  corrected  by  a  writ  of  error  in  some  appellate  proceeding:  Lam- 
son  V.  BruUey,  42  Vt.  165;  Spear  v.  Flint,  17  Vt.  497;  nor  on  account  of  in. 
juries  suflFered  bj'  the  applicant  from  a  judgment  rendered  against  him 
through  his  own  negligence:  Thatcher  v.  Oammon,  12  Mass.  270;  Grisirold  v. 
Rutland,  23  Vt.  324;  Avery  v.  United  State.%  12  Wall.  304;  Barker  v.  Walsh, 
14  Allen,  175;  nor  because  his  defense  was  equitable,  and  the  court  at  law 
could  not  consider  it:  Garfield  v.  University,  10  Vt.  536.  The  attack  by 
audita   querela   being   direct,   the   party  seeking   relief   may  contradict  tha 


108  Morrill  v.  Morrill.  [Oregon, 

record:  Fol^^om  v.  Conner,  49  Vt.  4;  Paddleford  v.  Bancroft,  22  Vt.  529;  Hili 
V.    Warren,  54  Vt.  73. 

The  proceeding  by  writ  of  certiorari  is  direct:  Linrh  v.  Broad,  70  Tex.  92. 
In  some  of  the  states,  the  writ,  in  the  cases  to  which  it  is  applicable,  per- 
forms functions  similar  to  those  of   a  writ  of  error,  and  by  it  errors  of  law 
may  be  reviewed  and  set  right,  and  the  evidence  may  be  examined  for  the 
purpose  of  ascertaining  whether  some  finding  of  the  court  upon  an  essential 
fact  was  entirely  unsupported  by  such  evidence:   McAllillcy  v.    Horton,  75 
Ala.  491;  Central  P.  R.  R.  Co.  v.  Placer  Co.,  43  Cal.  365;  Jack.soa  v.  People, 
9  Mich.  Ill;  77  Am.  Dec.  491;  Rayner  v.  State,  52  Md.  368;  LaTpan  v.  Com- 
missioners, 65   Me.  160;   State  v.  2)am,  48  N.  J.  L.   112;  Ex  parte  Madiwn 
T.   Co.,  62   Ala.  93;   Rawson  v.   McElvaine,  49    Mich.   194;    State   v.    Whit- 
foi-d,  54   Wis.   150;   Gcrdes  v.   Champion,   108  111.   137;  Pec/ple  v.  Smith,  45 
N.  Y.  776;  Peopk  v.  Bttts,  55  N.  Y.  600;  note  to  Duggen  v.  McGruder,  12  Am. 
Dec.  529-537;  while  in  other  states  its  only  office  is  to  compel  an  inferior 
judicial  tribunal  to  certify  its  proceedings  to  some  superior  court  for  the  in- 
spection of  the  latter,  which,  after  such  inspection,  is  required  to  set  the 
proceedings  aside  only  in  so  far  as  they  are  found  to  be  beyond  the  jurisdic- 
tion of  the  subordinate  tribunal:  Territory  v.  Dunbar,  1  Ariz.  510;  State  v. 
Le  Blanc,  42  La.  Ann.  1190;  State  v.  Judge,  42  La.  Ann.  1089;  State  v.  Chan- 
dler, 43  La.  Ann.;  Barber  v.   Harris,  6  Mackey,  586;  16  Wash.  Law  Rep. 
796;  Brovm  v.  Robertson,  123  111.  631;  Sayers  v.  Superior  Court,  84  Cal.  642; 
Alexander  v.  Municipal  Court,  66  Cal.  387;  Gibson  v.  Superior  Court,  83  Cal. 
643;  85  Cal.  216.     Whether  the  proceeding  by  certiorari  is  regarded  as  one 
merely  to  set  aside  proceedings  in  excess  of  the  jurisdiction  of  the  inferior 
tribunal,  or  as  including  the  power  to  review  errors  committed  in  the  exer- 
cise of   existing   jurisdiction,  the  attack  thereby  made   must  be   supported 
solely  by  the  record  which  is  brought  before  the  superior  court,  and  the  par- 
ties cannot  go  beyond   it  to  show  either  the  existence  of  alleged  errors,  or 
that  the  judgment  sought  to  be  annulled  is  in  excess  of  the  jurisdiction  of 
the  court,  or  was  entered  in  a  case  in  which  it  had  no  jurisdiction  what- 
ever over  the  subject-matter  or  of  the  parties  against  whom  the  judgment 
was  rendered:  Fore  v.  Fore,  44  Ala.  478;  Alexander  v.  Archer,  24  Pac.  Rep. 
373  (Nev.);  Miller  v.  McCuUough,  21  Ark.  426;  North  v,  Joslin,  59  Mich.  624; 
Galloway  v.  Corbitt,  52  Mich.  460;  Tewksbui-y  v.  Commissioners,  117  Mass.  563; 
Barclay  v.  Brabston,  49  N.  J.  L.  629;  Finery  v.  Brann,  67  Me.  39;  Lees  v. 
Drainage  Commissioners,  125  111.  47;  People  v.  Talmage,  46  Hun,  606;  State  v. 
Kemen,  61  Wis.  494;  People  v.  Fire  Commissioners,  73  N.  Y.  437;  Hannibal  dk 
St.  J.  R.  R.  Co.  V.  State  Board,  64  Mo.  296. 

When  a  judgment  of  conviction  and  sentence  is  attacked  by  habeas  corpus, 
the  attack  must  be  treated  as  collateral:  Turney  v,  Barr,  75  Iowa,  758;  Ex 
parte  Ah  Men,  77  Cal.  198;  11  Am.  St.  Rep.  263;  except  when,  as  in  the 
supreme  court  of  the  United  States,  the  writ  is  issued  in  the  exercise  of  ap- 
pellate jurisdiction,  and  is  accompanied  by  a  writ  of  certiorari  to  bring  up 
the  records  and  proceedings  of  the  inferior  court;  and  even  then  the  court 
disclaims  the  right  to  review  mere  errors  or  irregularities:  Ex  parte  Virginia, 
100  U.  S.  341;  Ex  parte  Yerger,  8  Wall.  385;  Ex  parte  Carll,  106  U.  S,  521; 
Ex  parte  Curtis,  106  U.  S.  371.  The  writ  of  habeas  corpus  does  not,  ordinarily, 
lie  to  review  errors  of  law  or  of  fact,  and  a  prisoner,  when  in  custody  under  a 
commitment  issued  on  a  judgment  of  conviction  and  sentence,  must  be  re- 
manded, unless  the  judgment  has  been  satisfied,  set  aside,  or  reversed,  or 
is  absolutely  void:  Ex  parte  Marx,  86  Va.  40;  Ex  parte  Rollins,  80  Va.  314; 
In  re  Coy,  127  U.  S.  757;  Ex  parte  Watkina,  3  Pet,  202.     It  should  not  be 


Nov.  1890.]  Morrill  v.  Morrill.  109 

treated  as  void  because  the  verdict  on  which  it  was  based  was  defective: 
Willis  V.  Bayles,  105  Ind.  363;  Dover  v.  State,  75  Ala.  40;  or  the  court,  after 
the  defendant  j)leaded  guilty,  failed  to  call  a  jury  to  say,  in  their  discretion, 
whether  he  should  suffer  the  penalty  of  death  or  should  be  imprisoned  for 
life:  Loioery  v.  Ilovmrd,  103  Ind.  440;  or  the  evidence  was  insufficient  to 
warrant  a  conviction:  In  re  Bion,  59  Conn.  372;  In  re  Wight,  136  U.  S.  148; 
Tunietj  V.  Barr,  75  Iowa,  758;  Stevens  v.  Fuller,  134  U.  S.  468;  or  the 
judgment,  though  against  the  defendant,  was  upon  an  obligation  executed 
by  another  person  having  the  same  name:  Gorman's  Case,  124  Mass.  190;  or 
the  prisoner  did  not  commit  the  act  for  which  he  has  been  adjudged  guilty 
of  a  contempt  of  court:  Ex  parte  Terry,  128  U.  S.  289;  State  v.  Wood/in, 
5  Ired.  199;  42  Am.  Dec.  161;  Whittem  v.  State,  36  Ind.  196;  or  his  age  was 
or  was  not  such  as  to  authorize  his  imprisonment  in  the  place  in  which 
the  judgment  directs  him  to  be  confined:  Exparie  Williams,  87  Cal.  78;  Ex 
parte  Kaufman,  73  Mo.  588;  or,  though  the  court  had  adjudged  him  able 
to  comply  with  an  order,  and  to  be  guilty  of  contempt  in  not  complying  with 
it,  yet  that  he  was  not,  in  fact,  able  to  yield  such  compliance:  In  re  Spencer, 
83  Cal.  460;  17  Am.  St.  Rep.  266;  People  v.  Foster,  104  111.  156.  "As  to  ju- 
risdictional questions,  a  judgment  under  which  the  prisoner  is  held  is  aided 
by  the  same  presumptions  as  in  otlier  cases  of  collateral  assault.  If  the  record 
is  silent  as  to  jurisdictional  facts,  jurisdiction  is  presumed:  Ex  parte  Ah  Men, 
77  Cal.  198;  11  Am.  St.  Rep.  263.  Any  irregularity  in  the  service  of  pro- 
cess, or  in  making  the  arrest,  is  immaterial:  Ex  parte  McGtll,  6  Tex.  App. 
498;  Ex  parte  Kellorjg,  6  Vt.  511;  Oioens  v.  Gotzain,  4  Dill.  438.  'After  final 
judgment  of  conviction,  the  jurisdiction  of  the  court  cannot  be  questioned  by 
an  inquiry  into  the  manner  in  which  the  accused  was  brought  before  it; 
and  this  is  true  even  though  the  prisoner  had  been  kidnaped  and  forcibly 
brought  before  the  court  from  a  foreign  jurisdiction  ':  Ex  ftarte  Ah  Men,  77 
Cal.  198;  11  Am.  St.  Rep.  263;  People  v.  Rowe,  4  Park.  Cr.  253;  United  State* 
v.  Laurence,  13  Blatchf.  306;  State  v.  Rosx,  21  Iowa,  467;  Mahon  v.  Justice, 
127  U.  S.  700.  If  it  appears  that  the  jurisdiction  of  the  court  depended 
upon  a  litigated  fact  which  it  adjudged  to  exist,  this  adjudication  ia  con- 
clusive upon  habeas  corpus,  as  well  as  in  all  other  collateral  proceedings  ": 
Freeman  on  Judgments,  sec.  619;  Ex  parte  Sternes,  77  Cal.  156;  11  Am.  St. 
Rep.  251. 

As  a  general  rule,  all  errors  and  irregularities  which  might  have  been 
grounds  of  appeal,  or  of  motions  for  new  trials  or  to  set  aside  the  judgment 
or  conviction,  or  in  arrest  of  judgment,  are  not  available  on  habeas  corpus  for 
the  purpose  of  securing  the  prisoner's  discharge:  Freeman  on  Judgments, 
sees.  6-0,  621.  There  are,  however,  some  matters  which,  though  they  might 
have  sustained  an  appeal,  are  not  waived  b}'  the  failure  to  prosecute  it,  and 
which  are  available  on  habeas  coipus.  These  matters  generally,  and  perhaps 
universally,  are  apparent  from  an  inspection  of  the  record,  in  connection 
with  tlie  existing  laws,  and  can  hardly  be  regarded  as  constituting  subjects 
of  an  attack  upon  the  judgment,  but  rather  as  establishing  that,  conceding 
the  defendant  to  have  been  guilty  of  the  acts  of  which  he  has  been  con- 
victed, yet  that  the  law  does  not  sanction  his  imprisonment  therefor.  While 
the  sufficiency  of  an  indictment  will  not  be  considered  if  it  is  apparent  there- 
from that  the  defendant  has  been  convicted  of  some  crime  under  an  imper- 
fect, informal,  or  defective  accusation  (Matter  of  Eaton,  21  Mich.  1;  Emanuel 
V.  State,  36  Miss.  627;  Parker  v.  State,  5  Tex.  App.  579;  Petition  of  Sender, 
41  Wis.  517;  Ex  parte  Walkins,  3  Pet.  1;I3;  Ex  parte  Parks,  93  U.  S.  20; 
McLaughlin  v.  Etchison,  127  Ind.  474;  22  Am.  St.  Rep.  658;  Ex  parte  Fil  Ki, 


110  Morrill  v.  Morrill.  [Oregon, 

79  Cal.  584),  yet  we  tliink  that  if  the  act  of  which  he  is  convicted  ia  clearly 
not  criminal,  either  because  there  is  no  law  making  it  such,  or  because  the 
enactment  to  make  it  criminal  had  been  repealed  or  is  unconstitutional  and 
inoperative,  he  must  be  released:  In  Matter  of  Corryell,  22  Cal,  178;  Ex  parte 
McNulty,  77  Cal.  164;  11  Am.  St.  Rep.  257;  Ex  parte  Kearney,  55  Cal.  212; 
Freeman  on  Judgments,  sec  ;.  622,  624,  026;  Ex  parte  Grace,  12  Iowa,  20S;  79 
Am.  Dec.  529;  Ex  parte  Siehold,  100  U.  S.  376;  Herrick  v.  (Smitli,  1  Gray,  49; 
61  Am.  Dec.  381.  His  release  must  also  be  ordered  if  he  is  shown  to  have 
been  previously  convicted  of  the  same  crime:  Bhc  parte  Rosenblatt,  19  Nev. 
439;  3  Am.  St.  Rep.  901;  Ex  parte  Rollins,  80  Va.  314;  Brown  v.  Dnffus,  66 
Iowa,  193;  W/dtcomb's  Case,  120  Mass.  118;  21  Am.  Rep.  502;  BusheCs  Case, 
6  How.  St.  Tr.  999;  In  re  Snow,  120  U.  S.  274;  In  re  Nielsen,  131  U.  S.  176. 

In  criminal  as  in  civil  cases,  a  judgment  is  void  if  rendered  by  a  court  hav- 
ing no  jurisdiction  either  of  the  subject-matter  of  the  proceeding  or  of  the 
person  of  the  defendant,  and  if  this  want  of  jurisdiction  appears,  he  must  be 
released  upon  habeas  corpus:  Freeman  on  Judgments,  sec.  623;  Cropper  v. 
Commonwealth,  2  Rob.  (Va.)  842;  Ex  parte  Milligan,  4  Wall.  2;  Ex  parte 
Schultz,  6  Whart.  269.  It  is  essential  that  the  court  not  only  have  juris- 
diction of  the  crime,  but  that  its  jurisdiction  be  invoked  in  the  manner 
sanctioned  by  law.  Therefore,  if  the  crime  of  which  the  defendant  baa 
been  convicted  is  one  for  which  he  could  be  held  to  answer  only  upon  the 
presentment  or  indictment  of  a  grand  jury,  and  he  has  not  been  indicted 
nor  presented,  his  conviction  is  void:  Ex  parte  Yarhonigh,  110  U.  S.  651; 
State  V.  West,  42  Minn.  147.  If  the  jurisdiction  of  the  court  is  dependent 
upon  the  existence  of  some  fact  which  it  was  the  duty  of  the  prosecu- 
tion to  prove  at  the  trial,  and  the  proof  of  which  was  necessary  to  sustain 
the  verdict  of  guilty,  such  verdict  and  the  judgment  entered  thereon  are 
conclusive  against  the  defendant,  and  he  cannot  relitigate  the  same  issue  on 
habeas  corpus:  People  v.  Liscomb,  60  N.  Y.  571;  19  Am.  Rep.  211;  Matter 
of  Newton,  16  Com.  B.  97;  24  L.  J.  Com.  P.  148.  It  is  not  sufficient  that  a 
court  have  jurisdiction  to  try  a  cause  and  to  enter  judgment  therein;  it  must 
also  have  had  power  to  grant  the  relief  or  to  impose  the  sentence  contained 
in  its  judgment.  Hence,  if  it  appears  that  the  court  directed  the  defendant 
to  do  some  act  which  it  had  no  power  to  require  of  him,  and  then  imprisoned 
him  for  contempt  in  not  doing  as  directed  {Ex  parte  Gordan,  Sup.  Ct.  Cal., 
Dec,  1891;  Ex  parte  Fisk,  113  U.  S.  713;  Ex  parte  Roioland,  104  U.  S.  604;  Ex 
parte  Ayers,  123  U.  S.  443),  or,  after  his  conviction  of  some  crime,  sentenced 
him  to  suffer  a  punishment  which  it  had  no  power  to  impose,  the  sentence,  in 
so  far  as  it  is  in  excess  of  the  jurisdiction  of  the  court,  is  void,  and  will  not 
justify  the  detention  of  the  prisoner:  Ex  parte  Bond,  9  S.  C.  80;  30  Am.  Rep. 
20;  Ex  parte  Crandall,  34  Wis.  177;  People  v.  Baker,  89  N.  Y.  460;  Ex  parte 
Mooney,  26  W.  Va.  36;  53  Am.  Rep.  59;  Rex  v.  Collyer,  Sayers,  44;  Ex  parte 
Page,  49  Mo.  291;  Ex  parte  Lange,  18  Wall.  163;  People  v.  Liscomb,  60  N.  Y. 
659;  19  Am.  Rep.  211. 

The  national  courts  and  judges  may  issue  writs  of  habeas  corpus  for  the  re- 
lease of  prisoners  in  custody  for  acts  done  or  omitted  in  pursuance  of  a  law 
of  the  United  States,  or  of  an  order,  process,  or  decree  of  the  court  or  judge 
thereof,  or  in  custody  in  violation  of  the  constitution,  laws,  or  treaties  of  the 
United  States,  or  for  an  act  done  or  omitted  by  a  subject  or  citizen  of  a 
foreign  country,  under  a  legal  right,  title,  authority,  privilege,  protection, 
or  exemption  claimed  under  the  commission,  order,  or  sanction  of  such  for- 
eign state,  or  under  the  color  thereof,  the  validity  and  effect  of  which  depend 
upon  the  law  of  nations.    It  ia  perfectly  obvious,  therefore,  that  persons  may 


Nov.  1890.]  Morrill  v.  Morrill.  Ill 

be  discharged  on  habeas  corpus,  though  convicted  after  a  regular  prosecution 
or  trial,  if  the  act  or  omission  upon  which  the  conviction  was  bad  was  one  of 
the  class  specified  above.  Generally,  the  record  of  conviction  would  disclose 
the  act  or  omission  for  which  the  sentence  was  imposed,  and  it  would  not 
be  necessary  for  the  court  or  judge  issuing  the  writ  of  habeas  corpus  to  look 
beyond  such  record  for  the  purpose  of  determining  whether  the  defendant 
should  be  released:  Freeman  on  Judgments,  sec.  626.  Whether,  however, 
it  would  be  competent  for  the  court  to  receive  extrinsic  evidence  for  the  pur- 
pose of  showing  whether  or  not  the  act  or  omission  of  which  the  defendant 
was  convicted  was  one  entitling  him  to  release  is  a  question  which,  so  far  aa 
we  are  aware,  has  not  been  judicially  determined. 

There  are  various  other  special  proceedings  in  which  judgments  may  be  re- 
lied upon  by  one  of  the  litigants,  such,  for  instance,  as  mandamits  and  quo 
warranto,  and  in  which  the  judgment  so  relied  upon  may  be  sought  to  be 
avoided.  Neither  of  these  proceedings  is  to  annul,  vacate,  or  modify  a  judg- 
ment, and  upon  principle,  a  judgment,  when  pleaded  or  oflFered  in  evidence 
therein,  is  entitled  to  the  same  immunity  from  collateral  attack  as  if  oflFered 
in  any  other  collateral  action  or  proceeding.  In  mandamus  to  compel  the 
payment  or  to  aid  the  enforcement  of  a  judgment,  if  it  appears  from  the 
record  before  the  court  that  the  judgment  was  recovered  upon  certain 
bonds  and  coupons  which  were  void  for  want  of  authority  to  issue  them,  the 
writ  M  ill  be  denied  in  the  national  courts,  on  account  of  such  invalidity,  not- 
withstamling  the  judgment  recovered  upon  them:  Brownsville  v.  Loague,  129 
U.  S.  493.  The  general  rule,  however,  is,  that  judgments  have  the  same 
effect  as  res  judicata  in  proceedings  by  mandamus  aa  elsewhere:  S  uper  visors  v. 
United  States,  4  Wall.  435;  Mayor  v.  Lord,  9  Wall.  409;  High  on  Extraordi- 
nary Legal  Remedies,  sec.  396. 

It  may  be  that  a  corporation,  officer,  or  other  person,  natural  or  artificial, 
proceeded  against  by  quo  warranto  pleads  or  proves  in  justification  that  the 
exercise  of  the  oflHoe  or  franchise  in  question  is  sanctioned  by  the  judgment  or 
decision  of  some  court,  or  of  some  person  or  tribunal  exercising  judicial  func- 
tions, ami  the  effect  of  this  judgment  or  decision  may  be  sought  to  be  avoided 
either  by  showing  that  it  was  erroneous,  or  was  made  by  a  court  or  tribunal  not 
possessed  of  jurisdiction  to  make  it.  We  are  aware  of  no  decision  upon  this 
subject,  but,  upon  principle,  the  judgment  should  be  treated  precisely  as  if  it 
were  offered  or  pleaded  in  any  other  proceedin^^  as  a  cause  of  action  or  of  de- 
fense. If  the  ju<lgtnent  or  decision  was  pronounced  by  a  tribunal  of  special 
or  limited  jurisdiction,  its  authority  to  act  must  be  established  by  the  person 
relying  upon  it,  and  when  so  established,  its  decision  must  be  respected, 
whether  erroneous  or  not.  If,  on  the  other  hand,  the  judgment  was  ren- 
dered by  a  court  of  general  jurisdiction,  jurisdictional  presumptions  in  its 
favor  should  be  rt'garded  as  incontrovertible,  to  the  same  extent  as  they  are 
in  other  collateral  proceedings. 

There  is,  however,  a  class  of  proceedings  similar  in  effect  to  proceedings  by 
quo  warranto,  but  which  are  essentially  different  in  their  nature,  and  which 
may  properly  be  regarded  as  direct.  Thus  if  the  existence  of  a  corporation 
or  the  authority  of  a  board  or  other  tribunal  depends  upon  some  pre-existing 
jurisdictional  fact  which  has  been  determined  to  exist  by  some  court  or  other 
tribunal  possessing  authority  to  determine  it,  but  the  proceedings  of  such 
court  or  tribunal  are  required  to  be  submitted  to  a  superior  court  to  be  ex- 
amined for  the  purpose  of  ascertaining  whether  they  are  valid,  and  of  approv- 
ill,::;  them  if  found  to  be  so,  the  proceeding  in  the  latter  court  is  direct,  and 
before  its  approval  can  be  given,  it  must  be  shown  that  the  jurisdictional  fact 


112  Morrill  v.  Morrill,  [Oregon, 

did  in  truth  exist  as  was  affirmed  by  the  subordinate  court  or  tribunal:  In  the 
Matter  of  Madeira  Irrigation  District,  Cal.  Sup.  Ct.,  Dec.  12,  1891;  Thorny, 
West  Chicago  Park  Commissioners,  130  111.  594.  In  cases  of  this  class  it  is  evi- 
dent that  the  proceeding  stands  on  substantially  the  same  footing  as  if  an 
appeal  had  been  authorized  to  be  takeu  to  the  superior  court  upon  the  ques- 
tion both  of  law  and  of  fact,  and  the  party  interested  had  availed  himself  of 
the  remedy  thus  afiforded. 

If  a  debtor  has  been  granted  a  discharge  from  his  debts  or  other  obligations 
by  a  court  of  bankruptcy  or  insolvency,  the  eifect  of  the  judgment  or  order 
granting  such  discliarge  may  be  avoided  by  showing  any  of  the  grounds  of 
avoidance  specified  in  the  statute  authorizing  the  discharge  and  declaring  its 
effect.  In  all  other  respects,  it  is  as  impregnable  to  collateral  assault  as  any 
other  judgment  of  a  court  of  competent  jurisdiction:  Freeman  on  Judgments, 
sees.  .337  a,  607.  If  the  judgment  was  entered  during  the  pendency  of  the 
bankruptcy  proceeding,  and  before  the  discharge  was  granted,  the  bankrupt, 
upon  obtaining  the  discharge,  is  entitled  to  have  the  court  in  which  the  judg- 
ment was  rendered  enter  a  perpetual  stay  of  proceedings  therein:  Boynton  v. 
Bell,  121  U.  S.  457.  If,  however,  he  secures  his  discharge  before  the  judg- 
ment is  rendered  against  him,  he  must,  whether  the  action  is  then  pending 
or  is  subsequently  commenced,  avail  himself  of  such  discharge  by  some  ap- 
propriate pleading,  motion,  or  other  proceeding,  and  if  he  fails  to  do  so,  or 
though  he  does  so  if  the  court  refuses  to  give  the  proper  effect  to  the  dis- 
charge, any  judgment  subsequently  recovered  against  him  cannot  be  avoided 
collaterally  by  showing  his  previous  discharge,  and  that  such  judgment,  be- 
cause of  the  discharge,  ought  not  to  have  been  rendered:  Rahm  v.  Minis,  40 
Cal.  421;  Marsh  v.  Mandeville,  28  Miss.  122;  Dimock  v.  Rerere  G.  Co.,  117 
U.  S.  559;  Woodbury  v.  Perkins,  5  Gush.  86;  51  Am.  Dec.  51;  Bounv.  Mo- 
range,  108  Pa.  St.  69. 

The  effect  of  a  judgment  or  order  of  a  court  of  bankruptcy  may,  like  the 
judgment  of  any  other  court,  be  collaterally  avoided  by  showing  that  it  did 
not  have  jurisdiction  of  the  subject-matter,  or  that  the  person  against  whom 
the  judgment  is  sought  to  be  used  was  not  subject  to  the  jurisdiction  of  the 
court.  A  discharge  granted  to  a  bankrupt  or  insolvent  is  operative  in  hia 
favor  against  every  person  over  whom  the  court  had  jurisdiction.  Over  the 
creditors  resident  in  the  state  or  nation  wherein  the  discharge  is  granted,  it 
has  undoubted  jurisdiction,  and  the  discharge  is  valid  and  operative  against 
them,  both  there  and  elsewhere,  unless  its  effect  is  annulled  or  limited  by 
some  constitutional  inhibition  or  restriction:  Baker  v.  Wheaton,  5  Mass.  509; 
4  Am.  Dec.  71,  and  note;  Norton  v.  Cook,  9  Conn.  314;  23  Am.  Dec.  342,  and 
note;  Blanchard  v.  Russell,  13  Mass.  1;  7  Am.  Dec.  106,  and  note;  Peck  v. 
Hibbard,  26  Vt.  702;  62  Am.  Dec.  605;  and  if  both  the  creditor  and  debtor 
are  residents  of  the  state  or  nation,  it  is  of  no  consequence  that  the  contract 
was  made  and  is  to  be  performed  elsewhere:  Marsh  v.  Putnam,  3  Gray,  551. 
As  against  non-residents  who  have  not  appeared  in  the  foreign  court,  nor  in 
any  way  submitted  either  their  claims  or  their  persons  to  its  jurisdiction, 
any  discharge  granted  by  it  must  generally  be  wholly  ineffective  in  any 
other  state  or  country:  Norton  v.  Cook,  9  Conn.  314;  23  Am.  Dec.  342;  Smith 
V.  Buchanan,  5  East,  6;  Munroe  v.  Guilliaiime,  3  Keyes,  30;  3  Abb.  App.  334; 
Smith  V.  Smith,  2  Johns.  235;  3  Am.  Dec.  410,  and  note;  White  v,  Canjield, 
7  Johns.  117;  6  Am.  Dec.  249;  Mitchell  v.  McMillan,  3  Mart.  (La.)  676;  6 
Am.  Dec.  690;  Vamixem  v.  Hazlehursts,  4  N.  J.  L.  192;  7  Am.  Dec.  582. 
But  it  may  be,  and  has  been  insisted,  that  the  place  where  a  contract  was 
made  or  is  to  be  performed  is  of  controlling  importance  in  determining  what 


Nov.  1890.]  Morrill  v.  Morrill.  113 

courts  have  jurisdiction  to  discharge  it,  and  that  though  the  creditor  is  a  resi- 
dent of  another  state  or  nation,  his  residence  does  not  carry  with  it  the  debt 
due  him,  so  tiiat  the  courts  where  it  was  created  may  not  discharge  the 
debtor  from  all  obligation  to  pay  it.  We  apprehend  there  is  no  doubt  that 
the  courts  of  a  country  where  an  obligation  arose  or  was  created  may  grant 
a  discharge  therefrom  which  is  there  operative,  whether  the  creditor  is  resi- 
dent or  non-resident,  because,  unless  restrained  by  some  constitutional  limi- 
tation, laws  may  be  enacted  in  any  country  withdrawing  all  aid  for  the 
enforcement  of  obligations  by  legal  proceedings,  and  there  are  numerous  de- 
cisions to  the  effect  that  when  a  contract  is  discharged  by  proceedings  in  the 
country  where  it  was  created  or  made  payable,  and  where  the  debtor  resides, 
it  must  be  regarded  as  discharged  everywhere,  though  the  creditor  was  a 
non-resident  and  did  not  appear  in  the  foreign  court:  May  v.  Breed,  7  Cush. 
15;  54  Am.  Dec.  700;  Balbintine  v.  Goldiiig,  1  Cooke,  487;  Pottei-  v.  Brown, 
6  East,  124;  Very  v.  McHenry,  29  Me.  20(5;  In  re  Kinsley,  1  Low.  221;  Long 
V.  I/ammond,  40  Me.  204;  Gardiner  v.  Howjhton,  2  Best  &  S.  743.  These 
decisions  are,  however,  necessarily  in  conflict  with  the  principles  adopted 
and  enforced  by  the  supreme  court  of  the  United  States,  as  well  as  by  other 
courts,  to  the  effect  that  a  bankruptcy  or  insolvency  statute  can  have  no 
extraterritorial  operation,  and  that  a  citizen  of  one  state  cannot  be  required 
to  appear  in  the  courts  of  another,  and  to  submit  to  their  exercise  of  juris- 
diction over  him,  or  to  their  discharge  of  an  obligation  due  him,  though  it 
was  created  or  is  to  be  performed  in  the  state  where  such  courts  have  juris- 
diction: Baldwin  v.  Hale,  1  Wall.  223;  Felch  v.  Bughee,  48  Me.  9;  77  Am. 
Dec.  203;  Anderson  v.  Wheeler,  25  Conn.  613;  Whitney  v.  Whiting,  35  N.  H. 
457;  Alurphy  v.  Manning,  134  Mass.  488.  It  is  true  that  these  principles 
weie,  in  the  cases  cited,  applied  only  to  discharges  granted  by  the  courts  of 
one  state,  when  sought  to  be  asserted  against  the  citizens  of  anotlier;  but  it 
seems  unreasonable  to  concede  to  the  courts  of  foreign  nations  an  authority 
over  the  citizens  of  a  state  which  is  denied  to  the  courts  of  sister  states. 

It  only  remains  for  us  to  consider,  as  briefly  as  possible,  the  rules  appli- 
cable to  ordinary  actions,  the  object  of  which  is  not  to  annul,  vacate,  or 
modify  a  judgment.  We  need  not  cite  authorities  to  show  that  a  judgment, 
whenever  proj)erly  pleaded  or  otiered  in  evidence  in  another  action,  cannot 
be  avoided,  as  between  the  parties  to  it,  for  any  mere  error  or  irregularity  of 
the  court  by  which  it  was  pronounced,  and  that  whatever  has  been  thereby 
decided  and  determined  must  be  regarded  as  conclusively  and  irrevocably 
established,  as  between  the  parties  thereto  and  persons  in  privity  with  them, 
until  the  judgment  shall  have  been  set  aside,  eitlier  upon  appeal  or  upon  some 
other  appropriate  proceeding  directed  against  the  judgment,  for  the  purpose 
either  of  annulling,  vacating,  or  modifying  it.  Therefore,  in  a  collateral  ac- 
tion, the  force  of  a  judgment  can  l)e  destroyed  only  by  sliowing  that  the 
court  did  not  have  jurisdiction  over  the  subject-niatter  or  the  person  against 
whom  it  was  rendered,  or,  though  having  jurisdiction  both  of  the  subject- 
matter  and  of  the  person,  did  not  have  power  to  give  the  relief  which  it 
awarded. 

If  the  judgment  relied  upon  was  pronounced  by  a  court  of  limited  juris- 
diction, there  is  no  presumption  in  favor  of  its  authority  to  act,  and  such 
authority  must,  tlierefore,  be  shown  by  the  party  who  relies  upon  it:  Free- 
man on  Judgments,  sec.  517;  Tucker  r.  Harris,  13  Ga.  1;  58  Am.  Dec.  488; 
Peoples  Savingn  Bank  v.  Wilcox,  15  R.  I.  258;  2  Am.  St.  Rep.  894;  Lowry  v. 
Erwin,  6  Rob.  (La.)  192;  39  Am.  Doc.  556;  Smith  v.  Finley,  52  Ark.  373.  The 
jurisdiction  of  the  court  would  ordinarily  affirmatively  appear  from  its  judg- 
Am.  ST.  Kep.,  Vol.  XXIII. —  8 


114  Morrill  v.  Morrill.  [Oregon, 

ment  and  the  papers  on  file  in  the  action.  If  it  does  not  so  appear,  there  is 
some  doubt  whether  it  may  be  shown  by  extrinsic  evidence  or  not,  the  better 
opinion  being,  in  our  judgment,  that  unless  the  jurisdictional  facts  are  by  stat- 
ute required  to  appear  from  the  papers  and  files  in  the  action,  they  may  be  es- 
tablished by  competent  extrinsic  evidence:  Freeman  on  Judgments,  sec.  518; 
Jolley  V.  Foltz,  34  Cal.  321;  Williams  v.  Cammack,  27  Miss.  209;  61  Am.  Dec. 
508;  Liss  v.  Wilcoxen,  2  Col.  85;  Van  Duesen  v.  Sweet,  61  N.  Y.  385;  Behymer 
V.  Nordloh,  12  Col.  352.  Though  the  jurisdiction  of  the  court  appears 
aflBrmatively  from  the  papers  and  files,  they  are  not  entitled  to  the  verity  of 
records,  and  their  assertions  may  be  disproved  by  extrinsic  evidence,  and  the 
judgment  thereby  be  shown  to  be  void:  Sanborn  v.  Fellows,  22  N.  H.  489; 
Salladay  v.  Bainhill,  29  Iowa,  555;  Sears  v.  Terry,  26  Conn.  273;  Culver's  Ap- 
peal, 48  Conn.  165;  People's  Savings  Bank  v.  Wilcox,  15  R.  I.  258;  2  Am.  St. 
Rep.  894.  In  some  of  the  states  this  rule  does  not  prevail  where  the  evi- 
dence of  the  service  of  process  consists  of  the  return  of  an  oflScer,  and  the 
party  affected  thereby  has  a  remedy  against  him  by  an  action  for  a  false  re- 
turn: Lightsey  v.  Harris,  20  Ala.  409.  Though  the  court  is  one  of  inferior 
jurisdiction,  if  it  has  authority  to  inquire  concerning  the  existence  of  some 
jurisdictional  fact  and  to  determine  whether  it  existed  or  not,  its  determina- 
tion on  this  subject  is  as  conclusive  as  upon  any  other,  and  cannot  be  assailed 
collaterally,  and  such  determination  need  not  appear  in  "express  terms,  but 
will  be  implied,  if  the  tribunal  proceeded  to  take  such  action  as  could  prop- 
erly be  taken  only  after  it  had  made  the  requisite  inquiry  and  found  that  the 
jurisdictional  fact  existed:  Freeman  on  Judgments,  sec.  523;  Ela  v.  Smith,  5 
Gray,  135;  66  Am.  Dec.  359;  Spaulding  v.  Homestead  Ass'n,  87  Cal.  40;  Stod- 
dard V.  Johnson,  75  Tnd,  31;  Coloma  v.  Eaves,  92  U.  S.  484;  Commissioners  v, 
Aspinwall,  21  How.  539. 

If  the  judgment  is  one  pronounced  by  a  court  of  record,  its  jurisdiction 
will  be  presumed,  and  if  it  is  also  a  court  of  the  state  in  which  the  judgment 
is  ofi'ered  in  evidence,  the  presumption  is,  in  most  states,  indisputable  in  a 
collateral  action:  Freeman  on  Judgments,  sees.  130-132.  It  is,  however, 
always  essential  that  the  court  should  have  had  jurisdiction  over  the  subject- 
matter  of  the  action  or  proceeding,  and  authority  to  award  the  relief  granted: 
Freeman  on  Judgments,  sees.  120,  120  c;  and  while,  if  such  jurisdiction  did 
not  exist,  its  absence  will  generally  appear  from  the  record  taken  in  connec- 
tion with  the  existing  laws,  there  is  at  least  one  instance  in  which  it  may  be 
established  by  extrinsic  evidence,  to  wit:  it  may  be  shown  by  such  evidence 
that  the  person  upon  whose  estate  letters  testamentary  or  of  administration 
were  granted  was  at  the  time  still  living,  and  that  the  court,  therefore,  had  no 
jurisdiction  over  him  and  his  estate:  Freeman  on  Judgments,  sec.  120;  Dun- 
can V.  Steivart,  25  Ala.  408;  60  Am.  Dec.  527;  Fisk  v,  Norvel,  9  Tex.  13;  58 
Am.  Dec.  128;  Withers  v.  Patterson,  27  Tex.  496;  86  Am.  Dec.  643;  Bechtt  v. 
Selover,  7  Cal.  215;  68  Am.  Dec.  237;  contra,  Boderigas  v.  East  River  S.  I.,  63 
N.  Y.  460;  20  Am.  Rep.  555. 

It  is  a  condition  precedent  to  the  existence  of  jurisdiction  over  a  person 
who  does  not  voluntarily  appear,  that  the  court  rendering  the  judgment 
against  him  have  authority  to  require  him  to  appear  before  it.  Therefore, 
every  personal  judgment  which  a  court  may  render  against  one  who  does  not 
voluntarily  submit  to  its  authority,  and  who  was  not  a  citizen  of  the  state, 
nor  served  with  process  within  its  borders,  no  matter  what  the  mode  of  ser- 
vice was,  is  void:  Freeman  on  Judgments,  sec.  120  a.  A  person  or  corpora- 
tion against  whom  a  judgment  is  offered  must,  therefore,  be  permitted  to 
bhow  that  he  or  it  was  not  a  citizen  of  the  state  when  served  with  process, 


Nov.  1890.]  Morrill  v.  Morrill.  115 

and  that  such  process  was  not  served  within  the  bordera  of  the  state:  Free, 
man  on  Judgments,  sees.  120  a,  120  b. 

There  is  a  class  of  persons  who  are  in  fact  within  a  state,  but,  in  contem< 
plation  of  law,  are  not  so  within  it  as  to  be  subject  to  the  jurisdictiou  of  its 
courts,  because  their  presence  is  as  the  representatives  of  some  other  sov- 
ereignty, such  as  ambassadors  and  other  public  ministers  and  consuls  and 
vice-consuls  of  foreign  nations.  Persons  of  this  class,  whether  served  with 
process  or  not,  and  whether  they  appear  in  court  in  response  to  such  process 
or  not,  may,  at  any  time,  avoid  a  judgment  against  them,  though  entered 
after  a  trial  upon  the  merits,  by  showing  their  official  capacity:  Miller  v.  Van 
Loben  Sets,  66  Cal.  341;  Bors  v.  Preston,  111  U.  S.  256;  United  States  v.  Ben- 
ner,  1  Bald.  234;   United  Staler  v.  Lafontaine,  4  Cranch  C.  C.  173. 

While,  as  we  have  stated,  persona  not  within  the  jurisdiction  of  a  court 
cannot  be  required  to  appear  before  it  and  to  submit  to  its  exercise  of  author- 
ity over  them,  yet  if  they  have  property  within  the  state,  its  courts  have 
jurisdiction  over  such  property,  and  may,  by  the  service  of  process  beyond 
the  state,  actual  or  constructive,  obtain  jurisdiction  over  non-residents  to 
the  extent  of  rendering  judgments  against  them  which  may  affect  the  title 
to  their  property  within  the  state,  as  where  the  object  of  the  action  is  to  en- 
force a  lien,  make  partition,  set  aside  a  transfer,  determine  conflicting  claims 
of  title,  compel  specific  performance  of  contracts,  condenm  lands  in  the  ex- 
ercise of  the  power  of  eminent  domain,  or  to  enforce  a  pecuniary  liability  for 
the  satisfaction  of  which  property  has  been  attached:  Freeman  on  Judg- 
ments, sec.  120  a;  Arndt  v.  Griijgs,  134  U.  S.  316;  Perkins  v.  Wakeham,  86 
Cal.  580;  21  Am.  St.  Rep.  67;  Anderson  v.  Goff,  72  Cal.  65;  1  Am.  St.  Rep. 
34;  Eastman  v.  Wadlehjh,  65  Me.  251;  20  Am.  Rep.  695;  Loaiza  v.  Superior 
Court,  85  Cal.  11;  20  Am.  St.  Rep.  197;  Young  v.  Upshur,  42  La.  Ann.  .362; 
21  Am.  St.  Rep.  .381;  Venable  v.  Dutch,  37  Kan.  515;  1  Am.  St.  Rep.  260. 

There  are,  doubtless,  judgments  entered  in  cases  over  which  the  court  had 
undoubted  jurisdiction,  which  are  wholly  or  partly  void  because  the  court 
either  decided  some  question  which  it  had  no  power  to  decide,  or  granted 
some  relief  which  it  had  no  power  to  grant;  but  it  is  very  difficult  to  formu- 
late any  test  by  which  to  unerringly  determine  whether  the  action  of  the 
court  in  cases  of  this  class  is  void  or  erroneous  only.  The  fact  that  the 
court  did  something  in  excess  of  its  jurisdiction,  if  it  exists  at  all,  must 
undoubtedly  appear  by  the  record,  and  such  attack  as  is  made  must  ap- 
pear  from  and  be  established  by  the  record  taken  in  connection  with  the 
constitution  and  laws  of  the  state.  If  a  court  should  grant  relief  which  un- 
der no  circumstances  it  has  authority  to  grant,  its  judgment  is  to  that  ex- 
tent void;  as  where  it  orders  a  donation  out  of  the  public  treasury:  Bridges 
v.  Clay  Co.  Supervisors,  57  Miss.  252;  enters  judgment  for  an  amount  greater 
than  it  is  authorized  to  give:  Feillett  v.  Engler,  8  Cal.  76;  sentences  a  defend- 
ant to  undergo  a  punishment  dififerent  from  or  in  excess  of  that  which  it  is 
authorized  to  impose:  Ex  parte  Lange,  18  Wall.  163;  fines  the  prosecuting 
witness  for  costs,  when  there  is  no  finding  that  the  prosecution  was  instituted 
without  probable  cause  and  from  malicious  motives:  Little  v.  Evans,  41  Kan. 
578;  annuls  conveyances  which  are  not  the  subject-matter  of  the  action,  nor 
sought  to  be  annulled  therein:  Munday  v.  Vail,  34  N.  J.  L.  418;  Seam^ter  v. 
Blackstock,  83  Va.  232;  5  Am.  St.  Rep.  262;  Anthony  v.  Kasey,  83  Va.  338;  5 
Am.  St.  Rep.  277;  Wade  v.  Hancock,  76  Va.  620;  directs  the  sale  of  property 
in  a  proceeding  not  institutetl  for  the  purpose  of  obtaining  such  sale,  or 
enters  personal  judgment  against  the  vendee  of  a  mortgagor  in  a  statutory 


116  Morrill  v.  Morrill.  [Oregon, 

proceeding  to  foreclose  a  mortgage  in  which  such  judgment  ia  entirely  un 
authorized:  Fithianv.  Monks,  43  Mo.  502. 

Though  a  court  had  jurisdiction  both  of  the  subject-matter  and  of  the  par- 
ties to  the  action,  it  may  lose  such  jurisdiction  at  some  subsequent  stage  of 
the  proceeding,  as  where  an  appeal  is  prosecuted  to  some  appellate  tribunal: 
McKinney  v.  Jones,  57  Wis.  301;  Ex  parte  Sihbald  v.  United  Slates,  12  Pet. 
488;  McClanahans  Heirs  v.  Henderson,  1  T.  B.  Mon.  261;  MeArtlmr  v. 
Dane,  61  Ala.  539;  Boynton  v.  Foster,  7  Met.  415;  or  the  cause  is  removed  to 
the  national  courts  by  proper  proceedings  taken  therefor:  Steamship  Co.  v. 
Tuqman,  106  U.  S.  118;  Railroad  Co.  v.  Kooniz,  104  U.  S.  14;  or  the  term  of 
the  court  has  expired,  and  for  that  reason  the  authority  to  act  is  suspended 
until  the  commencement  of  the  next  term:  State  Nat.  Bank  v.  Neel,  53  Ark. 
110;  22  Am.  St.  Rep.  185;  Garlich  v.  Dunn,  42  Ala.  404;  Kimports  v.  Raivson, 
29  W.  Va.  487;  Brumley  v.  State,  20  Ark,  77;  Oalusha  v.  Butterjield,  2  Scam. 
227;  Ex  parte  Oshorn,  24  Ark.  479;  Hernandez  v.  James,  23  La,  Ann.  483; 
Dodge  Y.  Coffin,  15  Kan.  277;  Dixon  v.  Judge  Fifth  Dist.,  26  La.  Ann.  119; 
Earls  V.  Earls,  27  Kan.  538;  Filley  v.  Cody,  4  Col.  109:  Framis  v.  Wells,  4 
Col.  274;  Bruce  V.  Doolittle,  81  111.  103;  LanghUn  v.  Pechham,  66  Iowa,  121; 
Marshall  v.  Ravisies,  22  Fla.  583;  Balm  v.  Nunn,  63  Iowa,  641;  King  v.  Green, 
2  Stew.  133;  19  Am.  Dec.  46;  Daris  v.  Fish,  1  G.  Greene,  406;  48  Am.  Dec. 
387;  Wicks  v.  Ludwig,  9  Cal.  175;  Norwood  v.  Kenfield,  34  Cal.  333;  Doss  v. 
Waggoner,  3  Tex.  515;  Leclair  v.  Globensli,  4  L.  C.  Rep.  139;  or  the  juris- 
diction of  the  court  has  been  exhausted  by  the  entry  of  a  final  judgment  or 
order  in  the  action  or  proceeding:  Slate  v.  Railroad  Co.,  16  Fla.  708;  Fossett 
V.  McMahan,  74  Tex.  546;  or  the  court,  when  the  party  appeared  before  it, 
ordered  his  answer  to  be  stricken  out,  and  refused  to  hear  him  in  his  defense, 
in  a  case  where  it  had  no  authority  to  strike  out  such  answer  and  refuse 
8uch  hearing:  Henry  v.  Carson,  96  Ind.  412;  Windsor  v.  McVeigh,  93  U.  S. 
274.  If,  in  proceedings  to  settle  the  estate  of  a  deceased  person,  an  order 
is  made  appointing  an  executor  or  administrator,  the  court's  jurisdiction  to 
make  such  appointment  is  exhausted,  and  cannot  again  be  exercised  while 
the  person  so  appointed  continues  in  office,  and  any  further  grant  of  letters 
testamentary  or  of  administration  made  by  it  is  void:  Griffith  v.  Frazier,  8 
Cranch,  9;  Flinn  v.  Cltase,  4  Denio,  90.  So  if  an  estate  is  fully  administered 
upon,  and  the  property  thereof  distributed  to  the  heirs:  Fisk  v.  Norvel,  9 
Tex.  13;  58  Am.  Dec.  128;  or  if,  in  the  due  coarse  of  administration,  the 
property  of  the  decedent  is  sold  and  the  title  vested  in  the  purchaser  thereof, 
any  further  proceeding  for  the  readministration  or  distribution  of  the  prop- 
erty so  distributed,  or  for  the  sale  of  the  property  so  sold,  whether  taking 
place  in  the  same  or  in  another  court,  is  without  jurisdiction  and  void:  Lind' 
say  V.  Jaffray,  55  Tex.  626;  Smith  v.  Wooljolk,  115  U.  S.  143. 

A.  scire  facias  or  an  action  at  law  upon  a  domestic  judgment  is  a  collateral 
proceeding  so  far  as  any  attack  upon  the  judgment  is  concerned.  The  efifect 
of  the  judgment  cannot  be  avoided  for  error  or  irregularity,  nor  can  any  de- 
fense be  made  which  must  involve  a  re-examination  of  the  issues  presented 
in  the  original  action,  and  either  determined  by  the  court  or  confessed  by 
the  defendant,  nor  can  any  attack  upon  the  jurisdiction  of  the  court  be  en- 
tertained which  would  not  be  proper  if  it  were  attempted  in  any  other  action, 
if  the  judgment  were  oflFered  therein  as  part  of  a  chain  of  title  or  otherwise, 
Freeman  on  Judgments,  sec.  435.  If,  however,  the  court  in  which  the  actioa 
is  pending  is  competent  to  receive  and  act  upon  an  equitable  defense,  such 
defense  may  be  asserted  by  way  of  answer  or  cross-complaint,  and  relief  given 
under  the  same  circumstances  eis  if  such  relief  were  sought  in  an  independent 


Nov.  1890,]  Morrill  v.  Morrill.  117 

«uit:  Dohson  v.  Pearce,  12  N.  Y.  156;  62  Am.  Dec.  152;  Kecler  v.  E!sion,  22 
Neb.  .310;  Drinkard  v.  Ingram,  21  Tex.  650;  Dnnlnf  v.  Cody,  31  Iowa,  260;  7 
Am.  Rep.  129;  Duringer  v.  Moschino,  93  Ind.  495.  If  the  action  is  upon  the 
judgment  of  a  court  of  another  state,  or  of  a  foreign  nation,  it  cannot  be 
resisted  by  showing  mere  errors  or  irregularities;  but  the  jurisdiction  of  the 
court  by  which  the  judgment  was  pronounced  is  always  open  to  question, 
and  the  defendant  is  at  liberty  to  controvert  jurisdictional  statements  and 
recitals,  and  to  show  by  any  competent  evidence,  extrinsic  or  otherwise,  that 
the  court  was  not  entitled  to  exercise  jurisdiction  over  him:  Freeman  oa 
Judgments,  sees.  562-564,  5SS-590. 

A  suit  in  equity  to  obtain  relief  from  a  judgment  is  a  collateral  attack 
within  the  definition  given  in  the  principal  case,  because  it  is  not  within 
the  power  of  a  court  of  equity  to  annul,  vacate,  or  modify  a  judgment  at 
law.  The  judgment  complained  of  is  permitted  to  stand,  and  the  court  of 
equity  merely  inquires  whether  there  are  any  equitable  circumstances  re- 
quiring it  to  prevent  the  person  in  wKose  favor  the  judgment  was  recovered 
from  enforcing  or  taking  advantage  of  it:  Freeman  on  Judgments,  sec.  485. 
Among  the  grounds  inducmg  a  court  of  equity  to  act,  error  of  a  court  at  law 
in  matters  of  law  or  of  fact  is  not  included:  Freeman  on  Judgments,  sec.  487. 
It  must  appear  that  the  complainant  could  not  present  his  cause  of  action  or  of 
defense  to  the  court  of  law,  either  because  it  was  incompetent  to  hear  it  and 
to  grant  relief  therein,  or  because  he  was  prevented  from  presenting  it  and 
from  having  it  properly  considered,  through  fraud,  accident,  mistake,  sur- 
prise, or  some  other  sixfficient  cause  for  the  interposition  of  a  court  of  equity: 
Freeman  on  Judgments,  sec.  486.  He  may,  if  he  can,  show  the  existence  of 
any  of  these  causes,  and  that  it  operated  to  his  prejudice,  though  his  evidence 
tends  to  contradict  the  record.  He  may,  therefore,  prove  that  process  was 
not  served  upon  him,  though  the  record  declares  that  it  was  so  served:  Free- 
man on  Judgments,  sec.  495;  Wilson  v.  Hawthorne,  14  Col.  530;  20  Am.  St. 
Rep.  290;  Armswortliij  v.  Cheshire,  2  Dev.  Eq.  234;  34  Am.  Dec.  273;  Crafts 
V.  Dexter,  8  Ala.  767;  42  Am.  Dec.  666;  Magin  v.  Lamh,  43  Minn.  80;  19  Am. 
St.  Rep.  216;  Bridgeport  S.  B.  v.  Eldredge,  28  Conn.  556;  73  Am.  Dec.  688; 
Johnson  v.  Coleman,  23  VVis.  452;  99  Am.  Dec.  193;  Laphnm  v.  Campbell,  61 
Cal.  296.  If  the  evidence  of  the  service  of  process  is  contained  in  the  return 
of  a  sheriff  or  other  officer  whose  duty  it  was  to  serve  such  process  and 
make  return  thereof,  some  of  the  courts  deny  relief,  unless  it  appears  that 
the  false  return  was  induced  by  the  plaintiff  in  the  action:  Walker  v.  Bobbins, 
14  How.  584;  Knox  Co.  v.  Ilarxhinan,  133  U.  S.  152;  Johnson  v.  Jones,  2  Neb. 
133;  Ki-ug  v.  Davis,  85  Ind.  309;  Taylor  v.  Lewis,  2  J.  J.  Marsh.  400;  19  Am. 
Dec.  135;  Thomas  v.  Ireland,  88  Ky.  581;  21  Am.  St.  Rep.  356;  while  other 
courts  grant  relief  whether  the  plaintiff  was  instrumental  in  procuring  the 
false  return  or  not:  Ridgewny  v.  Bank  of  Tenn.,  1 1  Humph.  523;  Ryan  v.  Boyd, 
33  Ark.  778;  Dunklin  v.  Wilson,  64  Ala.  162;  Ilausivirth  v.  Sidlivan,  6  Mont. 
203. 

Where  the  appearance  of  the  defendant  was  entered  in  an  action  by  an 
attorney,  it  was  formerly  thought  that  such  appearance  was  binding  on  him, 
and  that,  except  in  an  action  against  the  attorney,  the  defendant  would  not 
be  permitted  to  show  that  the  appearance  was  not  authorized,  unless,  per- 
haps, where  the  attorney  was  irresponsible  or  the  appearance  was  entered 
through  the  procurement  of  the  plaintiff:  Freeman  on  Judgments,  sec.  499. 
But  the  rule  now  generally  prevading  is,  that  a  judgment  resting  upon  the 
unauthorized  appearance  of  an  attorney  will  not  be  allowed  to  be  enforced, 
irrespective  of  the  question  whether  the  attorney  is  responsible  or  irrespousi- 


118  Morrill  v.  Morrill,  [Oregon, 

ble:  Harf:hey  v.  Blachmarr,  20  Iowa,  161;  89  Am.  Dec.  520;  O'tfford  v.  Thom^ 
9  N.  J.  Eq.  702;  Marvel  v.  Manouvrier,  14  La.  Ann.  3;  74  Am.  Dec.  424; 
De  Louis  v.  Jifeek,  2  G.  Greene,  55;  50  Am.  Dec.  491;  Jones  v.  Williamson,  5 
Cold,  370;  Boro  v.  Harris,  13  Lea,  36;  Neiocomh  v.  Dewey,  27  Iowa,  381. 

Where  the  relief  sought  in  equity  must,  if  granted,  affect  rights  acquired 
by  strangers  to  the  judgment  who  are  purchasers  for  value  in  good  faith, 
and  without  there  being  anything  in  the  record,  or  elsewhere,  to  give  them 
any  notice  of  any  vice  or  other  intirmity  in  the  proceedings,  it  is  manifest 
that  their  equities  are,  at  least,  equal  to  those  of  the  complainant,  and  that 
relief  cannot  be  granted  against  them  without  violating  the  legal  maxim, 
that  where  the  equities  are  equal,  the  legal  title  must  prevail:  Freeman  on 
Judgments,  sec.  510.  We  think  no  court  will  hesitate  to  apply  this  maxim, 
unless  in  cases  where  there  was  no  service  of  process,  and  the  court  of  law 
therefore  did  not  have  jurisdiction  over  the  defendant,  and  had  no  notice  of 
the  action,  and  has  been  guilty  of  no  laches.  In  the  latter  class  of  cases 
some  of  the  courts  have  denied  relief:  Reeve  v.  Kennedy,  43  Cal.  649;  Stokes 
V.  Geddes,  46  Cal.  17;  while  others  have  granted  it:  Harshey  v.  Blackmarr, 
20  Iowa,  161;  89  Am.  Dec.  520;  Bryant  v.  Willi'ims,  21  Iowa,  329;  and  the 
rule  upon  the  subject  cannot  be  regarded  as  settled  by  any  decided  prepon- 
derance of  authority. 

If  a  party  to  a  judgment  which  is  not  void  does  not  procure  its  vacation 
by  some  motion,  or  prosecute  some  appellate  proceeding,  or  seek  relief  in 
equity,  he  cannot  avoid  it  when  offered  in  evidence  against  him  by  proving 
that  it  ought  not  to  have  been  pronounced,  and  was  procured  by  fraud, 
mistake,  perjury,  or  collusion,  or  th^^)ugh  some  agreement  entered  into  by 
the  prevailing  party  which  he  had  neglected  or  refused  to  perform:  Freeman 
on  Judgments,  sec.  334.  The  judgment  is,  however,  ordinarily  obligatory 
only  upon  the  parties  thereto,  and  persons  in  privity  with  them.  It  may  be 
that  at  the  time  the  judgment  is  entered  there  are  persons  neither  parties 
nor  privies  thereto,  but  whose  interests  may  be  injuriously  affected  if  it  is 
enforced  as  against  them.  Not  being  parties  to  the  action,  they  are,  in  most 
instances,  not  entitled  to  move  to  vacate  the  judgment,  nor  to  prosecute  an 
appeal  therefrom,  nor  to  institute  and  maintain  proceedings  in  equity  to 
enjoin  its  enforcement.  Their  position  would  be  sad,  if  they  were  not,  there- 
fore, permitted  to  a  certain  extent  to  impeach  the  judgment  collaterally, 
when  it  is  offered  in  evidence  against  them,  or  for  the  purpose  of  affecting 
their  rights  and  interests.  They  are  permitted  to  attack  the  judgment  on 
the  ground  that  they  are  creditors  of  the  defendant,  and  that  the  judgment 
was  suffered  for  the  purpose  of  hindering,  delaying,  and  defrauding  them: 
Beelerv.  Bullitt,  3  A.  K.  Marsh.  280;  13  Am.  Dec.  161;  Freeman  on  Execu- 
tions, sec.  136.  Whenever  a  judgment  or  decree  is  procured  through  the  fraud 
of  either  of  the  parties  or  by  the  collusion  of  both,  for  the  purpose  of  defraud- 
ing a  third  person,  he  may  escape  from  the  injury  thus  attempted  by  show- 
ing, even  in  a  collateral  proceeding,  the  fraud  or  collusion  by  which  the 
judgment  or  decree  was  obtained:  Freeman  on  Judgments,  sec.  336;  Atkin- 
eons  V.  Allen,  12  Vt.  619;  36  Am.  Dec.  361;  Sidensparker  v.  Slden-'^-parker,  52 
Me.  481;  83  Am.  Dec.  527;  Downs  v.  Fuller,  2  Met.  135;  35  Am.  Dec.  393; 
Mackie  v.  Cairns,  5  Cow.  547;  15  Am.  Dec.  477;  Bohiii.son  v.  Da  is,  11  N.  J. 
Eq.  302;  69  Am.  Dec.  591;  Bunnv.  Ahl,  29  Pa.  St.  387;  72  Am.  Dec.  6.39; 
Morrill  v.  Morrill,  20  Or.  96;  ante,  p.  95.  A  stranger  to  a  judgment, 
prejudiced  by  it  when  entered,  may  not  avoid  it  collaterally  for  mere  error 
or  irregularity,  though  he  may  doubtless  show  by  extrinsic  evidence  that 
the  court  did  not  have  jurisdiction  to  enter  it,  and  may  further  show  that  it 


Dec.  1890.]  State  v.  Wheeler.  119 

is  erroneous,  and  also  collusive,  and  if  not  collusive,  that  the  nominal  defend- 
ant made  no  defense  therein,  because  he  had  no  interest  to  be  protected; 
but  when  a  real  defense  is  made  in  good  faith,  we  think  a  stranger  affected 
by  the  judgment  will  not  be  permitted  to  impeach  it  by  retrying  the  case 
before  anotlier  court,  for  the  purpose  of  convincing  it  that  a  different  judg- 
ment ought  to  have  been  entered  in  the  former  action:  Freeman  on  Judg- 
ments, sec.  337. 


Stati:  v.  Wheeler. 

[•20  Oregon,  192.] 

Cbiminal  Law  —  Forgery  of  Note.  —  One  who  signs  a  promissory  note 
under  a  false,  fictitious,  or  assumed  name,  with  intent  to  defraud  another, 
is  guilty  of  forgery. 

Criminal  Law  —  Forgery  —  Intent.  —  The  essential  element  of  forgery 
consists  in  the  intent,  when  making  the  signature  or  procuring  it  to  be 
made,  even  though  the  name  affixed  is  that  actually  borne  by  the  person 
affixing  it,  to  pass  it  fraudulently  as  the  signature  of  another  than  the 
one  who  actually  makes  it. 

Lydell  Baker,  for  the  appellant. 

T.  A.  Stevens,  district  attorney,  and  W.  T.  Hume,  for  the  re- 
spondent. 

Bean,  J.  The  defendant  was  indicted,  tried,  and  convicted 
of  the  crime  of  forgery,  from  which  judgment  he  appeals. 
The  indictment  cliarges  that  on  June  28,  1890,  the  defendant 
made  and  forged  a  promissory  note  for  $85.50,  payable  to 
John  P.  Fidock  or  order,  due  thirty  days  after  date,  by  then 
and  there  signing  the  name  of  John  Williams  to  said  note, 
with  an  intent  to  defraud  and  injure  J.  T.  Milner. 

At  the  trial  in  the  court  below,  after  the  evidence  for  the 
Btate  was  closed,  defendant's  counsel  moved  the  court  that 
the  jury  be  instructed  to  render  a  verdict  of  not  guilty,  upon 
the  ground  that  the  evidence  failed  to  prove  the  crime  charged. 
The  refusal  of  the  court  to  give  this  instruction  is  the  only 
error  claimed  on  this  appeal.  An  examination  of  this  ques- 
tion renders  it  necessary  to  briefly  state  the  evidence  as  given 
on  the  trial,  which  was  as  follows:  On  June  28,  1890,  the  de- 
fendant called  at  the  office  of  J.  T.  Milner,  in  Mulkey's  block, 
in  the  city  of  Portland,  and  represented  to  Mr.  Milner  that  his 
name  was  John  Williams,  and  applied  for  a  loan  of  $85.50, 
oflFering  to  secure  the  same  by  a  chattel  mortgage  on  a  team 
of  horses.  He  drove  the  team  up  in  front  of  the  office,  and 
Mr.  Milner  looked  at  them  and  agreed  to  make  the  loan. 
The  note  was  drawn  up  by  Milner,  and  the  defendant  signed 


AMERICAN  STATE  REPORTS. 


Vol.   XXIV,    Pages  789-819. 
BOLLING  7'.   KIRBV. 

[9(1  Alabama,  'i\r).\ 

Conversion. 


May,  1890.]  Bolling  v.  Kirby.  789 

BOLLING    V,    KiRBY. 

[90  Alabama,  215.] 

Conditional  Sale  —  Payment  and  Rescission  thereof.  — Where  a  note  is 
given  in  payment  for  a  sewing-machine,  the  title  to  which  is  to  be  held 
by  the  seller  until  the  payment  of  the  note,  which  is  left  with  a  third 
party  authorized  to  receive  cattle  in  payment  and  to  surrender  the 
note,  and  after  such  surrender  the  cattle  are  claimed  by  the  execution 
creditors  of  the  maker  of  the  note,  who  thereupon  redelivers  the  note 
to  the  third  person,  under  agreement  that  it  shall  be  considered  that  no 
payment  has  been  made,  the  title  to  the  machine  is  thereby  reinvested 
in  the  seller  upon  his  ratitication  of  the  transaction,  although  the  third 
party  had  no  authority  except  to  receive  payment  of  the  note  and  to 
surrender  it. 

Conversion  —  What  Constitutes. — An  intermeddling  with  or  dominion 
over  the  property  of  another,  whether  by  the  defendant  alone  or  in 
connection  with  others,  which  is  subversive  of  the  dominion  of  the  true 
owner,  and  in  denial  of  his  rights,  is  a  conversion.  It  is  not  essential 
to  conversion  sufficient  to  support  the  action  of  trover  that  the  defend- 
ant should  have  the  complete  manucaption  of  the  property. 

Conversion  —  What  Constitutes.  —  Where,  under  a  conditional  sale  of  a 
sewing-machine,  the  seller,  upon  default  in  payment,  demands  the 
machine  from  the  purchaser's  wife,  the  purchaser  himself  having  left 
the  state,  and  her  father  unconditionally  refuses  to  allow  the  seller  to 
take  possession  of  the  machine,  this  will  amount  to  a  conversion;  but 
if  such  refusal  is  based  on  a  disputed  question  of  payment,  and  upon 
an  agreement  that  the  father  is  to  have  time  to  ascertain  if  payment 
has  been  made,  and  if  it  has  not,  to  surrender  the  machine,  then  he  is 
not  guilty  of  conversion,  although  in  the  mean  time  the  original  pur- 
chaser returns  and  removes  the  machine  without  his  knowledge  or  con- 
Bent. 

Conversion  cannot  be  Based  on  Possession  Retained  by  Agreement 
until  demand  and  refusal  to  deliver  after  the  assent  has  been  with- 
drawn, or  the  time  covered  by  it  has  lapsed. 

CoHVERSiON,  to  Sustain  Trover,  must  be  a  destruction  of  the  plaintiff's 
property,  or  some  unlawful  interference  with  his  use,  enjoyment,  or 
dominion  over  it;  an  appropriation  of  it  by  defendant  to  his  own  use, 
or  to  the  use  of  a  third  person,  in  disregard  or  defiance  of  the  owner's 
right,  or  a  withholding  of  possession  under  a  claim  of  title  inconsis- 
tent with  the  title  of  the  owner. 

Conversion  upon  Which  Trover  may  be  Based  must  be  a  positive  tor- 
tious act.  Non-feasance  or  neglect  of  legal  duty,  or  mere  failure  to  per- 
form an  act  made  obligatory  by  contract,  or  by  which  property  is  lost 
to  the  owner,  will  not  support  the  action. 

Conversion.  —  Bailee  Undertaking  to  Carry  Property  to  the  Owner, 
but  failing  to  do  so,  whereby  it  is  subsequently  lost  while  in  his  posses- 
eion,  through  no  positive  misconduct  of  his,  is  not  liable  for  conversion. 
But  if  he  does  any  affirmative  act  inconsistent  with  the  bailment,  and 
known  by  him  to  be  so,  trover  will  lie  against  him. 

COKVBBSION.  —  One  having  Notice  of  the  claim  of  the  true  owner,  and  who 
delivers  the  property  to  another  person,  or  permits  him  to  take  it  out 
of  his  possession,  whereby  it  is  lost  to  the  owner,  is  liable  for  its  value 
in  trover. 


790  BoLLiNO  V.  KiRBY.  [Alabama, 

Con  VERSION.  — Bare  Possession  of  Property,  without  some  wrongful  act 
in  the  acquisition  of  possession,  or  in  its  detention,  and  without  any 
illegal  assumption  of  ownership,  or  illegal  user  or  misuser,  is  not  a  con- 
version  for  which  trover  will  lie. 

Trover  by  Kirby  and  Brother,  a  partnership,  against  W. 
Boiling  to  recover  for  the  conversion  of  a  sewing-machine. 
On  the  trial,  it  appeared  from  the  testimony  of  Kirby  that  on 
September  7,  1885,  the  plaintiffs  sold  to  T.  Bishop  and  his 
wife  a  sewing-machine,  taking  their  joint  note  for  the  price, 
payable  on  November  15,  1885,  and  retaining  the  legal  title 
in  themselves  until  payment  was  made;  that  when  the  ma- 
chine was  delivered,  it  was  agreed  between  the  parties  that 
young  cattle  would  be  taken  in  payment,  and  this  was  in- 
dorsed on  the  note;  that  about  the  time  that  the  note  became 
due  he  went  to  Bishop's  house,  and  upon  being  told  by  Mrs. 
Bishop  that  Mr.  Bishop  had  the  cattle,  he  left  word  for  him 
to  bring  them  to  a  place  called  Guntersville,  at  which  place 
he  authorized  one  A.  R.  Hooper  to  receive  the  cattle,  and  left 
the  note  with  him  to  be  delivered  to  Bishop.  Hooper  testi- 
fied that  Bishop  came  to  him  in  Guntersville  a  few  days  after 
he  was  given  the  note,  and  said  that  he  had  brought  the  cat- 
tle to  pay  it;  that  they  then  went  to  where  the  cattle  were 
standing  in  the  street;  that  he  agreed  to  take  the  cattle,  and 
handed  Bishop  the  note;  that  two  of  the  latter's  creditors 
immediately  claimed  the  cattle  under  a  mortgage  lien;  that 
Bishop  then  gave  them  the  cattle,  handing  the  note  back  to 
the  witness,  saying  that  he  had  more  cattle,  and  would  bring 
them  and  pay  the  note;  that  witness  had  not  taken  charge  of 
the  cattle,  tried  to  drive  them  away,  nor  taken  any  control 
over  them.  Kirby  then  testified  that  during  the  fall  of  1886 
he  went  to  the  residence  of  Bishop  and  wife  to  get  the  ma- 
chine, as  the  note  had  not  been  paid;  that  he  found  that  they 
had  removed,  Mrs.  Bishop  having  gone  to  the  home  of  defend- 
ant Boiling,  who  was  her  father,  her  husband  being  absent 
in  another  state;  that  he  went  to  defendant's  house  and 
demanded  the  machine;  that  Mrs.  Bishop  claimed  that  the 
machine  had  been  paid  for  in  cattle,  and  that  defendant  re- 
fused to  allow  him  to  take  the  machine,  as  it  was  paid  for, 
and  belonged  to  Mrs.  Bishop;  that  after  some  further  conver- 
sation between  them,  defendant  Boiling  agreed  to  go  to  Gun- 
tersville and  ascertain  if  witness  had  a  right  to  take  the  ma- 
chine, and  if  so,  he  would  have  nothing  further  to  do  with  it; 
that  they  met  in  that  town  the  next  day,  when  defendant  said 


May,  1890.]  Bollinq  v.  Kibby.  791 

he  was  ready  to  deliver  the  machine;  that  witness  told  de- 
fendant to  deliver  it  to  one  Winston,  and  that  he  had  never 
received  it.  Winston  testified  that  he  agreed  to  receive  the 
machine  at  the  request  of  the  parties;  that  defendant  agreed 
then  and  afterwards  to  send  the  machine,  but  failed  to  do  so, 
and  subsequently  informed  witness  that  Bishop  had  moved 
his  family  away,  and  had  taken  the  machine  with  him.  Judg- 
ment for  plaintiffs,  and  defendant  appealed. 

Lusk  and  Bell,  for  the  appellant. 

McClellan,  J.  We  do  not  doubt  that  the  title  to  the  ma- 
chine involved  in  this  action  remained  in  the  plaintiffs  below, 
under  the  contract  put  in  evidence,  until  the  purchase-money 
thereof  was  paid.  In  considering  the  question  whether  the 
transaction  between  Hooper  and  Bishop  was  a  payment,  it 
may  be  admitted  that  Hooper  was  the  special  agent  of  plain- 
tiffs to  receive  cattle  in  payment,  and  to  deliver  up  the  paper, 
and  that  he  did  so  receive  the  cattle  and  deliver  up  the  paper^ 
as  that,  without  more,  the  debt  was  satisfied;  and  it  may  be 
further  conceded  that  he  had  no  authority  to  enter  into  an 
arrangement  with  Bishop  by  which  creditors  of  the  latter, 
having  a  lien  of  some  sort  on  the  property,  were  allowed  to 
take  the  cattle,  and  the  note  was  handed  back  to  him  by 
Bishop,  and  the  satisfaction  thereof  obviated  and  expunged, 
so  to  speak.  Yet  we  do  not  doubt  that  Bishop  had  full  au- 
thority to  make  this  arrangement,  and  that  the  lack  of  power 
to  this  end  in  Hooper  was  cured  by  the  ratification  of  his  un- 
authorized act  in  this  behalf  by  his  principals,  the  present 
plaintiffs.  The  note  did  not  bind  the  wife:  2  Brickell's  Digest, 
98;  Walker  v.  Struve,  70  Ala.  167.  Under  the  facts  of  the  case, 
the  delivery  of  the  cattle  in  payment  of  the  note  was  no  more 
than  an  exchange  of  that  property  for  the  machine,  vesting 
title  to  the  machine  in  the  husband  alone;  and  this,  even  had 
the  cattle  belonged  to  the  wife,  of  which  there  is  no  proof: 
Woods  v.  Dunlap,  73  Ala.  1G9;  Kennon  v.  Dibble,  75  Ala.  351. 
The  title  thus  being  in  Bishop  alone,  it  was  entirely  compe- 
tent for  him  to  agree  that  the  payment  which  had  so  vested 
it  in  him  should  be  considered  as  not  having  been  made,  and 
that  it  should  revest  in  Kirby  and  Brother;  and  this  agree- 
ment he  must  be  held  to  have  made,  by  handing  the  note 
back  to  Hooper,  in  consideration  of  the  cattle  being  applied 
to  another  debt  owed  by  him.  The  rulings  and  instructions 
of  the  court  on  this  part  of  the  case  were  free  from  error. 


792  BoLLiNQ  V.  KiRBY.  [Alabama, 

It  is  not  essential  to  a  conversion  which  will  support  the 
action  of  trover  that  the  defendant  should  have  the  complete 
manucaption  of  the  property.  An  intermeddling  with  or  do- 
minion over  the  property  of  another,  whether  by  the  defend- 
ant alone  or  in  connection  with  others,  which  is  subversive  of 
the  dominion  of  the  true  owner,  and  in  denial  of  his  rights, 
is  a  conversion:  Freeman  v.  Scurlock,  27  Ala.  407;  Conner 
V.  Allen,  33  Ala.  515.  Hence  it  is  not  important  that  when 
Kirby  went  to  the  residence  of  the  defendant  to  demand  the 
machine,  it  was  not  in  his  possesssion,  strictly  speaking,  but 
in  that  of  Mrs.  Bishop,  who  then  lived  on  his  premises,  if  tlie 
defendant  interfered  to  prevent,  and  did  prevent,  the  plaintiff 
from  then  taking  possession  of  it  by  the  unqualified  assertion 
of  a  title  inconsistent  with  the  plaintiffs',  and  an  uncondi- 
tional refusal  to  allow  the  plaintiffs  to  take  the  property 
away.  Whether  the  defendant  had  the  possession  in  himself 
or  not,  such  intermeddling,  in  defiance  of  plaintiffs'  right,  was 
a  conversion.  But  if  there  was  a  bona  fide  controversy  as  to 
whether  payment  had  been  made;  and  if  the  defendant,  while 
asserting  payment,  and  predicating  his  right  to  prevent  a 
removal  of  the  property  on  title  in  Bishop  springing  out  of 
payment,  recognized  the  controversy  and  uncertainty  as  to 
whether  payment  had  been  made,  and  declined  to  allow  the 
machine  to  be  removed  until  the  truth  of  that  matter  could 
be  ascertained;  and  if  it  was  thereupon  agreed  between  him 
and  Kirby  that  he  should  go  to  Guntersville  the  next  day,  and 
satisfy  himself  about  it,  and  that  if  he  found  the  note  had  not 
been  paid,  the  property  should  be  surrendered  to  the  plain- 
tiffs,—  these  facts  would  not  constitute  a  conversion.  Such 
a  qualified  and  conditional  refusal  by  Mrs.  Bishop  would  have 
been  reasonable  and  justifiable  under  the  circumstances,  and 
would  not  have  afforded  any  evidence  of  a  conversion  by  her; 
and  the  interference  of  Boiling  in  her  behalf  stands  upon  the 
same  footing:  Dent  v.  Chiles,  5  Stew.  &  P.  383;  26  Am.  Dec. 
350;  Butler  v.  Jones,  80  Ala.  486.  In  such  case  the  plaintiffs 
are  held  to  have  assented  to  the  retention  of  possession  by 
Mrs.  Bishop,  pending  the  investigation  agreed  on,  and  no 
action  for  conversion  can  be  predicated  on  a  possession  so 
retained  until  a  demand  and  refusal  to  deliver  after  the 
assent  has  been  withdrawn,  or  the  time  covered  by  it  has 
lapsed:  Voltz  v.  Blackmar,  64  N.  Y.  646;  Finch  v.  Clarky 
Phill.  (N.  C.)  335. 

Conversion  which  will  sustain  trover  must  be  a  destruction 


- 


May,  ISUO.]  Bollix\g  v.  Kikby.  793 

of  the  plaintiffs'  property,  or  some  unlawful  interference  with 
his  use,  enjoyment,  or  dominion  over  it;  an  appropriation  of 
it  by  the  defendant  to  his  own  use,  or  to  the  use  of  a  third 
person,  in  disregard  or  defiance  of  the  owner's  right;  or  a  with- 
holding of  possession  under  a  claim  of  title  inconsistent  with 
the  title  of  the  owner:  Glaze  v.  McMillan,  7  Port.  279;  Gray 
V.  Crocheron,  8  Port.  191;  Freeman  v.  ScurlocJc,  27  Ala.  407; 
Conner  v.  Allen,  33  Ala.  515;  Thweat  v.  Stamps,  67  Ala. 
96;  Central  R  R.  etc.  Co,  v.  Lampley,  76  Ala.  357,  368;  52 
Am.  Rep.  334;  Tinker  v.  Morrill,  39  Vt.  477;  94  Am.  Dec. 
345;  BurrotigJis  v.  Bayne,  5  Hurl.  &  N.  296;  Fauldes  v.  Wil- 
loughhy,  8  Mees.  &  W.  539;  2  Greenl.  Ev.,  sec.  642.  It  is  im- 
material whether  the  conversion  or  appropriation  be  for  the 
benefit  of  the  defendant  or  of  a  third  person.  "  The  true  in- 
quiry is,  Does  the  defendant  exercise  a  dominion  over  the 
property  in  exclusion  or  defiance  of  the  plaintiff's  right?  If 
he  does,  that  is,  in  law,  a  conversion,  be  it  for  his  own  or  an- 
other person's  use":  Cooley  on  Torts,  448;  Liptrot  y.  Holmes, 
1  Ga.  381-391. 

Conversion  upon  -which  recovery  in  trover  may  be  had 
must  be  a  positive,  tortious  act.  Non-feasance  or  neglect  of 
legal  duty,  mere  failure  to  perform  an  act  made  obligatory  by 
contract,  or  by  which  property  is  lost  to  the  owner,  will  not 
support  the  action:  Sturges  v.  Keith,  57  111.  451;  Bailey  v. 
Moulthrop,  55  Vt.  17;  Rodgers  v.  Hine,  2  Cal.  571;  56  Am. 
Dec.  363;  Ragsdale  v.  Willinms,  8  Ired.  498;  49  Am.  Dec.  406. 
A  bailee  is  not  liable  in  trover  for  a  loss  of  pro})erty  through 
larceny  from  him,  or  because  of  negligence  resulting  in  its 
destruction:  Hawkins  v.  Hoffman,  6  Hill,  586;  41  Am.  Dec. 
767;  Packard  v.  Getmxin,  4  Wend.  613;  21  Am.  Dec.  166.  If 
the  bailee  undertakes  to  carry  the  property  to  the  owner,  and 
fails  to  do  so,  and  it  is  subsequently  lost  while  in  his  posses- 
sion, through  no  positive  misconduct  of  his,  he  is  not  liable  for 
conversion:  Farrer  v.  Rollins,  37  Vt.  295.  But  if  he  does  any 
affirmative  act  inconsistent  with  the  bailment,  and  known  by 
him  to  be  so,  trover  will  lie  against  him:  Jones  v.  Hodgkins, 
61  Me.  480.  And  if,  having  notice  of  the  claim  of  the  true 
owner,  he  delivers  the  property  to  another  person,  or  permits 
another  to  take  it  out  of  his  possession,  whereby  it  is  lost  to 
the  plaintiff,  he  is  liable  for  its  value  in  this  form  of  action: 
Dearborn  v.  Union  Nat.  Bank,  58  Me.  273;  Phillips  v.  Brig- 
ham,  26  Ga.  617;  71  Am.  Dec.  227;  Alabama  etc.  R.  R.  Co.  v. 
Kidd,  35  Ala.  209. 


794  BoLLiNG  V.  KiRBY.  [Alabama, 

Each  of  the  several  charges  given  by  the  court  below  at  the 
request  of  the  plaintiffs  is  supported  by  one  or  another  of  the 
principles  we  have  announced.  Only  one  of  them  is  objec- 
tionable in  any  respect,  and  that  not  in  such  sort  as  will  work 
a  reversal.  Charge  No.  6  is  argumentative,  in  that  it  directs 
that  the  jury  may  look  to  certain  testimony,  etc.,  as  determin- 
ing whether  defendant  had  control  of  the  property;  but  while 
the  charge  might  have  been  refused  on  this  ground,  the  giving 
of  it  is  not  a  reversible  error:  Birmingham  F.  Brick  Works  v. 
Allen,  86  Ala.  185. 

Of  the  charges  asked  by  the  defendant,  the  first  and  tenth 
direct  a  verdict  for  the  defendant,  if  the  jury  believe  the  evi- 
dence. We  suppose  these  charges,  as  also  charges  5,  7,  and 
9,  were  requested  on  the  theory  that  the  cattle  transaction,  to 
which  reference  has  been  had,  was  a  payment  of  Bishop's  note, 
and  operated  a  divestiture  of  plaintiffs*  title.  This  position,  as 
we  have  seen,  is  untenable,  and  it  follows  that  charges  1,  5,  7, 
9,  and  10  were  properly  refused.  Charge  No.  4  is  bad,  in  that 
it  required  the  jury  to  find  that  Boiling  had  not  converted  the 
property,  although  they  should  believe  that  when  Kirby  de- 
manded it  from  Mrs.  Bishop,  Boiling  interfered,  and  unquali- 
fiedly and  unconditionally  refused  to  allow  him  to  remove  it, 
and  by  these  means  prevented  its  removal.  Charge  No.  6  would 
have  defeated  a  recovery,  unless  the  jury  believed  Boiling 
converted  the  machine  to  his  own  use,  when  he  would  have 
been,  as  we  have  seen,  equally  liable  for  a  conversion  to  the 
use  of  Bishop  or  Mrs.  Bishop,  or  for  a  delivery  to  either  of 
them,  if  he  had  possession  or  control  of  it  after  notice  of 
plaintiffs'  claim.  Charge  No.  8  is  open  to  the  same  infirmity 
as  No.  6,  and  moreover  is  misleading,  at  least  in  its  require- 
ment of  evidence  of  possession  in  the  defendant,  since  the  jury 
might  thereby  have  been  induced  to  the  conclusion  that  his 
intermeddling  with  the  property  while  in  strictness  the  posses- 
sion was  in  Mrs.  Bishop  was  not  a  conversion,  although  it  was 
in  one  aspect  of  the  evidence  a  palpable  dominion  over  it  to 
the  exclusion  of  plaintiffs'  rights. 

The  defendant  also  requested  the  following  charge:  "If  the 
jury  find  from  the  evidence  that  all  the  defendant  did  in 
reference  to  the  machine  was  to  move  it,  with  his  daughter,  to 
a  house  on  his  place,  and  come  to  town  to  make  inquiry  as  to 
what  was  the  truth  as  to  the  payment  of  the  note  given  by 
Bishop  for  the  machine,  and  that  he  allowed  bis  daughter, 
Mrs.  Bishop,  to  remain  in  a  house  on  his  place,  and  that  the 


May,  1890.]  Bolling  v.  Kirby.  795 

machine  was  afterwards  carried  away  by  Bishop,  one  of  the 
makers  of  the  note,  this  would  not  make  him  guilty  of  a  con- 
version of  the  sewing-machine,  and  the  verdict  of  the  jury 
should  be  for  the  defendant."  This  charge  was  refused,  and 
an  exception  reserved.  As  we  read  the  evidence,  every  fact 
it  hypothesizes  is  based  on  testimony  in  the  case.  It  is  there- 
fore not  abstract.  It  presents  the  defendant's  aspect  of  the 
case,  not  upon  a  part  of  the  testimony,  but  on  all  of  it.  The 
jury  are  not  restricted  in  determining  whether  they  will  be- 
lieve the  facts  hypothesized  to  the  evidence  in  behalf  of  the 
defendant,  but  they  are  directed  to  consider  the  whole  evi- 
dence, and  if  upon  that  consideration  they  find  these  facts  to 
be  true,  they  must  find  for  the  defendant.  If  the  charge  as- 
serts a  correct  proposition  of  law,  therefore,  it  should  have 
been  given:  Alexander  v.  Wheeler,  78  Ala.  167;  Hunkers  v. 
Stale,  87  Ala.  84.  Our  opinion  is,  that  the  charge  asserts  a 
sound  principle  of  law.  If  the  facts  stated  were  found  to  exist 
by  the  jury,  the  only  act  the  defendant  did  in  connection  with 
the  property  was  in  conservation  of  it, —  he  gave  it  shelter, —  a 
''kindness  to  the  owner,  done  without  any  intention  of  injury 
to  the  thing,  or  of  converting  it, —  an  act  perfectly  consistent 
with  the  right  of  the  owner  and  his  dominion  over  it":  Con- 
ner v.  Allen,  33  Ala.  515;  Dent  v.  Chiles,  5  Stew.  &  P.  383;  26 
Am.  Dec.  350.  And  though  he  thus  gave  shelter  to  the  prop- 
erty, it  was  as  property,  the  possessory  right,  at  least,  to 
which  was  in  Mrs.  Bishop;  and  on  these  facts  he  never  dis- 
turbed her  possession,  or  acquired  any  possession  in  himself, 
that  would  have  authorized  or  enabled  him  to  have  prevented 
the  removal  of  the  machine  by  Bishop.  The  charge  ought  to 
have  been  given.  So  ought  charge  No.  2.  The  bare  posses- 
sion of  property,  without  some  wrongful  act  in  the  acquisition 
of  possession,  or  in  its  detention,  and  without  illegal  assump- 
tion of  ownership,  or  illegal  user  or  misuser,  is  not  a  conver- 
sion: Glaze  V.  McMillan,  7  Port.  297. 

For  the  errors  committed  in  refusing  to  give  the  two  charges 
last  considered,  the  judgment  of  the  circuit  court  is  reversed, 
and  the  cause  remanded.       

CoNVER.sioK  OF  Personalty  Sufficient  to  Sustain  Trovek  —  Dbfini* 
TIONS.  —  Conversion  of  personal  property  takes  place  whenever  a  person  who 
is  neither  the  owner  nor  entitled  to  the  possession  exercises  dominion  or  control 
over  it  inconsistent  with  or  in  defiance  of  the  rights  of  a  person  who  U  either 
in  possession  or  entitled  to  the  immediate  possession  thereof :  Fuller  v.  Tabor, 
39  Me.  519;  Liptrot  v.  Holmes,  1  Ga.  381;  Oilman  v.  Hill,  36  N.  H.  311;  West 


796  BoLLiNG  V.  KiRBY.  [Alabama, 

Jersey  R.  R.  Co.  v.  Trenton  etc.  Co.,  32  N.  J.  L.  517;  Bridol  v.  Burt,  7  Johns. 
254;  Murray  V.  Burling,  10  Johns.  172;  Reynold-^  v.  Shider,  5  Cow.  323;  Cham.' 
bersv.  Lewis,  28  N.  Y.  454;  Boyce  v.  Brockway,  31  N.  Y.  490;  Reid  v.  Colcock, 
1  Nott  &  Mc.C.  592;  9  Am.  Dec.  729;  Allen  v.  Crary,  10  Wend.  349;  25  Am. 
Dec.  566;  Beald  v.  Carey,  11  Com.  B.  977;  16  Jur.  197;  21  L.  J.  Com.  P.  97; 
Ragsdale  V.  Williams,  8  Ired.  498;  49  Am.  Dec.  406;  Woodman  v.  Hubbard,  25 
N.  H.  67;  57  Am.  Dec.  310;  Maxwell  v.  Harrison,  8  Ga.  61;  52  Am.  Dec. 
385;  Bnker  v.  Wheeler,  8  Wend.  505;  24  Am.  Dec.  66;  Hale  v.  Ames,  2  T.  B. 
Mon.  14o;  15  Am.  Dec.  150;  Goell  v.  Smith,  128  Mass.  238.  Conversion  has 
b(;en  defined  as  a  dealing  by  a  person  with  chattels  not  belonging  to  him  in 
a  manner  inconsistent  with  the  rights  of  the  true  owner:  Velsain  v.  Leiois, 
15  Or.  539;  3  Am.  St.  Rep.  184;  Ramsby  v,  Beezley,  11  Or.  51.  The  word 
"owner,"  as  here  and  elsewhere  used  in  connection  with  the  law  of  conver- 
sion, does  not  necessarily  signify  the  person  in  whom  the  title  to  the  prop- 
erty is  vested,  for  there  are  instances  in  which  persons  who  are  not  owners 
may  recover  for  a  conversion  of  chattels:  Nicholls  v.  Bastard,  1  Tyrw.  &  G. 
156;  2  Cromp.  M.  &  R.  659;  1  Gale,  295;  Jeffries  v.  G.  W.  Ry  Co.,  5  El.  &  B. 
802;  2  Jur.,  N.  S.,  250;  25  L.  J.  Q.  B.  107;  Roberts  v.  Wyatt,  2  Taunt.  268; 
and  in  which  he  who  is  their  owner  may  not  recover  therefor.  Conversion 
is  an  offense  against  the  possession;  and  a  recovery  therefor  may  be  had  by 
him  who  was  either  in  possession  or  entitled  to  the  immediate  possession  of 
the  property  when  the  conversion  was  committed,  and  by  no  otlier  person. 
Hence  if  the  owner  was  neither  in  possession  nor  entitled  to  the  immediate 
possession  of  his  property  when  it  was  concerted,  whatever  his  other  reme- 
dies may  be,  he  cannot  recover  in  trover  for  the  conversion:  Gordon  v.  Harper, 
Term  Rep.  9;  2  E^p.  465;  Owen  v.  Knight,  4  Bing.  N.  C.  54;  6  Dowl.  P.  C. 
245;  5  Scott,  307;  Bradley  v.  Coplnj,  1  Com.  B.  685;  9  Jur.  599;  14  L.  J. 
Com.  P.  2-22;  Bain  v.  Sheriff  of  Middlesex,  Ryan  &  M.  99;  Middlesworth  v, 
Sedgwick,  10  Cal.  392;  Swift  v.  Moseley,  10  Vt.  208;  33  Am.  Dec.  197. 

"  'Whoever  undertakes  tortiously  to  deal  with  the  property  of  another  as 
his  own,  or  tortiously  detains  it  from  the  owner,  is,  in  contemplation  of  law, 
guilty  of  a  conversion ':  Watt  v.  Potter,  2  Mason,  77.  *A  conversion,  in  the 
sense  of  the  law  of  trover,  consists  either  in  the  appropriation  of  the  thing 
to  the  party's  own  use  and  beneficial  enjoyment,  or  in  its  destruction,  or  in 
exercising  dominion  over  it  in  exclusion  or  defiance  of  the  plaintiff's  right, 
or  in  withholding  the  possession  from  the  plaintiff  under  a  claim  of  title  in- 
consistent with  his  own':  2  Greenl.  Ev.,  sec.  642.  But  the  use,  or  dispo- 
sition, or  detention  of  a  thing  that  'might  be  a  tort  under  one  circumstance 
might,  if  done  under  others,  assume  a  different  appearance  ';  as,  for  example, 
if  the  use,  disposition,  or  detention  was  to  do  a  kindness  to  the  owner,  and 
without  any  intention  of  injury  to  the  thing,  or  of  converting  it  to  the  use  of 
the  person  using,  disposing  of,  or  detaining  it,  and  was  merely  conservative 
of  it,  and  perfectly  consistent  with  the  right  of  the  owner  and  his  dominion 
over  it:  2  Greenl.  Ev.,  sec.  643;  Drake  v.  Shorter,  4  Esp.  165;  Sparks  v. 
Purdy,  11  Mo.  219;  Watt  v.  Potter,  2  Mason,  77;  Glover  v.  Riddick,  11  Ired. 
582;  Dent  v.  Chiles,  5  Stew.  &  P.  383;  26  Am.  Dec.  350":  Conner  v.  Allen,  33 
Ala.  516.  Hence  where  the  act  relied  upon  as  a  conversion  consisted  of  the 
bottling  of  a  large  quantity  of  wine,  and  there  was  evidence  that  it  was  likely 
to  suffer  injury  if  not  bottled,  the  bottling  was  adjudged  not  to  be  necessa- 
rily a  conversion,  and  it  was  left  for  the  jury  to  determine  from  the  whole 
evidence  whether  a  conversion  had  taken  place  or  not:  Phillpot  v.  Kelley,  4 
Nev.  &  M.  611;  3  Ad.  &  E.  106;  11  Har.  &  W.  134. 

"  In  the  sense  of  the  law  of  trover,  a  conversion  consists  either  in  the  ap- 


May,  1890.]  Bolling  v.  Kirby.  797 

propriation  of  the  property  to  the  party's  own  use  and  beneficial  enjoyment, 
or  in  its  destruction,  or  in  exercising  dominion  over  it,  in  exclusion  or  defi- 
ance of  the  plaintiff's  right,  or  in  withholding  the  possession  from  the  plain- 
tiff under  a  claim  inconsistent  with  his  own:  2  Sauud.,  Patterson  and 
Williams's  ed.,  47  h;  2  Greenl.  Ev.,  sec.  642.  Lord  Holt's  general  definition 
of  a  conversion,  in  Baldwin  v.  Cole,  6  Mod.  212,  is,  that  it  is  '  the  assuming 
upon  one's  self  the  property  in  and  right  of  disposing  of  another's  goods'  ": 
Tinker  v.  Morrill,  39  Vt.  477;  94  Am.  Dec.  345. 

Conversion  by  Selling  Chattels  of  Another.  —  If  one  has  under- 
taken to  convert  the  chattels  of  another  to  his  own  use,  or  to  do  any  act 
which,  if  accomplished,  must  result  in  depriving  the  owner  of  his  property, 
then  clearly  the  wrong-doer  is  answerable  for  a  conversion:  Clark  v.  Wlut- 
taker,  19  Conn.  319;  48  Am.  Dec.  IGO;  Marker  v.  Dement,  9  Gill,  7;  52  Am, 
Dec.  670.  Hence  one  who,  without  authority,  assumes  to  sell  or  otherwise 
dispose  of  the  chattels  of  another,  whether  for  his  own  benefit  or  not,  is 
guilty  of  a  conversion:  Houston  v.  Dyclie,  Meigs,  76;  33  Am,  Dec.  130;  Ev- 
erett  v.  Coffin,  6  Wend.  603;  22  Am.  Dec.  551;  Gentry  v.  Madden,  3  Ark.  127; 
Thompson  v.  Cuirier,  24  N.  H.  237;  Firemen  s  Ins.  Co.  v.  Cochran,  27  Ala, 
228;  Anderson  v.  Nicholas,  28  N.  Y.  600. 

Conversion  by  Sale  not  Made  Pursuant  to  Agent's,  Bailee's,  or  Of- 
ficer's Authority.  —  Though  the  person  making  a  sale  of  the  chattels  of 
another  might  have  been  authorized  to  make  such  sale  under  certain  circum- 
stances, yet  if  he  was  not  authorized  to  make  the  sale  at  the  time  or  in  the 
manner  in  which  it  was  made,  or  to  the  person  who  became  the  purchaser, 
the  act  may  generally  l)e  treated  as  a  conversion:  Bailey  v.  Col'y,  34  N,  H. 
29;  66  Am.  Dec.  752;  Perkins  v.  Thomfson,  3  N.  H.  144;  Sanjent  v.  Gile,  8 
N,  H.  325;  Grace  v,  McKissack,  49  Ala,  163;  Porter  v.  Foster,  20  Me.  391; 
37  Am,  Dec.  59;  Johnson  v.  Stear,  15  Com.  B.,  N.  S.,  330;  10  Jur.,  N.  S.,  99; 
33  L,  J.  Com.  P.  l.-^O;  12  Week.  Rep.  349;  9  L.  T.,  N.  S.,  804. 

A  sherifif  or  constable  who  has  levied  upon  property  under  a  writ  entitling 
him  to  sell  it  in  the  manner  prescrdjed  by  law,  for  the  purpose  of  satisfying 
the  writ,  is  deprived  of  the  protection  of  his  writ,  and  made  a  trespasser  ab 
initio,  if  he  abuses  his  authority,  and  hence  is  liable  as  for  the  conversion  of  the 
property,  if  he  sells  it  in  defiance  of  a  proper  claim  for  its  exemption  from 
sale,  or  if  he  makes  the  sale  before  or  after  the  time  at  which  he  was  author- 
ized to  make  it,  or  at  a  place  different  from  that  designated  in  the  notice  of 
sale,  or  in  the  absence  of  such  notice:  Hall  v.  Jiay,  40  Vt.  576;  94  Am.  Dec. 
440;  Evarts  v.  Burgess,  48  Vt.  206;  Breck  v,  Blanchard,  20  N.  Y.  223;  51 
Am.  Dec.  220;  Freeman  on  Executions,  sec.  .302. 

A  pledgee  of  personalty  may  also  become  liable  for  its  conversion  by  its 
sale,  though  he  was  authorized  to  sell  to  certain  persons,  or  after  complying 
with  certain  prerequisites,  if  the  sale  was  made  before  it  was  authorized,  or 
was  made  to  one  not  authorized  to  purchase,  or  without  complying  with  some 
of  the  prerequisites  exacted  either  by  the  contract  of  pledge  or  by  the 
law  applicable  to  the  relation  of  the  parties:  Johnson  v.  Stear,  15  Com.  B., 
N.  S.,  3.30;  10  Jur.,  N.  S.,  99;  33  L.  J:  Com.  P.  130;  12  Week.  Rep.  349;  9 
L,  T.,  N.  S.,  804;  Maryland  F.  I.  Co.  v.  Dalrym-ple,  25  Md.  242;  89  Am.  Dec, 
779;  Stearns  v.  Marsh,  4  Denio,  227;  47  Am.  Dec.  248. 

Conversion  by  Vendee  of  Property  Sold  without  Authority. — 
When  a  sale  is  made  under  such  circumstances  that  the  seller  is  guilty  of  a 
conversion  in  making  it,  the  vendee  is  also  guilty  of  a  conversion,  if  he  takes 
possession  of  the  property  pursuant  to  the  sale  and  exercises  any  dominion  or 


798  BoLLiNQ  V.  KiRBY.  [Alabama, 

control  over  it:  Cooper  v.  Willomatt,  1  Com.  B.  672;  9  Jur.  598;  14  L.  J.  Com. 
P.  219;  Cundt/  v.  Lindsay,  L.  R.  3  App.  C.  459;  47  L.  J.  Q.  B.  481;  38  L.  T., 
N.  S.,  575;  26  Week.  Rep.  406.  A  recovery  may  therefore  be  had  against 
him  in  an  action  of  trover  without  any  prior  demand  upon  him  for  the  prop- 
erty, thoagh  he  purchased  it  in  good  faith,  and  paid  a  full  consideration  there- 
for, in  the  belief  that  the  seller  was  the  owner  of  the  property  or  had  power 
to  sell  and  dispose  of  it:  Gilmore  v.  Nnvion,  9  Allen,  171;  85  Am.  Dec.  749; 
Saltna  V.  Everett,  20  Wend.  267;  32  Am.  Dec.  541;  Sanborn  v.  Colman,  6  N.  H. 
14;  23  Am.  Dec.  703;  Freeman  v.  Underwood,  U6  Me.  229;  Hyde  v.  Nohle,  13 
N.  H.  494;  38  Am.  Dec.  508;  VcMan  v.  Lewis,  15  Or.  539;  3  Am.  St.  Rep. 
184;  McCombie  v.  Davis,  6  East,  538;  Galvin  v.  Bacon,  11  Me.  29;  25  Am. 
Dec.  258;  Stanley  v.  Gaylord,  1  Cush.  536;  48  Am.  Dec.  643;  Trudo  v.  An- 
derson, 10  Mich.  358;  Hake  v.  Buell,  50  Mich.  89;  Harpending  v.  Meyer,  55 
Cal.  555;  Williams  v.  Merle,  11  Wend.  80;  25  Am.  Dec.  604;  Agnew  v.  John- 
mm,  22  Pa.  St.  471;  62  Am.  Dec.  303;  Houston  v.  Dyche,  Meigs,  76;  33  Am. 
Dec.  130;  Chapman  v.  Cole,  12  Gray,  141;  71  Am.  Dec.  739;  note  in  25  Am. 
Dec.  605;  Porter  \.  Foster,  20  Me.  391;  37  Am.  Dec.  59;  Tuttle  v.  Campbell, 
74  Mich.  652;  16  Am.  St.  Rep.  652.  The  mere  bidding  off  or  purchasing  of 
property  at  a  sale  thereof  by  one  who  is  neither  the  owner  nor  authorized  by 
him  to  make  such  sale  appears  not  to  be,  of  itself,  sufficient  to  constitute  a  con- 
version, unless  it  is  followed  on  the  part  of  the  purchaser  by  his  taking  actual 
or  virtual  possession  of  the  property,  or  exercising  some  other  unequivocal 
dominion  or  control  over  it:  Traylor  v.  Horrall,  4  Blackf.  317.  The  courts  of 
New  York  insist  that  one  who  purchases  and  takes  possession  of  property 
in  good  faith  cannot  properly  be  treated  as  a  wrong-doer  until  he  has  notice 
of  the  invalidity  of  his  title,  and  they  will  not  sustain  an  action  against  him 
by  the  owner  for  their  conversion,  unless  the  latter  has  demanded  possession 
or  otherwise  made  his  title  known,  and  the  demand  has  been  refused,  or 
some  other  act  done  in  defiance  of  the  owner's  title,  after  its  existence  was 
made  known:  Gillett  v.  Roberts,  57  N.  Y.  28;  Ely  v.  Ehle,  3  N.  Y.  506;  Bar- 
rett V.  Warren,  3  Hill,  348. 

Conversion,  though  No  Sale  is  Madb.  —  It  is  by  no  means  essential  to 
the  conversion  of  chattels  that  the  wrong-doer  sell  or  attempt  to  sell  them, 
or  even  that  he  do  any  other  act  calculated  to  convert  them  to  his  own  use. 
Any  other  exercise  of  dominion  over  personalty  in  defiance  of  the  owner's 
rights  accomplishes  the  same  legal  reault.  Hence  one  who  aids  another  to 
take  property  from  its  owner,  or  to  withhold  possession  of  it  from  him  in  de. 
fiance  of  his  rights,  is  guilty  of  a  conversion,  though  the  act  was  done  with- 
out intending  to  claim  any  personal  benefit  or  advantage  therefrom,  and  in 
the  belief  that  it  was  merely  in  the  way  of  rendering  assistance  to  one  who 
was  entitled  either  to  take  or  to  retain  possession  of  the  property:  Baler  v. 
Beers,  64  N.  H.  102;  Coughlin  v.  Ball,  4  Allen,  334;  Mead  v.  Jack,  12  Daly, 
65;  McCormich  v.  Stevenson,  13  Neb.  70;  Freeman  v.  Scurlock,  27  Ala.  407; 
Scott  V.  Perkins,  28  Me.  22;  48  Am.  Dec.  470. 

Conversion  by  W^ords  Alone.  — There  may  also  be  a  conversion,  tliough 
there  is  no  moving  or  seizing  of  the  Chattels,  and  no  interference  with  them 
except  such  as  consists  in  words,  spoken  or  written,  indicating  an  intention 
to  claim  and  exercise  dominion  over  them  inconsistent  with  the  rights  of 
their  owner,  as  where  an  officer  had  a  writ  proclaiming  a  levy  upon  goods, 
and  threatened  to  take  them  away  unless  a  receipt  was  given  for  them,  and 
was  prevented  from  so  taking  them  by  the  giving  of  such  receipt,  though 
he  did  not  touch  them:    Wintringham  v.  Lafoy,  7  Cow.  735;  Connah  v.  Hale, 


May,  1890.]  Bollinq  v.  Kirby.  799 

23  Wend.  462;  Phillips  v.  Hall,  8  Wend.  610;  24  Am.  Dec.  108;  Allen  v. 
Crary,  10  Wend.  349;  25  Am.  Dec.  566;  Fonda  v.  Van  Home,  15  Wend.  631; 
30  Am.  Dec.  77.  Of  some  of  the  cases  last  cited  it  may  be  said  that  tha 
requiring  a  person  to  give  a  receipt  for  the  property  was  in  fact  requiring 
him  to  hold  it  for  the  officer,  and  therefore  was  an  actual  holding  by  the  offi- 
cer through  the  receiptor  as  his  agent;  but  it  is  not  necessary  that  a  person, 
to  be  guilty  of  a  conversion,  should  take  actual  possession,  either  in  person 
or  by  his  agent.  It  is  sufficient  that,  being  in  a  condition  to  exercise  do- 
minion and  control  over  the  property,  he  assumes  the  right  so  to  do,  and  the 
assumption  is  acquiesced  in  by  the  owner  or  the  party  in  possession  at  the 
time  the  assumption  is  made:  Bristol  v.  Burt,  7  Johns.  254;  5  Am.  Dec.  264, 
Webber  v.  Davis,  44  Me.  147;  69  Am.  Dec.  87;  Hall  v.  Amos,  5  T.  B.  Mon. 
89;  17  Am.  Dec.  42.  Therefore,  where  one  who  claimed  to  be  entitled  to 
certain  hay  notified  the  owner  not  to  remove  it,  and  apparently  intended 
and  designed  that  it  should  be  used  by  the  person  in  whose  possession  it  was, 
and  by  whom  it  was  subsequently  used,  both  were  held  to  be  guilty  of  a 
conversion,  the  court,  in  so  deciding,  saying:  "Any  distinct  act  of  dominion 
wrongfully  exerted  over  another's  property  in  denial  of  liis  right,  or  incon- 
■istent  with  it,  is  a  conversion.  It  is  not  necessary  that  there  should  be 
a  manual  taking  of  the  property.  If  the  wrong-doer  exercises  a  dominion 
over  it  in  exclusion  or  in  defiance  of  the  owner's  right,  whether  it  be  for  his 
own  or  another's  use,  it  is  in  law  a  conversion:  Cooley  on  Torts,  44S;  2 
Greenl.  Ev.,  sec.  642;  Evans  v.  Mason,  64  N.  H.  98.  '  The  very  denial  of 
goods  to  aim  that  has  a  right  to  demand  them  is  an  actual  conversion,  and 
not  only  evidence  of  it,  as  has  been  holdeu;  for  what  is  a  conversion  but  an 
assuming  upon  one's  self  the  property  and  right  of  disposing  of  another's 
goods?  And  he  that  takes  upon  himself  to  detain  another  man's  goods  from 
him  without  cause  takes  upon  himself  the  right  of  disposing;  of  them': 
Holt,  C.  J.,  in  Baldwin  v.  Cole,  6  Mod.  212.  Although  the  defendant  did 
not  have  the  possession  of  the  hay  after  the  sale,  or  the  right  to  control  the 
movements  of  Bosworth,  there  was  evidence  that  both  understood,  after 
the  sale,  that  Bosworth  was  authorized  by  the  defendant  as  vendor  to  use 
the  hay,  and  that  was  a  conversion  by  the  defendant.  He  had  sold  it  for  a 
price  to  Bosworth.  His  claiming  that  he  bought  it  of  the  plaintiff,  and  (lis 
forbidding  the  plaintiff  to  remove  it,  then  in  the  actual  possession  of  Bos- 
worth, was  evidence  from  which  it  was  competent  to  find  that  his  purpose 
was  to  enable  his  vendee  to  consume  the  hay,  and  that,  for  the  purpose  of 
this  case,  its  conversion  by  his  vendee,  authorized  by  the  vendor,  was  the 
act  of  the  vendor.  In  authorizing  and  aiding  Bosworth  to  convert  it  to  his 
own  use  he  became  liable  to  tlie  plaintiff  in  trover:  Flanders  v.  Colby,  28 
N.  H.  34.  When  several  join  in  the  conversion,  trover  will  lie  against 
either  of  them:  Paltee  v.  Gilmore,  IS  N.  H.  4()0;  45  Am.  Dec.  385.  There 
was  evidence  from  which  it  was  competent  to  find  a  couversiou  by  the  de- 
fendant": Bilker  V.  Beers,  64  N.  H.  102. 

There  is  perhaps  not  an  entire  accord  in  the  authorities  upon  the  subject 
of  a  conversion  of  chattels  by  mere  words  indicating  an  intention  on  the  part 
of  the  speaker  to  take  or  to  retain  possession  of  them  when  the  property  ia 
not  in  his  possession  nor  under  his  immediate  control  when  they  are  uttered. 
Thus  in  New  York,  one  who  had  purchased  property  from  a  person  having 
no  title  was  visited  at  his  home,  thirty  miles  distant  from  the  property,  by 
its  true  owner,  who  there  made  a  demand  for  its  possession,  to  which  such 
purchaser  replied  that  he  was  willing  to  do  what  was' right;  that  he  did  not 
want  any  trouble  about  it;  that  he  would  not  give  it  up  unless  he  could  get 


800  BoLLiNG  V.  KiRBY.  [Alabama, 

relccased  from  paying  the  man  he  bought  it  of.  There  was,  at  the  time, 
nothing  to  prevent  the  owner  from  taking  possession  of  his  property  where 
it  was.  The  court  hehi  that  no  conversion  had  taken  place,  saying:  "It  is 
true  tliat,  to  constitute  a  conversion,  a  manual  taking  is  not  necessary,  but 
where  words  are  relied  upon,  they  must  be  uttered  in  such  circumstances  iu 
proximity  to  the  property  as  to  show  defiance  of  the  owner's  right,  — a  deter- 
mination to  exercise  dominion  and  control  over  the  property,  and  to  exclude 
the  property  from  the  exercise  of  his  riglits  ":  Oillett  v.  Roberts,  57  N.  Y.  28. 

Though  chattels  are  in  the  possession  of  one  wlio  claims  to  be  their  owner, 
his  assertion  of  ownership  is  not  a  conversion  if  mads  to  a  stranger  not  in 
sight  of  the  property,  nor  in  the  presence  of  the  owner,  nor  made  with  a 
view  to  preventing  him  from  taking  possession  or  assuming  his  rightful  do- 
minion and  control:  Irish  v.  Cloyes,  8  Vt.  30;  30  Am.  Dec.  446. 

Illustrations  Showing  Various  Modes  of  Conversion.  —  The  follow- 
ing acts  have,  in  harmony  with  the  general  rules  herein  stated,  been  declared 
to  be  sufficient  evidence  of  a  conversion  on  the  part  of  the  person  guilty 
of  their  commission:  Sawing  logs  bearing  plaintiff's  marks,  which  had  be- 
come intermingled  in  a  boom  with  defendant's  logs:  Clark  v.  Nelson  Lumber 
Co.,  34  Minn.  289;  selling  under  execution  chattels  of  one  who  is  not  a  party 
to  the  writ,  whether  the  chattels  were  removed  or  not:  Scudder  v.  Anderson, 
54  Mich.  122;  attaching  the  property  of  one  person  under  a  writ  against  an- 
other, though  there  was  no  manual  taking  or  removal:  Johnson  v.  Farr,  60 
N.  H.  426;  Woodbury  v.  Long,  8  Pick.  543;  19  Am.  Dec.  345;  selling  the 
property  of  another,  though  the  party  making  the  sale  never  had  nor  at- 
tempted to  deliver  the  possession  of  the  property  sold,  and  there  was  no 
evidence  whether  the  purchaser  ever  took  possession  or  not:  Ramsby  v. 
Beezley,  11  Or.  49;  procuring  a  certificate  of  stock  to  be  issued  to  one  not 
entitled  thereto,  and  then  selling  it  to  an  innocent  purchaser:  Balcer  v. 
Wasson,  59  Tex.  140;  permitting  plaintiff's  sheep  to  become  intermingled 
with  defendant's,  and  then  assisting  tlie  purcliaser  of  defendant's  flock  to 
drive  away  such  flock  with  plaintiff's  sheep  therein,  knowing  that  such  pur- 
chaser intended  to  convert  them  to  his  own  use,  though  he  said  he  would 
send  back  and  pay  for  them  if  any  one  claimed  it:  Allen  v.  McMonwjle,  77 
Mo.  478;  taking  bonds  from  a  bank  in  which  they  were  deposited,  and  send- 
ing them  out  of  the  state,  to  be  used  as  collateral  security  for  the  debt  of  the 
taker,  though  he  intended  and  expected  to  have  the  identical  bonds  returned 
to  their  place  of  custody:  Commonwealth  v.  Teiiney,  97  Mass.  50;  cutting  tim- 
ber on  the  lands  of  another,  though  it  ia  not  carried  away:  Sanderson  v.  Haver- 
slick,  8  Pa.  St.  294;  claiming  the  ownership  of  property,  and  by  threats  pre- 
venting the  rightful  owner  from  taking  possession  of  it:  Hare  v.  Pearson,  4 
Ired.  76;  Crocket  v.  Beaty,  8  Humph.  20;  attaching  chattels  and  placing  them 
in  the  care  of  a  keeper,  who,  upon  demand,  refuses  to  deliver  them  to  their 
owner:  Bowen  v.  Sanborn,  1  Allen,  389;  receiving  payment,  under  a  claim  of 
right,  of  a  note  or  security  in  the  possession  of  the  party  receiving,  but  which 
belongs  to  another:  Schroeppelv.  Corning,  5  Denio,  236;  Donndlv.  Thompson, 
13  Ala.  440;  taking  possession  of  premises  and  letting  them,  together  with 
the  use  of  chattels  thereon,  and  receiving  pay  for  such  use:  Miller  v.  Plumb, 
6  Oow.  6G5;  16  Am.  Dec.  456;  delivery  by  a  bailee  of  a  certificate  of  stock 
to  the  officers  of  a  corporation,  to  be  canceled  and  a  new  certificate  to  be 
issued  to  another  person,  though  such  delivery  was  induced  by  a  forged 
order  purporting  to  be  signed  by  the  owner:  Hubbell  v.  Blandy,  87  Mich. 
209;  ante,  p.  154;  receiving  the  transfer  of  and  collecting  a  promissory  note, 
which  the  transferee  knew  had  previously  been  indorsed  to  another  iu  blank 


May,  1890.]  Bolling  v.  Kirby.  801 

as  collateral  security:  Carter  v.  Lehman,  90  Ala.  126;  treating  a  special  de- 
posit as  though  it  were  a  part  of  the  general  fund  of  a  bank:  jMoninouth 
Ba)ik  V.  Dunbar,  19  111.  App.  55S;  refusal  by  innocent  purchasers  of  stolen 
property  to  pay  the  proceeds  of  a  sale  thereof  to  its  rightful  owner:  McDan- 
ielv.  Adams,  87  Tenn.  756;  delivery  by  agent  in  payment  of  his  debt  of  a 
watch  intrusted  to  him  for  sale:  liodich  v.  Coburn,  68  Me.  170;  continuing 
to  use  and  claim  a  chattel  taken  in  excliauge  of  a  person  having  no  title 
thereto,  after  being  informed  of  the  title  of  the  owner:  Porter  v.  Foster,  20 
Me.  391;  37  Am.  Dec.  59;  unjustifiable  refusal  by  a  master  to  proceed  on  a 
voyage,  or  deliver  the  cargo  to  its  owners:  Portland  Bank  v.  Stuhhs,  6  Mass. 
422;  receiving  a  loan  of  property,  knowing  that  he  who  granted  the  loan 
was  without  authority  to  do  so:  Pice  v.  Clark,  8  Vt.  109;  purchasing  and 
collecting  a  promissory  note,  with  knowledge  of  the  claim  of  its  owner: 
Allison  V.  King,  25  Iowa,  56;  removal  of  goods  by  a  purchaser  after  notice 
that  his  vendor  held  them  only  as  a  factor:  Scriber  v.  Masten,  11  Cal.  303; 
refusal  by  an  auctioneer  to  surrender  property  upon  a  demand  being  made 
on  him  by  an  assignee  in  insolvency,  and  proceeding  to  sell  in  disregard  of 
such  demand,  after  knowledge  of  the  insolvency;  31illikin  v.  Hathaway,  148 
Mass.  69;  agreement  by  an  agent  to  hold  the  goods  of  his  principal  for  a 
third  person:  Holbrook  v.  Wigld,  24  Wend.  169;  35  Am.  Dec.  607;  refusal  by 
an  officer  to  deliver  upon  demand  intoxicating  liquors  seized  without  a  war- 
rant, and  detained  without  legal  authority:    Weston  v.  Carr,  71  Me.  356. 

CONVEUSION    BY     DELIVERING    CHATTELS   TO     OnE    NOT   THEIR    OWNER.  — 

If  the  holder  of  goods,  as  the  agent  or  bailee  of  another,  delivers  them  to  one 
who  claims  title  adverse  to  the  owner,  or  who  seeks  possession  of  them  for  the 
purpose  of  destroying  or  devoting  them  to  some  use  inconsistent  with  the 
rights  of  the  owner,  the  party  so  delivering  them  is  liable  for  a  conversion: 
iSavaije  v.  Durliwj,  151  Mass.  5;  /////  v.  Hayes,  38  Conn.  532;  Hicks  v.  Lyle, 
46  Mich.  488;  Hubbell  v.  Blandy,  87  Mich.  209;  ante,  p.  154;  nor  can  this 
liability  be  avoided  by  showing  that  the  person  to  whom  the  delivery  is 
made  was  an  officer  claiming  the  right  to  seize  the  property  as  such  under  a 
wi-it  in  his  hands,  unless  iu  fact  the  writ  authorized  the  seizure:  Gibbons  v. 
Farwell,  63  Mich.  344;  6  Am.  St.  Rep.  301;  Kifv.  Old  Colony  etc.  By  Co., 
117  Mass.  591;  19  Am.  Rep.  429;  Edwards  v.  White  L.  T.  Co.,  104  Mass. 
159;  6  Am.  Rep.  213;  Hall  v.  Boston  R.  R.  Co.,  14  Allen,  439;  92  Am.  Dec. 
783.  If,  however,  a  bailee  receives  goods  from  one  whom  he  finds  in  posses* 
sion  of  them,  and  believes  to  be  their  owner  or  entitled  to  their  possession,  and 
sul)sequently  redelivers  them  to  him  in  good  faith  in  pursuance  of  the  express 
or  implied  terms  of  the  bailment,  and  without  any  knowledge  of  the  claims 
of  one  who  turns  out  to  be  their  true  owner,  he  is  not  answerable  to  the  lat- 
ter for  their  conversion:  NeUionv.  Iverson,  17  Ala.  216;  Burditt  v.  Himt,  25 
Me.  419;  43  Am.  Dec.  289;  Nanson  v.  Jacob,  93  Mo.  331;  3  Am.  St.  Rep.  531; 
Sheridan  v.  Netv  (Jiiay  Co.,  4  Cum.  B.,  N.  8.,  619;  Ogle  v.  Atkinson,  5  Taunt. 
759;  Biddle  v.  Bond,  6  Best  &  S.  225;  Hardmanv.  Willcock,  9  Bing.  328; 
Bales  V.  Stanton,  1  Duer,  79;  Metcal/v.  McLaughlin,  122  Mass.  84.  Perhaps 
he  may  sa;cly  return  them  after  having  notice  of  the  claims  of  the  owner,  if 
he  does  so  before  any  demand  is  nuitle  for  the  possession  of  the  property  and 
without  asserting  any  riglit  of  dominion  or  control  over  it  adverse  to  the 
title  or  inconsistent  with  the  rights  of  the  owner;  Rembaughv.  Phipps,  75 
Mo.  422.  A  bailee  of  goods  from  one  whom  he  knows  did  not  lawfully  hold 
tliera  has  also  been  held  not  to  be  liable  for  letting  them  be  taken  out  of  bis 
possession  by  the  bailor,  where  he  did  nothing  to  withhold  possession  from 
the  owner,  and  tiiere  is  nothing  to  indicate  that  lie  would  have  withheld  such 
Au.  St.  Rkp.  Vol.  XXIV.— 51 


802  BoLLiNG  V.  KiRBY.  [Alabama, 

possession  had  the  owner  made  any  demand  upon  him  therefor:  Loving  v. 
Alukahy,  3  Allen,  575.     A  warehouseman  who,  when  an  officer  goes  to  his 
warehouse  with  a  writ  of  attachment  and  demands  access  for  the  purpose  of 
levying  upon  certain  goods  therein,  opens  the  house  and  permits,  or  at  least 
does  not  oppose,  the  officer's  taking  them,  has  been  held  not  to  be  guilty  of  a 
conversion,  though  the  taking  was  not  authorized.    The  grounds  upon  which 
this  decision  was  placed  by  the  court  which  rendered  it  were,  that  the  ware- 
houseman in  not  impeding  the  officer  in  finding  or  taking  the  goods,  and 
even  in  pointing  them  out  to  him  as  the  goods  he  was  in  search  of,  did  not 
show  any  intention  to  give  permission  to  take  the  goods,  but  merely  submit- 
ted to  legal  process  and  to  the  exercise  of  authority  made  by  the  officer 
holding  it:  Clegg  v.  Boston  S.  W.  Co.,  149  Mass.  454;  14  Am.  St.  Rep.  436. 
Delivery  of  Chattels  to  One  Found  in  Possession  op  Them.  —  The 
rule  that  a  bailee  is  not  liable  for  a  conversion  in  delivering  goods  to  one 
whom  he  found  in  possession  of  them  has,  at  least  in  one  state,  been  extended 
so  as  to  protect  one  who  received  goods  from  another  in  apparent  possession 
of  them,  though,  in  contemplation  of  law,  they  were  in  possession  of  their 
owner.     A  job  teamster,  being  applied  to  by  W.  to  remove  goods  which  were 
in  the  latter's  house,  did  as  requested,  and  delivered  them  to  W,  at  a  place 
designated  by  him.     The  goods  in  fact  belonged  to  G-.,  who  had  hired  the 
room  and  placed  them  therein,  leaving  the  room  neither  locked  nor  fastened. 
In  announcing  its  decision  that  the  teamster  was  not  guilty  of  a  conversion, 
the  court  said:  "It  is  conceded  that  whoever  receives  goods  from  one  in 
actual,  although  illegal,  possession  thereof,  and  restores  the  goods  to  such 
person,  is  not  liable  for  a  conversion  by  reason  of  having  transported  them: 
Strickland  v.  Barrett,  20  Pick.  415;  Leonard  v.  Tidd,  3  Met.  6.     And  this 
would  be  so,  apparently,  even  if  the  goods  thus  received  were  restored  to  the 
wrongful  possessor   after  notice  of  the  claim  of  the  true  owner:  Loving  v. 
Midcahy,  3  Allen,  575;  Metcalfv.  McLaughlin,  122  Mass.  84.     Upon  the  pre- 
cise question  raised  we  have  found  no  direct  authority,  nor  was  any  cited  in 
the  argument;  but  the  principle  upon  which  the  decisions  above  cited  rest  is 
not  unreasonably  extended  when  it  is  applied  to  the  circumstances  of  the 
case  at  bar.    The  act  of  removing  goods  by  direction  of  the  wrongful  posses- 
sor of  them  is  an  act  iu  derogation  of  the  title  of  the  rightful  owner;  but  the 
party  doing  this  honestly  is  protected,  because  from  such  actual  possession 
he  is  justified  in  believing  the  possessor  to  be  the  true  owner.     He  does  no 
more  than  such  possessor  might  himself  have  done  by  virtue  of  hia  wrongful 
possession.     The  defendant  was  a  job  teamster,  and  thus  in  a  small  way  a 
common  carrier  of  such  wares  and  merchandise  as  could  appropriately  be 
transported  in  his  team  or  wagon.     He  exercised  an  employment  of  such  a 
character  that  he  could  not  legally  refuse  to  transport  property  such  as  he 
usually  carried,  which  was  tendered  to  him  at  a  suitable  time  and  place  with 
the  offer  of  a  reasonable  compensation.     If  he  holds  himself  out  as  a  common 
carrier,  he  must  exercise  his  calling  upon  proper  request  and  under  proper 
circumstances:  Bitckland  v.  Adams  Exp.  Co.,  97  Mass.    124;  Judson  v.   West- 
ern R.  R.  Co.,  6  Allen,  486;  83  Am.   Dec.   646.     Hid  means  of  ascertaining 
the  true  title  of  the  freight  confided  to  him  are  of  necessity  limited.      He 
must  judge  of  this  as  it  is  fairly  made  to  appear.     If  Wliittier  had  actually 
gone  into  the  room,  as  he  might  readily  have  done,  and  taken  physical  pos- 
session of  the  goods,  the  defendant,  upon  well-established  authority,  would 
have  been  justified  in  obeying  the  order,  and  transporting  the  goods  to  Whit- 
tier  at  another  place;  and  he  should  not  be  the  less  justified  where  Whittier, 
in  apparent  control  of  the  goods  in  his  own  house,  and  capable  of  imu)edi- 


May,  1890.]  Bolling  v.  Kikby.  803 

ately  taking  them  into  his  actual  custody  by  entering  the  room  through  the 
unlocked  door,  has  directed  the  removal.  If  a  person  standing  near  and  in 
sight  of  a  bale  of  goods  lying  on  the  sidewalk  belonging  to  another,  and  thua 
in  the  legal  possession  of  such  other,  is  able  at  once  to  possess  himself  of  it 
actually,  although  illegally,  and  directs  a  carrier  to  remove  it,  and  deliver  it 
to  him  at  another  place,  compliance  with  this  order  in  good  faith  cannot  be 
treated  as  a  conversion;  and  apparent  control,  accompanied  with  the  then 
present  capacity  of  investing  himself  with  actual  physical  possession,  must 
be  equivalent  to  illegal  possession  in  protecting  a  carrier  who  obeys  the  order 
of  one  having  such  control:  Gurley  v.  Annstead,  148  Mass.  267;  12  Am.  St. 
Rep,  555. 

Conversion  by  Abeiting  and  Encouraging  a  Wrong-doer.  —  One 
may  be  guilty  of  a  conversion  though  he  does  not  personally  perform  any  of 
the  acts  by  which  it  was  consummated,  as  where  he  abets  and  encourages 
another  who  makes  such  conversion,  or  adopts  or  approves  it  after  it  is 
made,  by  taking,  using,  or  consuming  the  property  converted:  Clark  v. 
Whitaker,  19  Conn.  39;  48  Am.  Dec.  160.  Therefore  a  land-owner  who, 
knowing  that  a  house  had  been  wrongfully  taken  from  the  land  of  another, 
granted  permission  to  the  wrong-doer  to  place  it  upon  his  land,  and  then 
refused  to  permit  the  owner  to  remove  it  unless  he  first  paid  a  sum  which 
was  claimed  to  be  due  from  the  wrong-doer,  was  adjudged  to  have  adopted 
the  original  conversion  and  to  be  liable  therefor:  Jotisson  v.  Lindstrom,  114 
Ind.  152.  There  are  cases,  however,  which  we  are  unable  to  wholly  recon- 
cile with  the  principles  just  stated,  and  which  appear  to  proceed  upon  the 
ground  that,  when  a  conversion  has  been  completed,  one  who  has  not  par- 
ticipated in  it,  nor  himself  taken  possession  of  the  property  so  that  he  is 
entitled  to  restore  it  to  its  owner,  cannot  be  held  liable  for  its  conversion, 
though  he  may  have  aided  the  wrong-doer  in  retaining  possession,  or  have 
received  the  proceeds  of  the  property  when  sold  by  him.  Thus  in  Maine, 
where  it  was  claimed  that  defendant  had  been  guilty  of  a  conversion  because 
he  had  personally  resisted  the  plaintiff's  attempt  to  take  possession  of  his 
property,  the  court  said:  "The  proposition  that  the  use  of  force  by  one  not 
having  possession  of  goods  to  prevent  the  true  owner  from  obtaining  them 
amounts  to  a  conversion  of  those  goods  is  not  sustained  as  sound  in  prin- 
ciple. If  the  defendant  in  an  action  of  trover  has  not  possession,  actual  or 
constructive,  at  the  time  of  the  demand  by  the  true  owner  and  the  refusal 
by  him  to  deliver  the  property,  and  there  has  been  no  tortious  taking  or 
witliholding  of  the  same  previously,  he  cannot  restore  the  chattel,  and  he  is 
absolved  from  liability,  notwithstanding  he  may  forcibly  interpose  obstacles 
in  or<ler  to  prevent  the  true  owner  from  obtaining  the  possession  sought. 
And  it  has  been  held  that  when  a  plaintifiF  relies  only  upon  a  demand  and 
refusal  as  evidence  of  conversion  by  the  defendant,  he  must  show  that  the 
latter  had  the  power  to  give  up  the  goods":  Boofiier  v.  Boohier,  39  Me.  406. 
In  Massachusetts,  after  goods  were  attached  by  an  officer,  an  agreement 
to  which  he  was  not  a  party  was  made  and  carried  out,  whereby  the 
owners,  disregarding  the  attachment,  took  the  goods,  sold  them,  and  paid 
the  proceeds  to  certain  of  their  creditors.  An  action  was  subsequently 
brought  against  the  creditors,  on  behalf  of  the  attaching  ofGcer,  and  they 
were  sought  to  be  held  liable  on  tlie  ground  that  they  had  assented  to  the 
conversion  before  it  was  made  and  hail  received  the  benefit  thereof,  but  the 
court  declared  that  the  defendants  had  not  been  guilty  of  any  conversion, 
saying:  "In  the  present  case  there  was  no  taking  of  the  glass  by  the  de- 
fendants,  and    they  never  had  possession  of  it.     They  therefore  had  not 


804  BoLLiNG  V.  KiRBY.  [Alabama, 

convertel  it  by  detaining  it  from  the  plaintiflF.  Nor  would  tliey  so  have 
converted  it,  even  if  tliey  had  forcibly  prevented  the  plaintiff  from  obtain- 
ing possession  of  it:  Boobierv.  Boohier,  39  Me.  409,  410.  His  remedy  in  that 
case  must  have  been  sought  in  some  other  form  of  declaration.  Not  only 
was  there  no  wrongful  taking  or  detaining  of  the  glass  by  the  defendants, 
but  there  was  no  illegal  assumption  of  the  ownership  of  it,  nor  any  illegal 
using  or  misusing  of  it  by  them,  which  constitutes  a  conversion.  They 
merely  sufifered  the  glass  company  to  sell  it  on  an  agreement  that  the  com- 
pany should  pay  to  them  the  proceeds  of  the  sale,  and  afterwards  received 
those  proceeds.  If  the  defendants  had  themselves  sold  the  glass,  the  sale 
would  have  been  a  conversion  of  it  by  them,  if  the  plaintiff's  attachment 
was  valid;  but  their  suffering  others  over  whom  they  had  no  control  to  con- 
vert it  by  a  sale  was  not  a  conversion  by  them.  'To  support  an  action  of 
trover,'  says  Heath,  J.,  'there  must  be  a  positive  tortious  act' :  Bromley  v. 
Coxivell,  2  Bos.  &  P.  439  ":  Policy  v.  Lennox  Iron  Works,  2  Allen,  182. 

Unless  a  party  can  be  held  to  have  adopted  a  conversion  made  by  another, 
either  iu  receiving  the  benefit  of  it  or  by  aiding,  abetting,  or  encouraging  it 
when  made,  he  cannot  be  made  answerable  for  it  on  the  ground  that  he 
merely  suffered  or  did  not  resist  it:  Leonard  v.  Tidd,  3  Met.  6;  Diiffield  v. 
Miller,  92  Pa.  St.  28(5;  Traylor  v.  Hughes,  88  Ala.  617. 

Intknt  of  Weong-doer,  when  Material. — It  is  perhaps  difficult  to 
reconcile  what  is  said  in  the  different  decisions  as  to  the  effect  to  be  given 
to  the  intention  of  the  defendant,  in  determining  whether  or  not  he  has  been 
guilty  of  a  conversion.  There  are  doubtless  cases  asserting  that  the  inno- 
cence of  his  intent  is  immaterial,  and  others  absolving  him  from  liability 
because  of  such  innocence.  The  true  rule  is,  or  at  least  should  be,  that  his 
intent  should  be  taken  into  consideration  when  his  act  is  otherwise  equiv- 
ocal. If  one  sells  the  chattels  of  another  without  authority  so  to  do,  the  act 
is  necessarily  a  conversion,  and  cannot  be  made  any  the  less  such  by  proving 
that  the  wrong-doer  had  purchased  them  of  another  in  good  faith,  or  believed 
himself  to  be  their  owner,  or  acted  in  good  faith  as  the  agent  or  servant  of 
one  whom  he  supposed  to  be  the  owner;  Tultle  v.  Campbell,  74  Mich.  652;  16 
Am.  St.  Rep.  652;  Robinson  v.  McDonald,  2  Ga.  116;  Courtis  v.  Cane,  32  Vt. 
232;  76  Am.  Dec.  174;  Kimhall  v.  Billings,  55  Me.  147;  92  Am.  Dec.  581; 
Levi  V.  Booth,  58  Md.  305;  Branch  v.  Planters'  L.  <&  S.  Bank,  75  Ga.  342; 
Lahnerv.  Hertzog,  23  111.  App  308;  Thacher  v.  Moors,  134  Mass.  156;  Seal 
V.  Zell,  63  Md.  356;  Cerkel  v.  Waterman,  63  Cal.  34;  or  uses  or  sells  property 
which  had  come  into  his  possession  through  the  innocent  mistake  of  his 
agents  or  servants:  Lee  v.  McKay,  3  Ired.  29.  In  all  of  these  cases  there  is 
no  doubt  that  the  property  has  been  appropriated  to  the  use  of  the  defend- 
ant, and  that  he  intended  to  so  appropriate  it,  and  all  that  can  be  said  in 
his  favor  is,  that  both  his  intention  and  his  act  resulted  from  his  innocent 
ignorance  of  the  rights  of  the  true  owner.  This,  while  sufficient  to  protect 
him  from  any  claim  for  exemplary  damages,  does  not  otherwise  deprive  the 
owner  of  the  goods  of  any  legal  remedy  for  their  wrongful  use  or  disposition. 
A  purchaser  of  property  from  one  not  authorized  to  sell  it,  who  takes  pos- 
session and  exercises  dominion  over  it  under  a  claim  of  right,  appropriates 
it  to  his  own  use,  though  the  appropriation  may  be  less  irrevocable  than  if 
he  had  sold  it  and  received  the  proceeds:  HollLt  v.  Fowler,  44  L.  J.  Q.  B.  169; 
7  H.  L.  Cas.  757.  He  is  therefore  generally,  but  not  universally,  regarded 
as  guilty  of  a  conversion,  though  no  demand  upon  him  has  been  made  by  the 
true  owner:  Gilmore  v.  Newton,  9  Allen,  171;  85  Am.  Dec.  749;  Omaha  and 
Oraul  S.  di-  R.  Co.  v.  Tabor,  13  Col.  41;  16  Am.  St.  Rep.  185;  Ward  V.  Car- 


May,  1890.]  .  Bolling  v.  Ktrby.  805 

son  niver  Wood  Co.,  13  Nev.  44.  So  if  any  other  interference  with  the 
chattels  of  another  results  in  their  loss  or  destruction,  this  is  a  conversion, 
though  the  interference  was  occasione<l  l>y  mistake:  Piatt  v.  Tiittle,  23  Conn. 
233;  Tohin  v.  Deal,  60  Wis.  87;  50  Am.  Rep.  345.  Hence  a  conversion 
results  from  the  cutting  of  grass  on  the  lands  of  another,  though  the  cutting 
was  unintentional  in  the  sense  that  it  was  done  in  ignorance  of  the  location 
of  the  boundary  lines:  Donalnie  v.  SJiipjiec,  15  R.  I.  453. 

An  innoceiit  person  cannot  be  held  liable  for  a  conversion,  if  his  act  can 
be  justified  as  having  been  in  any  manner  authorized  by  the  owner  of  the 
property.  Therefore  if  a  baker  orders  flour  of  K.  and  H.,  who,  in  turn, 
buy  of  G.  to  fill  such  order,  and  the  warehouseman  with  whom  the  flour  was 
stored  delivers  to  K.  and  H.  flour  which  belonged  to  M.,  and  K.  and  H. 
deliver  it  to  the  buker,  who  uses  it,  the  warehouseman  cannot  maintain 
trover  against  the  baker  therefor.  "In  this  case,"  the  court  said,  "when 
the  owner  has  giveu  to  another,  or  permitted  him  to  have,  control  of  the 
property,  no  one  can  be  held  responsible  in  tort  for  its  convcrson  who  merely 
makes  such  use  of  the  property,  or  exercises  such  dominion  over  it,  as  is  war- 
ranted by  the  authority  thus  given:  Stricldand  v.  Barrett,  20  Pick.  415;  Bur- 
hank  V.  Crooker,  7  Gray,  158;  66  Am.  Dec.  470.  In  this  case  the  plaintiffs  de- 
livered the  flour  to  Kenible  and  Hastings  as  the  flour  purchased  by  them  from 
Greenough.  Against  tlie  plaintiffs,  therefore,  the  delivery  to  Kemble  and 
Hastings,  and  the  sale  by  them  to  the  defendant,  was  an  authority  to  him 
to  treat  it  as  his  own.  That  it  was  so  delivered  by  mistake  might  have  en- 
titled the  plaintiffs  to  reclaim  tlie  ])roperty  from  one  having  it  in  possessi»jn, 
or  to  recover  its  value  from  one  who  had  diposed  of  it  with  knowledge  of 
the  mistake:  Chapman  v.  Cole,  12  Gray,  141;  71  Am.  Dec.  739.  But  they 
cannot  take  advantage  of  their  own  mistake  to  convert  into  a  tort  that  which 
has  been  done  in  good  faith,  in  pursuance  of  authority  given  by  themselves  ": 
HilU  V.  Snell,  104  Mass.  173;  6  Am.  Rep.  216. 

Tliough  the  intention  of  a  wrong-doer  is  not  to  claim  any  right  of  prop- 
erty in  chattels,  or  to  the  possession  thereof,  or  to  obtain  any  benefit  from 
them,  he  may  become  answerable  for  converting  them  if  he  abuses  them,  or 
by  his  uidawful  and  unauthorized  dominion  over  them  occasions  them  to  be 
lost  to  the  owner,  as  wliere,  after  finding  cattle  trespassing  on  his  premises, 
he  first  turns  them  into  a  public  higliway,  and  then  drives  them  for  a  great 
distance,  'or  in  a  direction  opposite  to  tlie  owner's  residence,  whereby  they 
are  lost  to  him:  Knoxir  v.  Warjoner,  16  Ind.  414;  Gil-son  v.  Fisk,  8  N.  H.  404; 
Knott  V.  Derjge.%  6  Har.  &  J.  230;  Tohin  v.  Deal,  60  Wis.  87;  50  Am.  Rep, 
345. 

Where,  on  the  other  hand,  though  there  is  some  interference  with  the 
chattels  of  another  without  his  authority,  they  are  not  sold,  lost,  destroyed, 
nor  otherwise  appropriated  to  the  use  of  the  wrong-doer,  his  intention  may 
properly  be  taken  into  consideration  in  determining  whether  there  has  been 
a  conversion:  Fouldes  v.  Willouiihhy,  8  Mees.  &  W.  540;  1  Dowl.,  N.  S.,  86; 
5  Jur.  534.  Thus  if  a  landlord  wrongfully  resumes  possession  of  a  leased 
room,  and,  as  part  of  such  act,  takes  chattels  of  the  tenant  from  the  room 
and  removes  them  to  another  part  of  the  building,  in  no  way  denying  the 
right  of  the  tenant  to  his  property,  nor  hindering  him  from  taking  it  when- 
ever he  wishes,  no  conversion  is  committed:  Mattice  v.  Brinkman,  74  Mich. 
705.  And  generally,  whenever  a  person  claims  property,  real  or  personal, 
and,  incidental  to  the  exercise  of  the  right  claimed  by  him,  he  removes  or 
otherwise  interferes  with  the  chattels  of  another,  without  claiming  any  right 
to  them  or  to  their  possession  or  control,  and  without  depriving  their  ownef 


806  BoLLiNQ  V.  KiRBY.   .  [Alabama, 

of  them,  or  of  his  possession  or  control  of  them,  he  is  not  liable  for  their  con- 
version, though  his  claim  of  title  or  right  in  the  other  property  was  un- 
founded: Sliea  V.  Milford,  145  Mass.  525;  Farnsworih  v.  Lowtry,  134  Mass. 
612;  Niemetz  v.  St.  Louis  tic.  Ass\  5  Mo.  App.  59;  Sparks  v.  Purdy,  11 
Mo.  219. 

Such  acts  as  one  may  lawfully  perform  in  the  exercise  of  his  own  rights  of 
property  cannot  amount  to  a  conversion  of  the  property  of  another,  though 
they  may  result  in  destroying  it,  or  depriving  him  of  the  benefit  thereof. 
Hence  if  the  owner  of  chattels  knew  that  they  were  on  the  lands  of  one  who 
intended  to  erect  a  freight-shed  thereon,  and  that  a  reasonable  and  necessary 
prosecution  of  the  work  would  prevent  the  subsequent  removal  of  such  chat- 
tels, he  cannot  maintain  trover  because,  through  his  failure  to  remove  them, 
the  construction  of  the  freight-shed  has  made  their  removal  impossible: 
Btachpoh  v.  Ea-stern  Railroad,  62  N.  H.  493;  Aldrich  v.  Wright,  53  N.  H.  398; 
16  Am.  Rep.  339. 

Demand  and  Refusal  as  Evidence  of  Conversion.  —  It  will  be  ob- 
■erved  that  where  the  intention  of  the  defendant  can  be  successfully  urged 
to  exonerate  him  from  a  charge  of  conversion  otherwise  sustainable,  it  is  not 
his  intention  to  do  no  wrong,  nor  his  ignorance  that  he  is  doing  wrong,  which 
relieves  him  from  liability,  but  his  absence  of  any  intention  to  use,  claim,  or 
dispose  of  the  property,  either  as  his  or  as  the  property  of  some  person  for 
whom  he  is  acting,  — his  freedom  from  any  act  inconsistent  with  or  in  defi- 
ance of  the  rights  of  the  owner  of  the  property.  Hence  where  a  demand  for 
the  possession  of  chattels  and  a  refusal  to  deliver  them  are  relied  upon  as 
evidence  of  a  conversion,  the  defendant  may  avoid  their  efifect  by  showing 
that  his  refusal  was  not  in  assertion  of  a  claim  of  right  on  his  part,  nor  in- 
consistent with  the  rights  of  the  owner.  Thus  if  a  person  in  possession  of 
property  has  a  reasonable  doubt  of  the  right  of  the  party  making  a  demand 
on  him  for  such  possession,  and  disclaiming  all  right  on  his  part,  declines  to 
surrender  possession  until  he  can  ascertain  whether  he  should  do  so  or  not, 
he  is  not  guilty  of  a  conversion:  Zachary  v.  Pace,  9  Ark.  212;  47  Am.  Dec. 
744;  Ingalls  v.  Bullcley,  15  111.  224;  Fletcher  v.  Fletcher,  7  N.  H.  452;  28  Am. 
Dec.  359;  DeiU  v.  Chiles,  5  Stew.  &  P.  383;  26  Am.  Dec.  350.  "  While  the 
law  is,  that  a  demand  and  refusal  are  generally  prima  facie  evidence  of  a  con- 
version, a  qualified,  reasonable,  and  justifiable  refusal  is  not  evidence  of  a 
conversion.  It  takes  a  wrongful  refusal  to  constitute  the  defendant  a  tort- 
feasor, and  in  the  absence  of  such  evidence  there  can  be  no  conversion.  It 
is  well  settled  that  the  possessor  of  goods  may  refuse  to  deliver  them  unless 
the  claimant  makes  some  proper  and  reasonable  show  of  ownership,  whicli 
necessarily  includes  evidence  of  identification  ":  Butler  v.  Jones,  80  Ala.  436; 
Oreen  v.  Dunn,  3  Camp.  216;  Wilde  v.  Waters,  16  Com.  B.  637;  24  L.  J.  Com, 
P.  193;  Philpot  v.  Kellcy,  4  Nev.  &  M.  611;  3  Ad.  &  E.  106;  1  Har.  &  W. 
134;  Varrall  v.  Robinson,  2  Cromp.  M.  &  R.  495;  4  Dowl.  Pr.  242;  1  Gale, 
244;  5  Tyrw.  1069;  Carroll  v.  Mix,  51  Barb.  212. 

One  who  has  received  possession  of  goods  as  the  agent,  bailee,  or  servant 
of  another  may,  without  being  guilty  of  a  conversion,  when  demand  is  made 
upon  him  for  them,  decline  to  deliver  them,  unless  he  has  had  time  to  ascer- 
tain their  ownership,  or  to  consult  with  his  principal  or  bailor;  but  if  after 
such  consultation  he  relies  upon  the  title  of  his  principal,  and  refuses  to  de- 
liver possession,  he  is  liable  for  a  conversion,  unless  such  title  is  paramount 
to  the  rights  of  the  person  making  the  demand:  Singer  Mfg.  Co.  v.  King,  14 
R.  I.  511;  Lee  v.  Bayes,  18  Com.  B.  599;  Sheridan  v.  New  Quay  Co.,  4  Com. 
B.,  N.  S.,  618;  Coles  v.   Wnght,  4  Taunt.  198;   Ward  v.  MofftU,  38  Mo.  App. 


May,  1890.]  Bollinq  v.  Kirby.  807 

395.  A  woman  who  had  long  been  in  the  possession  of  a  watch  died  at  the 
house  of  her  brother,  after  which  a  demand  was  made  on  him  for  the  watch. 
He  replied  that  the  decedent  left  a  will  which  he  would  have  probated  at 
the  earliest  moment;  that  the  watch  was  safe;  that  he  did  not  feel  at  liberty 
to  part  with  its  custody  until  some  one  was  appointed  to  take  charge  of  her 
estate.  It  was  decided  that  the  refusal  was  qualified  and  reasonable,  and 
therefore  did  not  amount  to  a  conversion  of  the  watch:  Bnflingion  v.  Clark, 
15  R.  I.  437.  If  a  demand  is  made  by  one  claiming  to  act  as  the  agent  of 
another,  it  may  be  refused  on  the  ground  that  he  does  not  present  any  evi- 
dence of  his  authority:  Wait  v.  PoUer,  2  Mason,  77;  Taylor  v.  Spears,  6 
Ark.  381;  44  Am.  Dec.  519.  Where,  however,  a  party  wishes  to  justify  his 
refusal  to  deliver  property  on  the  ground  that  he  has  doubts  of  the  owner- 
ship or  authority  of  the  person  making  the  demand,  he  must  not  make  an 
unqualified  refusal,  but  must  show  by  his  response  that  he  does  not  claim  a 
right  to  retain  the  property,  and  merely  desires  to  act  as  a  prudent  man 
should  before  delivering  up  chattels  which  have  been  intrusted  to  bis  care 
or  into  the  possession  he  originally  lawfully  came:  Doivd  v.  Wadxioorth,  2  Dev. 
130;  18  Am.  Dec.  567;  Dent  v.  Chiles,  5  Stew.  &  P.  383;  26  Am.  Dec.  350; 
Zacharyv.  Pace,  9  Ark.  212:  47  Am.  Dec.  744;  Ingalls  v.  BulUey,  15  III.  224. 

A  refusal  to  deliver  chattels  on  demand  can  never  constitute  a  conversion, 
if  the  party  on  whom  the  demand  is  made  did  not  at  the  time  have  power 
to  comply  therewith,  as  where  they  had  previously  been  lost,  stolen,  or  for- 
cibly or  otherwise  taken  from  his  possession  without  his  assent:  Abraham 
V.  Nunn,  42  Ala.  51;  Dearhourn  v.  Bank,  58  Me.  273;  Hawkins  y.  Hoffman, 
6  Hill,  586;  41  Am.  Dec.  767;  Carr  v.  Cloiujh,  26  N.  H.  280;  59  Am.  Dec.  345; 
Hill  V.  Belasco,  17  111.  App.  194;  Dads  v.  Buffum,  51  Me.  160;  Yale  v. 
Saunders,  16  Vt.  243. 

As  a  general  rule,  a  conversion  takes  place  whenever  one  in  whose  posses- 
sion or  control  personalty  is,  upon  demand  being  made  upon  him  therefor  by 
a  party  entitled  thereto,  makes  an  unqualified  refusal  to  surrender  it:  Doty 
V.  Hav>kin.%  6  N.  H.  247;  25  Am.  Dec.  459;  Dusky  v.  Ihidder,  80  Mo.  400; 
Oerman  Bunk  v.  Meadoivcroft,  95  111.  124;  35  Am.  Rep.  137;  Blickman  v. 
Lehman,  63  Ala.  547;  State  v.  Stevenson,  46  N.  J.  L.  326;  SoufhwortJi  Co.  v. 
Lamb,  82  Mo.  242;  Sherman  v.  Commercial  Printing  Co.,  29  Mo.  App.  31; 
Jonea  v.  Hunt,  74  Tex.  657;  Burroughs  v.  Bnyne,  5  Hurl.  &  N.  296;  29  L.  J. 
Ex.  188;  2  L.  T.,  N.  S.,  16;  or  places  his  refusal  on  some  untenable  ground, 
or  undertakes  to  exact,  as  a  condition  of  delivery,  the  discharge  of  some  lien 
or  other  claim  for  the  payment  of  which  the  property  is  not  bound:  Cannee 
V.  Spanton,  8  Scott  N.  R.  714;  7  Man.  &  G.  903;  8  Jur.  1008;  14  L.  J.  Com. 
P.  23;  Nutter  V.  Varney,  64N.  H.  611;  Briggsv.  Haycock,  63  Cal.  343;  Dusk^ 
V.  Rudder,  80  Mo.  400;  Wilson  v.  Andertoii,  I  Barn.  &  Adol.  450;  Thompson 
V.  Trail,  9  Dowl.  &  R.  31;  6  Barn.  &  C.  30;  2  Car.  &  P.  334.  One  cannot 
escape  the  consequence  of  a  demand  made  on  him  by  saying  that  he  neither 
admits  nor  denies  the  claim,  that  he  docs  not  assent  to  nor  forbid  the  tak- 
ing of  the  property,  and  that  both  he  ami  the  party  making  the  demand  are 
responsible  for  their  acts,  and  the  law  will  protect  them  in  their  rights,  and 
punish  them  for  unlawful  acts;  and  if  the  demand  is  thus  answered,  there  is 
sufficient  evidence  of  a  conversion:  Ingersoll  v.  Barnes,  47  Mich.  104.  A 
general  refusal  to  surrender  chattels  may  be  evidence  of  their  conversion, 
though  part  only  of  them  were  under  the  control  of  the  party  so  refusing: 
Ray  V.  LigM,  34  Ark.  421. 

DSMAND   AND   REFUSAL,    WHEN    ESSENTIAL  TO   A   C0NVER.SION.  —  In    many 

instances  a  demand  and  refusal  are  necessary  to  the  holding  of  a  person  in 


808  BoLLiNG  V.  KiRBY.  [Alabama, 

possession  of  goods  liable  for  their  conversion.  Upon  principle,  this  can  be 
true  only  when  no  actual  conversion  lias  been  made  prior  to  such  demand, 
and  when,  but  for  such  demand,  the  person  on  whom  it  was  made  would  be 
entitled  to  continue  to  hold  possession  of  the  personalty  demanded.  Hence 
when  a  sale  has  been  made  of  the  chattels  of  another  without  authority:  Com'- 
tis  V.  Cane,  32  Vt.  232;  76  Am.  Dec.  174;  Velskin  v.  Lewis,  15  Or.  539;  3 
Am.  St.  Rep.  184;  Haas  v.  Taylor,  80  Ala.  459;  Howitt  v.  E^telle,  92  111. 
218;  and  in  every  other  case  in  which  an  actual  conversion  has  already  taken 
place:  Kendrick  v.  Rogers,  26  Minn.  344;  Buivjer  v.  Roddy,  70  lad.  26;  or  in 
which  a  demand,  if  made,  must  have  proven  idle  and  unavailing:  Gottlieb  v. 
Hartman,  3  Col.  53;  or  in  which  the  taking  was  at  its  inception  tortious  and 
illegal:  RJioade.^  v.  Drummond,  3  Col.  374;  Woodbury  v.  Lo7ig,  8  Pick.  543; 
19  Am.  Dec.  345;  Farrington  v.  Payne,  15  Johns.  'i'M;  Moses  v.  Walker,  2 
Hilt.  536;  Dq^vis  v.  Duncan,  1  McCord,  213;  Jones  v.  Diigan,  1  McCord,  428; 
or  in  which  the  possession  was  procured  by  duress  or  fraud  practiced  on 
the  owner  for  the  purpose  of  obtaining  it:  Foshay  v.  Ferguson,  5  Hill,  154; 
McCrillis  v.  Allen,  57  Vt.  505;  Thurston  \.  Blanchard,  22  Pick.  18;  Stevens 
V.  Austin,  1  Met.  557;  Ryan  v.  Brant,  42  111.  78;  or,  though  lawfully  obtained, 
the  property  is  misused  or  abused:  Maguyer  v.  Hawthorn,  2  Har.  (Del.)  71,  — 
no  demand  need  be  made  before  beginning  action  for  the  conversion. 

Negligence  or  Non-feasance  cannot  Support  a  Charge  of  Conver- 
sion. —  If,  after  a  conversion  has  taken  place,  the  property  is  lost  or  de- 
stroyed, either  through  the  negligence  of  the  wrong-doer,  or  the  wanton  or 
lawless  acts  of  other  persons,  the  cause  of  action  which  arose  as  soon  as  the 
conversion  was  consummated  continues,  and  a  subsequent  loss  or  destruction 
of  the  property  constitutes  no  defense  to  an  action  for  the  prior  conversion: 
Mason  v.  O'Brien,  42  Miss.  420.  But  as  a  conversion  is  an  appropriation  of 
property  to  one's  use,  either  actual  or  constructive,  any  wrong  which  does 
not  amount  to  such  appropriation  is  not  a  conversion,  and  while  it  may 
entitle  the  injured  person  to  some  remedy,  will  not  support  an  action  of 
trover.  Hence  if  chattels  which  were  in  the  possession  of  a  person  other 
than  their  owner  are  lost  or  stolen  through  want  of  reasonable  care  on  the 
part  of  their  custodian,  or  injured  by  accident,  or  through  his  mere  negli- 
gence or  non-feasance,  not  accompanied  by  any  misappropriation  on  his  part, 
he  is  not  answerable  for  their  conversion:  Haivkins  v.  Hoffman,  6  Hill,  586; 
41  Am.  Dec.  767;  Packard  v.  Getman,  4  Wend.  613;  21  Am.  Dec.  166;  Dor- 
man  V.  Kane,  5  Allen,  38;  Bromley  v.  Coxwell,  2  Bos.  &  P.  438;  Tinker  v. 
Morrill,  39  Vt.  477;  94  Am.  Dec.  345;  Bailey  v.  Moulthrop,  55  Vt.  17;  Aloses 
V.  Norris,  4  N.  H.  304;  Williams  v.  Gesse,  3  Bing.  N.  C.  849.  Even  the  de- 
struction of  a  chattel,  if  done  unintentionally,  as  where  the  bailee  of  a  draft 
burns  it  in  destroying  other  papers  which  he  considered  of  no  value,  with- 
out asserting  any  title  to  it  or  claiming  any  right  to  hold,  detain,  or  destroy 
it,  is  not  a  conversion:  Sail  Springs  Nat.  Bank  v.  Wheeler,  48  N.  Y.  492;  8 
Am.  Rep.  564. 

Restoration  of  Property  Converted,  whether  Owner  may  be  Re- 
quired to  Accept.  —  Whether  one  who  has  been  guilty  of  a  conversion  of 
chattels  may,  in  effect,  revoke  such  conversion,  and  compel  the  owner  of 
the  property  to  submit  to  its  restoration  to  him,  is  a  question  to  which  no 
postive  answer  can  be  given.  There  is  no  doubt  that  "it  has  been  the 
well-established  rule  in  the  courts  of  England  for  more  than  a  century,  that 
in  actions  of  trover,  the  court  will,  under  certain  circumstances,  permit  the 
defendant,  after  suit  is  brought,  to  bring  the  property  claimed  into  court 
for  the  plaintiff,  with  the  costs  up  to  that  time,  and  will  then  order  a  stay 


May,  1890.]  Bolling  v.  Kirby.  809 

of  proceedings,  or  permit  the  plaintifiF  to  proceed  with  the  action  at  the 
risk  of  having  the  costs  finally  adjudged  against  him,  unless  he  be  able  to 
show  that  he  has  been  specially  damaged  by  the  conversion  of  the  property 
by  the  defendant,  in  addition  to  its  value  at  the  time  of  its  return.  Or  the 
court  will,  in  a  proper  case,  after  the  verdict,  upon  tender  of  the  property, 
reduce  the  verdict  to  nominal  damages ":  Churchill  v.  Wehh,  47  Wis.  39; 
Fisher  v.  Prince,  3  Burr.  1.304;    Watts  v.  Phipp.%   Bull.   N.   P.   49;  Earle  v. 

Holdcrness,  4  Bing.  462;  1  Moore  &  P.  254.  Even  in  England  the  courts 
have  generally  declined  to  interfere  if  the  value  of  the  chattels  converted 
was  uncertain,    or  the   plaintiff  insisted   upon   claiming   special    damages: 

Whitten  v.  Fuller,  2  W.  Black.  902;  Tucker  v.  Wrhjht,  3  Bing.  601;  11 
Moore,  500;  Gibson  v.  Humphrey,  1  Car.  &  M.  544;  2  Tyrw.  588. 

The  existence  of  the  English  rule  has  been  recognized  in  several  American 
decisions,  and  its  applicability  to  cases  in  our  courts  apparently  conceded, 
with  the  qualification  that  whether  the  defendant  should  be  permitted  to 
return  tlie  property  rested  in  the  discretion  of  the  trial  court,  which  dis- 
cretion is,  however,  subject  to  review  by  the  appellate  courts:  Rogej-s  v. 
Crombie,  4  Me.  274;  Stevens  v.  Low,  2  Hill,  1.32;  Hart  v.  Skinner,  16  Vt. 
138;  42  Am.  Dec.  500;  Thayer  v.  Mauley,  8  Hun,  550.  Still  we  cannot 
ascertain  that  the  rule  has  been  actually  enforced  except  in  two  cases.  In 
Vermont,  defendants  into  wliose  possession  certain  bonds  lawfully  came, 
and  who  withheld  them  from  plaintiffs  under  a  claim  of  right  made  in  good 
faith,  were  permitted  to  bring  them  into  court  in  mitigation  of  damages: 
Rutland  etc.  R.  R.  Co.  v.  Bank  of  Middlebury,  32  Vt.  639.  In  a  subsequent 
case  in  the  same  state,  in  which  the  rule  under  consideration  could  not  be 
applied,  because  the  defendant,  after  notice  of  the  plaintiff's  title,  and 
without  offering  to  return  the  pro[)erty,  sold  it,  nevertheless  the  court  said: 
"It  would  seem,  upon  principle,  that  in  actions  of  trover  and  trespass 
de  bonis  asporfatis,  when  the  taking  is  not  willful  and  the  property  is  not 
essentially  injured,  the  defendant  should  be  allowed  to  surrender  back  the 
property,  and  to  pay  the  actual  damage  for  the  taking  and  detention  of  it 
into  court,  together  with  the  cost  of  the  action  already  accrued;  and  in 
case  the  [)laintiff  refused  to  accept  the  money  paid  into  court,  he  must  pro- 
ceed at  his  peril,  insomuch  that  if  at  the  trial  he  is  nonsuited,  or  if  the  jury 
shall  not  give  him  a  sum  exceeding  the  money  paid  into  court,  he  will  be 
obliged  to  pay  the  costs  of  the  action.  The  numerous  actions  of  trover  and 
trespass  de  bonis  asportati-<  growing  out  of  the  sale  and  transfer  of  personal 
property,  where  the  vendor  iiad  no  title,  and  where,  by  his  false  or  fraudu- 
lent representations,  or  by  some  indications  of  ownership,  the  vendee  was 
induced  to  make  the  purchase,  where  there  was  no  intentional  wrong  on 
the  part  of  the  purchaser,  and  no  real  damage  done  by  him,  require  that 
he  should  be  relieved  from  the  rigor  of  the  rule  applicable  to  cases  of  willful 
and  malicious  trespass.  The  rule  allowing  such  surrender  of  the  property 
and  payment,  in  the  discretion  of  the  court,  is  founded  in  equity,  which  is 
'  the  correction  of  that  wherein  the  law  (by  reason  of  its  universality)  is 
deficient.'  It  goes  upon  the  principle  that  when  the  defendant  is  ready  and 
willing  to  pay,  and  places  within  the  reach  of  the  plaintiff  a  sum  of  money 
equal  to  the  actual  debt  or  damage  recoverable  by  law  and  the  costs  alreaily 
accrued,  the  action  ought  not  to  be  further  prosecuted  at  the  expense  of  the 
defendant  ":  Bucklin  v.  Reals,  38  Vt.  653. 

In  Wisconsin,  the  defendants  in  an  action  were  custodians  of  several 
promissory  notes,  never  clainiing  to  own  or  to  have  any  interest  in  them, 
and  offering  to  surrender  them  if  the  parties  of  whom  they  claimed  to  be 


810  BoLLTNQ  V.  KiRBY.  [Alabama, 

the  bailees  wonld  assent.  While  they  were  held  to  have  been  guilty  of  a 
technical  conversion  in  refusing  to  deliver  the  notes  to  their  payee,  yet  they 
acted  in  good  faith,  believing  that  they  had  no  right  to  make  such  delivery, 
and  their  refusal  to  deliver  did  not  occasion  any  special  damages  to  the 
plaintifiF.  After  a  verdict  had  been  returned  against  the  defendants,  they 
oflfered  to  surrender  the  notes  to  the  plaiutiEF,  and  moved  that  the  verdict 
upon  such  surrender  be  reduced  to  no-ninal  damages.  The  motion  being 
overruled  by  the  trial  court,  its  action  in  this  respect  was  reversed  on  ap- 
peal. The  opinion  of  the  appellate  court  shows,  however,  that  the  case  was 
an  exceptional  one,  and  that  the  verdict  of  the  jnry  might  well  have  been 
set  aside  on  the  ground  that  no  conversion  had  taken  place.  The  following 
extracts  from  the  opinion  show  the  considerations  influencing  the  flnal  decis- 
ion: "  The  question  is  an  open  one  in  this  court;  and  we  are  disposed  to 
adopt  the  rule  of  the  English  and  Vermont  courts,  in  a  case  like  the  one  at 
bar,  where  the  defendant  holds  the  property  as  custodian  for  the  parties  in 
interest,  and  has  never  claimed  any  personal  interest  in  the  same,  and  if 
guilty  of  conversion  of  the  same  at  all,  is  simply  guilty  of  a  technical  con- 
version, through  a  mistake  as  to  his  duty  as  custodian  of  the  same.  It  is 
not  a  case  in  which  there  has  been  a  complete  conversion  of  the  property  to 
the  use  of  defendants,  and  does  not  come  within  the  reason  of  the  rule  of 
those  cases  which  hold  that  where  there  has  been  such  a  conversion  the 
defendant  cannot  mitigate  the  damages  by  an  oSer  to  return  the  property. 
The  evidence,  we  think,  clearly  establishes  the  fact  that  the  notes  came  to 
the  possession  of  the  defendant,  either  as  the  agent  of  the  plaintifiF  solely, 
or  as  custodian  for  both  the  plaintiff  and  the  maker.  It  also  shows  that  the 
defendant  made  no  claim  to  any  ownership  of  the  notes,  or  to  any  interest 
in  them;  that  he  ofifered  to  surrender  them  if  both  parties  would  agree  to 
the  surrender;  that,  immediately  after  the  action  was  brought  against  him, 
he  offered  to  bring  the  notes  into  court,  and  asked  to  be  relieved  of  all 
further  responsibility  in  relation  to  them;  and  we  think  it  further  shows 
that  his  refusal  to  surrender  the  notes  to  the  plaintiff  upon  his  demand  was 
made  in  good  faith,  believing  that  he  had  no  right  to  make  such  surrender 
without  the  consent  of  the  maker,  Hartford,  and  that  if  he  was  guilty  of 
any  conversion  of  any  of  the  notes  to  his  own  use,  it  was  purely  a  legal  and 
technical  conversion.  We  are  also  unable  to  perceive  that  the  plaintiff  suf- 
fered any  special  damage  by  the  refusal  of  the  defendant  to  deliver  the  notes 
on  his  demand.  If  any  of  the  notes  were  due  and  payable  to  the  plaintiff, 
and  he  desired  to  enforce  the  payment  of  them,  the  fact  that  they  were  in 
possession  of  the  defendant,  he  not  claiming  any  interest  in  them,  could  not 
hinder  the  plaintiff  from  proceeding  to  enforce  their  collection,  either  by 
action  or  upon  the  chattel  mortgage.  We  think  great  injustice  will  be  done 
to  the  defendant  if  this  judgment  is  permitted  to  stan<i.  If  any  faith  or 
credit  is  to  be  given  to  his  own  testimony,  or  to  the  testimony  of  the  two 
Hartfords,  he  had  at  least  the  right  to  believe  that  it  was  not  his  duty  to 
surrender  the  notes  to  the  plaintiff;  and  although  the  jury  found  that  he 
waa  mistaken  in  that  belief,  still,  as  he,  immediately  upon  being  sued, 
brought  the  notes  into  court  and  asked  to  be  relieved  from  the  further  cus- 
tody of  the  same,  disclaimed  all  personal  interest  in  them,  and  stated  that 
his  only  reason  for  not  delivering  them  to  the  plaintiff  was  because  the 
other  party  interested  in  them  insisted  that  he  had  no  right  to  deliver  them 
to  the  plaintiff,  it  would  seem  most  inequitable  that  he  should  be  compelled 
to  purchase  them  at  their  face  value,  with  ten  per  cent  interest  added,  be- 
cause of  his  mistaken  belief  in  this  particular If  any  defendant  who 


May,  1890.]  Bollinq  v.  Kirby.  811 

is  sued  for  a  conversion  of  personal  property  can  be  allowed  to  surrender 
the  property  after  action  brought,  this  defendant  ought  to  be  permitted  to 
do  so.  As  there  is  no  claim  made  in  the  plaintifiF's  complaint  that  he  has 
suffered  any  special  damages  by  reason  of  defendant's  refusal  to  deliver  the 
notes  when  demanded,  nor  that  there  was  any  depreciation  in  the  value  of 
the  notes  between  the  time  of  their  alleged  conversion  by  the  defendant  and 
the  coinmencetnent  of  this  action,  or  the  time  of  the  trial,  the  return  of  the 
notes  to  the  plaintifif  would  have  placed  him  in  as  good  a  position,  so  far  as 
the  evidence  on  the  trial  and  the  verdict  of  the  jury  discloses,  as  though 
there  never  had  been  any  technical  conversion  by  the  defendant.  No  injus- 
tice would  be  done  by  their  return  to  the  plaintifif  and  permitting  him  to 
take  judgment  for  nominal  damages  and  costs;  whereas  great  injustice  will 
be  done  to  the  defendant  by  compelling  him  to  pay  presently,  in  cash,  a  very 
large  sura  of  money  for  notes,  many  of  which  will  not  become  due  for  a 
year  or  more,  and  whose  real  value  is  a  matter  of  the  greatest  uncertainty, 
because  he  made  an  honest  mistake  as  to  his  duty  as  custodian  of  them  ": 
Churchill  v.   Welsh,  47  Wis.  39. 

In  no  case  is  one  who  has  converted  a  chattel  entitled  to  require  its  owner 
to  permit  its  restoration  if  it  has  deteriorated  in  value  or  been  essentially 
injured  prior  to  the  ofifer  to  restore  it:  Hart  v.  Skinner,  16  Vt.  138;  42  Am. 
Dec.  500;  Whitaker  v.  Hoxighton,  86  Pa.  St.  48.  While,  so  far  as  we  are 
aware,  the  right  of  a  defendant  who  has  been  guilty  of  a  conversion  of  chat- 
tels to  restore  them  to  their  owner  has  not  been  tested  in  any  of  the  Amer- 
ican courts  by  any  direct  proceeding,  by  motion  or  otherwise,  except  in  the 
cases  already  cited,  the  emphatic  language  of  the  other  decisions  in  which 
this  right  has  been  considered,  either  directly  or  incidentally,  is  such  as  to 
convince  us  that  the  weight  of  authority  in  this  country  supports  the  rule 
that  when  a  cause  of  action  has  once  accrued  to  the  owner  of  chattels  on 
account  of  their  conversion  by  another,  the  latter  can  neither  destroy  it,  nor 
restore  the  property  in  mitigation  of  damages  without  the  assent  of  the 
former:  Hiijjins  v.  WJitiney,  24  Wend.  379;  Wooley  v.  Carter,  7  N.  J.  L.  85, 
11  Am.  Dec.  520;  Livtrmore  v.  Northrup,  44  N.  Y.  107;  Reynolds  v.  Shuler, 
5  Cow.  323;  Walker  v.  Fuller,  29  Ark.  448;  Hanmer  v.  Wihey,  17  Wend.  91; 
Stickney  v.  Allen,  10  Gray,  352;  Higgins  v.  Whitney,  'J4  Wend.  379;  Norman 
V.  Rogers,  29  Ark.  365. 

Restoration  Accepted  by  Owner  Mitigates  Damages.  —  If  property 
which  has  been  converted  is  returned  to  its  ownor,  who  accepts  it,  this  does 
not  destroy  the  cause  of  action  which  arose  on  the  conversion.  The  injured 
party  is  still  entitled  to  maintain  an  action  for  the  injury,  but  the  return 
must  be  consiilend  in  mitigation  of  damages.  In  other  words,  the  plain- 
tifiF's recovery  must  he  limited  to  nominal  damages,  and  such  special  damages 
as  he  is  shown  to  have  sufi'ered  from  the  conversion  before  the  restoration 
of  the  property  was  accepted:  Kelly  v.  McDonald,  .39  Ark.  3S7;  Whitaker  v. 
Houghton,  8(5  Pa.  St.  48;  Murphy  v.  Hohhs,  8  Col.  17;  Western  Land  and  Cattle 
Co.  v.  H(dl,  33  Fed.  Rep.  236;  Norman  v.  Ro:/er.<i,  29  Ark.  365;  Brewxter  v. 
Silliman,  38  N.  Y.  423;  Hepburn  v.  Sewell,  5  Har.  &  J.  211;  9  Am.  Dec.  512; 
Reynolds  v.  Shuler,  5  Cow.  323;  Barrelett  v.  Bell.jard,  71  111.  280;  Walker  v. 
Fuller,  29  Ark.  448;  Cook  v.  Loomis,  26  Conn.  483. 

Agent  or  Servant's  Liability  for  Conversion.  —  There  can  be  no 
doubt  that  one  cannot  give  another  an  authority  which  he  himself  does  not 
possess,  and  therefore  that  he  who  cannot  sell,  dispose  of,  or  otherwise  in- 
terfere with  chattels  without  being  guilty  of  their  conversion  cannot  give 
an  auctioneer  or  other  agent  autiiority  to  do  any  of  such  acts:  Losechman  v. 


812  BoLLiNG  V.  KiRBY.  [Alabama, 

MacJiin,  2  Stark.  311;  Stephens  v.  Elirell,  4  Maule  &  S.  259;  Perkins  v.  Smith, 
1  Wils.  328.  Undoubtedly  there  are  cases  in  which  agents  act  innocently  in 
making  conversions  of  personalty  for  their  principals,  and  in  which  there  is 
hardship  in  holding  them  personally  answerable  for  acts  from  which  they 
could  reap  no  benefit,  and  which  they  did  in  good  faith,  supposing  what 
they  did  to  be  within  the  line  of  their  duty  as  well  as  of  their  authority. 
In  one  state  it  has  been  said  that  "  we  hold  the  rule  of  law  to  be,  that  an 
agent  or  servant  who,  acting  solely  for  his  principal  or  master,  and  by  his  di- 
rection, and  without  knowing  of  anj"^  wrong,  or  being  guilty  of  any  gross 
negligence  in  not  knowing  of  it,  disposes  of  or  assists  the  master  in  disposing 
of  property  which  the  latter  had  no  right  to  dispose  of,  is  not  thereby  ren- 
dered liable  for  the  conversion  of  the  property":  Leutkold  v.  Fairchild,  35 
Minn.  100.  In  the  same  case  it  is  asserted  that  there  is  a  conflict  in  the  de- 
cisions upon  the  suljject,  the  cases  in  New  York  holding  that  the  conversion 
is  the  act  of  the  agent  as  well  as  of  the  master,  while  those  in  Massachusetts 
hold  the  conversion  to  be  the  act  of  the  master  alone.  No  authorities  were 
cited  to  establish  the  alleged  conflict,  and  our  industry  has  not  enabled  us 
to  discover  any.  On  the  other  hand,  all  the  authorities  which  have  come 
within  our  observation  afSrm  that  one  who  has  been  guilty  of  an  act 
whereby  the  chattels  of  another  have  been  converted  cannot  evade  liability 
therefor  by  proving  that  he  acted  innocently  as  the  agent  of  another:  Per- 
minter  v.  Kelly,  18  Ala.  716;  54  Am.  Dec.  177;  Kimhall  v.  Billings,  55  Me. 
147;  Koch  V.  Branch,  44  Mo.  542;  100  Am.  Dec.  324;  Coles  v.  €lark,  3  Cush. 
399;  Lee  v.  Mattheiu.%  10  Ala.  682;  44  Am.  Dec.  498;  Edgerly  v.  Whalan,  106 
J.lass.  307;  McPartland  v.  Read,  II  Allen,  231;  Gage  v.  Wkittier,  17  N.  H. 
312;  McPhetcrs  v.  Page,  83  Me.  234;  23  Am.  St.  Rep.  772;  Story  on  Agency, 
sec.  312;  Spraights  v.  Haivley,  39  N.  Y.  441;  100  Am.  Dec.  452;  Everett  v. 
Coffin,  6  Wend.  209;  22  Am.  Dec.  551;  Foivler  v.  Hollins,  L.  R.  7  Q.  B.  616; 
Williams  v.  Merle,  1 1  Wend.  80;  25  Am.  Dec.  604;  Perkins  v.  Smith,  1  Wils. 
328;  Stephens  v.  Eluxll,  4  Maule  &  S.  259. 

If  an  agent  is  in  the  possession  of  goods  intrusted  to  him  by  his  principal, 
and  a  demand  is  made  upon  him  for  them  by  a  third  person,  he  is  not  re- 
quired to  act  upon  it  immediately  without  any  opportunity  to  consult  with 
his  principal,  and  may  therefore,  without  being  guilty  of  any  conversion, 
decline  to  surrender  possession  until  he  has  had  such  opportunity;  but  if, 
either  before  or  after  such  consultation,  he  unqualifiedly  refuses  to  sur- 
render possession,  he  becomes  answerable  for  conversion,  unless  his  principal 
was  entitled  to  retain  such  possession:  Singer  Mfg.  Co.  v.  King,  14  R.  I.  511; 
Lee  v.  Robinson,  18  Com.  B.  599;  25  L.  J.  Com.  P.  249;  Stephens  v.  Elwell;  ^ 
Maule  &  S.  259;  Mires  v.  Solehaij,  2  Mod.  242;  Alexander  v.  Southey,  5  Barn. 
&  Adol.  247.  It  an  agent  purchases  chattels  from  one  not  authorized  to  sell 
them,  and  his  act  was  previously  authorized  or  subsequently  ratified  by  his 
principal,  the  latter  is  liable  for  the  conversion  arising  from  taking  posses- 
sion of  the  property  pursuant  to  the  sale,  though  he  had  no  knowledge  of 
the  want  of  authority  in  the  person  making  the  sale:  Hilbery  v.  Hatton,  2 
Hurl.  &  C.  822;  33  L.  J.  Ex.  190;  10  L.  T.,  N.  S.,  39. 

Agent,  when  Guilty  of  Converting  Chattels  of  his  Principal.  —  An 
agent  may  unquestionably  be  guilty  of  a  conversion  of  the  goods  of  his 
principal,  for  which  the  latter  may  seek  and  find  redress  by  an  action  of 
trover.  Still,  this  form  of  action  has  been  pursued  with  apparent  infre- 
quency,  and  the  decisions  formulating  tests  by  which  to  determine  whether 
an  agent  has  been  guilty  of  a  conversion  are  more  rare  and  less  satisfactory 
than  one  would  ajiticipate  before  making  an  attempt  to  discover  and  conipre- 


May,  1890.]  Bolling  v.  Kirby.  813 

hend  them.  Though  perhaps  a  dictum,  the  following  statement  of  the  gen- 
eral principle  applicable  to  the  suljject  is  as  accurate  and  comprehensible  as 
any  to  be  found  in  the  reports:  "The  question  whether,  in  any  view  of  the 
case,  this  action  of  trover  can  be  maintained,  was  discussed  at  the  argument, 
and  as  that  point  may  arise  on  another  trial,  it  will  be  proper  to  give  it  some 
consideration.  Tlie  most  usual  remedies  of  a  principal  against  his  agent  are 
the  action  of  assumpsit  and  a  special  action  on  the  case,  but  there  can  be  no 
doubt  that  trover  will  sometimes  be  an  appropriate  remedy.  That  action 
may  be  maintained  whenever  the  agent  has  wrongfully  converted  the  prop- 
erty of  his  principal  to  his  own  use;  and  the  fact  of  conversion  may  be  made 
out  by  showing  either  a  demand  and  refusal,  or  that  the  agent  has,  without 
necessity,  sold  or  otherwise  disposed  of  the  property  contrary  to  his  instruc- 
tions. When  an  agent  wrongfully  refuses  to  surrender  the  goods  of  his 
principal,  or  wholly  departs  from  his  authority  in  disposing  of  them,  lie 
makes  the  property  his  own,  and  may  be  treated  as  a  tort-feasor.  But  there 
must  be  some  act  on  the  ])art  of  the  agent,  —  a  mere  omission  of  duty  is  not 
euiiugh,  although  the  property  may  be  lost  in  consequence  of  the  neglect. 
Nor  will  trover  lie  where  the  agent,  though  wanting  in  good  faith,  has  acted 
within  the  general  scope  of  his  powers.  There  nmst,  I  think,  be  a  depart- 
ure from  his  autliority  before  this  action  for  a  conversion  of  the  goods  can 
be  maintained  ":  McMorriss  v.  Siiiqison,  21  Wend.  614.  Therefore  an  agent 
is  guilty  of  a  conversion  if,  having  no  authority  to  sell  the  property  of  his 
princijial,  he  nevertheless  sells  it:  Etter  v.  Bailey,  8  Pa.  St.  442;  or  having 
autliority  to  sell  it,  he  exchanges  it  for  other  property:  Haas  v.  Daviong,  9 
Iowa,  589;  or  being  intrusted  with  a  note  to  be  sold,  and  the  proceeds  to  be 
applied  to  the  payment  of  a  debt  of  the  maker's,  he  applies  it  to  the  pay- 
ment of  a  debt  due  to  himself:  Murray  v.  Burling,  10  Johns.  172;  or  being 
given  a  note  to  be  sold,  with  instructions  not  to  let  it  go  out  of  his  reach 
without  receiving  the  money,  he  delivers  it  to  another  on  h;s  promise  to  get 
it  discounted,  and  to  return  the  proceeds,  and  the  latter  procures  such  dis- 
counting, but  appropriates  the  avails  to  his  own  use:  Larerty  v.  Snclhen,  68 
N.  Y.  522;  23  Am.  Rep.  184;  or  being  sent  to  oi)tain  a  note  for  his  princi- 
pal, he  obtains  it  payable  to  himself,  and  disposes  of  it  for  his  own  use:  Mc- 
Near  y.  Atxoood,  17  Me.  434;  or  being  an  attorney  at  law,  and  authorized  to 
collect  money  due  his  principal,  he  collects  it  and  applies  it  to  his  own  use: 
Cotton  V.  Sharpstein,  14  Wis.  220;  80  Am.  Dec.  774;  or  being  authorized  to 
dispose  of  a  note  in  a  particular  manner  and  upon  certain  conditions,  he 
disposes  of  it  in  a  different  manner,  and  in  the  absence  of  any  of  the  re- 
quired conditions:  Badger  v.  Hatch,  71  Me.  562;  or  who,  when  money  is 
placed  in  his  hands,  belonging  to  his  principal,  to  be  loaned  in  the  latter's 
name,  loans  it  in  the  name  of  himself:  Furnind  v.  Hurlhut,  7  Minn.  477;  or 
who,  when  a  note  is  sent  to  him  to  sell,  with  notice  that  the  semler  has  drawn 
upon  him  for  the  amount  of  the  note,  replies  that  he  will  not  pay  the  draft, 
and  who,  on  being  notified  that  he  must  pay  the  draft  or  return  the  note, 
sells  the  note  while  declining  to  pay  the  draft:  Serurit;/  Bank  v.  Fogg,  148 
Mass.  273;  National  Bank  v.  Crocker,  111  Mass.  163;  or  who,  when  wheat  is 
given  to  him  to  sell  when  tlirected  by  his  principal,  refuses  either  to  sell  or 
account  for  the  wheat  when  directed,  and  retains  possession  against  the 
wishes  of  his  principal:  Coleman  v.  Pearce,  26  Minn.  123. 

In  those  cases  in  which  an  agent  actually  uses  the  property  of  his  principal 
for  his  own  benefit,  or  refuses  to  surrender  possession  thereof  to  his  princi- 
pal upon  a  proper  demand  therefor,  or  sells  or  embezzles  it,  or  refuses  to 
account  for  the  proceeds,  there  can  be  no  doubt  that  he  in  fact  has  appro- 


814  BoLLiNG  V.  KiRBY.  [Alabama, 

priated  it  to  his  own  use,  and  therefore  that  he  has  been  guilty  of  and  may 
be  held  liable  for  its  conversion.  If,  however,  an  agent  is  negligent  or  ia 
guilty  of  mere  non-feasance  or  omission,  whereby  the  property  of  his  princi- 
pal is  lost  or  injured,  while  he  may  be  and  is  liable  in  some  form  of  action, 
he  ia  not  deemed  guilty  of  conversion,  and  redress  against  him  must  be 
sought  in  some  other  form  of  action  than  trover.  It  appears  to  be  conceded 
that  an  agent  may  disobey  instructions  in  some  respects,  and  thereby  de- 
prive his  principal  of  his  property,  without  being  guilty  of  a  conversion. 
The  rule  which  the  authorities,  or  some  of  them,  seemingly  sustain  upon  this 
subject  is,  that  though  the  agent  departs  from  or  acts  in  disobedience  to  his 
instructions,  yet  if  the  act  which  he  does  is  so  far  within  the  limits  of  the 
powers  conceded  to  him  by  his  principal  that  it  must  be  regarded  as  valid  as 
between  the  principal  and  the  person  to  whom  the  agent  sells  or  disposes  of 
the  property,  that  then  the  sale  or  disposition,  though  it  may  support  an 
action  against  the  agent  for  a  breach  of  trust,  cannot  subject  him  to  liability 
for  a  conversion.  It  is  true  that  the  acts  to  which  this  rule  has  been  ap- 
plied seem  to  us  to  be  no  more  within  the  bounds  of  the  agent's  powers 
than  were  his  acts  in  other  instances  in  which  the  rule  was  deemed  inappli- 
cable. Thus  it  has  been  held  that  an  agent  authorized  to  sell  goods,  but 
directed  not  to  sell  them  on  credit,  or  unless  he  obtains  a  specified  price, 
was  not  guilty  of  their  conversion,  but  only  of  a  breach  of  duty,  when  he  sold 
them  on  credit,  or  for  a  price  less  than  that  apecified:  Sarjeant  v.  Blunt,  16 
Johns.  73;  Loveless  v.  Fowler,  79  Ga.  134;  11  Am.  St.  Rep.  407;  Cairnes  v. 
Bleecker,  12  Johns.  304;  Du/resne  v.  Hutchinson,  3  Taunt.  117.  So  far  as  we 
have  been  able  to  ascertain,  the  rule  has  not  been  applied  except  to  sales  of 
property  made  when  the  agent  was  authorized  to  sell,  but  had  violated  his 
instructions  by  selling  for  a  price  less  than  that  authorized  by  his  principal, 
or  upon  credit  when  the  latter  commanded  the  sale  to  be  made  for  cash  only. 
We  are  not  able  to  comprehend  why  a  aale  on  credit  can  be  held  to  be  au- 
thorized when  an  agent  waa  directed  to  sell  for  cash  only,  or  how  authority 
given  him  to  sell  for  a  price  specified  can,  under  ordinary  circumstances, 
authorize  him  to  sell  for  an  entirely  different  price;  and  it  seems  to  us  that 
in  either  event,  when  he  departs  from  his  instructions,  he  cannot,  as  between 
himself  and  his  principal,  be  regarded  as  making  other  than  a  tortious  and 
unlawful  use  and  disposition  of  the  latter's  property,  for  which  redress  ought 
to  be  given  by  an  action  of  trover.  However  this  may  be,  it  seems  to  be 
conceded  that,  with  the  exception  of  sales  made  under  the  circumstances 
indicated,  any  use  or  disposition  of  chattels  by  an  agent  contrary  to  the  in- 
structions of  his  principal  may  be  treated  by  the  latter  as  a  conversion: 
Laverty  v.  Snethen,  68  N.  Y.  522;  23  Am.  Rep.  184;  Syeds  v.  Hay,  4  Term 
Rep.  260;  Hynes  v.  Patterson,  95  N.  Y.  1;  Bachjer  v.  Hatch,  71  Me.  562. 
Hence  it  has  been  held  conversion  by  an  agent,  when  intrusted  with  a 
watch  for  the  purpose  of  having  it  appraised  by  a  watchmaker,  with  a  view 
to  procuring  a  loan  thereon,  that  he  permitted  it  to  go  out  of  his  possession 
and  to  be  levied  upon  under  a  writ  not  against  its  owner:  Spencer  v.  Black- 
man,  9  Wend.  167;  or  when  directed  to  sell  wheat  at  a  specified  price  on  a 
day  named,  and  if  not  sold  on  that  day  to  ship  it  to  New  York,  he  did  not 
sell  it  on  the  day  designated,  but  on  the  day  following:  Scott  v.  Rogers,  31 
N.  Y.  676. 

A  bailee  of  personalty  making  a  disposition  of  it  not  warranted  by  the 
contract  of  bailment  becomes  thereby  guilty  of  its  conversion:  Loeschnm  v. 
Machin,  2  Stark.  .SIX.  Hence  an  agent  is  answerable  for  a  conversion  of  a 
ohattel,  whether  intrusted  to  him  for  the  purpose  of  selling  it  or  not,  when 


May,  1890.]  BoLLiNa  v.  Kirby.  815 

he  pledges  it  as  collateral  security  for  his  own  debt:  S(a(e  v.  Berning,  74  Mo. 
87;  BinUnll  v.  Davenport,  43  Hun,  552;  Newconib- Buchanan  Co.  v.  Bafikett, 
14  Bush,  658;  Nichols  v.  Oage,  10  Or.  82;  Hall  v.  Corcoran,  107  Mass.  '251; 
9  Am.  Rep.  30;  or  exchanges  it  for  other  property:  Ainsxoorth  v.  Partillo,  13 
Ala.  460;  Atkinson  v.  Jones,  72  Ala.  248;  or  sells  it,  in  the  absence  of  authority 
80  to  do,  whether  such  want  of  authority  results  from  the  fact  that  no  power 
of  sale  existed  under  any  circumstances,  or  from  the  failure  to  comply  with 
some  condition  precedent  to  the  existence  of  that  power:  Ronenzweig  v. 
Eraser,  82  Ind.  342;  Sanhorn  v.  Colman,  6  N.  H.  14;  23  Am.  Dec.  703. 
Though  a  bailee  has  an  interest  in  property  in  his  possession  which  he  may 
rightfully  transfer,  as  where  he  is  its  lessee,  or  holds  it  under  a  conditit)nal 
purchase,  yet  if  he  makes  an  absolute,  unqualified  transfer,  his  act  is  incon« 
sistent  with  the  owner's  title,  and  is  a  conversion:  Swi/t  v.  Moseley,  10  Vt. 
208;  33  Am.  Dec.  197;  Sims  v.  James,  62  Ga.  260. 

Bailee,  when  Guilty  of  Conversion.  —  A  bailee,  though  he  does  not 
■ell  the  property  in  his  care  nor  part  with  its  custody,  may  be  adjudged 
gailty  of  its  conversion  when  he  misuses  or  abuses  it.  Manifestly  there 
may  be  some  misuse  or  abuse  of  property  for  which  a  guilty  party  will  not 
be  answerable  as  for  its  conversion,  but  it  is  difficult,  and  perhaps  impossi- 
ble, to  formulate  any  test  by  which  to  determine  what  abuses  are  conver- 
sions and  what  are  not.  It  seems  to  be  certain,  however,  that  a  misuse  or 
abuse  which  the  owner  of  property  is  entitled  to  treat  as  its  conversion 
must  be  intentional,  and  inconsistent  with  the  respective  rights  of  the  bailee 
and  bailor  expressed  in  or  implied  by  their  contract  of  bailment.  A  loan 
by  a  bailee  of  railway  bonds  in  his  custody  to  one  who  agrees  to  return  them 
upon  request  has  been  held  to  make  both  the  borrower  and  the  lentler  liable 
for  their  conversion:  Brannerv.  Branner,  1  Lea,  101.  It  has  also  been  held 
that  a  conversion  occurs  when  an  agister  of  cattle  uses  them  without  author- 
ity: Oove  v.  Watson,  61  N.  H.  1.3G;  and  when  a  hirer  of  a  horse  or  vehicle  to 
be  driven  to  a  particular  place  drives  it  beyond  that  place,  or  in  a  diflfereiit 
direction  from  it:  Wheelock  v.  Wheelwright,  5  Mass.  104;  Homer  v.  Thwing, 
3  Pick.  492;  Lucas  v.  Trumbull,  15  Gray,  306;  Woodman  v.  HuhJtard,  25 
N.  H.  07;  57  Am.  Dec.  300;  Fish  v.  Ferris,  5  Duer,  49;  Dlsbrowv.  Tenhroeck, 
4E.  D.  Smith,  397;  Hart  v.  Skinner,  16  Vt.  138;  42  Am.  Dec.  500.  But  to 
warrant  the  holding  of  a  bailee  for  a  conversion,  the  act  done  by  him  must 
be  intentional,  and  inconsistent  with  the  contract  of  bailment.  Hence, 
though  he  hired  a  horse  to  go  to  and  return  from  a  particular  place,  yet  if, 
in  returning,  he  innocently  got  upon  the  wrong  road,  and  after  discover- 
ing his  error  took  what  he  believed  to  be  the  best  way  back,  he  did  not 
thereby  convert  such  horse,  though  the  way  chosen  was  circuitous  and  led 
through  another  town:  Spooner  v.  Manchester,  133  Mass.  270;  43  Am.  Rep. 
514.  Neither  can  he  be  held  for  a  conversion  where  the  alleged  abuse  con- 
sisted of  an  omission,  though  such  omission  was  stipulated  against  in  the 
contract  of  bailment,  as  where  he  procured  a  horse  to  go  and  return  from 
a  place  without  stopping,  but  stopped  half-way  to  see  a  friend,  and  dur- 
ing the  stoppage  put  the  animal  in  a  stable  to  be  fed:  Evans  v.  Mason,  64 
N.  H.  98. 

Common  Carrier,  when  G{»ilty  of  Conversion. — If  a  bailee  has  pos- 
session of  chattels  as  a  common  carrier,  his  mere  non-feasance  cannot  render 
him  liable  for  a  conversion,  as  where  the  property  is  lost  through  his  negli- 
gence, or  he  fails  to  transport  or  deliver  it  within  a  reasonable  time:  Pack- 
ard V.  GetiiHtn,  4  Wend.  613;  21  Am.  Dec.  166;  Hawkin-^  v.  Hoffman,  6  Hill, 
586;  41  Am.  Dec.  707;  liobiason  v.  Audin,    ~  Gray,   564;   Bowlin  v.   Nye,   10 


816  BoLLiNa  V.  KiRBY.  [Alabama, 

Cush.  417;  Sr>;/g8  v.  New  York  etc.  B.  R.  Co.,  28  Barb.  515;  but  if  he  does 
any  affirmative  act  inconsistent  with  the  ric'lits  of  the  owner  of  the  property, 
the  effect  is  different:  Bench  v.  Walker,  14  Mass.  499.  It  has  been  held  that 
if  a  carrier,  instead  of  going  the  ordinary  route,  adopts  an  extraordinary 
one,  and  while  out  of  such  ordinary  route  the  property  intrusted  to  him  is 
lost,  he  is  answerable  for  its  conversion:  Phillips  v.  Bri'jham,  2G  Ga.  317;  71 
Am.  Dec.  227.  If,  when  possession  of  property  is  demanded,  he  unquali- 
fiedly refuses  to  deliver  it:  Lockwood  v.  Bull,  I  Cow.  322;  13  Am.  Dec.  539; 
Packard  V.  Getman,  4  Wend.  613;  21  Am.  Dec.  1C6;  McEntee  v.  New  Jersey 
S.  Co.,  45  N.  Y.  34;  6  Am.  Rep.  28;  or  falsely  asserts  that  it  is  not  in  his 
possession:  Louisville  etc.  R'y  Co.  v.  Lawson,  88  Ky.  496,  — he  becomes  liable 
for  its  conversion.  A  like  liability  arises  when  he  delivers  it  to  a  person 
not  entitled  to  it:  Erie  Dispatch  v.  Johnson,  87  Tenn.  490;  Sword  v.  Young, 
89  Tenn.  126;  Weyand  v.  Atchison  etc.  R'y  Co.,  75  Iowa,  573;  9  Am.  St.  Rep. 
504;  Claflin  v.  Boston,  &  L.  R.  R.  Co.,  7  Allen,  341;  Hawkins  v.  Hoffman,  6 
Hill,  586;  41  Am.  Dec.  767;  Merchants' D.  Co.  v.  Merriam,  111  Ind.  5;  Ycndv. 
Harbottle,  Peake,  49;  Devereux  v.  Barclay,  2  Barn.  &  Adol.  702;  Stephenson  v. 
Hart,  4  Bing.  476;  1  Moore  &  P.  357;  McEntee  v.  New  Jersey  Steamboat  Co.,  45 
N.  Y.  34;  6  Am.  Rep.  28;  though  such  person  is  an  officer  claiming  a  right  to 
take  it  under  process  then  in  his  hands:  Keff  v.  Old  Colony  R'y  Co.,  117 
Mass.  591;  19  Am.  Rep.  429;  Gihhons  v.  Farwell,  63  Mich.  344;  6  Am.  St. 
301;  Benjiett  v.  American  Exp.  Co.,  83  Me.  236;  23  Am.  St.  Rep.  774.  Be- 
cause a  carrier  is  under  obligation  to  deliver  to  tlie  proper  person,  and  is 
answerable  for  a  misdelivery,  he  cannot  be  treated  as  guilty  of  a  conver- 
sion, though  he  has  refused  to  make  delivery  to  the  party  entitled  thereto, 
if,  under  the  circumstances,  the  refusal  was  qualified  and  reasonable,  and 
made  upon  the  ground  that  the  person  making  the  demand  had  not  sup- 
ported it  by  sufficient  evidence  of  his  ownership  of  the  property,  or  of  his 
right  to  the  possession  thereof:  McEntee  v.  New  Jersey  Steamboat  Co.,  45  N. 
Y.  34;  6  Am.  Rep.  28. 

Mortgagor  or  Mortgagee,  Conversion  of  Chattels  by.  —  When  chat- 
tels are  mortgaged,  any  disposition  of  them  inconsistent  with  the  rights 
either  of  the  mortgagor  or  the  mortgagee,  by  whomsoever  made,  may  be 
treated  as  a  conversion,  as  where  the  mortgagee  sells  before  condition 
broken:  Eslow  v.  Mitchell,  26  Mich.  500;  or  after  he  has  sold  sufficient  of 
the  chattels  to  discharge  the  mortgage  debt  then  due:  Brink  v.  Frtoff,  40 
Mich.  610;  44  Mich.  69;  or  a  second  mortgagee  sells  chattels  without  dis- 
charging the  claims  of  the  prior  mortgage:  Kleinbenjer  v.  Brown.  8  N.  Y .  Sup. 
866.  A  mortgagor,  while  he  continues  in  possession  and  entitled  to  posses- 
sion, has  an  interest  in  the  property  which  he  may  transfer,  or  which  may 
be  seized  in  satisfaction  of  his  debts;  and  no  transfer  or  seizure  which  recog- 
nizes the  rights  of  the  mortgagee  and  is  not  inconsistent  with  them  can  be 
treated  by  him  as  a  conversion:  Hefiin  v.  Slay,  7b  Ala.  ISO;  Harbison  v. 
Harrell,  19  Ala.  753;  Hathaway  v.  Bray  man,  42  N.  Y.  322;  1  Am.  Rep.  524. 
On  the  other  hand,  any  sale,  or  seizure,  or  detention  of  possession  in  defiance 
of  the  mortgagee's  rights,  whether  by  the  mortgagor  or  any  other  person,  is 
a  conversion  for  which  the  mortgagee  is  entitled  to  redress  by  an  action  of 
trover:  Millar  v.  Allen,  10  R.  I.  49;  Ashmead  v.  Kellogg,  23  Conn.  70;  Coles 
v.  Clark,  3  Cush.  399;  Leonard  v.  Hair,  133  Mass.  455;  Black  v.  Hoioell,  56 
Iowa,  630;  Jorgensonv.  Tait,  26  Minn.  327;  Freeman  on  Executions,  sec.  117. 

Co-tenant,  when  Guilty  of  Conversion.  — A  part  owner  of  a  chattel 
may  be  guilty  of  a  conversion  of  the  interest  of  his  co-owner,  and,  upon 
principle,  the  test  by  which  to  determine  whether  he  has  been  so  guilty  or 


May,  1890.]  Bollinq  v.  Kirby.  817 

not  is  the  same  as  in  other  cases,  though  the  difficulty  in  applying  it  is 
greater.  A  conversion,  whether  the  wroug-doer  is  a  part  owner  of  the  chat- 
tel converted  or  not,  is  some  use  or  disposition  of  it  in  defiance  of  or  incon* 
sistent  with  the  rights  of  the  true  owner.  A  part  owner  of  a  chattel  is 
entitled  in  manyjrespects  to  make  the  same  use  of  it,  when  in  his  possession, 
as  if  he  were  an  owner  in  severalty;  and  such  uses  as  he  may  lawfully  make 
and  such  dominion  as  he  may  lawfully  exercise  cannot  be  inconsistent  with 
the  rights  of  his  co-owner,  and  the  latter  cannot  therefore  treat  them  as  a 
conversion  of  his  interest.  A  part  owner  of  a  chattel  is  entitled  to  remain 
in  its  exclusive  possession,  and  to  use  it  exclusively  while  in  such  possession, 
in  any  ordinary  and  proper  mode  of  using  it,  and  therefore  is  not  liable  in 
trover  or  otherwise  to  his  co-tenant  for  such  possession  or  use:  Freeman  on 
Cotenancy,  sec.  306;  Gilbert  v.  Dickerson,  7  Wend.  449;  22  Am.  Dec.  592; 
Hall  V.  Page,  4  Ga.  428;  48  Am.  Dec.  235;  Farr  v.  Smith,  9  Wend.  338;  24 
Am.  Dec.  162;  Kilgore  v.  Wood,  56  Me.  150;  96  Am.  Dec.  440.  If,  however, 
such  possession  and  use  are  maintained  and  continued  under  a  denial  that  his 
co-tenant  has  any  interest  whatever  in  the  property,  and  a  claim  that  the 
possessor  is  its  owner  in  severalty,  then  it  has  been  -held  that  a  conversion 
takes  place:  Bray  v.  Bray,  30  Mich.  479;  Orove  v.  Wise,  39  Mich.  161;  Pot' 
ter  v.  Neal,  62  How.  Pr.  158.  So  where  chattels  were  of  a  peculiar  charac- 
ter and  susceptible  of  one  use  only,  a  part  owner  who  took  and  maintained 
exclusive  possession,  neither  using  them  himself  or  permitting  their  use  by 
his  co-tenant,  was  adjudged  to  be  guilty  of  their  conversion:  Agneio  v.  John- 
ton,  17  Pa.  St.  373;  55  Am.  Dec.  565. 

If  chattels  owned  in  co-tenancy  are  of  such  a  character  that  a  division  of 
them  can  be  made  by  each  part  owner  taking  a  quantity  thereof  proportion- 
ate to  his  interest,  without  any  possibility  of  such  division  being  unfair,  as 
where  money,  or  wheat,  or  other  grain  is  held  in  common,  he  has  a  right  to 
make  such  division,  and  to  sever  and  take  his  share,  and  any  prevention  of 
the  exercise  of  this  right  is  a  conversion:  Lohdell  v.  Stowell,  51  N.  Y.  70; 
DaU  V.  Fuller,  50  Wis.  501;  Piquet  v.  Allison,  12  Mich.  330;  86  Am.  Dec. 
54;  Webh  v.  Mann,  3  Mich.  139;  Stall  v.  Wilbur,  11  N.  Y.  158.  A  like  result 
follows  when  a  co-tenant,  who  has  agreed  to  take  the  common  property  to  a 
designated  place  for  the  purpose  of  there  dividing  it,  takes  it  to  a  different 
place,  and  claims  to  have  succeeded  to  the  interest  of  his  co-tenant  under 
the  contract  of  purchase:  Ripley  v,  Davis,  15  Mich.  75;  90  Am.  Dec.  262. 

No  co-tenant  has  any  right  to  destroy  the  subject-matter  of  the  co-tenancy, 
or  to  put  it  to  any  use  which  must  preclude  all  further  enjoyment  of  it  by 
his  co-tenant,  or  to  mingle  it  with  other  property  so  that  its  identity  is  lost 
and  cannot  be  restored,  or  to  so  injure  or  expose  it  to  peril  that  it  must  be- 
come either  lost  or  worthless,  and  therefore  each  of  these  acts,  because  it  is 
inconsistent  with  the  interest  of  another  part  owner,  may  be  by  him  treated 
as  a  conversion:  Delaney  v.  Boot,  99  Mass.  546;  97  Am.  Dec.  52;  Freeman  on 
Cotenancy,  sees.  312-318;  Ttibbs  v.  Richardson,  6  Vt.  442;  27  Am.  Dec.  570; 
Guyther  v.  Pettijohn,  6  Ired.  388;  45  Am.  Dec.  499;  Lowe  v.  Miller,  3  Gratt. 
205;  46  Am.  Dec.  188;  Redinylon  v.  Chase,  44  N.  H.  36;  82  Am.  Dec.  189; 
Cowan  V.  Buyers,  Cooke,  53;  5  Am.  Dec.  668. 

A  part  owner  of  a  chattel  may  undoubtedly  sell  his  interest  therein,  and 
transfer  to  his  vendee  all  the  rights  possessed  by  himself  before  the  sale,  but 
he  has  no  power  to  act  for  his  co-tenant,  or  to  sell  or  transfer  any  interest  in 
excess  of  his  moiety.  He  may,  however,  undertake  to  sell  the  entirety.  If 
he  does  so,  his  act  is  inconsistent  with  the  title  of  his  co-owner,  and,  upon 
principle,  should  be  regarded  as  an  unlawful  couversion  of  the  hitter's  inter- 
Am.  St.  Rkp.,  Vol.  XXIV.  — 52 


818  BoLLiNG  V.  KiRBY.  [Alabama, 

est.  Such  a  majority  of  the  American  cases  upon  the  subject  declare  it  to  be: 
Dyckman  v.  Valiente,  42  N.  Y.  560;  Dain  v.  Cowing,  22  Me.  347;  39  Am. 
Dec.  585;  Carrv.  Doilje,  40  N.  H.  403;  Yamhill  B.  Co.  v.  Newhy,  1  Or.  173; 
Coursins  Appeal,  79  Pa.  St.  220;  Warreii  v.  Aller,  1  Pinney,  479;  44  Am. 
Dec.  406;  Lowe  v.  Miller,  3  Gratt.  213;  46  Am.  Dec.  188;  i?am.s-  v.  Mc- 
Nairy,  4  Humph.  358;  40  Am.  Dec.  651;  Person  v.  William-'i,  25  Minn. 
189;  Wheeler  v.  Wheeler,  33  Me.  347;  Permiuter  v.  Kelly,  18  Ala.  710; 
54  Am.  Dec.  177;  Nowlen  v.  Colt,  6  Hill,  461;  41  Am.  Dec.  756;  Nail  v. 
Page,  4  Ga.  428;  48  Am.  Dec.  235;  Hyde  v.  Stone,  9  Cow.  230;  18  Am. 
Dec.  501;  Hutchinson  v.  Chase,  39  Me.  508;  63  Am.  Dec.  645;  Burbunk  v. 
Crooker,  7  Gray,  158;  66  Am.  Dec.  470;  while  the  English  decisions  and 
those  of  a  few  of  the  American  states  deny  that  a  sale  by  a  part  owner  can 
be  a  conversion  of  the  interest  of  his  co-tenant,  unless  accompanied  by  pecu- 
liar circumstances  resulting  in  the  loss  of  the  property  to  the  latter:  Sanborn 
V.  Merrill,  15  Vt.  700;  40  Am.  Dec.  701;  Welch  v.  Clark,  12  Vt.  681;  36  Am. 
Dec.  368;  Pitt  v.  Petivay,  12  Ired.  73;  Rooks  v.  Moore,  1  Busb.  1;  57  Am. 
Dec.  569;  Barton  v.  Williams,  5  Barn.  &  Aid.  403;  Mayhew  v.  Hfrrirk,  7 
Com.  B.  229;  13  Jur.  1078;  18  L.  J.  Com.  P.  179;  Morgan  v.  Marqtm,  9  Ex:. 
145;  Brady  v.  Arnold,  19  U.  C.  C.  P.  46;  Freeman  on  Cotenancy,  sec.  309. 
Personalty  Which  may  be  Converted.  —  Every  species  of  personal 
property  which  is  subject  to  ownership,  and  over  which  another  than  the 
owner  can  exercise  dominion  or  control  in  defiance  of  or  inconsistent  with 
the  owner's  rights,  may,  when  such  dominion  or  control  is  so  exercised, 
be  regarded  as  converted:  Spalding  v.  Preston,  21  Vt.  9;  50  Am.  Dec.  68. 
Hence  an  action  of  trover  may  be  sustained  for  the  conversion  of  money  or 
bank  bills:  Moody  v.  Keener,  7  Port.  218;  promissory  notes  and  other  evi- 
dence of  indebtedness:  Lowremorev.  Berry,  19  Ala.  130;  54  Am.  Dec.  188; 
Day  V.  Whitney,  1  Pick.  503;  Davis  v.  Funk,  39  Pa.  St.  243;  SO  Am.  Dec. 
519;  Griswold  v.  Judd,  1  Root,  221;  Comparet  v.  Burr,  5  Blackf.  419;  Brick- 
house  V.  Brickhoiise,  11  Ired.  404;  Otisjield  v.  Mayheri~y,  63  Me.  197;  Stone  v. 
Clough,  41  N.  H.  290;  Penniman  v.  Wimier,  54  Md.  127;  contracts  for  the 
sale  of  land  and  other  property:  Hazewell  v.  Coursen,  45  N.  Y.  Sup.  Ct.  22;  cer- 
tificates of  the  stock  of  corporations:  Kingman  v.  Pierce,  17  Mass.  247;  Payne 
V.  Elliot,  54  Cal.  339;  35  Am.  Rep.  SO;  Neiler  v.  Kelley,  69  Pa.  St.  403;  Budd 
V.  R.  R.  Co.,  12  Or.  271;  53  Am.  Rep.  355;  Daggett  v.  Davis,  53  Mich.  35; 
51  Am.  Rep.  91;  copies  of  accounts:  Fullam  v.  Cummings,  16  Vt.  697; 
O'Donogliue  v.  Corby,  22  Mo.  394;  writs  of  execution:  Keeler  v.  Fassett,  21 
Vt.  539;  52  Am.  Dec.  71;  and  fixtures,  which,  either  from  their  character, 
mode,  or  annexation,  or  the  agreement  of  the  parties,  remain  personal  prop- 
erty: Smith  V.  Benson,  1  Hill,  176;  Osgood  v.  Howard,  6  Greenl.  452;  20  Am. 
Dec.  322;  Harris  v.  Powers,  57  Ala.  139;  Duine  v.  Dawe,  38  N.  H.  429;  75 
Am.  Dec.  195;  Korbe  v.  Barfour,  130  Mass.  255;  Powers  v.  Harris,  68  Ala. 
409;  Russell  v.  Richards,  11  Me.  371;  26  Am.  Dec.  532;  Hilhorne  v.  Brown,  12 
Me.  162;  Brown  v.  Wallis,  115  Mass.  156;  Crippen  v.  Morrison,  13  Mich.  23; 
but  it  is  said  that  such  an  action  is  not  sustainable  for  the  conversion  of 
judgments  or  other  records:  Piatt  v.  Potts,  11  Ired.  260;  53  Am.  Dec.  412; 
Cobb  V.  Cornegay,  6  Ired.  358;  45  Am.  Dec.  497.  The  fact  that  the  property 
alleged  to  have  been  converted  has  no  value  except  to  its  owner  will  nob 
defeat  an  action  for  its  conversion:  Pierce  v.  Gilson,  9  Vt.  216;  Piatt  v.  Potts, 
11  Ired.  266;  53  Am.  Dec.  412;  Lowremore  v.  Berry,  19  Ala.  130;  54  Am. 
Dec.  188.  Where  a  bond,  note,  or  other  evidence  of  indebtedness  is,  after 
its  payment,  seized,  detained,  or  transferred  by  a  person  having  no  right  so 
to  do,  when  it  is  no  longer  capable  of  being  asserted  as  a  cause  of  action,  some 


May,  1890.]  Roach  v.  Privett.  819 

of  the  cases  have  regarded  it  as  so  extinguished  by  the  payment  as  no  longer 
to  be  the  subject  of  conversion:  BesJverer  v.  Swisher,  3  N.  J.  L.  748;  Todd 
V.  Croohha?iJcs,  3  Johns.  432;  Lowremore  v.  Berry,  19  Ala.  130;  C4  Am.  Dec. 
188;  PkUt  V.  Potts,  11  Ired.  266;  53  Am.  Dec.  412.  While,  in  other  cases, 
any  wrongful  disposition  of  a  paid  note  or  bond  has  been  adjudged  to  amount 
to  its  conversion  as  against  the  maker,  who  b^'  such  payment  becomes  en- 
titled to  its  possession:  Stone  v.  Cloitgh,  41  N.  H.  290;  Otisfield  v.  Mayherry, 
63  Me.  197;  Neal  v.  Hanson,  60  Me.  84;  Buck  v.  Kent,  3  Vt.  99;  21  Am.  Dec. 
576;  Spencer  v.  Dearth,  43  Vt.  98.  If  a  note  is  founded  upon  illegal  consid- 
erations, the  payee  cannot  sustain  an  action  for  its  conversion:  Morrill  v, 
Ooodenow,  65  Me.  178;  nor  can  such  action  be  maintained  in  any  instance 
when  the  thing  converted  is  such  that  it  was  unlawful  and  criminal  for  the 
plaintiff  to  have  it  in  his  possession,  as  where  it  is  a  counterfeit  coin,  or  an 
implement  designed  to  aid  in  the  making  of  such  coin:  Spalding  v.  Preston, 
21  Vt.  9;  50  Am.  Dec.  68. 


KoACH  V.  Privett. 

[90  Alabama,  391.J 

JiTDOMENTS  —  MERGER  —  FOREIGN  JUDGMENT.  —  A  judgment  appealed  from 
is  merged  in  a  judgment  of  afiRrmance  on  appeal.  This  rule  applies  in 
a  suit  on  a  judgment  of  affirmance  rendered  in  another  state. 

Judgments  —  Merger  by  Affirmance  —  J  aRiSDicTiON.  —  When  the  judg- 
ment sued  on  was  affirmed  on  appeal,  and  the  defendant  submitted  him- 
self to  the  jurisdiction  of  the  appellate  court,  he  cannot  assail  it  on  the 
ground  that  the  trial  court  never  acquired  jurisdiction  of  his  person. 
This  rule  applies  to  affirmed  judgments  of  other  states. 

Judgments  —  CoNCLUSivENEsa  of,  as  against  Set-off.  —  A  set-off  may 
or  may  not  be  pleaded,  at  the  election  of  the  defendant;  and  if  not 
pleaded,  the  right  to  sue  upon  it  as  an  independent  cause  of  action,  or 
to  rely  upon  it  in  defense  to  another  action  by  the  same  plaintiff,  is  not 
affected  or  impaired  by  a  judgment  against  the  defendant.  This  rule 
applies  to  a  suit  on  a  judgment  rendered  in  another  state,  in  the  absence 
of  proof  that  a  different  rule  prevails  there. 

Practice  —  Error  without  Injury  in  Exclusion  of  Evidence. — When 
evidence  is  erroneously  excluded,  the  rule  of  error  without  injury  can- 
not be  invoked,  on  the  ground  that  the  ruling  was  made  after  all  the 
evidence  on  that  point  had  been  adduced,  and  that  the  evidence  was  in- 
sufficient. 

Judgments.  —  Parol  Evidence  of  Justice's  Judgment  rendered  during  s 
former  term  of  office  is  not  admissible  on  proof  of  search  in  his  office  for 
his  docket  and  papers,  and  in  the  absence  of  proof  that  he  has  been  in 
office  continually  since  the  judgment  was  rendered,  or  has  succeeded 
himself  after  being  out  one  or  more  terms. 

William  L.  Martin  and  J.  E.  Brown,  for  the  appellant. 
Hunt  and  Clopton,  for  the  appellee. 

McClellan,  J,     The  judgment  sued  on  was  rendered  by 
the   supreme  court  of  Tennessee  on   appeal   from   a  circuit 


MERICAN  STATE  REPOliTS. 

V(^<  ^<t;:i-s;)o. 

STATE  :-.  GOODWlL[..   STATE  r^   MINOR. 

|33  Wkst  Vik(;ima,   171).! 

Constitutional  law,  equal  rights  employers  and  employes, 


Nov.  1889.]  State  v.  Goodwill.  8G3 

Watercourses  —  Floatable  Stream  —  Right  of  Land-owner  to  Erect 
Mill-dam. — The  owner  of  soil  over  which  a  floatable  stream  passes  may 
build  a  dam  across  it,  but  he  must  furnish  a  suitable  sluice  for  the  public  by 
or  through  his  dam:  Lancey  v.  Clifford,  54  Me.  487;  92  Am.  Dec.  51)1 ;  Dwi- 
net  V.  Veazie,  44  Me.  167;  69  Am.  Dec.  94,  and  note;  note  to  Statev,  Thomp- 
ton,  47  Am.  Dec.  589;  Richards  v.  Peter,  70  Mich.  286. 


State  v.  Goodwill.     State  v.  Minor. 

[33  West  Virginia,  179.J 

Constitutional  Law  —  Equal  Rights. — The  Rights  of  Evert  Indi- 
vidual must  stand  or  fall  by  the  same  rule  of  law  that  governs  every 
other  member  of  the  body  politic  under  similar  circumstances,  and 
every  partial  or  private  law  which  directly  proposes  to  destroy  or  afl"ect 
individual  rights,  or  does  the  same  thing  by  restricting  the  privileges  of 
certain  classes  of  citizens,  and  not  of  others,  when  there  is  no  public 
necessity  for  such  discrimination,  is  unconstitutional  and  void. 

Constitutional  Law.  —  The  Police  Power,  however  broad  and  extensive, 
is  not  above  the  constitution,  and  must  be  exercised  in  subordinacy  to 
it. 

Constitutional  Law  —  Employers  and  Employees.  —  A  statute  declar- 
ing that  all  persons  engaged  in  mining  coal,  ore,  or  other  minerals,  or 
mining  or  manufacturing  them,  or  either  of  them,  or  manufacturing  iron 
or  steel,  or  both,  or  any  other  kind  of  manufacturing,  shall  not  issue, 
for  the  payment  of  labor,  any  order  or  other  paper,  unless  the  same 
purports  to  be  redeemable  at  its  face  value  in  legal  money  of  the  United 
States,  bearing  interest  at  the  legal  rate,  made  payable  to  the  employee 
or  bearer,  and  redeemable  within  thirty  days  by  the  maker  thereof,  ia 
unconstitutional  and  void. 

Henritze  and  Hnytlie,  C.  W.  Smith,  J.  W.  St.  Clair,  and 
Brown  and  Jackson,  for  the  plaintiffs  in  error. 

Alfred  Caldwell,  attorney-general,  for  the  state. 

Snyder,  P.  These  two  cases  present  the  same  questions 
and  may  therefore  be  considered  together.  The  first  is  a 
writ  of  error  to  a  judgment  of  the  circuit  court  of  Mercer 
County  pronounced  on  April  3,  1889;  and  the  second  is  a 
writ  of  error  to  a  judgment  of  the  circuit  court  of  Fayette 
County  pronounced  September  29,  1887.  Both  are  indict- 
ments and  convictions  for  the  violation  of  section  3  of  chapter 
63,  Acts  of  1887:  See  Code  1887,  p.  963. 

The  title  of  said  act  is  as  follows:  "An  act  to  secure  to 
operatives  and  laborers  engaged  in  and  about  mines,  manu- 
factories of  iron  and  steel,  and  all  other  manufactories,  the 
payment  of  their  wages  at  regular  intervals,  and  in  lawful 
money  of  the  United  States."     And  the  first  and   third  sec- 


864  State  v.  Goodwill.  [W.  Virginia, 

tions  are  in  these  words:  "  1.  That  all  persons,  firms,  cor- 
porations, or  associations  in  this  state  engaged  in  mining 
coal,  ore,  or  other  minerals,  or  mining  and  manufacturing 
them,  or  either  of  them,  or  manufacturing  iron  or  steel,  or 
both,  or  any  other  kind  of  manufacturing,  shall  pay  their  em- 
ployees as  provided  in  this  act 3.  That  it  shall  not 

be  lawful  for  any  person,  firm,  company,  corporation,  or 
association  engaged  in  the  business  aforesaid,  their  clerk, 
agent,  officer,  or  servant,  in  this  state,  to  issue  for  the  payment 
of  labor  any  order  or  other  paper  whatsoever,  unless  the  same 
purports  to  be  redeemable,  for  its  face  value,  in  lawful  money 
of  the  United  States,  bearing  interest  at  the  legal  rate,  made 
payable  to  employee  or  bearer,  and  redeemable  within  a  period 
of  thirty  days  by  the  person,  firm,  company,  corporation,  or 
association  giving,  making,  or  issuing  the  same."  The  resi- 
due of  the  section  makes  its  violation  a  misdemeanor,  and 
fixes  the  penalty  at  not  less  than  twenty-five  dollars,  or  more 
than  one  hundred  dollars. 

There  was  a  demurrer  to  each  of  the  indictments,  which 
was  overruled  by  the  court;  and  the  plaintiffs  in  error  assign 
this  as  ground  for  the  reversal  of  the  judgments. 

The  main  question  argued  before  this  court  is,  whether  or 
not  the  said  statute  is  constitutional,  the  counsel  for  the  plain- 
tiff's in  error  contending  that  it  is  unconstitutional  and  void, 
and  the  attorney-general  insisting  that  it  is  a  proper  exercise 
of  the  police  power,  and  therefore  not  unconstitutional  and 
void. 

It  will  be  observed  that  this  statute  applies  to  certain 
specified  classes  of  persons,  firms,  companies,  corporations, 
and  associations,  and  none  others.  It  is  by  its  terms  limited 
to  persons,  corporations,  etc.,  engaged  in  mining  coal  or  other 
minerals,  or  any  kind  of  manufacturing.  While  these  terms 
include  not  only  all  persons  engaged  in  mining  coal  and 
other  minerals,  and  all  persons  engaged  in  manufacturing 
iron  and  steel,  but  also  all  persons  engaged  in  any  kind  of 
manufacturing,  such  as  the  shoemaker,  the  cigar-maker,  the 
undertaker,  the  distiller,  the  brick-maker,  the  jeweler,  the 
weaver,  the  milliner,  the  dairy-man,  and  the  miller,  it  does  not 
include  the  wholesale  merchant  with  his  hundreds  of  clerks 
and  agents,  the  railroad  construction  companies  or  railroad 
companies  with  their  thousands  of  employees.  The  propriety 
or  the  necessity,  if  such  exists,  of  applying  the  provisions  of 
the  statute  to  these  latter  is  equally  as  great,  if  not  greater, 


Nov.  1889.]  State  v.  Goodwill.  865 

as  it  is  to  any  of  the  former.  The  rights  and  privileges  of 
certain  specified  employers  are  abridged,  while  others  of  the 
same  class  are  left  free. 

By  the  first  section  of  the  fourteenth  amendment  of  the  con- 
stitution of  the  United  States,  all  persons  born  or  naturalized 
in  the  United  States  are  made  citizens  thereof;  and  it  then 
declares  that  "no  state  shall  make  or  enforce  any  law  which 
shall  abridge  the  privileges  or  immunities  of  citizens  of  the 
United  States."  And  the  bill  of  rights  of  this  state  declares 
that  "all  men  are  by  nature  equally  free  and  independent, 
and  have  certain  inherent  rights,  of  which,  when  they  enter 
into  a  state  of  society,  they  cannot  by  any  compact  deprive 
or  divest  their  posterity;  namely,  the  enjoyment  of  life  and 
liberty,  with  the  means  of  acquiring  and  possessing  property, 
*ad  of  pursuing  and  obtaining  happiness  and  safety  ":  Const., 
art.  3,  sec.  1.  Can  the  legislature,  in  view  of  these  constitu- 
tional guaranties,  limit  or  forbid  the  right  of  contract  between 
parties  under  no  mental,  corporal,  or  other  disability,  when 
the  subject  of  contract  is  lawful,  not  public  in  its  character, 
and  the  exercise  of  it  is  purely  private,  and  personal  to  the 
parties  themselves? 

The  court,  in  People  v.  Gillson,  109  N.  Y.  398,  4  Am.  St. 
Rep.  465,  says:  "The  term  'liberty,'  as  used  in  the  constitu- 
tion, is  not  dwarfted  into  mere  freedom  from  physical  re- 
straint of  the  person  of  the  citizen,  as  by  incarceration,  but 
is  deemed  to  embrace  the  right  of  man  to  be  free  in  the  enjoy- 
ment of  the  faculties  with  which  he  has  been  endowed  hy  his 
Creator,  subject  only  to  such  restraints  as  are  necessary  for 
the  common  welfare.  Liberty,  in  its  broad  sense,  as  under- 
stood in  this  country,  means  the  right,  not  only  of  freedom 
from  servitude,  in)prisonment,  or  restraint,  but  the  right  of 
one  to  use  his  faculties  in  all  lawful  ways,  to  live  and  work 
where  he  will,  to  earn  his  livelihood  in  any  lawful  calling, 
and  to  pursue  any  lawful  trade  or  avocation":  Field,  J.,  in 
Butchers*  Union  etc.  Co.  v.  Crescent  City  etc.  Co.,  Ill  U.  S. 
755;  Butchers*  Ass'n  v.  Crescent  City  Co.,  1  Abb.  398. 

The  court  in  Civil  Rights  Cases,  109  U.  S.  23,  says:  "Under 
the  Fourteenth  Amendment,  it  [Congress]  has  power  to  coun- 
teract and  render  nugatory  all  state  laws  and  proceedings 
which  have  the  effect  to  abridge  any  of  the  privileges  or  im- 
munities of  citizens  of  the  United  States,  or  to  deprive  them 
of  life,  liberty,  or  property  witiiout  due  process  of  law,  or  to 
deny  to  any  of  them  the  equal  protection  of  the  laws 

Am.  St.  Kep.,  Vol.  XXV.— 55 


866  State  v.  Goodwill.  [W.  Virginia, 

^lany  wrongs  may  be  obnoxious  to  the  prohibitions  of  the 
Fourteenth  Amendment,  which  are  not,  in  any  just  sense,  inci- 
dents or  elements  of  slavery.  Such,  for  example,  would  be 
the  taking  of  private  property  without  due  process  of  law;  or 
allowing  persons  who  have  committed  certain  crimes  (horse- 
stealing, for  example)  to  be  seized  and  hung  by  the  posse  covn- 
tatus  without  regular  trial;  or  denyin  gto  any  person  or  class 
of  persons  the  right  to  pursue  anj'  peaceful  avocation  allowed 
to  others.  What  is  called  'class  legislation'  would  belong  to 
this  category,  and  would  be  obnoxious  to  the  prohibitions  of 
the  Fourteenth  Amendment." 

The  rights  of  every  individual  must  stand  or  fall  by  the 
same  rule  of  law  that  governs  every  other  member  of  the  body 
politic  under  similar  circumstances;  and  every  partial  or  pri- 
vate law  which  directly  proposes  to  destroy  or  affect  individ- 
ual rights,  or  does  the  same  thing  by  restricting  the  privileges 
of  certain  classes  of  citizens,  and  not  of  others,  when  there  is 
no  public  necessity  for  such  discrimination,  is  unconstitutional 
and  void.  Were  it  otherwise,  odious  individuals  or  corporate 
bodies  would  be  governed  by  one  law,  and  the  mass  of  the 
community,  and  those  who  make  the  law,  by  another;  whereas 
a  like  general  law  affecting  the  whole  community  equally 
could  not  have  been  enacted:  Wally  v.  Kennedy,  2  Yerg.  554; 
24  Am.  Dec.  511. 

The  property  which  every  man  has  in  his  own  labor,  as  it 
is  the  original  foundation  of  all  other  property,  so  it  is  the 
most  sacred  and  inviolable.  The  patrimony  of  the  poor  man 
lies  in  the  strength  and  dexterity  of  his  own  hands;  and  to 
hinder  him  from  employing  these  in  what  manner  he  may 
think  proper,  without  injury  to  his  neighbor,  is  a  plain  viola- 
tion of  this  most  sacred  property.  It  is  equally  an  encroach- 
ment both  upon  the  just  liberty  and  rights  of  the  workman  and 
his  employer,  or  those  who  might  be  disposed  to  employ  him, 
for  the  legislature  to  interfere  with  the  freedom  of  contract  be- 
tween them,  as  such  interference  hinders  the  one  from  working 
at  what  he  thinks  proper,  and  at  the  same  time  prevents  the 
other  from  employing  whom  he  chooses.  A  person  living 
under  the  protection  of  this  government  has  the  right  to  adopt 
and  follow  any  lawful  industrial  pursuit,  not  injurious  to  the 
community,  which  he  may  see  fit.  And  as  incident  to  this  is 
the  right  to  labor  or  employ  labor,  make  contracts  in  respect 
thereto  upon  such  terms  as  may  be  agreed  upon  by  the  parties, 
to  enforce  all  lawful  contracts,  to  sue,  and  give  evidence,  and 


Nov.  1889.]  State  v.  Goodwill.  867 

to  inherit,  purchase,  lease,  sell,  and  convey  property  of  every 
kind.  The  enjoyment  or  deprivation  of  these  rights  and 
privileges  constitutes  the  essential  distinction  between  freedom 
and  slavery;  between  liberty  and  oppression.  These  princi- 
ples have  been  fully  recognized  and  announced  in  many  de- 
cisions of  the  supreme  court  of  the  United  States  and  other 
courts:  Yick  Wo  v.  Hopkins,  118  U.  S.  356;  Slaughter  House 
Cases,  16  Wall.  86;  Butchers^  Union  Co.  v.  Crescent  City  etc. 
Co.,  Ill  U.  S.  746;  6  Myer's  Fed.  Dec,  sec.  1000:  In  re  Ja- 
cobs, 98  N.  Y.  98;  50  Am.  Rep.  636;  People  v.  Marx,  99  N.  Y. 
377;  52  Am.  Rep.  34;  Ez  parte  Westerfield,  55  Cal.  550;  36 
Am.  Rep.  47;  Ragio  v.  State,  86  Tenn.  272;  State  v.  Divine^ 
98  N.  C.  778. 

The  vocation  of  an  employer,  as  well  as  that  of  his  em- 
ployee, is  his  property.  Depriving  the  owner  of  property  of 
one  of  its  attributes  is  depriving  him  of  his  property,  under 
the  provisions  of  the  constitution:  People  v.  Otis,  90  N.  Y.  48. 
The  right  to  use,  buy,  and  sell  property,  and  contract  in 
respect  thereto,  including  contracts  for  labor,  —  which  is,  as 
we  have  seen,  property,  — is  protected  by  the  constitution.  If 
the  legislature,  without  any  public  necessity,  has  the  power 
to  prohibit  or  restrict  the  right  of  contract  between  private 
persons  in  respect  to  one  lawful  trade  or  business,  then  it 
may  prevent  the  prosecution  of  all  trades,  and  regulate  all 
contracts.  "Questions  of  power,"  says  Marshall,  C.  J.,  in 
Brown  y.  Maryland,  12  Wheat.  419,  "do  not  depend  on  the 
degree  to  which  it  may  be  exercised.  If  it  may  be  exercised 
at  all,  it  must  be  exercised  at  the  will  of  those  in  whose  hands 
it  is  placed." 

No  one  questions  the  position  that,  unless  the  government 
intervened  to  protect  property  and  regulate  trade,  property 
would  cease  to  exist,  and  trade  would  exist  only  as  an  engine 
of  fraud;  but  this  does  not  authorize  the  government  to  do 
for  its  people  what  they  can  do  for  themselves.  The  natu- 
ral law  of  supply  and  demand  is  the  best  law  of  trade.  In 
Munn  V.  Illinois,  94  U.  S.  113,  and  other  cases  involving 
the  same  questions,  the  supreme  court  of  the  United  States 
has  held  that  persons  or  corporations  engaged  in  occupations 
in  which  the  public  have  an  interest  or  use  may  be  regulated 
by  statute.  But  the  reasons  assigned  for  these  decisions  are, 
that  the  public  has  a  use  in  these  occupations,  and  that  the 
persons  engaged  in  them  are  in  the  exercise  of  a  public  fran- 
chise, or  special  privileges,  not  enjoyed   by  others  not  so  en- 


8G3  State  v.  Goodwill.  [W,  Virginia, 

gaged;  that  their  business  implies  a  trust  and  public  duty; 
and  that  the  government  has  therefore  the  power  to  see  that 
this  trust  is  not  abused,  and  that  the  duty  imposed  by  it  is 
properly  performed.  On  this  principle,  statutes  have  been 
upheld  which  regulate  the  charges  of  railroad  companies  and 
other  common  carriers;  elevator,  telephone,  telegraph,  and 
other  companies;  hackmen,  warehousemen,  owners  of  water- 
mills,  etc.  But  we  are  aware  of  no  well-considered  case  in 
which  a  statute  has  been  upheld  that  undertook  to  regulate 
the  dealings  between  employer  and  employee,  even  in  this 
class  of  occupations,  much  less  in  cases  that  are  not  im- 
pressed with  a  public  trust  or  duty. 

But  the  claim  is  made  that  the  legislature  should  pass  fhe 
act  now  in  question,  in  the  exercise  of  the  police  power  which 
every  eovereign  state  possesses.  That  power  is  very  broad 
and  comprehensive,  and  is  exercised  to  promote  the  health, 
safety,  and  welfare  of  society.  Its  exercise  in  extreme  cases 
is  frequently  justified  by  the  maxim,  Salus  popidi  suprema 
lax  est.  It  is  used  to  regulate  the  use  of  property  by  enfor- 
cing the  rule.  Sic  utere  tuo  ut  alienum  non  Ixdas.  Under  it, 
the  conduct  of  an  individual  and  the  use  of  property  may  be 
regulated  so  as  to  interfere,  to  some  extent,  with  the  freedom 
of  the  one  and  the  enjoyment  of  the  other;  and  in  cases  of 
great  emergency,  engendering  overruling  necessity,  property 
may  be  taken  or  destroyed  without  compensation.  The  limit 
of  the  power  cannot  be  accurately  defined,  and  the  courts 
have  not  been  willing  definitely  to  circumscribe  it.  But  this 
power,  however  broad  and  extensive,  is  not  above  the  consti- 
tution, which  is  the  supreme  law;  and,  so  far  as  it  imposes 
restraints,  the  police  power  must  be  exercised  in  subordination 
to  it:  In  re  Jacobs,  98  N.  Y.  98;  50  Am.  Rep.  636;  Cooley's 
Constitutional  Limitations,  719;  Mugler  v.  Kansas,  123  U.  S. 
623. 

Generally,  it  is  for  the  legislature  to  determine  what  laws 
and  regulations  are  proper  in  the  exercise  of  the  police  power; 
but  if  it  passes  an  act  ostensibly  for  the  public  health  or 
safety,  and  thereby  destroys  or  takes  away  the  property  of  a 
citizen,  or  interferes  with  his  rights  or  personal  liberty,  then 
it  is  for  the  courts  to  determine  whether  it  is  a  proper  and 
reasonable  exercise  of  the  power,  and  if  it  is  not,  to  declare 
it  void:  Austin  v.  Murray,  16  Pick.  121;  State  v.  Gilman,  33 
\V.  Va.  146. 

The  right  to  regulate  the  rate  of  interest  existed  at  the  time 


Nov.  1889.]  State  i;.  Goodwill.  869 

the  constitution  was  adopted,  and  cannot  therefore  be  consid- 
ered as  either  an  abridgment  or  restraint  upon  the  rights  of 
the  citizen  guaranteed  by  the  constitution.  Tlie  power  to 
pass  usury  laws  exists  by  immemorial  usage;  but  such  is  not 
the  case  with  such  acts  as  we  are  now  considering:  Munn  v. 
Illinois,  94  a.  S.  113,  153. 

Our  act  is  almost  a  literal  copy  of  an  act  passed  by  the 
legislature  of  Pennsylvania  on  June  29,  1881:  Pa.  Laws,  1881, 
p.  147.  In  Godcharles  v.  Wigeman,  113  Pa.  St.  431,  the  supreme 
court  of  that  state  declared  the  first  four  sections  of  that  act 
unconstitutional  and  void.  The  court,  in  its  opinion,  says: 
"  The  first,  second,  third,  and  fourth  sections  of  the  act  of 
June  29,  1881,  are  utterly  unconstitutional  and  void,  inasmuch 
as  by  them  an  attempt  has  been  made  by  the  legislature  to 
do  what,  in  this  country,  cannot  be  done;  that  is,  prevent  per- 
sons who  are  sui  juris  from  making  their  own  contracts.  The 
act  is  an  infringement  alike  of  the  rights  of  the  employer  and 
the  employee.  More  than  this,  it  is  an  insulting  attempt  to 
put  the  laborer  under  a  legislative  tutelage,  which  is  not  only 
degrading  to  his  manhood,  but  subversive  of  his  rights  as  a 
citizen  of  the  United  States.  He  may  sell  his  labor  for  what 
he  tliinks  best,  whether  money  or  goods,  just  as  his  employer 
may  sell  his  iron  or  coal;  and  any  and  every  law  that  pro- 
poses to  prevent  him  from  so  doing  is  an  infringement  of  his 
constitutional  privileges,  and  consequently  vicious  and  void." 

In  Millett  V.  People,  117  111.  294,  57  Am.  Rep.  869,  the 
supreme  court  of  Illinois,  in  a  well-considered  opinion,  held 
unconstitutional  and  void  an  act  of  the  legislature  of  that 
state  which  required  the  owners  or  operators  of  mines  to  pro- 
vide scales  for  weighing  their  coal,  and  make  the  weight  of 
coal  the  basis  of  the  wages  of  miners.  A  part  of  the  syllabus 
is  as  follows:  "It  is  not  competent  for  the  legislature,  under 
the  constitution,  to  single  out  owners  and  operators  of  coal 
mines  and  provide  that  they  shall  bear  burdens  not  imposed 
on  other  owners  of  property  or  employers  of  labor,  and  prohibit 
them  from  making  contracts  which  it  is  competent  for  other 
owners  of  property  or  employers  of  labor  to  make.  Such  legis- 
lation cannot  be  sustained  as  an  exercise  of  the  police  power." 

In  view  of  what  the  courts  have  uniformly  held  in  respect 
to  this  class  of  legislation,  it  is  needless  to  prolong  this  dis- 
cussion. It  is  a  species  of  sumptuary  legislation  which  has 
been  utiiversally  condemned,  as  an  attempt  to  degrade  the 
intelligence,  virtue,  and  manhood  of  the  American  laborer, 


870  State  v.  Goodwill.  [W.  Virginia, 

and  foist  upon  the  people  a  paternal  government  of  the  most 
objectionable  character,  because  it  assumes  that  the  employer 
is  a  knave  and  the  laborer  an  imbecile. 

"Such  legislation,"  as  is  well  said  by  the  court  in  In  re 
JacobSf  98  N.  Y.  114,  50  Am.  Rep.  636,  "may  invade  one 
class  of  rights  to-day  and  another  to-morrow;  and  if  it  can 
be  sanctioned  under  the  constitution,  while  far  removed  in 
time,  we  shall  not  be  far  away  in  practical  statesmanship  from 
those  ages  when  governmental  prefects  supervised  the  build- 
ing of  houses,  the  rearing  of  cattle,  the  sowing  of  seed,  and 
the  reaping  of  grain,  and  governmental  ordinances  regulated 
the  movements  and  labor  of  artisans,  the  rate  of  wages,  the 
price  of  food,  the  diet  and  clothing  of  the  people,  and  a  large 
range  of  other  affairs  long  since,  in  all  civilized  lands,  re- 
garded as  outside  of  governmental  functions.  Such  govern- 
mental interferences  disturb  the  normal  adjustments  of  the 
social  fabric,  and  usually  derange  the  delicate  and  compli- 
cated machii^ery  of  industry,  and  cause  a  score  of  ills  while 
attempting  the  removal  of  one." 

For  the  reasons  aforesaid,  we  are  clearly  of  opinion  that  the 
said  third  section  of  the  act  aforesaid  is  unconstitutional  and 
void.  In  arriving  at  this  conclusion,  we  have  not  been  un- 
mindful that  the  power  of  the  courts  to  condemn  legislative 
acts  as  unconstitutional  is  one  of  great  delicacy,  and  to  be 
exercised  with  extreme  caution,  and  even  with  reluctance. 
But,  as  said  by  Chancellor  Kent  (1  Kent's  Com.  450),  "it  is 
only  by  the  free  exercise  of  this  power  that  courts  of  justice  are 
enabled  to  repel  assaults,  and  protect  every  part  of  the  gov- 
ernment and  every  member  of  the  commuity  from  undue  and 
destructive  innovations  upon  their  charter  rights." 

The  statute  itself  being,  as  we  have  seen,  unconstitutional 
and  void,  there  could  be  no  valid  indictment  founded  upon 
it;  and  consequently  the  circuit  court  erred  in  overruling  the 
demurrer  to  the  indictment  in  each  of  these  cases;  and  for 
that  reason  the  judgments  of  the  circuit  court  are  reversed, 
and  the  defendants  discharged. 


The    Fourteenth    Amendment   Considered  -with    Relation  to   Special 
Privileges,  Burdens,  and  Restrictions.* 

TTie  First  Section  of  the  FourteeMh  Amendment  to  the  constitution  of  the 
United  States  declares  that  "all  persons  born  or  naturalized  in  the  United 

*RBFERENCB  TO  MONOGRAPHIC  NOTES. 

Statutes  prohibiting  adulteration  of  milk:  51  Am.  Rep.  347-.S54. 
Statutes  prohibiting  business  on  Sunday:  49  Am.  Dec.  61i>-6-23. 
Statutes  regulating  sales  of  intoxicating  liquors:  35  Am.  Dec.  331-334. 


Nov.  1889.]  State  v.  Goodwill.  871 

States,  and  subject  to  the  jurisdiction  thereof,  are  citizens  of  the  United 
States,  and  of  the  state  wherein  they  reside.  No  state  shall  make  or  en- 
force any  law  which  shall  abridge  the  privileges  or  immunities  of  citizens  of 
the  United  States;  nor  shall  any  state  deprive  any  person  of  life,  liberty,  or 
property  without  due  process  of  law,  nor  deny  to  any  person  within  its  ju- 
risiliction  the  equal  protection  of  the  laws."  Many  of  the  state  constitu- 
tions contain  provisions  of  nearly  similar  import,  the  object  of  which  is  to 
secure  to  all  persons  equality  before  the  law,  and  to  prevent  the  imposition 
of  burdens  upon  one  person  to  which  others  are  not  subject  under  the  same 
circumstances.  No  questions  exceed  in  interest  and  importance  those  which 
present  for  judicial  determination  the  validity  of  statutes  assailed  on  the 
ground  that  they  concede  privileges  to,  or  impose  penalties  or  burdens  upon, 
one  or  more  persons  to  which  others  belonging  to  the  same  class  are  not  en- 
titled in  the  one  case  and  not  liable  in  the  other. 

Orujinal  Purpose  of  the  Fourteenth  Amendment.  — Speaking  of  the  amend- 
ments to  the  constitution  of  the  United  States  adopted  at  the  close  of  the 
Civil  War,  the  supreme  court  said:   "  We  repeat,  then,  in  the  light  of  this 
recapitulation  of  events,  almost  too  recent  to  be  called  history,  but  which 
are  familiar  to  us  all,  and  on  the  most  casual  examination  of  the  language  of 
these  amendments,  no  one  can  fail  to  be  impressed  with  the  one  pervading 
purpose  found  in  them  all,  lying  at  the  foundation  of  each,  and  without 
which  none  of  them  would  have  been  even  suggested;  we  mean  the  freedom 
of  the  slave  race,  the  security  and  firm  establishment  of  that  freedom,  and 
the  protection  of  the  newly  made  freeman  and  citizen  from  the  oppressions 
of  those  who  formerly  exercised  unlimited  dominion  over  him.     It  is  true 
that  only  the  Fifteenth  Amendment  in  terms  mentions  the  negro  by  speak- 
ing of  his  color  and  his  slavery.     But  it  is  just  as  true  that  each  of  the  other 
articles  was  addressed  to  the  grievances  of  that  race,  and  designed  to  rem- 
edy them,  as  the  fifteenth.     We  do  not  say  that  no  one  else  but  the  negro 
can  share  in  this  protection.     Both  the  language  and  spirit  of  these  articles 
are  to  have  their  fair  and  just  weight  in  any  question  of  construction.     Un- 
doubtedly, while  negro  slavery  alone  was  in  the  mind  of  the  Congress  which 
proposed  the  thirteenth  article,  it  forbids  any  other  kind  of  slavery,  now  or 
hereafter.      If   Mexican  peonage  or  the  Chinese  coolie  lal)or  system  shall 
develop  slavery  of  the  Mexican  or  Chinese  race  within  our  territory,  this 
amendment  may  be  safely  trusted  to  make  it  void.     And  so  if  other  rights 
are  assailed  by  the  states  which  properly  and  necessarily  fall  within  the 
protection  of  these  articles,  that  protection  will  apply,  though  the  party  in- 
terested may  not  be  of  African  descent.     But  what  we  do  say,  and  what  we 
wish  to  be  understood,  is,  that  in  any  fair  and  just  construction  of  any  sec- 
tion or  phrase  of  these  amendments,  it  is  necessary  to  look  to  the  purpose 
which  we  h;ive  said  was  the  pervading  spirit  of  them  all,  the  evil  which 
they  were  designed  to  remedy,  and  the  process  of  continued  addition  to  the 
constitution,  until  that  purpose  was  supposed  to  be  accomplished,  as  far  as 
constitutional  law  can  accomplish  it":  SlaiKjhter  Houne  Cases,  16  Wall.  71; 
Plunkard  v.  State,  67  Md.  864.     With  respect  to  the  privileges  or  immuni- 
ties of  citizens  of  a  state  as  contradistinguished  from  the  privileges  or  immu- 
nities of  citizens  of  the  United  States,  the  decision  from  which  we  have  just 
quoted  established  that  it  was  the  latter  only  which  were  secured  by  the 
Fourteenth  Amendment,  and  that  if  there  were  any  difference  between  the 
privilegus  and  immunities  "belonging  to  a  citizen  of  the  United  States  as 
Buch,  and  those  belonging  to  a  citizen  of  a  state  as  such,  the  latter  must  rest 
for  their  security  and  protection  where  they  have  heretofore  rested;    for 


872  State  v.  Goodwill.  [\V.  Virginia, 

they  are  not  embraced  within  this  paragraph  of  the  amendment;  and  fur- 
thermore, that  the  inhibition  against  any  state  denying  to  anj'  person  within 
its  jurisdiction  the  equal  protection  of  its  laws  was  chiefly  designed  to  ren- 
der void  "  laws  in  the  states  where  the  newly  emancipated  negroes  resided 
which  discriminated  with  gross  injustice  and  hardship  against  them  as  a 
class,  "and  to  forbid  the  enactment  or  enforcement  of  such  laws  in  the  fu- 
ture," 

Privileges  and  Immunities  of  Citizens. — The  Fourteenth  Amendment  did 
not  add  to  the  privileges  and  immunities  of  any  citizen  of  the  United  States, 
but  merely  furnished  additional  guaranties  of  such  as  he  already  had. 
Hence,  as  the  right  of  sufiFerage  was  not  necessarily  a  privilege  of  a  citizen, 
it  was  not  conferred  upon  any  person  by  that  amendment:  Minor  v.  Hap- 
persett,  21  Wall.  162.  The  only  consequence  of  its  denial  was,  when  de- 
nied to  any  male  citizen  and  inhabitant  of  a  state  more  than  twenty-one 
years  of  age,  except  for  participation  in  some  crime,  a  diminution  in  the 
number  of  representatives  in  Congress,  and  electors  for  President  and  Vice- 
President,  to  which  the  denying  state  was  otherwise  entitled.  Nor  has  any 
amendment  given  to  all  citizens  the  right  to  vote,  though  the  fifteenth  has 
prohibited  the  denial  of  that  right  "on  account  of  race,  color,  or  previous 
condition  of  servitude."  The  result  is,  that  any  state  may  discriminate  be- 
tween its  citizens  by  denying  to  some  of  them  the  right  of  suffrage,  provided 
the  test  of  exclusion  is  not  that  of  race,  color,  or  previous  condition  of  servi- 
tude: United  States  v.  Beese,  92  U.  S.  214;  United  States  v.  CruiJ:s/ia»l',  92 
U.  S.  542.  Nor  is  the  right  to  practice  law:  Bradwellv.  State,  16  Wall.  130; 
or  to  have  a  cause  in  a  state  court  tried  before  a  jury:  Walker  v.  Saicvinet, 
92  U.  S.  90,  — a  privilege  or  immunity  secured  by  this  amendment.  And  if 
there  is  any  privilege  or  immunity  of  a  citizen  of  the  United  States  which 
could  have  been  abridged  by  a  sxate  before  the  adoption  of  this  amendment, 
and  which  has  by  the  amendment  been  withdrawn  from  the  power  of  state 
abridgment,  it  does  not  stand  revealed  in  any  light  emitted  by  the  highest 
of  the  national  courts.  The  real  force  of  the  amendment  is  contained  in  its 
clauses  declaring  who  are  citizens,  and  prohibiting  the  denial  of  the  equal 
protection  of  the  laws  and  the  deprivation  of  life,  liberty,  or  property  with- 
out due  process  of  law. 

Who  are  Protected  by  the  Fourteenth  Amendment.  — While,  as  indicated 
in  the  Slawjliter  Houf>e  Cases,  the  purpose  of  the  Fourteenth  Amendment  of 
protecting  the  enfranchised  negro  against  oppression  and  unjust  discrimi- 
nation may  properly  be  considered  in  determining  whether  the  special 
privileges  granted  or  burdens  exacted  by  a  statute  are  forbidden  by  the 
amendment,  and  the  fact  that  the  statute  in  question  is  or  is  not  against  or 
specially  applicable  to  that  race  may  exercise  a  great  or  even  paramount  influ- 
ence in  the  deliberations  of  the  judiciary,  yet  there  is  no  doubt  that  all  other 
races  or  persons  within  the  jurisdiction  of  the  state,  whether  citizens  or 
aliens,  "  without  regard  to  any  difi'erences  in  race,  color,  or  nationality,"  are 
within  the  protection  of  that  portion  of  the  amendment  prohibiting  any  state 
from  depriving  any  person  of  life,  liberty,  or  property  without  due  process  of 
law,  and  from  denying  to  any  person  within  its  jurisdiction  the  equal  protec- 
tion of  the  laws:  Yich  Wo  v.  Hopkins,  118  U.  S.  369.  As  to  non-residents,  a 
different  rule  may  apply.  If  they  are  citizens  of  the  United  States,  the  privi- 
leges and  immunities  to  which  they  are  entitled  as  such  are  by  the  express 
terms  of  the  amendment  not  to  be  impaired  by  any  state;  but  if  there  is  any 
immunity  or  privilege  peculiar  to  the  citizen  of  a  state,  and  not  possessed  by 
other  citizens  of  the  United  States,  it  may  doubtless  be  withheld  from  non- 


Nov.  1889.]  State  v.  Goodwill.  873 

residents.  It  has  been  decided  that  a  state  may  impose  conditions  upon 
non-residents  suing  in  its  courts  not  imposed  upon  residents,  — such,  for  in- 
stance, as  requiring  them  to  give  security  for  costs:  Cummhtgs  v.  Wingo,  31 
S.  C.  427;  or  may  deny  to  non-residents  the  right  to  sue  foreign  corporations 
in  its  courts,  unless  the  cause  of  action  shall  have  arisen,  or  the  subject  of 
the  action  shall  be  situated  within,  the  state:  Central  etc.  Co.  v.  Georgia  etc. 
Co.,  .32  S.  C.  319.  So  far  as  a  state  possesses  property,  it  may  restrict  the 
right  to  use  it  to  residents.  Hence  it  may  prohibit  residents  of  other 
states  from  planting  or  taking  oysters,  or  fishing  in  tide  or  other  waters,  the 
ownership  of  which  is  vested  in  the  state:  People  v.  Loundes,  1.30  N.  Y.  455; 
McCrendy  v.  Virginia,  94  U.  S.  391;  Commonivealth  v.  Manchester,  152  I\Iass. 
280;  23  Am.  St.  Rep.  820;  MancJmter  v.  Ma.i.iachuse/ts,  139  U.  S.  240.  The 
privileges  to  which  non-residents  are  entitled  under  the  constitution  must, 
we  apprehend,  be  those  secured  them  by  section  2  of  article  4,  declaring 
that  "the  citizens  of  each  state  shall  be  entitled  to  all  privileges  and  im- 
munities of  citizens  of  the  several  states."  The  consideration  of  this  clause 
of  the  constitution  is  not  within  the  purview  of  the  present  note.  The 
leading  decisions  construing  it  are  Corfield  v.  Coryell,  4  Wash.  C.  C.  380; 
Conner  v.  Elliott,  18  How.  591;  Paul  v.  Virginia,  8  Wall.  180;  Ward  v. 
Maryland,  12  Wall.  418. 

Corporations,  to  What  Extent  Protected. —  Private  corporations  must  also  be 
regarde<l  as  persons  to  whom  the  equal  protection  of  the  laws  must  not  be 
denied,  and  who  cannot  be  deprived  of  property  without  due  process  of  law: 
Santa  Clara  Co.  v.  .Southern  Pac.  R.  R.  Co.,  1 18  U.  S.  .394;  Charlotte  etc.  R.  R.  Co. 
V.  Gihles,  142  U.  S.  38G;  Minneapolis  etc.  R'y  Co.  v.  Bechvith,  129  U.  S.  26;  Mis- 
souri Pac.  R'y  Co.  v.  Machy,  127  U.  S.  205;  Mitmeapolis  etc.  R'y  Co.  v.  Nerrick, 
127  U.  S.  210.  "The  equal  protection  of  the  laws  which  these  bodies  may 
claim  is  oidy  such  as  is  afforded  similar  associations  within  the  jurisdiction  of 
the  state  ":  Pembina  etc.  Milling  Co.  v.  Penmyhania,  125  U.  S.  181.  A  private 
corporation  is  not,  however,  a  citizen  of  the  United  States  within  the  meant 
ing  of  the  proliibition  against  abridging  the  privileges  and  immunities  of  citi- 
zens of  the  United  States:  Paul  v.  Virginia,  8  Wall.  168.  "The  state  is  not 
prohibited  from  di.scriminating  in  the  privileges  it  may  grant  to  foreign  cor- 
porations as  a  condition  of  their  doing  business  or  hiring  offices  within  its 
limits,  provided  always  such  discrimination  does  not  interfere  with  any 
transaction  b}'  such  corporations  of  interstate  or  foreign  commerce.  It  is  no- 
every  corporation  lawful  in  the  state  of  its  creation  that  other  states  may 
be  willing  to  admit  witliin  their  jurisiliction,  or  consent  that  it  have  offices 
in  them,  —  such,  for  example,  as  a  corporation  for  lotteries.  And  even  where 
the  business  of  a  foreign  corporation  is  not  unlawful  in  other  states,  the  lat- 
ter may  wish  to  limit  the  nunilier  of  such  corporations,  or  to  subject  their 
business  to  sucli  control  as  would  be  in  accordance  with  the  policy  governing 
domestic  corporations  of  a  similar  character.  Tiie  states  may  therefore 
require  for  the  admission  within  their  limits  of  tlie  corporations  of  other 
states,  or  of  any  number  of  them,  such  conditions  as  they  may  choose,  with- 
out acting  in  conflict  with  the  concluding  provision  of  the  first  section  of  the 
Fourteenth  Amendment.  As  to  the  meaning  and  extent  of  that  section  of  the 
amendments,  see  Barbier  v.  Connolly,  113  U.  S.  27;  Soon  /ling  v.  Crowley,  1 13 
U.  S.  703;  Mis.oouri  v.  Lewis,  101  U.  S.  22.  30;  Missouri  Pac.  R'y  Co.  v. 
Humes,  115U.  S.  512;  Yick  Wo  v.  Hopkin'i,  118  U.  S.  356;  Hayes  v.  Missouri, 
120  U.  S.  68;  People  v.  Wemp'e,  131  N.  Y.  64.  The  only  limitation  upon 
this  power  of  the  state  to  exclude  a  foreign  corporation  from  doing  business 
withiu  its  limits  or  hiring  offices  for  that  purpose,  or  to  exact  conditions  for 


874  State  v.  Goodwill.  [W.  Virginia, 

allowing  the  corporation  to  do  business  or  hire  offices  there,  arises  where 
the  corporation  is  in  the  employ  of  the  federal  government,  or  where  its 
business  is  strictly  commerce,  interstate  or  foreign.  The  control  of  such 
commerce,  being  in  the  federal  government,  is  not  to  be  restricted  by  state 
authority":  Pembina  etc.  Milling  Co.  v.  Pennsylvania,  125  U.  S.  181.  And 
when  a  foreign  corporation  has  not  complied  with  the  conditions  required  by 
the  laws  of  a  state  to  authorize  it  to  do  business  therein,  the  act  of  its  agents 
in  coming  within  the  state  for  the  purpose  of  there  doing  business  may  by  its 
laws  be  declared  a  crime,  and  punished  as  such:  Moses  v.  State,  65  Miss.  56. 

Nor  has  any  domestic  corporation  a  right  to  do  business  or  to  otlierwise 
exercise  its  franchise  within  a  state  except  by  its  permission.  Having  power 
to  withhold  such  permission  altogether,  the  state  may  grant  it  upon  such 
conditions  as  it  sees  fit,  and  the  exercise  of  the  franchise  is  an  acceptance 
of  the  conditions.  One  of  the  conditions  may  be  the  payment  of  a  tax  on 
the  corporate  franchise  or  business.  This  tax  may  be  exacted  of  both 
foreign  and  domestic  corporations  doing  business  or  otherwise  exercising 
their  franchises  in  the  state.  The  amount  of  the  tax,  the  basis  upon  which 
it  shall  be  computed,  the  mode  in  which  it  may  be  ascertained,  and  the 
manner  in  which  its  collection  shall  be  enforced,  are  matters  for  considera- 
tion and  determination  by  the  state  legislature,  whose  judgment  as  expressed 
in  its  enactments  is  not  subject  to  review  by  the  judiciary.  Nor  is  it  any 
valid  objection  to  such  enactments  that,  taken  in  connection  with  other 
laws  imposing  taxes  and  exacting  license  fees,  they  may  result  in  the  cor- 
porations affected  by  them  being  compelled  to  contribute  to  the  revenues 
of  the  states  sums  largely  in  excess  of  those  contributed  by  private  persons 
engaged  in  the  same  class  of  business,  and  using  in  its  transaction  prop- 
perty  of  the  same  kind,  amount,  and  value:  ffoi-n  S.  M.  Co.  v.  iVew  York, 
143  U.  S.  305;  Delaware  P.  P.  Tax  Case,  18  Wall.  206;  Home  ftis.  Co.  v. 
Neio  York,  134  U.  S.  594;  Standard  U.  C.  Co.  v.  Attorney -General,  46  N.  J. 
Eq.  276;  19  Am.  St.  Rep.  394.  A  statute  forbidding  the  payment  by  life 
insurance  corporations,  whether  foreign  or  domestic,  of  auj"  rebate  of  pre- 
mium as  an  inducement  to  any  person  to  insure,  and  declaring  any  person 
violating  the  prohibition  guilty  of  a  misdemeanor,  is  valid.  "The  corpora- 
tions organized  under  the  laws  of  this  state  for  life  insurance  are  absolutely 
under  the  direction  and  control  of  the  legislature.  It  may  specify  how  and 
on  what  terms  they  may  do  business,  and  enact  laws  regulating  their  con- 
duct and  the  conduct  of  their  agents,  for  their  protection  and  the  protection 
of  their  policy-holders,  and  enforce  obedience  to  such  laws  by  such  penalties, 
forfeitures,  and  punishments  as  it  may,  within  constitutional  limits,  prescribe. 
As  all  these  corporations  must  act  through  agents,  it  has  the  same  power 
and  authority  to  regulate  the  conduct  of  their  agents  as  it  has.  to  regulate 
the  corporations  themselves.  It  would  be  quite  preposterous  to  say  that  the 
legislature  could,  in  the  exercise  of  its  legitimate  authority,  regulate  these 
corporations  and  prescribe  the  terms  under  which  they  may  exist  and  do 
business,  and  yet  could  not  by  similar  laws  regulate  and  control  the  conduct 
of  their  agents.  When  these  corporations  seek  the  benefits  and  privileges 
of  the  laws  creating  and  authorizing  them,  they  must  conform  to  the  laws 
enacted  for  their  conduct,  and  if  they  are  unwilling  to  do  so,  they  must  go 
out  of  existence.  So,  too,  all  persons  who  seek  to  act  as  agents  of  such  cor- 
porations must  conform  to  the  laws  regulating  the  business  of  such  corpora- 
tions, or  cease  to  act  for  them  ":  People  v.  Formosa,  131  N.  Y.  478;  Common' 
wealth  V.  Morningstar,  144  Pa.  St.  103. 

Retrospective  Effect.  —  There  can  be  no  doubt  that  the  amendment  here 


Nov.  1889.]  State  v.  Goodwill.  875 

uiitler  consiileration  applies  to  pre-exi.sting  statutes  as  well  as  to  those  en- 
acted after  its  adoptioa.  Though  a-  statute  when  enacted  was  constitu- 
tional,  no  proceeding  can  be  taken  under  it  after  the  adoption  of  this 
amendment,  the  effect  of  which  proceeding,  if  sustained,  must  be  to  deprive 
some  person  of  a  right  secured  by  the  amendment  against  legislative  action 
on  the  part  of  any  of  the  states:  Kaukauna  v.  Green  Bay  etc.  Canal,  142  U.  S. 
254. 

Burdens  and  Restrictions  Founded  on  Race. — The  general  object  of  the 
Fourteenth  Amendment,  and  the  provisions  in  the  state  constitutions  of 
similar  import,  is  to  extend  to  all  persons  within  the  jurisdiction  of  the 
state  the  protection  of  its  laws  and  judicial  tribunals  on  the  same  terms, 
and  not  to  permit  the  granting  of  privileges  to  one  person  to  which  others 
of  the  same  class  are  not  entitled,  and  not  to  impose  upon  one  person  bur- 
dens, obligations,  or  penalties  to  which  others  in  the  same  situation  are  not 
subjected;  and  while  an  individual  may  often  be  required  to  content  him- 
self with  the  privileges  granted  and  to  submit  to  the  burdens  imposed  on 
all  members  of  the  particular  class  of  persons  to  which  he  belongs,  though 
some  other  or  all  other  classes  of  persons  are  exempt,  yet  the  classification 
to  wliich  he  must  thus  submit  must  not  be  made  capriciously,  nor  directed 
at  a  particular  class  of  persons  with  a  view  to  deprive  them  of  privileges 
and  subject  them  to  burdens  merely  because  they  belong  to  some  race  or 
class.  So  far  as  the  negro  race  is  concerned,  the  effect  of  the  Fourteenth 
Amendment  is  to  require  that  its  membera  be  subjected  to  the  same  laws, 
entitled  to  the  same  protection,  and  secured  in  the  same  immunities  and 
privileges  as  members  of  the  white  race,  and  any  law  depriving  any  one  of 
a  riglit  because  of  his  color  is  doubtless  unconstitutional  and  void:  Strauder 
V.  West  Virginia,  100  U.  S.  30.3;  Ex  parte  Vir(jinia,  100  U.  S.  .339. 

If  there  is  a  system  of  public  schools  in  the  state  supported  by  taxation, 
the  children  of  colored  persons  cannot,  by  implication  or  otherwise,  be  ex- 
cluded from  the  benehts  thereof:  Daiunon  v.  Lee,  83  Ky.  49;  nor  can  the 
state  divide  the  school  funds  by  appropriating  to  the  support  of  the  schools 
for  white  children  the  moneys  received  from  the  property  of  white  persons, 
leaving  for  the  support  of  tlie  schools  for  negroes  only  such  moneys  as  have 
been  received  from  property  belonging  to  persons  of  that  race:  Marhham,  v. 
Manning,  96  N,  C.  132.  So  far  as  we  are  aware,  there  has  been  no  decision 
assuring  to  any  member  of  any  race  the  right  to  receive  his  education,  or 
any  other  privilege  to  which  he  is  entitled,  at  the  same  place  or  in  the  same 
company  with  members  of  any  otlier  race.  The  privileges  themselves  must 
not  be  curtailed  by  law,  unless,  indeed,  it  is  a  curtailment  of  them  to  be 
denied  the  right  to  receive  them  in  the  midst  of  members  of  the  other 
races;  and  hence  a  state  may  provide  for  separate  schools  for  children  of 
white  and  of  colored  races,  if  the  facilities  and  opportunities  for  education 
provided  for  the  one  race  equal  those  provided  for  the  other:  People  v.  Oal- 
lagher,  93  N.  Y.  438;  45  Am.  Rep.  232;  Stale  v.  McCann,  21  Oliio  St.  198; 
Cory  V.  Carter,  48  Ind.  32S;  17  Am.  Rep.  738;  Ward  v.  Flood,  48  Cal.  36; 
17  Am,  Rep.  405;  and  the  fact  that  the  children  of  a  colored  person  may, 
in  a  particular  case,  be  compelled  to  travel  farther  than  white  children  in 
the  same  district  to  reach  a  school  establislied  for  colored  children  will  not 
entitle  them  to  a<lmission  in  a  school  estalili.shed  for  whites:  Lehcw  v.  Brum- 
mel,  103  iMo.  546;  23  Am.  St.  Rep.  895;  though  doubtless  a  statute  upon 
tlie  face  of  which  it  appeared  that  this  result  was  sought,  or  that  colored 
children  would  be  required,  as  a  general  rule,  to  travel  farther  than  whites 
to  reach  their  schools,  would  be  invalid.     Otlierwise  they  might  be  required 


876  State  v.  Goodwill.  [W.  Virginia, 

to  attend  at  places  so  distant  from  their  homes  as  to  effectively  prevent 
their  attendance  at  all. 

It  appears  that  colored  persons  have  no  constitutional  right  to  ride  in  the 
same  railway  cars  with  wliites,  and  that  railway  corporations  may  voluntarily 
provide  separate  cars  for  the  two  races,  or  may  be  required  to  do  so  by  state 
legislation,  if  the  accommodations  supplied  to  the  one  race  eqnal  those  sup- 
plied to  the  other:  Louisville  etc.  R'y  Co.  v.  State,  66  Miss.  662;  14  Am.  St. 
Rep.  599;  Chesapeake  etc.  R.  R.  Co.  v.  Wells,  85  Tenn.  613.  As  to  places  of 
amusement,  like  skating-rinks  kept  by  private  persons,  and  charged  with  no 
public  iluty,  their  managers  may,  at  tlieir  pleasure,  admit  negroes  or  not: 
BoioUn  V.  Lyon,  67  Iowa,  5156;  56  Am.  Rep.  355;  unless  there  is  some  statute 
enacted  by  the  state  legislature  requiring  their  admission  on  the  same  terms 
as  persons  of  other  races,  in  which  event  such  enactment  is  valid,  and  must 
be  obeyed:  People  v.  King,  110  N.  Y.  418;  6  Am.  St.  Rep.  389. 

Tlie  Liberty  of  Earh  Person  and  his  Right  to  Acquire  and  Retain  Property 
must  always  be  considered  in  connection  with  the  rights,  liberties,  and 
welfare  of  others,  and  each  person  must  submit  to  such  reasonable  restric- 
tions as  must  necessarily  be  imposed  for  the  better  protection  of  the  whole 
community,  and  even  for  the  protection  of  a  particular  class,  and  it  will  hence 
always  be  difficult,  if  not  impossible,  to  detine  or  prescribe  any  precise  test 
from  which  to  determine  with  unvarying  certainty  what  restrictions  upon 
the  liberties  of  individuals,  or  of  classes  of  individuals,  are  sustainable  and 
what  are  not.  While  the  courts  properly  hesitate  to  formulate  definitions 
of  liberty  or  of  due  process  of  law,  or  to  give  enumerations  of  all  that  may 
be  conceded  to  one  person  or  denied  to  another  without  denying  to  "  anj-  per- 
son the  equal  protection  of  the  laws,"  yet  they  have,  in  some  instances,  given 
general  descriptions  or  definitions  which,  while  not  intended  to  be  appli- 
cable under  all  circumstances,  are  usually  applicable,  and  therefore  wortliy 
of  restatement  here.  Thus  it  was  said  in  People  v.  GilUou,  109  N.  Y.  389, 
4  Am.  St.  Rep.  465:  "The  follovving  propositions  are  firmly  estal)lished  and^ 
recognized:  A  person  living  under  our  constitution  has  the  right  to  adopt 
and  follow  such  lawful  industrial  pursuit,  not  injurious  to  the  community, 
as  he  may  see  fit.  The  term  'liberty,*  as  used -in  the  constitution,  is  not 
dwarfed  into  mere  freedom  from  physical  restraint  of  the  person  of  tlie 
citizen,  as  by  incarceration,  but  is  deemed  toemlirace  the  right  of  man  to  be 
free  in  the  enjoyment  of  the  faculties  with  which  he  has  been  endowed  by 
his  Creator,  subject  only  to  such  restraints  as  are  necessary  for  the  coinninn 
welfare.  Liberty,  in  its  broad  sense,  as  understood  in  this  country,  means 
the  right  not  only  of  freedom  from  servitude,  imprisonment,  or  restraint, 
but  the  riglit  of  one  to  use  his  faculties  in  all  lawful  ways,  to  live  and  work 
where  he  will,  to  earn  his  livelihood  in  any  lawful  calling,  and  to  pursue  any 
lawful  trade  or  avocation."  "The  common  business  and  callings  of  life,  tlie 
ordinary  trades  and  pursuits,  which  are  innocuous  in  themselves,  and  have 
been  followed  in  all  countries  from  time  immemorial,  must  therefore  be 
free  in  this  country,  to  all  alike,  upon  the  same  conditions.  The  right  to- 
pursue  them  without  let  or  hindrance,  except  that  which  is  implied  to  all 
persons  of  the  same  sex,  age,  and  condition,  is  a  distinguishing  privilege  of 
the  cit'zens  of  the  United  States,  and  an  essential  element  of  that  freedom 

which    they    claim    as    their    birthright Civil    liberty    exists  only 

where  every  individual  has  the  power  to  pursue  his  own  happiness  according' 
to  his  own  views,  unrestrained,  except  by  equal,  just,  and  impartial  laws."" 
Butchers'  Union  Co.  v.  Crescent  City  Co.,  Ill  Q.  S.  757. 

General  Scope  of  Fourteenth  Amendment.  —  Mr.  Justice  Field,  in  his  di»- 


Nov.  1889.]  State  v.  Goodwill.  877 

seiiting  opinion  in  Ex  parte  Virginia,  100  U.  S.  367,  while  denying  that  the 
operation  of  the  Fourteenth  Amendment  extended  beyond  the  securing  of 
what  he  denominated  civil  rights,  said:  "And  yet  the  reach  and  influence  of 
the  aineudinent  are  immense.  It  opens  the  courts  of  the  country  to  every 
one,  on  the  same  terms,  for  the  security  of  his  person  and  property,  the  pre- 
vention and  redress  of  wrongs,  and  the  enforcement  of  contracts;  it  assures 
to  every  one  the  same  rules  of  evidence  and  modes  of  procedure;  it  allows 
no  impediments  to  the  acquisition  of  property  and  the  pursuit  of  happiness 
to  which  all  are  not  subjected;  it  suffers  no  other  or  greater  burdens  or 
charges  to  be  laid  upon  one  than  such  as  are  equally  borne  by  others;  and  iu 
the  administration  of  criminal  justice  it  permits  no  dififerent  or  greater  pun- 
ishment to  be  imposed  upon  one  than  such  as  is  prescribed  to  all  for  like 
offenses."  The  same  learned  jurist,  in  pronouncing  judgment  of  the  court 
in  Barbier  v.  Connolly,  113  U.  S.  27,  expressed  his  views  upon  this  subject  aa 
follows:  "  The  Fourteenth  Amendment,  in  declaring  that  no  state  'shall  de- 
prive any  person  of  life,  libertj',  or  property  without  due  process  of  law,  nor 
deny  to  any  person  within  its  jurisdiction  the  equal  protection  of  the  laws, 
und')ubteiUy  intended,  not  only  that  there  should  be  no  arbitrary'  depriva- 
tion of  life  or  liberty  or  arbitrary  spoliation  of  property,  but  that  equal  pro- 
tection and  security  should  be  given  to  all  under  like  circumstances  in  the 
enjoyment  of  their  personal  and  civil  rights;  that  all  persons  should  be 
equally  entitled  to  pursue  their  happiness  and  acquire  and  enjoy  property; 
that  they  should  have  like  access  to  the  courts  of  the  country  for  the  pro- 
tection of  tlieir  persons  and  property,  the  prevention  and  redress  of  wrongs, 
and  the  enforcement  of  contracts;  that  no  impediment  should  be  interposed 
to  the  pursuits  of  any  one,  except  as  applied  to  the  same  pursuits  by  others 
under  like  circumstances;  that  no  greater  burdens  should  be  laid  upon  one 
than  are  laid  upon  others  in  the  same  calling  and  condition,  and  that  in  the 
administration  of  criminal  justice  no  different  or  higher  punishment  should 
be  imposed  upon  one  than  such  as  is  prescribed  to  all  for  like  offenses." 

Special  Pririlegcx  and  Rules  of  L(tw.  —  Every  person  must  have  the  right 
to  resort  to  tlie  courts  for  redress  under  substantially  the  same  terms,  and  no 
rule  of  law  or  of  evidence  can  be  applied  to  one  which  is  not  equally  appli- 
cable to  others  in  controversies  of  the  same  character.  Hence  it  has  been 
hell!  that  a  statute  authorizing  ])roseeuting  attorneys  in  criminal  cases,  at 
their  election,  to  deprive  defendants  of  the  right  to  the  continuance  of  their 
case  for  the  purpose  of  i)rocuring  the  attendance  of  witnesses,  notwitlistand- 
ing  the  use  of  due  diligence,  by  stipulating  that  the  testimony  wliich  it  is 
claimed  such  witness,  if  present,  would  give  may  be  regarded  as  given  by 
him,  is  unconstitutional,  because  under  the  operation  of  the  statute  tliere 
may  be  two  persons  accused  of  crime,  both  of  whom  have  been  equally  dili- 
gent in  seeking  to  procure  the  atten  lance  of  witnesses,  one  of  whom  may  be 
forcetl  to  trial  at  the  election  of  the  prosecutor  without  obtaining  the  advan- 
tage of  having  the  jury  see  and  hear  and  juilge  of  the  credibility  of  his  wit. 
nesses,  while  the  other,  on  the  prosecutor's  niakin,'  a  different  election  in  his 
case,  may  receive  the  benefit  of  this  advantage:  Sfaf.e  v.  Berkley,  92  Mo.  41. 
For  similar  reasons  a  statute  is  unconstitutional  which  declares  that  certain 
acts,  if  done  in  a  designated  river,  within  the  limits  of  a  particular  county, 
shall  be  regarded  aa  injurious  and  dangerous,  and  shall  be  enjoined  witliout 
proof  that  injury  or  danger  has  been  or  will  be  done  them,  when  the  acta 
are  such  as  may  be  done  without  danger  or  injury,  and  may  be  necessary  to 
the  enjoyment  and  protection  of  private  property:  City  of  Janesvtlle  v.  Car* 
penter,  77  Wis.  2SS;  20  Am.  St.  Rep.  123, 


878  State  v.  Goodwill.  [W.  Virginia, 

A  statute  is  unconstitutional  which  deprives  a  person  charged  with  a  crim- 
inal offense  of  the  presumption  of  innocence,  or  makes  acts  done  by  certain 
persons  in  certain  localities  criminal,  which  if  done  by  other  persons  in  dif- 
ferent localities  are  innocent;  as  where  a  statute  makes  the  killing  of  stock 
on  any  railroad  within  specified  counties  a  misdemeanor,  for  which  the  pres- 
ident, receiver,  and  superintendent  of  the  road,  and  the  engineer  and  con- 
ductor in  charge  of  the  train,  may  be  indicted,  unless  the  parties  indictable 
shall,  within  six  months  after  such  killing,  and  before  any  indictment  ia 
preferred,  pay  the  owner  of  the  stock  his  charges  therefor,  or  if  they  are 
deemed  too  high,  submit  the  question  to  arbitration:  State  r.  Divine,  98 
N.'O.  778.  It  has  also  been  held,  in  Michigan,  that  a  statute  authorizing  the 
owner  of  stock  killed  by  a  railroad:  Lafferty  v.  Chicago  etc  B'y  Co.,  71  Mich. 
35;  Wilder  v.  Chicago  etc.  R'y  Co.,  70  Mich.  382;  or  a  person  suing  for  certain 
classes  of  personal  services:  Orand  Rapids  Chair  Co.  v.  Runnels,  77  Mich.  104, 
• —  to  recover,  in  addition  to  the  damages,  or  the  amount  due,  an  attorney's  fee 
fixed  by  statute,  is  class  legislation,  and  therefore  void.  These  Michigan 
decisions  are,  however,  probably  not  sustainable,  in  view  of  the  more  recent 
and  authoritative  adjudications  in  the  national  courts  and  elsewhere.  In 
all  cases  where  the  liability  of  a  railway  corporation  or  of  any  other  person, 
natural  or  artificial,  results  from  its  or  his  failure  to  observe  some  rule  which 
the  legislature  of  the  state  was  competent  to  prescribe  in  the  exercise  of  the 
police  powers  vested  in  it,  it  may,  by  way  of  penalty,  impose  on  the  guilty 
party  not  only  the  payment  of  the  attorney's  fees  of  his  adversary:  Burling' 
ton  etc.  Ky  Co.  v.  Dey,  48  N.  W.  Rep.  98  (Iowa,  Feb.  9,  1891);  Perkins  v.  St. 
Louis  etc.  R'y  Co.,  103  Mo.  52;  Peoria  etc.  R'y  Co.  v.  Dttggan,  109  111.  537;  but 
also  damages  in  excess  of  tliose  suffered.  On  this  ground  a  statute  was  sus- 
tained which  authorized  the  recovery  of  double  the  value  of  the  stock  killed, 
or  the  damages  caused  thereto,  by  a  railway,  when  the  injury  was  inflicted  at 
a  point  on  the  road  where  the  corporation  had  the  right  to  erect  a  fence,  and 
had  failed  to  do  so,  and  the  injury  was  not  occasioned  by  the  willful  act  of 
the  owner  or  of  his  agent:  Minnenpnlis  R'y  Co.  v.  Bechwith,  129  U.  S.  26; 
Humes  v.  Missouri  Pac.  R'y  Co.,  82  Mo.  221 ;  Missouri  P.  etc.  R'y  Co.  v.  Humes, 
115  U.  S.  512. 

Jurors.  — In  the  eyes  of  the  law,  white  and  colored  persons  are  equal,  and 
neither  has  any  right  to  insist  that  a  person  of  his  race  or  color  shall  be  on 
the  jury  by  which  he  is  tried  when  accused  of  crime,  or  when  he  is  other- 
wise a  party  to  an  action  or  proceeding:  Laiorence  v.  Commonwealth,  81  Va. 
484;  State  v.  Sloan,  97  N.  C.  499;  Virginia  v.  Rives,  100  U.  S.  313.  Each 
has,  however,  the  right  to  insist  that  no  person  be  excluded  from  the  jury 
because  of  his  color  or  race.  Any  statute  seeking  to  justify  such  exclusion 
is  unconstitutional  and  void:  Strai/der  v.  West  Virginia,  100  U.  S.  303;  F«-- 
ginia  v.  Rives,  100  U.  S.  313;  JVeal  v.  Delawire,  103  U.  S.  370;  and  where, 
in  the  absence  of  such  statute,  or  otherwise,  it  appears  that  the  officer  sum- 
moning or  drawing  the  jury,  grand  or  petit,  has  been  influenced  by  consid- 
erations of  race,  and  has  excluded  qualified  persons  from  the  jury  solely 
because  of  their  race  or  color,  it  has  been  held  that  "  it  would  be  the  duty  ot 
the  court  before  which  such  motion  could  alone  be  made  in  the  first  instance, 
on  sufficient  proof  of  the  facts,  to  quash  such  illegally  drawn  or  summoned 
panel,  or  any  indictment  found  by  such  illegally  constituted  grand  jury": 
Green  v.  State,  73  Ala.  26. 

Restrictions  on  Pursuit  of  Lawful  Business.  — One  of  the  rights  unquestion- 
ably secured  to  all  persons  within  the  jurisdiction  of  a  state  is  that  of  fol- 
lowing any  lawful  calling  or  pursuit,  subject  only  to  such  conditions  and 


Nov.  I'So'J.]  State  v.  Goodwill.  879 

restrictions  as  may  be  imposed  for  the  public  welfare,  calculated  to  exclude 
from  the  calling  persons  incompetent  to  exercise  it,  or  to  guard  the  pul)lic 
from  such  frauds  or  impositions  as  might  readily  be  employed  but  for  some 
statutory  safeguard;  but  whatever  be  the  nature  or  object  of  the  imposition 
or  restriction,  it  must  apply  to  all  persons  of  the  same  class  and  oontlition, 
or  if  can  be  applied  to  none.  "  While  the  power  of  the  legislature  to  im- 
pose restrictions  upon  the  exercise  of  certain  trades  and  professions  for  the 
protection  of  the  public  is  unquestioned,  it  must  be  exercised  in  confoim" 
ity  with  the  constitutional  requirement  that  such  restrictions  must  operate 
equally  upon  all  persons  pursuing  the  same  business  or  profession,  under  the 
same  circumstances.  The  constitutionality  of  a  statute  cannot  be  sustained 
which  selects  particular  individuals  from  a  class  or  locality  and  subjects 
them  to  peciiliar  rules,  or  imposes  upon  tlieni  special  obligations  or  bur- 
dens from  which  others  in  the  same  locality  or  class  are  exempt.  The 
imposition  of  special  restrictions  or  burdens  or  the  granting  of  special  privi- 
leges to  persons  engaged  in  the  same  business,  under  the  same  circumstances, 
is  in  contravention  of  the  equal  right  which  all  can  claim  in  the  enforcement 
of  the  laws  and  in  the  enjoyment  of  liberty,  and  the  right  of  acquiring  and  pos- 
sessing property  ":  State  v.  Hinvian,  65  N.  H.  103;  23  Am.  St.  Rep.  22;  Soon 
Hiwj  V.  Vrowle!),  113  U.  S.  703;  Yick  Wo  v.  JJopkins,  118  U.  S.  356.  There- 
fore, those  statutes  which  regulate  the  practice  of  dentistry  and  medicine,  and 
provide  what  qualifications  the  practitioners  must  possess,  are  valid,  if  they 
apply  equally  to  all  persons  who  seek  to  qualify  themselves  for  or  to  pursue 
those  callings,  or  either  of  them,  and  are  not  arbitrary  in  the  conditions 
which  they  impose. 

A  statute  making  unlawful,  in  cities  of  over  five  hundred  thousand  inhab- 
itants, the  manufacture  of  cigars,  or  preparation  of  tobacco  in  any  form,  on 
any  floor,  or  on  any  part  of  any  floor,  in  any  tenement-house,  if  such  floor, 
or  any  part  of  such  floor,  is  by  any  person  occupied  as  a  home  or  residence 
for  the  purpose  of  living,  sleeping,  cooking,  or  doing  any  household  work 
therein,  but  excepting  from  the  operation  of  the  statute  the  first  floor  of  any 
tenement-house  on  which  there  is  a  store  for  the  sale  of  cigars  or  tobacco, 
was  also  held  to  be  invalid,  and  void,  on  the  ground  that  it  was  arbitrary, 
because  it  made  unlawful  in  cities  of  tlie  class  described  what  was  lawful 
everywhere  else  in  the  world,  required  the  occupant  of  the  house  either  to 
abandon  the  trade  by  which  he  earned  a  living  for  himself  and  his  family  or 
to  procure  a  room  elsewiiere,  "or  hire  himself  out  to  one  who  has  a  room, 
upon  such  terms  as,  under  the  fierce  competition  of  trade  and  the  inex- 
orable laws  of  supply  and  demand,  he  may  be  able  to  obtain  from  his  em- 
ployer," and  because  "it  is  therefore  plain  that  this  law  interferes  with  the 
profitable  and  free  use  of  his  property  by  the  owner  or  lessee  of  a  tenement- 
house,  who  is  a  cigar-maker,  and  trammels  him  in  the  application  of  his  in- 
dustry and  the  disposition  of  his  labor,  and  thus,  in  a  strictly  legitimate 
sense,  it  arbitrarily  deprives  him  of  his  property,  and  of  some  portion  of  hia 
personal  liberty":  In  reJacob.%  98  N.  Y.  98;  50  Am.  Rep.  63G. 

The  right  of  every  person  to  pursue  any  lawful  calling  without  let  or 
hindrance  cannot  be  secured  without  permitting  every  person  who  wishes 
employment  to  seek  it,  and  to  leave  all  persons  free  to  accept  the  services  of 
others  on  such  terms  as  may  be  agreed  upon  by  them.  Therefore,  an  ordi- 
nance is  void  which  makes  it  unlawful  for  a  contractor,  when  having  labor 
performed  under  a  contract  with  the  city,  to  demand,  neeive,  or  contract 
for  more  than  eight  hours'  labor  in  any  one  day  from  any  person  in  hia 
employ  or  under  his  control,  with  the  promise  or  understanding  that  such. 


880  State  v.  Goodwill.  [W.  Virginia, 

person  so  la%oring  over  eight  hours  shall  receive  a  sum  for  a  day's  work  more 
than  that  paid  for  a  legal  day's  work,  or  to  employ  any  Chinese  labor  to  be 
used  in  performing  such  contract  with  the  city:  Ex  parte  Kuhack,  85  Cal. 
274;  20  Am.  St.  Rep.  226. 

Arbitrary  Tests,  Wliat  are,  — An  arbitrary  test  would  be  one  "having  no 
reference  to  skill,  learning,  or  fitness  for  the  practice  of  the  profession  "  to 
which  it  was  applied;  as  where  all  persons  desiring  to  practice  dentistry  are 
required  to  have  received  a  dental  degree  from  some  college,  or  a  license 
from  a  dental  society,  excepting  such  persons  as  have  resided  or  practiced 
their  profession  in  the  town  or  city  of  their  present  residence  since  January 
1.  1875:  State  v.  Hinman,  65  N.  H.  103;  23  Am.  St.  Rep.  22.  A  test  is 
also  arbitrary  if  it  is  one  which  is  not  definite  or  prescribed  by  law,  and  in 
the  application  of  which  the  officer  to  whom  its  enforcement  is  committed 
can  find  no  guide  in  the  law,  and  may  therefore  lawfully  permit  the  ap- 
plicant to  carry  on  business  for  such  reason  as  to  the  officer  may  seem 
proper,  or  may  lawfully  grant  a  permit  to  one  person  while  he  denies  it  to 
another  equally  well  qualified  to  carry  on  the  business.  Therefore,  a  muni- 
cipal ordinance  which  prohibits  the  carrying  on  of  a  laundry  by  any  person 
within  the  limits  of  a  city  "without  having  first  obtained  the  assent  of  the 
board  of  supervisors,  except  the  same  be  located  in  a  building  constructed 
either  of  brick  or  of  stone,"  is  void,  because,  "if  the  applicant  for  such  consent, 
being  in  every  way  a  qualified  and  competent  person,  and  having  complied 
with  every  reasonable  condition  demanded  by  any  public  interest,  should, 
failing  to  obtain  the  requisite  consent  of  the  supervisors  to  the  prosecution 
of  his  business,  apply  for  redress  by  mandamus  to  require  the  supervisors  to 
consider  and  act  upon  his  case,  it  would  be  a  sufficient  answer  for  them  to  say 
that  the  law  had  conferred  upon  them  the  authority  to  withhold  their  assent 
without  reason  and  without  responsibility.  The  power  given  them  is  not 
confided  to  their  discretion  in  the  legal  sense  of  that  term,  but  is  granted  to 
their  mere  will.  It  is  purely'  arbitrary,  and  acknowledges  neither  guidance 
nor  restraint":   Yick  Wo  v.  Hopkins,  118  U.  S.  358. 

Arhitrary  Reatrictions,  Illustrations  of. — The  following  are  further  illus- 
trations of  statutes  and  ordinances  invalid  because  of  their  being  arbitrary, 
or  imposing  restrictions  upon  or  granting  privileges  to  one  or  more  persons 
to  which  other  persons  in  the  same  condition  are  not  entitled  and  subject: 
A  statute  making  it  unlawful  for  barbers  to  keep  open  their  bath-rooms  on 
Sundays  while  all  other  persons  remained  at  liberty  to  keep  theirs  open: 
Ragio  v.  State,  86  Tenn.  272;  a  statute  granting  to  a  single  corporation  the 
right  to  take  a  greater  rate  of  interest  than  any  other  person,  natural  or 
artificial,  is  allowed  to  exact:  Gordon  v.  Winchester  Building  Ass'n,  12  Bush, 
110;  an  ordinance  requiring  persons  whose  principal  place  of  business  is  not 
in  a  city  designated  to  obtain  an  annual  license  and  pay  two  hundred  dollars 
before  selling  or  offering  to  sell  any  merchandise  by  sample  or  representa- 
tion in  such  city  to  any  person  other  than  persons  living  in  or  doing  business 
in  the  city,  while  persons  doing  business  within  the  city,  though  required  to 
obtain  a  license,  were  entitled  to  have  the  amount  which  they  must  pay 
therefor  regulated  by  the  amount  of  business  done  by  them:  Fecheimer  v. 
Louisville,  84  Ky.  306;  Walling  v.  Michigan,  116  U.  S.  446;  a  statute  making 
criminal  the  violation  of  a  labor  contract  by  either  party  thereto,  but  impos- 
ing a  more  severe  punishment  upon  a  guilty  employee  than  upon  a  guilty 
employer:  State  v.  Williarns,  32  S.  C.  123;  a  statute  attempting  to  restrict 
the  damages  recoverable  in  certain  cases  of  newspaper  libel  to  such  as  plain- 
tiff might  show  "  he  has  suffered  in  respect  to  his  property,  business,  trade, 


Nov.  1889.]  State  v.  Goodwill.  881 

profession,  or  occupation,"  ami  the  result  of  which  must  have  been  to  pro- 
vide a  complete  immunity  in  slandering  persons  who  were  without  property, 
and  were  not  engaged  in  any  business,  trade,  or  occupation:  Park  v.  Detroit 
Free  Press  Co.,  72  Mich.  560;  16  Am.  St.  Rep.  544, 

The  Liberty  of  Mnkinq  Contracts  \s  absolutely  essential  to  the  acquisition, 
retention,  and  enjoyment  of  property,  and  still  it  must  necessarily  be  subject 
to  such  restraints  as  will  prevent  the  enforcement  of  contracts  which  are 
illegal,  immoral,  or  against  public  policy,  and  protect  infants  and  persons  of 
unsound  mind  against  engagements  to  which  a  more  mature  or  sound  mind 
might  not  assent;  and  there  are  also  many  classes  of  persons  over  which 
otiiers  have  a  great  opportunity  to  exercise  fraud,  oppression,  and  imposi- 
tion, and  the  law  may  doubtless  interpose  safeguards  against  such  exercise, 
and  may  perhaps  absolutely  nullify  contracts  of  such  character,  and  made 
under  such  conditions  as  are  likely  to  be  the  consequence  of  fraud,  imposi- 
tion, or  oppression.  On  the  other  hand,  the  legislature  cannot  interpose 
arbitrary  and  unreasonable  restrictions,  nor  make  those  contracts  criminal 
or  unlawful  which  are  necessarily  innocent  in  purpose. 

Statutes  enacted  in  some  of  the  states  for  the  purpose  of  preventing  mer- 
chants from  offering  to  give  or  giving  any  article  as  a  gift,  prize,  premium, 
or  reward  to  the  person  purchasing  some  other  article  have  been  assailed  as 
arbitrary  infringements  upon  the  right  to  contract  and  to  do  business.  In  Ma- 
ryland, a  statute  of  this  character  was  sustained  without  any  apparent  con- 
sideration of  the  question  whether  or  not  it  conflicted  with  the  Fourteenth 
Amendment:  Long  v.  State,  73  Md.  527;  ante,  p.  606;  while  in  New  York, 
a  similar  enactment  was  denounced  as  in  violation  of  the  clause  of  the  state 
constitution  providing  that  "no  person  shall  be  deprived  of  life,  liberty, 
or  property  without  due  process  of  law,"  and  as  not  being  an  author- 
ized exercise  of  the  police  power  of  the  state:  People  v.  Gillson,  109  N.  Y. 
389;  4  Am.  St.  Rep.  465.  A  like  contrariety  of  opinion  has  resulted  from 
statutes  enacted  with  a  view  to  protecting  certain  classes  of  employees  from 
the  supposed  opportunity  of  tiieir  employers  to  impose  upon  them  and  op- 
press them  by  paying  their  wages  otherwise  than  in  money,  or  by  selling 
them  supplies  at  a  greater  price  than  was  charged  for  like  supplies  when 
sold  to  other  persons.  A  statute  of  Maryland  enacted  in  1880  provided 
that  every  corporation  engaged  in  manufacturing,  or  in  operating  a  railroad, 
in  Allegheny  County,  and  employing  ten  hands  or  more,  should  pay  its  em- 
ployees the  full  amount  of  their  wages  in  legal-tender  money  of  the  United 
States,  and  that  any  contract  by  or  in  behalf  of  such  corporation  for  the 
payment  of  any  part  of  such  wages  in  any  other  manner  shall  be  and  is  ille- 
gal and  void,  and  every  such  employee  shall  be  entitled  to  receive  from  any 
such  corporation  the  whole  or  so  much  of  the  wages  earned  by  him  as  shall 
not  have  been  actually  paid  him  in  legal-tender  money  of  the  United  States, 
without  set-off  or  deduction,  of  his  demand  in  respect  to  any  account  or 
claim  whatever,  and  that  the  making  of  any  contract  forbidden  in  the  stat- 
ute shall  be  an  indictable  offense.  This  statute  was  sustained,  as  against 
the  corporation  resisting  it,  on  the  ground  that  as  the  legislature  had  the 
right  at  any  time  to  alter  or  amend  its  charter  at  pleasure,  it  could  forbid 
its  paying  its  employees  otherwise  than  in  money,  and  making  contracts  for 
such  payment:  Shaffer  v.  Union  M.  Co.,  55  Md.  74.  A  statute  making  void 
contracts  whereby  employees  agreed  in  advance  to  accept  payment  in  any- 
thing else  than  money  for  services  to  be  rendered  by  them  was  also  sus- 
tained in  Indiana:  Hancock  v.  Yaden,  121  Ind.  366;  16  Am.  St.  Rep.  396. 
On  the  other  hand,  the  judiciary  of  the  states  of  Illinois,  Pennsylvania,  and 
AM.  ST.  Rep.,  Vol.  XXV.— 56 


882  State  v.  Goodwill.  [W.  Virginia, 

West  Virginia  have  regarded  every  attempt  by  the  legislatures  of  those  states 
to  make  void  contracts  or  other  dealings  between  employers  and  employees 
as  "infringements  alike  on  the  right  of  the  employer  and  the  employee, 
as  insulting  attempts  to  put  the  laborer  under  legislative  tutelage,  which  is 
not  only  degrading  to  his  manhood,  i)ut  subversive  to  his  rights  as  a  citizen 
of  the  United  States":  Millett  v.  People,  117  111.  294;  57  Am.  Rep.  869;  God- 
Charles  v.  Wigeman,  113  Pa.  St.  431;  State  v.  Goodwill,  33  W.  Va.  179;  ante, 
p.  863;  State  v.  F.  C.  Coal  etc.  Co.,  33  W.  Va.  188;  post,  p.  891.  This  inter- 
esting question  has  not  yet  been  settled  by  the  adjudications  of  the  national 
courts.  To  us  it  seems  that  the  existence  of  a  necessity  of  protecting 
certain  classes  of  employees  from  oppression  and  imposition  by  their  em- 
ployers, and  the  means  bj'  which  that  necessity  shall  be  met,  if  found  to 
exist,  are  questions  within  the  police  power  of  the  several  states,  and 
that  when  they,  in  the  assumed  exercise  of  that  power,  determine  that  such 
necessity  does  exist,  and  devise  measures  calculated  to  overcome  or  mitigate 
it,  their  action  is  not  annulled  by  the  Fourteenth  Amendment. 

Police  Power  and  the  Fourteenth  Amejidrnent. —  In  determining  whether  or 
not  an  enactment  infringes  upon  the  Fourteenth  Amendment  by  abridging 
privileges  or  immunities  of  a  citizen  of  the  United  States,  we  must  inquire 
whether  the  alleged  privilege  or  immunity  which  it  abridges  or  destroys  is 
such  as  was  possessed  by  citizens  of  the  United  States  before  the  adoption 
of  the  amendment.  When,  however,  the  enactment  is  assailed  on  the 
ground  that  it  deprives  some  person  or  class  of  persons  of  liberty  or  property 
without  due  process  of  law,  or  denies  to  some  person  or  class  of  persons  the 
equal  protection  of  the  laws,  the  effect  of  the  amendment  must  be  consid- 
ered in  connection  with  the  police  power  of  the  state;  for  it  is  settled  beyond 
further  judicial  controversy  that  these  inhibitions  do  not  limit,  and  were  not 
"designed  to  limit,  the  subjects  upon  which  the  police  power  of  the  state 
may  be  exerted":  Barhier  v.  Connolly,  113  U.  S.  27;  Minneapolis  R'y  Co.  v. 
Becktvith,  129  U.  S.  29;  Mtigler  v.  Kansas,  123  U.  S.  663.  On  the  other 
hand,  it  is  equally  certain  that  the  legislature  cannot,  by  assuming  to  exer- 
cise the  police  power,  act  upon  subjects  which  do  not  and  cannot  fall  within 
its  dominion,  nor  impose  restrictions  or  create  or  enforce  discriminations 
which  are  not  in  the  legitimate  exercise  of  that  power;  and  that  while  the 
judgment  of  the  legislature  is  accepted  upon  doubtful  subjects:  Powell  v. 
Commonwealth,  114  Pa.  St.  265;  60  Am.  Rep.  350;  State  v.  Moore,  104  N.  C. 
744;  17  Am.  St.  Rep.  696;  yet  the  courts  must,  in  others,  overrule  it,  and  re- 
fuse to  sustain,  as  exercises  of  the  police  power,  enactments  not  sanctioned 
by  it:  Peoplev.  Gillson,  109  N.  Y.  389;  4  Am.  St.  Rep.  465. 

The  Police  Potoer  **  is  but  another  name  for  that  authority  which  resides  in 
every  sovereignty  to  pass  all  laws  for  the  internal  regulation  and  govern- 
ment of  the  state,  necessary  for  the  public  welfare.  The  existence  of  this 
power  is  universally  recognized.  All  property,  all  business,  every  private 
interest,  may  be  afifected  by  it  and  be  brought  within  its  influence.  Under 
this  power,  the  legislature  regulates  the  uses  of  property,  prescribes  rules 
of  personal  conduct,  and  in  numberless  ways,  through  its  pervading  and  ever- 
present  authority,  supervises  and  controls  the  affairs  of  men  in  their  rela- 
tions to  each  other  and  to  the  community  at  large,  to  secure  the  mutual  and 
equal  rights  of  all,  and  promote  the  interests  of  society.  It  has  limitations; 
it  cannot  be  arbitrarily  exercised  so  as  to  deprive  the  citizen  of  his  liberty 
or  property.  But  a  statute  does  not  work  such  a  deprivation  in  the  consti- 
tutional sense  simply  because  it  imposes  burdens  or  abridges  freedom  of  ac- 
tion, or  regulates  occupations,  or  subjects  individuals  or  property  to  restraints 


Nov.  1889.]  State  v.  Goodwill.  883 

in  matters  indifferent,  except  as  they  affect  pulilic  interests  or  the  rights  of 
others.  Legislation  under  the  police  power  infringes  the  constitutional  guar- 
anty only  when  it  is  extended  to  suljjectsnot  \rithin  its  scope  and  purview  aa 
that  power  was  defined  and  understood  when  the  constitution  was  adopted. 
The  generality  of  the  terms  employed  by  jurists  and  publicists  in  defining 
this  power,  while  they  show  its  breadth  and  the  universality  of  its  presence, 
nevertheless  leave  its  boundaries  and  limitations  indefinite,  and  impose  upon 
tlie  court  the  necessity  and  duty,  as  each  case  is  presented,  to  determine 
whether  the  particular  statute  falls  within  or  outside  of  its  appropriate  lira- 
its":  People  V.  Budd,  117  N.  Y.  1;  15  Am.  St.  Rep.  460;  State  v.  Moore, 
104  N.  C.  714;  17  Am.  St.  Rep.  696. 

Under  the  definition  given  of  the  police  power,  that  it  is  the  authority  re- 
siding in  every  sovereignty  to  pass  laws  "  for  the  internal  regulation  and 
government  of  the  state,  necessary  for  the  public  welfare,"  and  the  judicial 
concession  that  this  power  is  not  impaired  by  the  Fourteenth  Amendment, 
there  is  grave  danger  that  that  amendment  will  become  irretrievably  lost 
within  the  illimitable  or  indescribable  boundaries  of  the  police  power.  Fur- 
thermore, it  is  conceded  that  all  doubtful  questions  are  to  be  resolved  in 
favor  of  the  police  power:  State  v.  Moore,  104  N.  C.  744;  17  Am.  St.  Rep. 
696;  and  that  not  only  does  the  police  power  confer  upon  each  state  the 
right  to  legislate  for  the  public  welfare  and  the  preservation  of  the  public 
health,  safety,  and  morals,  but  that  the  power  of  determining  what  will  in- 
juriously aSect  either  is  also  primarily  vested  in  the  state.  "Power  to 
determine  such  questions,  so  as  to  bind  all,  must  exist  somewhere,  else 
society  will  be  at  the  mercy  of  the  few,  who,  regarding  only  their  own  appe- 
tites or  passions,  may  be  willing  to  imperil  the  peace  and  security  of  the 
many,  provided  only  they  are  permitted  to  do  as  they  please.  Under  our 
system,  that  power  is  lodged  with  the  legislative  branch  of  government.  It 
belongs  to  that  department  to  exert  what  are  known  as  the  police  powers  of 
the  state,  and  to  determine,  primarily,  what  measures  are  appropriate  or 
needful  for  the  protection  of  the  public  morals,  the  public  health,  or  the 
public  safety":  Mur/ler  v.  Kansas,  123  U.  S.  660.  We  do  not  assert  that 
any  decision  has  held  the  legislative  determination  conclusive,  but  merely 
that  it  must,  if  the  power  to  determine  at  all  be  conceded,  be  conclusive, 
unless  the  statute  enacted  apparently  or  professedly  to  accomplish  some  of 
the  legitimate  objects  of  the  police  power  "has  no  real  or  substantial  rela- 
tion to  those  objects":  Mu'jler  v.  Kansas,  12.3  U.  S.  661.  Manifestly,  it  is 
only  in  extreme  cases  that  the  judiciary  will,  with  respect  to  a  matter  which 
it  concedes  a  co-ordinate  branch  of  the  government  had  power,  primarily,  to 
determine,  overrule,  and  set  at  naught  the  determination  there  made,  when 
to  do  so  it  must,  in  substance,  declare  that  such  determination  was  in  effect 
a  sham,  a  mere  pretense, — a  legislative  decision  which  had  no  real  or  sub- 
stantial relation  to  the  objects  in  furtherance  of  which  it  was  professedly 
pronounced.  Whenever  it  is  claimed  that  the  grant  of  a  special  privilege, 
or  the  imposition  of  a  special  burden  or  restriction,  must  be  disregarded,  be- 
cause in  violation  of  the  Fourteenth  Amendment,  we  must  inquire  whether  it 
is  one  which  the  legislature  might  have  granted  or  imposed  in  good  faith, 
in  an  honest  desire  to  promote  the  public  morals,  health,  safety,  or  wel- 
fare, and  if  so,  it  can  rarely,  if  ever,  be  declared  void  liecause  of  this  amend- 
ment. 

Local  and  Special  Lfijidallm,  otherwise  valid,  and  not  directed  against  any 
particular  race  or  nationalitj',  is  not  invalidated  by  the  Fourteenth  Amend- 
ment: MUsouri  R'y  Co.  v.  Mackey,  127  U.  S.  209;  DeiU  v.    H'ent  Viryinia,  129 


884  State  v.  Goodwill.  [W.  Virginia, 

U.  S.  114;  Belts  Gap  Road  Co.  v.  Pennf<yhania.  134  U.  S.  237;  State  v.  Schlem- 
mer,  42  La.  Ann.  1166;  Barhier  v.  Connolly,  113  U.  S.  27,  and  whether  it  is 
intended  to  operate  against  "one  race  or  nationality,  rather  than  against 
another,  or  is  otherwise  prohibited  by  the  amendmeut,  must  be  determined 
from  an  inspection  of  the  statute,  because  "  the  rule  is  general  with  reference 
to  the  enactments  of  all  legislative  boilies,  that  the  courts  cannot  inquire  into 
the  motives  of  the  legislators  in  passing  them,  except  as  they  may  be  dis- 
closed on  the  face  of  the  acts  or  inferable  from  their  operation,  considered 
with  reference  to  the  conditions  of  the  country  and  existing  legislation. 
The  motives  of  the  legislators,  considered  as  to  the  purposes  they  had  in 
view,  will  always  be  presumed  to  be  to  accomplish  that  which  follows  as  a 
natural  and  reasonable  effect  of  their  enactments":  Soon  Hing  v.  Crowley, 
113  U.  S.  703.  It  is  no  objection  to  a  statute  that  it  is  special  or  local,  "if 
all  persons  subject  to  it  are  treated  alike  under  similar  circumstances  and 
conditions  in  respect  both  to  the  privileges  conferred  and  the  liabilities 
imposed":  Missouri  R'y  Co.  v.  Marhey,  127  U.  S.  209;  Misxouri  v.  Leivis,  101 
U.  S.  22;  Hayeii  v.  Missouri,  120  U.  S.  68.  Therefore  the  following  special 
legislation  has  been  sustained:  A  statute  subjecting  railway  corporations 
whose  tracks  have  not  been  fenced  to  double  damages  for  injuries  to  animals 
on  such  tracks:  Missouri  Pac.  B'y  Co.  v.  Humes,  115  U.  S.  512;  Minncnpolis 
tt-  St.  L.  RyCo.  v.  BecJavilh,  Vld  U.  S.  26;  or  applying  to  municipal  corpora- 
tions and  giving  them  privileges  to  which  private  persons  or  corporations, 
or  even  other  municipal  corporations,  are  not  entitled:  Preston  v.  Louisville, 
84  Ky.  118;  providing  that  in  prosecutions  for  crime  in  cities  having  a  pop- 
ulation of  mora  than  five  hundred  thousand  inhabitants  the  state  shall  be 
allowed  fifteen  peremptory  challenges  to  jurors,  while  elsewhere  it  is  allowed 
but  eight:  Hayes  v.  Missoiiri,  120  U.  S.  68;  local-option  laws  which  restrict 
the  sale  of  intoxicating  liquors  in  such  cities  as  may  adopt  them  by  a  major- 
ity vote:  Ex  parte  Sivann,  96  Mo.  44;  municipal  ordinances  prohibiting  the 
carrying  on  of  public  laundries  within  certain  prescribed  limits  in  a  city 
from  ten  o'clock  at  night  until  six  o'clock  in  the  morning:  Barhier  v.  Connolly, 
113  U.  S.  23;  a  statute  giving  miners  or  others  employed  in  or  about  coal 
mines  a  prior  lien  on  mining  property  for  work  and  labor,  and  land-owners  a 
prior  lien  for  royalty:  Warren  v.  Sohn,  112  Ind.  213;  or  dispensing  with 
undertakings  in  proceedings  by  attachment,  when  the  defendants  are  non- 
residents: Head  v.  Daniels,  38  Kan.  1;  or  with  the  signature  of  a  wife  who 
is  not  and  has  never  been  a  resident  of  the  state  to  a  conveyance  by  her  hus- 
band of  property,  in  effect  releasing  her  right  to  dower  by  such  convej'ance, 
though  had  she  been  a  resident  her  signature  would  have  been  indispensable: 
Buffiiif/ton  V.  Grosvenor,  46  Kan.  730;  making  every  railway  corporation 
organized  and  doing  business  in  the  state  liable  for  damages  done  to  any 
employee  of  such  company  in  consequence  of  any  negligence  of  its  agents  or 
by  any  mismanagement  of  its  engineers  or  other  employees  to  any  person  sus- 
taining such  damage:  3fissoicri  Pac.  R'y  Co.  v.  MacJcey,  127  U.  S.  205;  Minne- 
apolis etc.  Ry  Co.  V.  Herrick,  127  U.  S.  210;  Pierce  v.  Central  I.  B'y  Co.,  73 
Iowa,  140;  Rnyhurn  v.  Central  I.  R'y  Co.,  74  Iowa,  637;  creating  a  presump- 
tion of  negligence  against  railway  corporations,  when  damage  has  been  done 
by  fire  or  other  means:  Missouri  Pac.  R'y  Co.  v.  Merrill,  40  Kan.  404;  Au- 
gusta etc.  R.  R.  Co.  V.  Rand(dl,  79  Ga.  304;  excluding  the  defense  of  contribu- 
tory negligence  when  injuries  have  resulted  from  the  failure  of  railway  cor- 
porations to  fence  their  tracks:  Quackenhush  v.  Wisconsin  etc.  R'y  Co.,  62 
Wis.  411;  Curry  v.  Chicago  etc.  B'y  Co.,  43  Wis.  665;  or  their  failure  to  give 
signals  or  warnings  when  approaching  crossings:  Kaminitsky  v.  Northeastern 


Nov.  1889.1  State  v.  Goodwill.  885 

R.  B.  Co.,  25  S.  C.  53;  punishing  employees  of  railway  corporations  for  muti- 
lating, disfiguring,  burning,  hauling  off,  or  burying  any  dead  carcass  of  any 
animals  that  shall  be  killed  by  any  railway  in  the  state  without  first  notify- 
ing two  citizens  of  the  neighborhood:  Bannon  v.  State,  49  Ark.  1(37;  declar- 
ing that  any  person  having  in  his  posses.sion  Texas  cattle  shall  be  liable  for 
any  damages  that  may  accrue  from  allowing  such  cattle  to  run  at  large  and 
thereby  spreading  the  disease  among  other  cattle,  known  as  "Texas  fever," 
and  also  subjecting  him  to  fine  and  imprisonment:  Kimmighv.  Ball,  129  U.  S. 
217;  exempting  growers  of  tobacco  or  purchasers  thereof  who  pack  the 
same  in  the  county  or  the  neighborhood  where  it  was  grown  from  having  it 
opened  and  inspected  before  being  exported  from  the  state,  if  they  have  first 
marked  it  with  the  full  name  of  the  owner  and  place  of  his  residence,  though 
other  persons  are  required  to  submit  to  such  opening  and  inspection:  Turner 
V.  Maryhmd,  107  U.  S.  38;  affirming  55  Md.  240;  restricting  the  amount  of 
land  which  may  be  cultivated  by  one  family  or  household  within  the  limits 
of  a  municipal  corporation:  Town.  Council  v.  Preasly,  33  S.  C.  56. 

Sprcial  Punishmnitfor  Crimes. — "The  Fourteenth  Amendment  undoubtedly 
forbids  any  arbitrary  deprivation  of  life,  liberty,  or  property,  and  in  the  ad- 
ministration of  criminal  justice  requires  that  no  different  degree  or  higher 
punishment  shall  be  imposed  on  one  than  is  imposed  on  all  for  like  offenses, 
but  it  was  not  designed  to  interfere  with  the  power  of  the  state  to  protect 
the  lives,  liberty,  or  property  of  its  citizens,  nor  with  the  exercise  of  that 
power  in  the  adjuilication  of  the  courts  of  the  state  in  administering  the  pro- 
cess provided  by  the  law  of  the  state":  In  re  Converse,  137  U.  S.  624;  Lee-per 
V.  TcxnK,  139  U.  S.  462.  Nor  is  it  universally  true,  as  stated  in  this  quota- 
tion, that  no  higher  punisliment  can  be  "imposed  upon  one  than  is  imposed 
on  all  for  like  offenses."  Not  only  may  the  state  prescribe  different  punish- 
ments for  different  acts  constituting  the  same  offense  in  different  degrees  or 
by  different  classes  of  persons:  Ex  parte  Garza,  28  Tex.  App.  381;  19  Am. 
St.  Rep.  845;  but  it  may  doubtless  provide  that  a  person  who  has  been  be- 
fore convicted  of  crime  may  suffer  a  more  severe  punishment  than  for  a  first 
offense  against  the  law:  In  re  Boffjs,  45  Fed.  Rep.  475;  and  that  minors 
below  a  specified  age  shall  not  be  subject  to  the  death  penalty,  though  their 
crime,  if  committed  by  an  adult,  would  be  rewarded  by  that  punishment: 
Ex  parte  Walker,  28  Tex.  App.  246.  A  statute  is  not  invalid  because  it  pun- 
ishes adultery  between  persons  of  different  races  more  severely  than  if  they 
belonged  to  the  same  race:  Puce  v.  Alabama,  106  U.  S.  583. 

Taxation. — The  Fourteenth  Amendment  has  not  impaired  the  power  of 
each  state  to  select  the  subjects  of  taxation  and  provide  the  modes  of  assess- 
ment and  collection.  The  different  classes  of  property  may  be  subject  to 
different  modes  and  degrees  of  taxation.  No  one  has  a  right  to  insist  that 
no  property  shall  be  exempt,  or  that  the  value  of  all  property  shall  be  ascer- 
tained in  the  same  manner,  or  subject  to  the  same  mode  or  amount  of  taxa- 
tion: Charlotte  etc.  R.  R.  Co.  v.  GihbeH,  14'2  U.  S.  386;  The.  Delaware  R.  R.  Tax, 
18  Wall.  206;  Maine  v.  Grand  Trunk  Ry  Co.,  142  U.  S.  217;  State  R.  R.  Tax 
Coxes,  92  U.  S.  575;  Kentucky  R.  R.  Tax  Cases,  115  U.  S.  321.  If  the  uses  to 
which  any  particular  class  of  property  is  devoted  are  such  that  it  must  be 
specially  benefited  by  some  service  rendered  by  the  government,  or  some 
department  thereof,  the  expenses  of  such  service  may  be  imposed  upon  it. 
Hence  a  statute  providing  for  a  .state  railway  commission,  and  that  the  salary 
of  its  members  shall  be  borne  by  the  several  companies  operating  railways 
within  the  state,  is  not  invalid:  Charlotte  etc.  R.  R.  Co.  v.  Gibbes.  142  U.  S.  386. 
So  persons  carrying  on  various  occupations  may  be  required  to  take  out  a 


886  State  v.  Goodwill.  [W,  Virginia, 

license  and  pay  a  fee  therefor;  and  what  persons  shall  be  required  to  submit 
to   the   payment  of  such  fee,  and  the  amount  and  terms  of  payment,  and 
modes  of  collection  are  subjects  for  th.e  determination  of  the  state  legisla- 
ture; and  the  fact  that  the  legislature  has  imposed  a  greater  burden  upoa 
some  corporations  than  upon  others,  or  has  burdened  some  and  left  others 
free,  is   not   a  valid  objection   to  the   statute,  provided  there   is  no  arbi- 
trary discrimination  between  persons  situated  in  the  same  circumstances, 
and  no  unlawful  interference  with  interstate  commerce:  Bostich  \.  State,  ^1 
Ark.  126;  Fahey  v.  Slate,  27  Tex.  App.  146;  Bother mel  v.  Meyerle,  136  Pa. 
St.  250;  State  v.   Wessell,  109  N.  C.  735;  State  v,  Smithson,  106  Mo.  149;  and 
merchants,  in  addition  to  an  ad  valorem  tax  oa  their  stock,  may  be  required 
to  pay  a  tax  equivalent  to  one  tenth  of  one  per  cent  of  the  total  amount  of 
their  purchases,  excepting  purchases  of  farm  products,  from  their  producers: 
State  V.  French,  109  N.  C.  722.     The  views  of  the  supreme  court  of  the  United 
States  concerning  the  effect  of  the  Fourteenth  Amendment  upon  the  right  of 
the  states  to  impose  and  collect  taxes  and  licenses  was  thus  clearly  and  forci- 
bly expressed  by  the  late  Mr.  Justice  Bradley,  delivering  the  opinion  of  the 
court  in  Bell's  Gap  Road  Co.  v.  Pennsylvania,  134  U.  S.  237:   "  Tlie  provision 
in  the  Fourteenth  Amendment  that  no  state  shall  deny  to  any  person  within 
its  jurisdiction  the  equal  protection  of  the  laws  was  not  intended  to  prevent  a 
state  from  adjusting  its  system  of  taxation  in  all  proper  and  reasonable  ways. 
It  may,  if  it  chooses,  exempt  certain  classes  of  property  from  any  taxation  at 
all,  such  as  churches,  libraries,  and  the  property  of   charitable  institutions. 
It  may  impose  different  specific  taxes  upon  different  trades  and  professions, 
and   may  vary  the  rates  of  excise   upon  various  products;   it  may  tax  real 
estate  and  personal  property  in  a  different  manner;  it  may  tax  visible  prop- 
erty only,  and  not  tax  securities  for  payment  of  money;  it  may  allow  deduc- 
tions for  indebtedness,  or  not  allow  them.     All  such  regulations,  and  those 
of  like  character,  so  long  as  they  proceed  within  reasonable  limits  and  gen- 
eral usage,  are  within  the  discretion  of  the  state  legislature,  or  the  people  of 
the  state  in  framing  their  constitution;  but  clear  and  hostile  discriminations 
against  particular  persons  and  classes,  especially  such  as  are  of  an  unusual 
character,  unknown  to  the  practice  of  our  governments,  might  be  obnoxious 
to  the  constitutional  prohibition.     It  would,  however,  be  impracticable  and 
unwise  to  attempt  to  lay  down  any  general  rule  or  definition  on  the  subiect 
that  would  include  all  cases.     They  must  be  decided  as  they  arise.     We 
think  that  we  are  safe  in  saying  that  the  Fourteenth  Amendment  was  not  in- 
tended to  compel  the  state  to  adopt  an  iron  rule  of  equal  taxation.      If   that 
were  its  proper  construction,  it  would  not  only  supersede  all  those  constitu- 
tional provisions  and  laws  of  some  of  the  states  whose  object  is  to  secure 
equality  of  taxation,  and  which  are  usually  accompanied  with  qualifications 
deemed  material,  but  it  would  render  nugatory  those  discriminations  which 
the  best  interests  of  society  require,  which  are  necessary  for  the  encourage- 
ment of  needed  and  useful  industries,  and  the  discouragement  of  intemper- 
ance and  vice,  and  which   every  state,  in  one  form  or  another,   deems   it 
expedient  to  adopt." 

Judicial  Proceedings.  — Nor  does  the  Fourteenth  Amendment  entitle  every 
person  to  have  the  same  remedies  in  the  courts,  or  to  pursue  them  within 
the  same  times  or  in  the  same  modes,  as  every  other  person,  though  in  these 
respects  the  same  rights  and  remedies  must  be  conceded  to  all  persons  in  the 
same  condition  and  circumstances.  If  a  litigant's  cause  comes  on  to  be  tried 
before  a  court  then  presided  over  by  a  judge  de  facto,  he  cannot  avoid  the 
judgment  against  him  on  the  ground  that  causes  in  other  courts  of  the  state 


Nov.  1889.]  State  v.  Goodwill.  887 

were  decided  only  by  judges  de  jure:  In  re  Manning,  139  U.  S.  504;  nor  cau 
be  object  that  his  cause  ha{)peued  to  belong  to  a  class  or  to  be  tried  before  a 
court  from  the  decision  of  wliich  no  appeal  was  allowed,  though  had  it  be- 
longed to  a  dififereut  class  or  fallen  within  the  jurisdiction  of  a  dififerent 
court,  remedies  by  appeal  would  have  been  open  to  him:  SuUlva)i  v.  Haug^ 
82  Mich.  548;  St.  Louis  etc.  li'y  Co.  v.  Worthen,  52  Ark.  529;  Missouri  V. 
Lewis,  101  U.  S.  22;  or  that  in  the  city  where  he  was  tried  and  convicted  of 
crime,  the  state  was  entitled  to  fifteen  peremptory  challenges  of  jurors,  and 
elsewhere  to  but  eight:  Hayes  v.  Missouri,  120  U.  S.  68;  or  that  a  statute 
limited  to  ninety  days  the  time  within  which  suit  could  be  brought  in  a 
cause  of  action  such  as  that  upon  which  he  sought  to  recover:  Christy  v.  Life 
Imlemndy  de  Lis.  Co.,  48  N.  W.  Rep.  94  (Iowa,  Feb.  10,  1891);  or  that  a  stat- 
ute provided  that  cases  such  as  his  should  be  tried  without  a  jury:  Walker 
V.  Sauvinet,  92  U.  S.  90;  or  after  a  debt  due  from  him  had  become  barred  by 
the  statute  of  limitations,  had  repealed  the  statute  and  thereb}'  revived  the 
remedies  against  him,  and  authorized  the  judgment  of  which  he  complained: 
Campbell  V.  Holt,  115  U.  S.  620. 

Edablishimj  Markets  and  OtJterwise  Regulating  the  Modes  and  Places  of  do- 
ing Business.  —  Each  state  legislature  may,  when  justified  by  the  police 
power  vested  in  it,  restrict  the  places  and  modes  of  doing  business,  though 
in  so  doing  it,  in  some  respects,  creates  a  monoply.  Thus  it  may  foibid  the 
landing  and  slaughtering  of  animals  whose  flesh  is  intended  for  food,  within 
a  certain  city  and  adjacent  parishes,  except  within  certain  designated  locali- 
ties, and  forbid  the  keeping  or  establishing  of  slaughter-houses  within  those 
limits,  except  by  a  corporation  created  by  the  statute,  and  maj'  give  to  such 
corporation  the  exclusive  privilege  of  carrying  on  a  live-stock  landing  and 
slaughter-house  business  within  those  limits,  but  making  it  the  duty  of  the 
corporation  to  permit  any  person  to  slaughter  animals  in  its  slaughter-houses. 
This  statute  was  defensible  as  an  exercise'  of  the  police  power,  because  it 
regulated  an  unwholesome  trade  necessary  to  be  carried  on  in  the  midst  of  a 
dense  population,  which,  unless  regulated,  might,  and  probably  would,  be 
made  offensive  to  the  senses  and  injurious  to  the  health  of  the  community; 
SlaujJder  Ilou^e  Cases,  16  Wall.  36.  "The  regulation  and  control  of  markets 
for  the  sale  of  provisions,  including  the  places  and  distances  from  each  other 
at  which  they  may  be  kept,  are  matters  of  municipal  police  power,  and  may 
be  enforced  by  the  legislation  of  the  city  council,  to  be  exercised  as,  in  its  dis- 
cretion, the  public  health  and  convenience  may  require  ":  Natal  v.  Louisiana, 
139  U.  y.  64.  A  statute  may  make  it  criminal  for  any  person  to  vend  re- 
freshments at  a  camp-meeting  without  the  consent  of  the  persons  in  charge 
thereof,  but  exempting  from  its  operation  persons  having  a  regular  place  of 
business  where  such  meeting  is  held:  Meyers  v.  Baker,  120  111.  567.  Business 
may  be  regulated  so  as  not  to  be  ofl'ensive  to  decency:  Nolin  v.  Franklin,  4 
Yerg.  163;  or  as  not  to  create  or  constitute  a  nuisance  in  other  respects; 
and,  if  necessary,  property,  the  use  of  which  is  a  public  nuisance,  may  be 
authorized  to  be  destroyed:  Watertoivn  v.  Mayo,  109  Mass.  315;  Taylor  v. 
State,  35  Wis.  298;  Mugler  v.  Kansas,  123  U.  S.  623;  Fertilizing  Co.  v.  Hyde 
Park,  97  U.  S.  659.  In  Pennsylvania,  it  has  been  decided  that  a  statute  au- 
thorizing the  sale  of  certain  articles  by  hawkers  or  peddlers  relates  to  the 
manner  of  sale,  and  not  to  the  right  of  sale,  and  was  sustainable  as  an  exer- 
cise of  the  police  power:  Commonwealth  v.  Gardner,  133  Pa.  St.  284;  19  Am. 
St.  Rep.  645. 

Bules  and  Restrictions  to  Prevent  Imposition  and  Fraud.  — If  a  business  is  of 
a  character  oli'ering  special  opporlunities  for  imposition  and  fraud  or  render- 


888  State  v.  Goodwill.  [W.  Virginia, 

ing  imposition  and  fraud  specially  difficult  of  detection  or  redress,  it  is  un- 
questionably within  tlie  power  of  the  state  to  impose  such  regulations  and 
restrictions  as  to  its  legislature  may  seem  proper  for  the  better  protection  of 
its  citizens  and  others,  unless,  indeed,  the  restrictions  imposed  are  of  a  capri- 
cious and  arbitrary  character,  such  as  could  not  have  been  enacted  in  good 
faith.  Therefore  a  statute  is  not  subject  to  constitutional  objection  which 
provides  that  tobacco  shall  not  be  carried  out  of  the  state  unless  packed  in  a 
designated  manner,  in  hogsheads  of  a  particular  size,  and  either  opened  and 
submitted  to  inspection  by  a  public  official,  or  if  packed  by  the  grower  or 
purchaser  thereof  in  the  same  county  or  neighborhood  where  grown,  marked 
with  the  full  name  of  the  owner  and  his  place  of  residence:  Turner  v.  Stale, 
55  Md.  240;  107  U.  S.  38;  or  that  it  shall  be  unlawful  to  sell,  deliver,  or  receive 
any  cotton  in  the  seed  in  less  quantity  than  one  bale,  unless  the  sale  is  in  writ- 
ing, signed  by  the  parties  thereto,  witnessed  by  two  witnesses,  and  the  writ- 
ing delivered,  with  a  fee,  to  the  nearest  justice  of  the  peace,  to  be  docketed 
for  the  inspection  of  all  persons:  State  v.  Moore,  104  N.  C.  714;  17  Am.  St.  Rep. 
696;  or  places  the  sale  of  fertilizers  under  the  control  of  a  commissioner  of 
agriculture,  who  is  authorized  to  make  analysis  of  all  fertilizers  offered  for  sale 
in  the  state,  to  issue  and  distribute  circulars  setting  forth  the  price  of  fertiliz- 
ers sold  or  offered  for  sale,  their  analysis  as  claimed  by  the  manufacturer  or 
dealer  in  them,  to  provide  tags  for  attachment  to  bags,  barrels,  and  packages 
of  fertilizers,  which  shall  be  printed,  and  the  word  "guaranteed,"  with  the  year 
or  season  in  each  year  in  which  they  are  to  be  used,  and  prohibiting  the  sale 
or  exchange  of  fertilizers  witliout  a  license  from  such  commissioner:  Steiner 
V.  Bay,  84  Ala.  95;  5  Am.  St.  Rep.  332;  or  prohibiting  the  manufacture  of 
oleomargarine,  or  any  other  substance  or  compound  other  than  that  pro- 
duced by  unadulterated  milk  or  cream  from  such  milk,  designed  to  take 
the  place  of  butter  or  cheese  produced  from  pure  milk  or  cream:  Waieihury 
V.  Neivton,  50  N.  J.  L.  534;  Powell  v.  Pennsylvania,  127  U.  S.  678;  State  v. 
Marshall,  64  N.  H.  549;  Butler  V.  Chambers,  36  Minn.  69;  1  Am.  St.  Rep. 
638;  or  prohibiting  the  sale  of  milk  adulterated  with  pure  water,  or  other- 
wise, and  fixing  a  standard,  and  declaring  tiiat  all  milk  below  that  standard 
is  impure  or  adulterated:  Connnomuenlth  v.  Waite,  11  Allen,  264;  87  Am. 
Dec.  711;  State  v.  Campbell,  64  N.  H.  402;  10  Am.  St.  Rep.  419;  State  v. 
Smyth,  14  R.  I.  100;  51  Am.  Rep.  344;  or  requiring  persons  selling  patent 
rights  to  file  with  the  clerk  of  the  county  an  authenticated  copy  of  the  let- 
ters patent,  a!id  an  affidavit  that  they  are  genuine  and  have  not  been  re- 
voked, and  that  the  affiant  is  authorized  to  sell  the  right  patented:  Brechhill 
V.  EandaXl,  102  Ind.  528;  52  Am.  Rep.  695;  or  requiring  operatives  of  butter 
and  cheese  factories  on  the  co-operative  plan  to  give  bonds  for  the  faithful 
accounting  of  property  received  by  them:  Haivthorn  v.  People,  109  111.  302; 
50  Am.  Rep.  610. 

Fixing  Rates  to  he  Ghai-ged  for  Services.  —  Over  no  subject  has  litigation  been 
more  persistent  than  that  of  the  right  of  the  legislature  to  prescribe  rates  to 
be  charged  for  services  rendered  by  carriers  and  others  engaged  in  businesses 
which  are  regarded  as  charged  with  public  use,  or  "affected  with  a  public 
interest."  It  would,  we  think,  be  impossible,  from  existing  decisions,  to 
form  any  reliable  test  by  which  to  determine  in  all  cases  whether  the  busi- 
ness in  question  is  or  is  not  such  as  is  charged  with  a  public  use,  or  "  affected 
with  a  public  interest "  so  as  to  bring  it  within  the  power  of  the  legislature 
to  prescribe  the  charges  wliich  may  lawfully  be  made  therein.  If  the  busi- 
ness is  one  which  it  is  not  lawful  to  carry  on  without  a  franchise  or  license 
from  the  state,  or  is  rendered  especial  assistance  by  the  state,  by  taxation  or 


Nov.  1889.]  State  v.  Goodwill.  889 

otherwise,  or  is  allowed  the  use  of  public  property  or  of  some  public  ease- 
ment, or  is  granted  some  exclusive  privilege  by  the  state  or  the  public,  its 
charges  may  be  fixed  by  the  legislature:  Cooley's  Constitutional  Limitations, 
6th  ed.,  738.  We  apprehend,  however,  that  the  power  of  the  legislature, 
though  usually  exercised  over  businesses  such  as  we  have  just  referred  to,  is 
not  limited  to  them,  and  may  be  extended  to  all  cases  in  which  the  business  is 
one  which  is  carried  on  under  such  circumstances  as  to  create  a  substantial 
monopoly  or  to  give  special  opportunities  for  extortion  or  oppression:  People 
V.  Budd,  17  N.  Y.  1;  15  Am.  St.  Rop.  400;  athrmed  Budd  v.  New  York, 
143  U.  S.  517;  Sinking  Fund  Cases,  99  U.  S.  700;  Spriwj  Valley  etc.  Co.  v. 
SchoUler,  110  U.  S.  347;  Doio  v.  Beidleman,  125  U.  S.  080,  GSO.  At  all  events, 
the  exercise  of  this  power  has  been  sustained  as  against  common  carriers: 
Stone  V.  Farmers'  L.  <ic  T.  Co.,  116  U.  S.  307;  Chicago  etc.  li'y  Co.  v.  Iowa,  94 
U.  S.  155;  Buggies  v.  Illinois,  108  U.  S.  526;  Railroad  Co.  v.  Maryland,  21 
Wall.  456;  Dow  v.  Beidelnian,  49  Ark.  455;  warehousemen:  Stone  v.  Yazoo  etc. 
R.  R.  Co.,  62  Miss.  607;  52  Am.  Rep.  193;  Delaware  etc.  R.  B.  Co.  v.  Central 
Stock  Yard,  45  N.  J.  Eq.  50;  corporations  authorized  to  manufacture  and 
sell  illuminating  gas:  State  v.  Colundms  Gas  Co.,  34  Ohio  St.  572;  32  Am. 
Rep.  390;  Zanesrilk  v.  Gas  Light  Co.,  47  Ohio  St.  1;  or  to  use,  rent,  and 
maintain  telephones,  and  the  wires  and  appliances  necessary  thereto:  Chesa- 
peake cfr  P.  T.  Co.  v.  Baltimore  etc.  Tel.  Co.,  60  Md.  399;  59  Am.  Rep.  107; 
Hockelt  V.  State,  105  Ind.  250;  55  Am.  Rep.  201;  Central  U.  T.  Co.  v.  State, 
lis  Ind.  194;  10  Am.  St.  Rep.  114;  Central  U.  T.  Co.  v.  Bradbury,  100  Ind. 
1;  Wehster  Telephone  Case,  17  Neb.  126;  52  Am.  Rep.  404;  and  persona, 
whether  natural  or  artificial,  engaged  in  the  business  of  elevating,  receiv- 
ing, and  discharging  grain:  Munn  v.  Illinois,  94  U.  S.  113;  People  v.  Budd, 
117  N.  Y.  1;  15  Am.  St.  Rep.  460;  affirmed  143  U.  S.  517.  We  had  un- 
derstood Chicago  etc.  R'y  Co.  v.  Minnesota,  134  U.  S.  418,  as  in  effect  over- 
ruling the  earlier  decisions  upon  the  same  subject,  and  determining  that  a 
common  carrier  or  other  person  could  not  be  prevented  from  showing  in 
some  appropriate  judicial  tribunal  that  the  charges  fixed  for  his  services 
were  unreasonable,  and  thereby  relieving  himself  from  the  obligation  to  con- 
form to  such  charges.  A  more  recent  decision,  though  by  a  divided  court, 
has  limited  the  apparent  signification  of  the  former  decision  by  restricting  its 
application  to  cases  in  which  the  rates  and  charges  were  not  fixed  by  the 
legislature  itself,  but  by  some  commission  or  other  tribunal  to  which  the 
legislative  authority  has  been  delegated,  and  has  reaffirmed  Munn  v.  Hli- 
nois,  and  the  other  cases  in  harmony  with  it:  Budd  v.  New  York,  143  U.  S. 
517. 

Regulations  and  Restrictions  to  Promote  and  Secure  the  Public  Health  and 
Safely  are  also  within  the  police  power  of  the  state  and  may  extend  to  a  pro- 
tection both  of  person  and  of  property.  In  cities  and  other  places  of  dense 
popuhition,  what  is  known  as  "fire  limits"  may  be  fixed,  and  the  construc- 
tion, alteration,  and  repair  of  wooden  and  other  specially  combustible 
buildings  there  prohibited:  Respnblica  v.  Duquet,  2  Yates,  493;  Wadleigh  v. 
Gilman,  12  Me.  403;  28  Am.  Dec.  188;  Monroe  v.  Hoffman,  29  La.  Ann.  051; 
29  Am.  Rep.  345;  King  v.  Darenport,  98  111.  305;  38  Am.  Rep.  89;  Ex  parte 
Fuke,  72  Cal.  125;  the  right  to  store  gunpowder  and  otiier  exi)losive  and 
dangerous  material  may  be  confined  to  certain  limits,  where  the  harm  which 
may  be  produced  by  them  wUl  be  reduced  to  the  minimum:  Foote  v.  Fire 
Department,  5  Hill,  99;  Davenport  v.  Richmond,  81  Va.  636;  the  sale  of  poi- 
sons may  be  forbidden  unless  they  are  lalieled  so  as  to  give  warning  of  their 
character  and  effect:  Morey  v.  Brown,  42  N.  H.  373;  a  bicycle  or  other  vehi- 


890  State  v.  Goodwill.  [W.  Virginia, 

cle  which  from  its  form,  appearance,  or  manner  of  tise  may  frighten  horses, 
and  there))y  imperil  the  lives  of  people,  may  he  excluded  from  the  puhlic 
highway:  State  v.  Yop2),  97  N.  C.  477;  2  Am.  St.  Rep.  305;  railroad  cor- 
poratious  may  be  required  to  fence  their  tracks  and  put  on  cattle-guarda: 
Wilder  V.  Maine  etc.  R.  R.  Co.,  65  Me.  322;  20  Am.  Rep.  698;  Thorpe  v. 
Rutland  R.  R.  Co.,  27  Vt.  140;  62  Am.  Dec.  625;  or  to  keep  that  part  of  the 
country  within  the  lines  of  their  right  of  way  safe  and  convenient  for  trav- 
elers upon  it:  Boston  etc.  R.  R.  Co.  v.  County  Commissioners,  79  Me.  386;  Peo- 
ple V.  Boston  cfc  A.  R.  R.  Co.,  70  N.  Y.  569;  and  to  that  end  to  keep  in  repair 
suitable  crossings,  where  railways  intersect  public  highways:  dtate  v.  C/it- 
ca(jo  etc  R.  R.  Co.,  29  Neb.  412;  to  require  locomotive-engineers  and  other 
persons  in  the  employment  of  railway  corporations  whose  duties  call  for 
ability  to  distinguish  between  colors  to  be  examined  in  this  respect  and 
that  such  corporations  pay  for  the  expenses  of  such  examination:  Nashville 
etc.  R'y  Co.  v.  Alabama,  128  U.  S.  96. 

Statutes  Reyalating  the  Practice  of  Dentistry  and  of  Medicine,  providing 
means  of  securing  the  competency  of  persons  engaged  therein,  and  excluding 
all  other  persons  from  such  practice,  are  defensible,  both  on  the  ground  that 
they  are  in  the  interest  of  the  public  health  and  are  designed  and  well  cal- 
culated to  protect  the  public  from  imposition  and  fraud.  They  have  never 
been  pronounced  invalid,  except  when  they  imposed  arbitrary  discriminations 
between  persons  equally  well  qualified  to  engage  in  the  profession  to  which 
Buch  statute  applied:  Willins  v.  State,  113  Ind.  514;  State  v.  Dent,  25  W.  Va. 
1;  Hardin  J  v.  People,  10  Col.  387;  People  v.  Phippin,  70  Mich.  6;  State  v. 
Green,  112  Ind.  462;  Dent  v.  West  Virginia,  129  U.  S.  114.  And  they  are 
not  deemed  arbitrary  because  they  exempt  from  their  prohibitions  midwives 
and  non-resident  physicians  coming  within  the  state  to  consult  with  resident 
registered  physicians:  Stale  v.   Van  Doran,  109  N.  C.  864. 

Statutes  Restricting  Sales  of  Intoxicating  Liquors.  — The  right  to  sell  intoxi- 
cating liquors  is  not  one  of  the  privileges  and  immunities  of  citizens  of  the 
United  States,  and  is  not  assured  by  that  portion  of  the  Fourteenth  Amend- 
ment prohibiting  the  abridging  of  such  privileges  and  immunities:  Barte- 
meyer  v.  lotoa,  18  Wall.  129;  nor  is  there  elsewhere  in  that  amendment  any 
protection  for  the  liquor  traffic.  In  the  legislature  is  vested  the  authority 
to  determine  whether  the  manufacture  or  sale  of  particular  drinks  will  in- 
juriously afifect  the  public,  and  they  may  therefore  regulate,  restrict,  or 
prohibit  the  manufacture  or  the  sale  of  intoxicating  liquors,  unless  perhaps 
when  used  for  medical  purposes:  Beer  Co.  v.  Massachu.ietts,  97  U.  S.  25;  Fos- 
ter V.  Kansas,  112  U.  S.  201;  Mugler  v.  Kansas,  123  U.  S.  623.  When  the 
sale  of  such  liquors  is  permitted,  the  right  to  sell  them  may  be  restricted  to 
such  classes  of  persons  as  the  legislature  may  think  proper.  Hence  this 
right  may  be  confined  to  male  inhabitants  of  a  state:  Blair  v.  Kilpairick,  40 
Ind.  315;  WeM  v.  State,  126  Ind.  71;  or  to  citizens  of  the  United  States 
of  temperate  habits  and  good  character:  Trageser  v.  Gray,  73  Md.  250; 
ante,  p.  587;  and  a  person  convicted  of  intoxication  may  be  compelled  to 
disclose,  "  under  oath,  when,  where,  how,  and  from  whom  he  procured  the 
liquor  by  which  his  intoxication  was  produced,"  and  his  refusal  to  make  such 
disclosure  may  be  punished  as  a  contempt  of  court:  In  re  Clayton,  69  Conn. 
510;  21  Am.  St.  Rep.  128. 


AMERICAN  STATE  REPOllTS. 


V(M.    XXX'l,    Pa.,f^    1-3;!    liil 

ROSS  2'.   HIXON. 

|4f)   Kansas,   •">■")'*.  | 

Malicious  Prosecution. 


Jan.  1891.]  Ross  v.  Hixon.  123 

case,  the  court  said:  "Where  a  parent  executes  to  his  infant 
son  a  conveyance  of  property  in  consideration  of  services  per- 
formed, it  must  be  considered  as  a  voluntary  conveyance, 
without  legal  consideration,  as  he  is  not  legally  bound  to  pay 
for  his  son's  services.  Such  a  deed  is  therefore  void  against 
the  creditors  of  the  parent,  if  made  when  his  remaining  prop- 
erty is  insufficient  to  pay  his  debts." 

We  think  there  was  no  evidence  to  support  a  consideration 
in  the  deed  for  the  lots  in  question  from  Beverly  Anderson 
and  wife  to  their  minor  son.  We  do  not  deem  it  necessary  at 
this  time  to  pass  upon  the  sufficiency  of  the  consideration  of 
the  conveyance  as  to  William  Mack  Anderson. 

We  recommend  a  reversal  of  the  judgment,  and  that  a  new 
trial  be  granted. 

The  Court.     It  is  so  ordered. 

Fraudulent  Conveyances  between  Parent  and  Child.  —  A  convey- 
ance by  an  insolvent  father  to  his  son  of  property,  the  consideration  for  which 
is  that  the  sou  should  support  him  during  his  life,  is  fraudulent  and  void  as  to 
his  existing  creditors:  Woodall  v.  Kelly,  85  Ala.  .368;  7  Am.  St.  Rep.  57;  John- 
ston V.  Harvy,  2  Penr.  &  W.  82;  21  Am.  Dec.  426,  and  note;  and  the  same 
rule  exists  where  the  consideration  for  the  conveyance  was  the  earnings  of  a 
minor  unemancipated  son:  Holliday  v.  Miller,  29  W.  Va.  424;  6  Am.  St. 
Rep.  653,  and  aote;  I<mia  Savings  Batik  v.  McLean,  84  Mich.  625. 


Eoss   V.    HlXON. 

146  Kansas,  550.] 

Malicious  Prosecution  —  Pkobablk  Cause  —  Finding  as  Evidence. — 
The  finding  of  a  committing  magis^trate  that  an  offense  has  been  com- 
mitted,  and  that  tliure  is  probable  cause  to  believe  the  defendant  guilty 
thereof,  is  only  prima  fncie.  and  not  conclusive  evidence  of  probable 
cause,  in  an  action  for  n)alicious  prosecution,  brought  by  such  defendant 
after  his  discliarge,  against  the  complaining  witness. 

Malicious  Pko.skcution —  Pkobablk  Cause.  —  Conviction  is  generally  con- 
clusive of  probable  cause  in  actions  for  malicious  prosecution,  yet  it  may 
be  overcome  by  showing  that  it  was  procured  by  fraud,  uudue  means,  or 
the  false  testimony  of  the  prosecution. 

Hulett  and  Fletcher,  for  the  plaintiff  in  error. 

Hill  and  Chenault,  for  the  defendant  in  error. 

Simpson,  C.  On  the  peventeenth  day  of  .January,  1887, 
Hixon  filed  an  affidavit  before  a  justice  of  the  peace  in  Bour- 
bon County,  charging  Ross  with  having  mixed  certain  poison 


124  Ross  V.  HixoN.  [Kansas, 

with  a  quantity  of  flour,  with  the  intent  and  for  the  purpose 
of  causing  the  death  of  certain  persons.  Upon  said  complaint 
a  warrant  was  issued,  and  Ross  was  arrested.  A  preliminary 
trial  was  had  on  the  4th  of  February,  before  the  justice  who 
issued  the  warrant.  At  the  preliminary  examination,  twelve 
witnesses  were  examined  for  the  state  and  seven  for  the  de- 
fendant. After  the  hearing  of  all  the  evidence,  the  justice 
bound  Ross  to  appear  at  the  district  court  and  answer  the 
charge.  He  failed  to  give  bond,  and  was  committed  to  jail. 
The  finding  of  the  justice  was  as  follows:  "After  hearing  the 
evidence,  I  find  that  said  oflFense  has  been  committed,  and  that 
there  is  probable  cause  to  believe  the  defendant  guilty  thereof" 

Ross  was  in  jail  from  the  seventeenth  day  of  January,  1887, 
until  May  2,  1887.  On  the  latter  date,  the  district  court  of 
Bourbon  County  being  in  session,  the  county  attorney  filed  a 
statement  showing  cause  for  non-prosecution,  and  Ross  was  dis- 
charged. On  the  eighth  day  of  August,  1887,  he  commenced 
this  action  for  malicious  prosecution  against  James  Hixon,  the 
prosecuting  witness.  A  trial  was  had  at  the  May  term,  1888. 
The  plaintiff  in  error  offered  evidence  showing  the  proceedings 
before  the  justice  of  the  peace  on  the  criminal  charge,  and 
tending  to  prove  every  material  allegation  in  such  an  action. 
When  the  plaintiff  rested,  the  defendant,  Hixon,  introduced  a 
large  number  of  witnesses,  when  he  was  interrupted  by  the 
court,  the  trial  was  stopped,  and  a  verdict  was  ordered  for  the 
defendant.  The  jury  returned  a  verdict  for  the  defendant,  and 
a  motion  for  a  new  trial  was  overruled.  The  record  itself  dis- 
closes no  reason  for  the  ruling  of  the  court,  but  counsel  agree 
that  the  reason  assigned  by  the  trial  court  was,  that  the  ex- 
amining magistrate  had  made  a  finding  of  probable  cause, 
and  that  such  finding  was  conclusive  upon  that  question.  It 
is  further  claimed  by  counsel  for  the  defendant  in  error  that 
the  trial  court  made  the  further  statement:  "That  as  the 
petition  does  not  charge  fraud  or  undue  means  in  obtaining 
the  finding  of  probable  cause  by  the  magistrate,  the  same  can- 
not be  attacked." 

The  sole  question  discussed  in  the  oral  argument  of  counsel 
for  defendant  in  error  and  the  briefs  on  both  sides  is  as  to  the 
weight  to  be  given  to  the  finding  of  the  examining  magistrate; 
as  to  whether  it  is  prima  facie  or  conclusive  on  the  question 
of  probable  cause;  and  whether  or  not,  in  either  case,  the  find- 
ing must  be  attacked  for  fraud  or  undue  means  by  proper  al- 
legations in  the  petition.    In  the  case  of  Sweeney  v.  Pemey,  40 


Jan.  1891.]  Ross  v.  Hixon.  125 

Kan.  102,  this  court  incidentally  noticed  the  conflict  in  au- 
thorities as  to  whether  or  not  proof  of  arrest,  committal,  and 
indictment  is  prima  facie  proof  of  probable  cause;  and  the 
case  o(  Ricordw.  Central  Pac.  R.  R.  Co.,  15  Nev.  167,  was  cited 
on  one  side,  and  that  of  Wovxack  v.  Circle,  29  Gratt.  192,  on 
the  other.  The  question  in  this  case  is  closely  allied  to  this 
controversy,  but  authorities  can  be  found  on  both  sides  of  this 
question.  In  the  case  of  Bauer  v.  Clay,  8  Kan.  580,  Mr.  Jus- 
tice Valentine  says:  "The  proof  showing  that  the  justice  or- 
dered that  Clay  should  be  bound  over  for  his  appearance  at 
court,  or  in  default  of  bail,  that  he  should  be  committed  to 
the  county  jail,  is  only  jsrima/acie  and  not  conclusive  evidence 
of  probable  cause." 

The  cases  of  Ash  v.  Marlow,  20  Ohio,  119,  and  Ewing  v. 
Sanford,  19  Ala.  605,  are  cited  in  support.  The  force  of  this 
decision  is  sought  to  be  destroyed  by  counsel  for  defendant  iii 
error  by  an  assertion  that  it  is  a  dictum.  It  is  sometimes  dif- 
ficult to  draw  the  line  between  what  is  authoritative  and  what 
is  not  in  a  judicial  opinion.  The  report  of  the  case  does  not 
give  either  the  pleadings,  the  assignment  of  errors,  or  the 
briefs,  but  it  is  evident  that  the  question  was  necessarily  in- 
volved in  the  rulings  of  the  trial  court,  and  this  court  thought 
it  necessary  to  give  this  as  one  of  the  reasons  for  affirmance 
of  the  judgment  below,  because,  if  counsel  for  defendant  in 
error  are  now  right  in  their  contention.  Clay  had  no  cause  of 
action,  and  the  case  was  decided  wrongfully  in  both  the  trial 
and  the  appellate  courts.  However  the  rule  may  be  in  cases 
in  which  the  magistrates  have  jurisdiction  to  hear  and  pass 
judgment,  we  are  satisfied  that  the  case  of  Barter  v.  Clay,  8 
Kan.  580,  states  the  true  rule  in  cases  in  which  the  magis- 
trates have  only  power  to  bind  over.  This  rule  is  upheld  by 
the  cases  of  Ash  v.  Marlow,  20  Ohio,  119;  Eiving  v.  Sanford, 
19  Ala.  605;  Raleigh  v.  Cook,  GO  Tex.  438;  Ricord  v.  Central 
Pac.  R.  R.  Co.,  15  Nev.  167;  Hale  v.  Boylen,  22  W.  Va.  284; 
Bacon  v.  Towne,  4  Cush.  217;  Spalding  v.  Loxoe,  56  Mich.  866; 
Ganea  v.  Southern  Pac.  R.  R.  Co.,  51  Cal.  140;  Diemer  v.  ITer- 
ber,  75  Cal.  287.  These  are  all  express  adjudications  on  tliat 
particular  question.  In  one  of  these  cases,  decided  in  1885, 
being  that  of  Si^alding  v.  Lowe,  56  Mich.  366,  the  defendant 
requested  the  trial  court  to  instruct  the  jury  as  follows:  "It 
appears  from  tlie  proofs  in  this  case  that  an  examination 
was  had  upon  the  charge  made  against  Spalding,  and  that 
the  justice,  upon  such  examination,  determined  that  this  of- 


126  Ross  V.  HixoN.  [Kansas, 

fense  charged  against  Spalding  had  been  committed,  and 
that  there  was  probable  cause  to  believe  said  Spalding  guilty 
thereof.  This  was  a  judicial  determination  the  justice  was  au- 
thorized to  make,  and  unless  such  action  and  determination 
of  the  justice  was  corrupt  or  collusive,  or  was  wrongfully  pro- 
cured by  the  defendant  herein,  it  is  final  as  to  the  question  of 
probable  cause,  and  your  verdict  should  be  for  the  defendant." 

The  trial  court  refused  to  so  instruct  the  jury,  and  this 
refusal  was  assigned  as  error  in  the  supreme  court;  but  that 
court  say  (page  372):  "No  authority  has  been  produced  in 
support  of  it,  and  we  think  none  exists."  We  have  been 
unable  to  find  a  reported  case  in  which  the  rule  is  held  as 
claimed  by  counsel  for  defendant  in  error.  There  are  cases 
that  so  hold  when  the  magistrate  has  power  to  render  a  judg- 
ment of  conviction. 

How  much  weight  as  proof  of  probable  cause  shall  be  attrib- 
uted to  the  judgment  of  a  court  in  an  original  action  when 
subsequently  reversed  for  error  is  elaborately  discussed  by 
the  supreme  court  of  the  United  States  in  the  case  of  Cres- 
cent City  Live  Stock  Co.  v.  Butchers^  Union  etc.  Co.,  120  U.  S. 
141,  —  a  case  much  relied  on  by  counsel  for  defendant  in  error. 
To  our  mind,  however,  the  distinction  between  that  case  and 
the  one  at  bar  is  plain  and  distinct.  If  the  magistrate  in 
Bourbon  County  had  possessed  the  statutory  power  to  hear  the 
evidence  and  determine  the  guilt  or  innocence  of  the  defend- 
ant, and  to  punish  by  fine  and  imprisonment  if  guilt  was  found, 
then  his  finding  and  judgment  would  come  within  the  rule 
established  by  that  case  to  be  the  law  of  the  land.  The  ques- 
tion in  this  case  is,  How  much  weight,  as  proof  of  probable 
cause,  shall  be  attributed  to  the  finding  of  an  examining  ma- 
gistrate that  "an  offense  has  been  committed,  and  that  there 
is  probable  cause  to  believe  the  defendant  guilty  thereof," 
when  the  defendant  is  subsequently  discharged,  the  prosecu- 
tion against  him  confessedly  ended,  and  he  has  instituted  a 
suit  for  malicious  prosecution  against  the  complaining  witness? 
In  the  one  case,  there  is  a  solemn  judgment,  rendered  by  a 
court  having  full  and  complete  jurisdiction  both  of  the  parties 
and  subject-matter,  binding  on  all  until  reversed  on  appeal  or 
error.  In  the  other  case,  there  is  a  finding  in  effect  that  suffi- 
cient facts  have  been  developed  that  justifies  a  magistrate  in 
sending  the  parties  before  a  court  competent  to  ultimately 
deal  with  the  question  of  guilt  or  innocence. 

Again,  while  a  conviction  is  generally  conclusive  of  prob- 


Jan.  1891.]  Roas  v.  Hixon.  127 

able  cause,  yet  it  may  be  overcome  by  a  showing  that  it  was 
procured  by  fraud,  undue  means,  or  the  false  testimony  of  the 
prosecution:  Womack  v.  Circle^  29  Gratt.  192;  Olson  v.  Needy 
63  Iowa,  214;  Cloon  v.  Gerry,  13  Gray,  201;  Whitney  v.  PecJc 
ham,  15  Mass.  243;  Peck  v.  Chateau,  91  Mo.  138;  60  Am.  Rep. 
236;  Bowman  v.  Brown,  52  Iowa,  437;  Palmer  v.  Avery,  41 
Barb.  290;  Richey  v.  McBean,  17  111.  63;  Paysony.  Caswell,  22 
Me.  212;  Herman  v.  Brookerhoff,  8  Watts,  240;  Jones  v.  Kirk- 
sey,  10  Ala.  839.  In  such  a  case  the  petition  in  the  action  for 
malicious  prosecution  must  directly  attack  the  judgment  of 
conviction,  or  it  will  be  suicidal.  It  is  therefore  unimportant 
whether  the  words  used  by  the  court  in  Bauer  v.  Clay,  8  Kan. 
580,  are  dicta  or  authoritative  in  that  case,  as  they  express 
the  law  as  universally  held  by  all  courts  of  last  resort  that 
have  spoken  on  this  subject.  It  follows  that  the  other  sug- 
gestion of  counsel,  that  the  finding  of  the  magistrate  must  be 
directly  attacked  in  the  petition  for  fraud  or  undue  means,  is 
without  force;  because,  as  that  finding  is  only  prima  facie,  all 
that  is  necessary  for  the  plaintiff  to  do  to  win  is  to  overthrow 
it  by  a  preponderance  of  evidence.  It  can  be  fairly  said  that 
there  was  evidence  submitted  at  the  trial  by  the  plaintiff  in 
error,  other  than  the  transcript  of  the  proceedings  before  the 
examining  magistrate,  bearing  upon  the  question  of  probable 
cause,  which  the  court  below  permitted  to  go  to  the  jury,  from 
which  they  might  have  found  that  the  -prima  facie  case  made 
by  the  magistrate's  finding  was  overcome. 

It  is  recommended  that  the  judgment  of  the  district  court 
be  reversed,  and  the  cause  remanded,  with  instructions  to 
grant  a  new  trial. 

The  Court.     It  is  so  ordered. 


Malicious  Prosecution  of  Criminal  Charges.* 
Scope  of  This  Note.  — In  Texas,  and  perhaps  in  other  states,  the  institu- 
tion of  a  criminal  prosecution  by  one  person  against  another  for  the  purpose 
of  extorting  money,  or  the  payment  or  security  of  a  debt,  or  with  intent  to 
vex,  harass,  or  injure  such  person,  is  made  an  ofifense  by  the  Penal  Code, 
punishable  by  fine  or  imprisonment:  Dempsey  v.  State,  27  Tex.  App.  269; 
11  Am.  St.  Rep.  193.  It  is  not  the  purpose  of  this  note  to  treat  of  malicious 
prosecution  as  a  crime,  nor  to  show  what  acta  may  constitute  the  ofiFeuse  de- 

•  REFERENCE  TO  MONOGRAPHIC  NOTES. 

Malicious  prosecution  of  civil  nctiono:  14  Am.  Dec.  599-603;  44  Am.  Rep.  846-348. 

Malicious  prosecution,  where  the  indictment  does  not  charge  a  crime:  22  Am.  Rep^ 
6S9-64t. 

Malicl«us  prosecution,  liah  llty  of  corporations  for:  34  Am.  Rep.  495-499. 

Malicious  prosecution,  Judgment  in,  as  a  bar  to  subsequent  action  for  libel  or  slan* 
dor:  65  Am.  Dec  30;J,  304. 

False  imprisoi.ment,  liabilities  and  remedies  for:  54  Am.  Dec.  25&-271. 


128  Ross  V.  HixoN.  [Kansas, 

nounced  by  the  penal  codes  of  any  of  the  states.  Our  attention  will  be  con- 
fined to  the  consideration  of  the  malicious  prosecution  of  criminal  proceedings 
as  grounds  for  the  maintenance  of  civil  actions  to  redress  injuries  suffered 
thereby,  including  the  pleadings  and  evidence  in  such  actions  and  the  meas« 
ure  of  damages  applicable  thereto. 

Nature  and  Essentials  of  thb  Action.  — To  maintain  a  civil  action 
for  the  malicious  prosecution  of  a  criminal  charge,  the  plaintiff  must  show,  — 
1.  A  prosecution  of  him  such  as  may  support  a  recovery;  2.  That  it  was  in- 
stigated or  procured  by  the  defendant,  or  where  there  are  two  or  more 
defendants,  by  the  co-operation  of  all  of  them;  3.  That  the  prosecution  has 
terminated  in  the  final  acquittal  or  discharge  of  the  plaintiff;  4.  That  it  was 
without  probable  cause;  and  5.  That  it  was  malicious:  Vind  v.  Core,  18 
W.  Va.  1;  Scott  v.  Shelor,  28  Gratt.  891;  Wheeler  v.  Nesbitt,  24  How.  544. 

The  essential  difference  between  an  action  for  malicious  prosecution  and 
one  for  false  imprisonment  is,  that  in  the  former  the  imprisonment  must  have 
been  under  legal  process  issued  as  the  result  of  a  prosecution  commenced  or 
continued  maliciously  and  without  probable  cause,  while  the  latter  Ilea  for 
an  imprisonment  which  is  extrajudicial  and  without  legal  process,  and  from 
which  the  prosecutor  cannot  escape  liability  by  proving  that  he  acted  upon 
probable  cause  and  without  malice:  Boeger  v.  Langenberg,  97  Mo.  390;  10 
Am.  St.  Rep.  322;  Murphy  v.  Martin,  58  Wis.  276;  Mitchell  v.  State,  12  Ark. 
50;  54  Am.  Dec.  253;  Colter  v.  Lower,  35  Ind.  285;  9  Am.  Rep.  735;  Sutton 
V.  Johnstone,  1  Term  Rep.  493,  784;  Floyd  v.  State,  12  Ark.  43;  54  Am.  Dec. 
250.  What  are  the  elements  of  damages  arising  out  of  a  malicious  prosecu- 
tion which  may  properly  be  considered  by  the  jury  in  determining  the  com- 
pensation to  be  awarded  the  injured  party  will  be  treated  in  the  latter  part 
of  this  note. 

Whether  an  action  be  for  malicious  prosecution,  false  imprisonment,  slan- 
der, or  libel,  injury  to  the  plaintiff's  reputation  is  one  of  the  elements,  and 
ordinarily  the  chief  element,  of  his  damages;  and  where  two  or  more  of  these 
causes  of  action  exist  in  favor  of  the  plaintiff,  and  against  the  defendant,  they 
may  generally  be  united:  Haskins  v.  Ralston,  69  Mich.  63;  13  Am.  St.  Rep. 
376;  Shore  v.  Smith,  15  Ohio  St.  173;  Miles  v.  Oilfield,  4  Yeates,  423;  2  Am. 
Dec.  412.  When  they  all  arise  out  of  the  same  transaction,  it  is  evident  that 
all  maj-  be  considered  by  the  jury  and  recompensed  by  a  single  verdict: 
IVilliams  v.  Planters'  Ins.  Co.,  57  Miss.  759;  Neil  v.  Thorn,  88  N.  Y.  270;  and 
that  one  recovery  in  favor  of  the  accused  must  preclude  any  further  action 
by  him:  Boeger  v.  Langenherg,  97  Mo.  390;  10  Am.  St.  Rep.  322;  Jarniganv. 
Fleming,  43  Miss.  710;  5  Am.  Rep.  514;  Sheldon  v.  Carpenter,  4  N.  Y.  578; 
55  Am.  Dec.  .301. 

What  Pro.secutions  will  Support  the  Action. — With  respect  to  the 
crime  alleged  against  the  plaintiff  in  the  prosecution  of  which  he  complains, 
we  apprehend  that  it  will  sustain  an  action  if  it  appears  to  have  l)een  a  pros- 
ecution for  any  act  or  offense  for  which,  had  he  been  convicted,  he  might 
lawfully  have  been  punished.  As  already  indicated,  the  subject  of  the  mali* 
ci'His  prosecution  of  civil  actions  is  not  within  the  purview  of  this  note. 
There  are  proceedings  for  which,  though  not  strictly  civil  actions  nor  crimi- 
nal prosecutions,  redress  may  be  obtained  by  actions  for  malicious  prosecu- 
tion, as  where  one  is  arrested  or  "prosecuted  on  the  suggestion  of  his  lunacy: 
Lockenow  v.  Sides,  57  Ind.  360;  26  Am.  Rep.  58;  Look  v.  Dean,  108  Mass. 
116;  11  Am.  Rep.  323;  Turner  v.  Turner,  Gow,  50;  or  a  search-warrant  is 
maliciously  or  without  probable  cause  obtained,  authorizing  the  searching  of 
his  premises  on  the  allegation  that  stolen  goods  are  concealed  thereia:    Whit- 


Jan.  1891.]  Ross  v.  Hixon.  129 

son  V.  3Iay,  71  Inrl.  269;  Carey  v.  Sheds,  67  Ind.  375;  Boeger  v.  Langenherg, 
97  Mo.  390;  10  Am.  St.  Rep.  322;  Miller  v.  Brown,  3  Mo.  127;  23  Am.  Dec. 
693;  Ol'ion  v.  Tveie,  46  Minn.  225;  Boot  v.  Cooper,  1  Term  Rep.  535. 

Defects  in  the  Accusation  or  Proceedings. — It  may  be  that  the  charge  as 
made  does  not  constitute  a  public  offense,  or  that  for  some  other  reason  no 
conviction  can  be  had  under  it,  or  though  constituting  some  offense,  it  does 
not  justify  the  proceeding  taken  or  warrant  issued  by  the  magistrate,  and 
cannot  for  that  reason  result  in  a  conviction.  In  each  of  tl>e  instances  sup- 
posed, there  cannot,  if  the  law  is  properly  construed  and  applied,  be  any  con- 
viction, and  on  that  account  it  has  been  insisted  that  there  is  no  prosecution 
such  as  will  sustain  an  action,  though  it  is  shown  to  be  malicious  and  with- 
out probable  cause.  As  we  shall  hereafter  show,  it  is  necessary,  to  maintain 
an  action  for  malicious  prosecution,  that  the  defendant  was  guilty  of  malice 
and  acted  without  probable  cause  in  preferring  the  charge  which  he  made. 
If  both  of  these  elements  are  shown  to  have  been  present,  it  is  not  material 
that  the  prosecutor,  in  the  complaint  which  he  made,  did  not  state  facts  suf- 
ficient to  constitute  a  crime,  or  that  some  irregularity  of  proceeding  after 
the  complaint  was  preferred  made  the  arrest  under  it  improper  and  unau- 
thorized. Hence  if  the  charge  as  made  was  false,  malicious,  and  without 
probable  cause,  the  person  prosecuted  cannot  be  deprived  of  compensation 
for  such  injury  as  may  have  resulted  to  him  from  it,  by  proving  that  the  affi- 
davit or  complaint  was  defective  in  not  charging  a  criminal  offense  or  that 
the  proceedings  were  otherwise  irregular:  Belly.  Keepers,  37  Kan.  64;  Shnul 
\.  Brown,  28  Iowa,  37;  4  Am.  Rep.  151;  Potter  v.  Gjert^en,  37  Minn.  386; 
Forrest  v.  Collier,  20  Ala.  175;  56  Am.  Dec.  190;  Ward  v.  Sutor,  70  Tex.  343; 
8  Am.  St.  Rep.  606;  Parli  v.  Reed,  30  Kan.  534;  Farley  v.  Danks,  4  El.  &  B. 
493;  Barton  v.  Kavanaugh,  12  La.  Ann.  332;  Dennis  v.  Ri^an,  65  N.  Y.  385; 
22  Am.  Rep.  635;  Kline  v.  Shuler,  8  Ired.  484;  49  Am.  Dec.  402;  Streight  v.  Bell, 
2t7  Ind.  .550;  Stocking  v.  Howard,  73  Mo.  25.  There  are  cases,  however,  which, 
without  denying  the  liability  of  the  prosecutor,  insist  that  it  can  be  enforced 
only  b}'  an  action  of  trespass,  a^  though  the  arrest  were  not  justified  by  legal 
process:  Maher  v.  Ashnead,  30  Pa.  St.  344;  72  Am.  Dec.  70S;  Kramer  v.  Lott, 
50  Pa.  St.  495;  88  Am.  Dec.  556;  Krause  v.  Spiegel,  94  Cal.  370;  28  Am.  Rep. 
If  the  Charge  Made  hy  thr  Prosecutor  is  True,  but  the  legal  conclusion  drawn 
from  it  is  erroneous  and  cannot  be  sustained,  and  the  prosecution  must  there- 
fore fail,  no  action  ayainst  him  can  be  maintained,  as  where  he  correctly  stated 
the  facts  upon  which  he  relied,  and  the  magistrate  erroneously  regarded  them 
as  criminal  and  issued  his  warrant  thereon:  Cohen  v.  Morgan,  6  Dowl.  &  R. 
8;  Carratt  v.  Morley,  1  Gale  &  D.  45;  1  Q.  B.  18;  Hahn  v.  Schmidt,  64  Cal. 
284;  Newman  v.  Davis,  58  Iowa,  447;  McNeely  v.  Driskill,  2  Blackf.  259; 
Leigh  v.  Webb,  3  Esp.  165;  Borger  v.  Langenberg,  97  Mo.  390;  10  Am.  St. 
Rep.  322;  or  the  grand  jury  found  an  indictment  for  a  crime  different  from 
that  supported  by  the  prosecutor's  testimony:  Leidig  v.  Eawson,  1  Scam. 
272;  29  Am.  Dec.  354;  and  whenever  the  facts  are  truly  stated  in  the  prose- 
cutor's complaint  or  affidavit,  he  cannot  bft  held  liable,  on  the  failure  of  the 
prosecution,  because  he  drew  wrong  inferences  from  those  facts,  and  his  affi- 
davit named  a  particular  crime  as  the  result  of  tlie  acts,  when  they  did  not, 
as  he  supposed,  lead  to  such  result,  as  wheire  the  prosecutor  charged  the  com- 
mission of  larceny,  but  showed  by  his  affidavit  that  the  property  taken  was 
such  that  larceny  could  not  be  committed  by  taking  it:  Bartlett  v.  Brown,  6 
R.  I.  37;  75  Am.  Dec.  675;   IViaule  v.  Krekeler,  81  N.  Y.  428. 

Want  of  Jurisdiction  in  the  Court  in  Which  the  Prwecution  was  Commenced. 
—  Whether  a  prosecutor  may  in  all  cases  shield  himself  by  showing  that  th« 
Am.  St  Rkp.,  Voi^  XXVL— 9 


130  Ross  t7.  HixoN.  [Kansas, 

court  or  tribunal  in  which  he  maintained,  or  attempted  to  maintain,  his  pros- 
ecution was  withoiit  jurisdiction  to  entertain  it,  is  a  question  upon  which  the 
courts  are  almost  equally  divided.  Certainly,  if  a  complaint  were  made  to 
a  person  neither  possessing,  nor  assuming  to  possess,  authority  to  entertain  it, 
or  to  cause  the  person  charged  to  be  apprehended  or  punished,  there  is,  in  the 
eye  of  the  law,  no  criminal  prosecution,  and  this  has  been  held  to  be  equally 
true  when  the  charge  was  made  before  or  to  a  magistrate  possessing  some 
judicial  functions,  but  having  no  authority  over  the  subject-matter  contained 
in  the  charge  preferred:  Bixby  v.  Brutuliye,  2  Gray,  129;  61  Am.  Dec.  443; 
Bodwellv.  Osgood,  3  Pick.  379;  15  Am.  Dec.  228;  Whiting  v.  Johnson,  6  Gray, 
246;  Marshall  v.  Beiner,  17  Ala.  832;  Turpin  v.  Remy,  3  Blackf.  210;  Painter 
V.  Ives,  4  Neb.  122.  The  majority  of  the  cases  upon  the  subject,  in  our 
judgment,  sustain  the  proposition,  that  though  the  court  in  which  the  prose- 
cution took  place  did  not  have  jurisdiction  over  it,  yet  if  it  was  malicious 
and  without  probable  cause,  and  its  prosecution  inflicted  injury  upon  tlie 
person  thus  prosecuted,  he  may  recover:  Morris  v.  Scott,  21  Wend.  281 ;  34 
Am.  Dec.  236;  Smith  v.  Cattel,  2  Wils.  376;  Stone  v.  Stevens,  12  Conn.  219; 
30  Am.  Dec.  611;  El>iee  v.  Smith,  1  Dowl.  &  R.  97;  Boon  v.  3Iau!,  3  N.  J.  L. 
863;  Hays  Y.  Younglove,  7  B.  Mon.  545.  If  the  court  had  jurisdiction  over 
the  subject-matter,  and  its  alleged  want  of  authority  to  proceed  with  the 
prosecution  rested  upon  some  irregularity  or  omission,  but  the  warrant  issued 
was  valid  upon  its  face,  and  the  want  of  jurisdiction  must  be  established  by 
extrinsic  evidence,  the  courts  will,  we  think,  agree  that  such  want  of  juris- 
diction will  not  defeat  the  action  for  malicious  prosecution:  Sweet  v.  Hegu-f, 
30  Mich.  406;  Oibbs  v.  Ames,  119  Mass.  60;  Ward  v.  Sutor,  70  Tex.  343;  8 
Am.  St.  Rep.  606. 

Arrest  of  Person  Prosecuted,  tvhether  Essential.  —  When  we  come  to  the  m- 
quiry,  What  stage  must  the  criminal  prosecution  reach  before  the  prosecutor 
becomes  answerable?  and  consult  the  authorities  upon  the  subject,  we  find 
that  they  "speak  a  varied  language."  The  majority  seem  to  affirm  that  it 
is  not  until  an  arrest  has  been  made  that  a  cause  of  action  arises  in  favor  of 
the  person  accused,  and  furthermore,  that  the  arrest  must  be  made  under  a 
warrant  which  is  at  least  valid  on  its  face,  so  as  to  constitute  a  justification 
to  the  officer  in  what  he  did  under  it:  CocJc/ield  v.  Bravehoy,  2  McMull.  270; 
39  Am.  Dec.  12.S;  Vinal  v.  Core,  IS  W.  Va.  1;  Lewin  v.  Uzuher,  65  Md.  341; 
Cooper  V.  Armour,  42  Fed.  Rep.  215;  Bartlett  v.  Christhilf,  69  Md.  219.  On  the 
other  hand,  it  is  said,  apparently  with  the  better  reason,  that  the  person 
accused  is  injured  by  the  mere  fact  that  a  criminal  charge  is  maliciously  and 
wantonly  preferred  against  him,  whereby  his  reputation  is  injuriously  affected 
and  he  is  exposed  to  disgrace  and  infamy;  that  after  the  charge  has  been  made, 
and  the  person  accused  is  thereby  injured  in  his  reputation,  its  dismissal  with- 
out making  any  arrest  does  not  absolve  the  prosecutor  from  liability:  Coffey 
v.  Myers,  84  Ind.  105;  and  some  of  them  go  so  far  as  to  assert  that  the  mere 
making  of  the  charge  before  a  magistrate  for  the  purpose  of  inducing  him  to 
entertain  it  as  a  charge  of  felony  creates  a  liability  against  the  accuser,  though 
it  is  not  taken  down  in  writing:  Clarke  v.  Postan,  6  Car.  &  P.  423.  None  of 
the  authorities  insist  that  any  actual  imprisonment  is  essential  to  support 
the  action.  It  is  sufficient  that  tl>e  officer  having  the  warrant  of  arrest  noti- 
fies the  person  to  be  arrested  of  that  fact,  reads  the  warrant,  and  proclaims 
the  arrest,  to  which  the  accused  submits,  and  then  procures  sureties  for  his 
appearance  before  the  proper  magistrate  to  answer  the  charge  against  himr 
Malone  v.  Huston,  17  Neb.  107.  Nor  is  it  necessary  to  show  that  the  prose- 
cutor directly  procured  or  assented  to  the  issuing  of  the  warrant  on  ■which 


Jan.  1891.]  Ross  v.  Hixon.  131 

the  arrest  was  made,  if  he  preferred  the  charge  in  such  a  way  that  it  there- 
upon became  the  duty  of  some  public  official  to  issue  a  warrant  thereon  re- 
quiring the  apprehension  of  the  person  accused  to  answer  the  accusation 
made  against  him:  McLeod  v.  McLeod,  75  Ala.  483. 

Who  may  be  Held  Liable.  —  The  question  who  may  be  held  answerable 
for  the  malicious  prosecution  of  a  criminal  charge  may  be  considered, — 1. 
With  reference  to  the  persons  who  may  be  guilty  of  or  chargeable  with  such 
prosecution;  and  2.  What  acts  on  the  part  of  persons  who  have  capacity 
to  be  thus  guilty  and  chargeable  fix  upon  them  responsibility  for  the  injury 
suffered  by  the  person  prosecuted.  Upon  principle,  it  would  seem  that  all 
persons,  whether  natural  or  artificial,  capable  of  instituting,  or  causing  to  be 
instituted,  a  malicious  prosecution  without  probable  cause,  must  respond  in 
damages  for  their  unlawful  and  malicious  act. 

The  Liability  of  Private  Corporations  for  malicious  prosecutions  has  been 
denied  in  a  few  cases,  partly  on  the  ground  that  they  are  incapable  of  enter- 
taining malice  or  acting  from  malicious  motives,  and  partly  for  the  reason 
that  to  prosecute  any  person  maliciously  and  without  probable  cause  is  not 
within  the  scope  of  the  powers  conferred  upon  them  by  law  or  by  their  char* 
ters,  and  such  prosecution  must  therefore  be  ultra  vires:  Owsley  v.  Montgomery 
etc.  R.  R.  Co.,  37  Ala.  5G0;  overruled  in  Jordan  v.  Alabama  etc.  R.  R.  Co.,  74 
Ala.  85;  49  Am.  Rep.  800;  and  Gillett  v.  Missoia-i  etc.  R.  R.  Co.,  55  Mo.  315; 
17  Am.  Rep.  653;  Childs  v.  Bojik  of  Missouri,  17  Mo.  213;  overruled  in 
Boogher  v.  Life  Ass'n,  75  Mo.  319;  42  Am.  Rep.  413.  Probably  no  law  or 
charter  ever  authorized  a  corporation  to  do  any  kind  of  a  wrong,  or  even  to 
neglect  or  omit  to  do  any  duty  devolving  upon  it,  and  if  it  may  not  be  held 
liable  for  doing  things  not  authorized  by  law  or  its  charter,  it  cannot  be  held 
liable  for  anything  whatever;  for  certainly  it  ought  not  to  be  responsible  in 
damages  for  doing  anything  authorized  by  its  charter,  for  in  thus  doing  it 
must  be  acting  not  only  by  the  warrant,  but  under  the  protection  of  the  law. 
The  American  courts,  and  perhaps  the  English  also,  at  the  present  time,  will 
not  exonerate  a  corporation  from  responding  in  damages  for  a  wrong  done 
by  it,  on  the  ground  that  it  had  no  authority  or  power  to  do  it;  and  will 
therefore  hold  it  liable  for  a  malicious  prosecution  under  substantially 
the  same  rules  of  law  as  apply  against  private  persons:  Feiiton  v.  Wil- 
son  Seidu'i-marhine  Co.,  9  Phila.  189;  Williams  v.  Planters'  etc.  Co.,  57  Miss. 
759;  34  Am.  Rep.  494;  IV/idcss  v.  Second  Aat.  Bank,  1  Baxt.  4G9;  25  Am. 
Rep.  783;  Gowl^peed  v.  EaH  Haddam  BanJc^  22  Conn.  530;  58  Am.  Dec.  439; 
Ricord  v.  Central  P.  R.  R.  Co.,  15  Nev.  167;  Woodward  v.  St.  Louis  etc.  R.  R. 
Co.,  85  Mo.  J42:  Carter  v.  Howe  Machine  Co.,  51  Md.  290;  34  Am.  Rep. 
311;  Reed  v.  Home  Savings  Bank,  1.30  Mass.  443;  39  Am.  Rep.  468;  Vance  v. 
Erie  R.  R.  Co.,  32  N.  J.  L.  334;  90  Am.  Dec.  665;  Morton  v.  Metropolitan  L 
Co.,  34  Hun,  366;  103  N.  Y.  645;  Gulf  etc.  R.  R.  Co.  v.  Jamfs,  73  Tex.  12; 
15  Am.  St.  Rep.  743;  Ihissey  v.  Norfolk  etc.  R.  R.  Co.,  98  N.  C.  34;  2  Am. 
St.  Rep.  312;  National  Hank  v.  Graham,  100  U.  S.  699;  Denver  etc.  R.  R.  Co. 
V.  Harris,  122  U.  S.  597;  Jordan  v.  Alabama  etc.  R.  R.  Co.,  74  Ala.  85;  49 
Am.  Rop.  800;  Henderson  v.  Midland  R.  R.  Co.,  20  Week.  Rep.  23;  25 
L.  T.,  N.  S.,  SSI;  Edwards  v.  Midland  R.  R.  Co.,  L.  R.  6  Q.  B.  D.  287;  50 
L.  J.  Q   B.  281;  43  L.  T.,  N.  S.,  694;  29  Wtek.  Rep.  669. 

Co)-pora/io)is,  when  Liable.  —  The  difficulty  now  is,  not  in  showing  that 
private  corporations  may  be  answerable  for  a  malicious  prosecution,  what- 
ever be  tbe  nature  of  their  powers,  but  as  they  can  act  only  through  agents, 
and  as  their  agents,  like  those  of  natural  persons,  may  act  in  matters  over 
which  authority  has  not  been  delegated  to  them,  it  is  often  questionable 


132  Ross  V.  HixoN.  [Kansas. 

whether  a  particular  prosecution  instituted  or  carried  on  by  an  agent  of  a 
corporation  is  a  corporate  act  or  not.  Of  course,  the  fact  that  a  prosecution 
was  instituted  by  an  agent  of  a  corporation,  even  though  in  what  he  did  he 
claimed  to  be  acting  as  such  agent,  does  not  subject  it  to  responsibility  if  he 
acted  without  its  knowledge,  and  not  within  the  scope  of  the  authority  com- 
mitted to  him:  Stevem  v.  Midland  etc.  R.  R.  Co.,  2  Com,  L.  Rep.  1300;  10 
Ex.  352;  18  Jur.  932;  23  L.  J.  Ex.  32S;  S-pnwjfield  etc.  Co.  v.  Green,  25  HI. 
App.  106.  Formal  action  on  the  part  of  the  board  of  directors  of  a  corpora- 
tion need  not  be  established:  Ricord  v.  Central  P.  R.  R.  Co.,  15  Nev.  176.  If 
the  entire  business  affairs  of  the  corporation  are  under  the  control  of  a  gen- 
eral manager  who  has  authority  to  institute  criminal  prosecutions  arising  out 
of  alleged  violations  of  its  rights  of  property,  the  corporation  is  liable  if  he  ex- 
ercises his  authority  in  such  manner  and  under  such  circumstances  as  would 
support  an  action  against  a  private  person:  Gulf  etc.  R'y  Co.  v.  James,  73 
Tex.  12;  15  Am.  St.  Rep.  743.  Perhaps  a  majority  of  the  great  transpor- 
tation companies  have  special  agents  or  detectives  whose  duties  include  the 
apprehension  of  all  persons  who  have  committed  crimes  by  which  the  prop- 
erty of  the  corporation  has  been  embezzled,  stolen,  or  destroyed,  or  its  inter- 
ests otherwise  prejudiced;  and  while  it  may  be  said  that  the  delegation  of 
authority  to  do  these  things  does  not  imply  that  an  agent  thus  constituted 
shall  in  any  event  act  maliciously  and  without  probable  cause,  to  this  the 
unanswerable  reply  has  been  made  by  the  courts,  that  one  of  the  consequences 
liable  to  attend  the  delegation  of  the  authority  is  that  of  the  malicious  prose- 
cution of  persons  who  are  not  offenders,  and  that  when  this  consequence  does 
result,  the  corporation  must  be  held  answerable:  American  Exp.  Co.  v.  Pat- 
terson, 73  Ind.  430;  EvansviUe  etc.  R.  R.  Co.  v.  McKee,  99  Ind.  519;  50  Am. 
Rep.  103;  Goffv.  Great  Northern  ffy  Co.,  3  El.  &  E.  672;  30  L.  J.  Q.  B.  138; 
Pennsylvania  Co.  v.   Weddle,  100  Ind.  138. 

A  Prosecution  Instituted  by  a  Partner  for  an  alleged  crime  relating  to  the 
property  of  the  firm  cannot  impose  any  liability  on  another  partner  who  did 
not  assent  to  nor  have  any  knowledge  of  the  prosecution  at  its  commence- 
ment, and  especially  if  he  repudiates  it  as  soon  as  known  to  him:  Rosenkrans 
V.  Barker,  115  111.  331;  56  Am.  Rep.  169;  Gilbert  v.  Emmons,  42  III.  143;  89 
Am.  Dec.  412. 

Sometimes  Associations  are  Formed  for  the  purpose  of  contributing  money 
and  otherwise  aiding  in  the  prosecution  of  alleged  criminals  or  of  persons  sus- 
pected of  being  guilty  of  crimes  of  a  specified  class,  and  as  the  result  of  this 
arises  the  question  whether  all  the  members  of  the  association  are  answerable 
for  prosecutions  incited  or  aided  by  it,  whether  they  participate  therein  or 
not.  So  far  as  we  can  ascertain,  this  question  has  not  yet  been  adequately 
considered.  In  one  instance,  where  the  organization  of  an  association  of  this 
character  was  proved,  and  that  those  of  its  members  who  were  assembled  on 
one  occasion  voted  to  prosecute  a  particular  charge  and  to  raise  money  for 
that  purpose,  members  who  were  not  present  when  this  vote  was  taken,  and 
who  did  not  contribute,  by  money  or  otherwise,  to  the  prosecution  of  the ' 
charge,  were  held  not  to  be  answerable,  though  they  made  contributions  to 
the  general  purposes  of  the  association:  Johnson  v.  Miller,  63  Iowa,  535;  50  i 
Am.  Rep.  758;  69  Iowa,  562;  58  Am.  Rep.  231. 

Whether  Infancy  or  Coverture  Necessarily  Relieves  from  liability  for  a  ma- 
licious prosecution  is  a  question  which  has  been  but  little  considered.     Bothj 
infanta  and  married  women  are,  in  general,  answerable  for  their  torts:  Notej 
to  Humphrey  v.  Douglass,  33  Am.  Dec.  178-185;  note  to  Craig  v.   Van  Bebber, 
18  Am.  St.  Rep.  720-724;  Cooley  on  Torts,  116;  except  that  a  wife  may,  iaj 


Jan.  1891.]  Ross  v.  Hixon.  133 

some  instances,  escape  liability  on  the  presumption,  when  the  wrongful  act 
was  done  in  the  presence  of  her  husband,  that  it  is  to  be  imputed  to  him, 
rather  than  to  her;  and  when  a  tort  involves  some  element  of  design  or  of 
guilty  intent  or  purpose  not  imputable  to  an  infant  on  account  of  his  tender 
age  or  his  want  of  capacity,  he  cannot,  unless  his  capacity  is  aflSruiativelj 
shown,  be  adjudged  guilty  of  its  commission,  and  if  very  young,  the  pre- 
sumption of  his  incapacity  is  indisputable.  The  court  of  appeals  of  New 
York  appears,  in  Ctutsin  v.  Delany,  38  N.  Y,  178,  to  have  proceeded  on  the 
assumption  that  when  a  husband  and  wife  prosecute  a  charge  of  embezzle- 
ment, she  may  be  held  liable  in  damages,  though  she  acted  in  his  presence, 
upon  proof  that  she  acted  upon  her  own  motion,  and  not  by  his  direction. 
If  a  civil  action  is  brt  ught  in  the  name  of  a  minor,  without  his  authority  or 
knowledge,  by  a  prochein  ami,  the  infant,  though  he  subsequently  assents  to 
the  suit  upon  being  informed  of  it,  cannot  be  held  liable  for  its  prosecution, 
for  the  reason  that  he  had  no  power  to  discontinue  it  during  his  minority: 
Burnham'v.  Seaverns,  101  Mass.  360;  100  Am.  Dec.  123.  His  prosecution  of 
an  action  after  coming  of  age  would  undoubtedly  make  him  liable:  Sterling  v. 
Adams,  3  Day,  411.  A  criminal  charge  may  be  preferred  by  a  minor,  and  if 
unfounded  and  malicious,  the  wrong  done  is  not  less  than  if  it  were  preferred 
by  a  person  of  more  advanced  years.  If  the  age  of  the  minor,  and  his  man- 
ifest capacity  and  discrimination,  and  the  circumstances  accompanying  the 
making  of  the  charge,  are  such  as  to  demonstrate  that  his  act  was  malicious 
and  without  probable  cause,  we  know  of  no  reason  in  the  law,  or  elsewhere, 
for  not  obliging  him  to  respond  in  damages  for  the  injury  maliciously  in- 
flicted by  him. 

Real  Proseculor,  Evidence  to  Show  Who  tvas.  —  The  person  sued  for  malicious 
prosecution  is  generally  the  one  who  made  the  affidavit  or  complaint,  or  pre- 
ferred the  charge,  or  otherwise  set  the  machinery  of  the  law  in  motion,  and 
thereby  brought  about  the  arrest  of  the  accused.  The  person  who  makes 
the  afh  lavit  upon  which  the  arrest  is  effected  may  undoubtedly  be  regarded 
as  the  prosecutor,  and  held  liable  as  such:  Weil  v.  Israel,  42  La.  Ann.  955; 
Walser  v.  Tides,  56  Mo.  89.  Nor  is  it  essential  to  the  character  and  liability 
of  the  prosecutor  that  he  should  have  made  the  afEilavit  for  the  purpose  of 
procuring  the  arrest.  Thus  it  has  been  decided  that  he  who  by  means  of 
his  perjured  evidence  leads  a  judge  to  believe  that  another  witness  has  been 
guilty  of  perjury,  and  to  hold  the  latter  to  answer  and  be  tried  therefor,  is 
liable  in  damages  as  for  a  malicious  prosecution:  Fitzjohn  v.  Mackinder,  9 
Com.  B.,  N.  S.,  505;  7  Jur.,  N.  S.,  li>S3;  30  L.  J.  Com.  P.  257;  9  Week. 
Rep.  477;  4  L.  T.,  N.  S.,  149.  But  liability  does  not  attach  to  one  who 
fairly  discloses  to  a  magistrate  or  a  prosecuting  officer  all  the  information  in 
his  possession,  and  leaves  him  to  judge  of  the  propriety  of  proceeding  with 
the  charge:  Smith  v.  Auntin,  49  Mich.  286;  Teal  v.  Fissiel,  28  Fed.  Rep.  351. 
When  one  has  set  the  machinery  of  the  law  in  motion,  so  that  in  the  regular 
and  ordinary  course  of  its  action  an  arrest  must  be  made,  or  will  probably 
follow,  it  need  not  be  shown  that  he  ordered  or  directed  the  warrant  or  other 
process  to  issue,  or  participated  in  its  execution:  Waher  v.  Thics,  56  Mo.  89; 
McLeod  V.  McLcod,  75  Ala.  483.  On  the  other  hand,  he  is  not  answerable 
for  acts  which  do  not  properly  result  from  this  charge,  and  were  not  intended 
by  him,  as  for  a  wrongful  and  unauthorized  proceeding  of  the  officer  in  serv- 
ing the  warrant:  Bartlett  v.  Hnwley,  38  Minn.  .308.  The  liability  of  a  person 
for  the  prosecution  of  a  criminal  case  need  not  appear  from  the  record  therein. 
The  question  is,  not  whether  it  proceeded  in  his  name,  I)ut  whether  it  pro- 
ceeded by  virtue  of  his  authority  or  procurement.     If  he  was  the  real,  or  one 


134  Ross  V.  HixoN.  [Kansas, 

of  the  real,  prosecutors,  he  cannot  escape  liability  by  keeping  some  other  per- 
son in  the  position  of  apparent  prosecutor.  Hence  evidence  outside  of  the 
record  is  always  admissible  to  show  who  was  in  fact  prosecutor:  Knauer  v. 
Morrow,  23  Kan.  360.  For  he  who  conducts  a  prosecution  in  the  name  of 
another  is  not  less  liable  than  if  he  conducted  it  in  his  own  name:  Cotterell  v. 
Jones,  11  Cora.  Ey  713;  16  Jur.  88;  21  L.  J.  Com.  P.  2;  Clements  v.  Ohrly,  2 
Car.  &  K.  868.  If  the  defendant  is  the  person,  or  one  of  the  persons,  who 
caused  the  prosecution,  he  is  liable,  whatever  may  be  the  means  he  employed. 
He  may  have  incited  some  other  person  to  present  and  verify  the  complaint, 
or  have  procured  the  action  of  some  prosecuting  officer,  or  have  acted  by  his 
servant  or  agent.  In  employing  either  of  these  supposed  means  of  action,  he 
is  equally  culpable  and  equally  liable:  Stansbury  v.  Fogle,  37  Md.  369;  Kline 
v.  Shuler,  8  Ired.  484;  49  Am.  Dec.  402;  Wells  v.  Parsons,  3  Harr.  (Del.)  505; 
Grant  v.  Deuel,  3  Rob.  (La.)  17;  38  Am.  Dec.  228. 

A  Piincipal  Acting  by  or  through  his  Agent  may  be  answerable  for  a  mali- 
cious prosecution.  If  he  directs  the  agent  in  what  the  latter  does,  there  can 
be  no  question  that  his  liability  must  be  the  same  as  if  he  had  acted  without 
the  aid  or  intervention  of  an  agent.  But  where  he  did  not  direct  the  agent, 
and  the  latter  acted  without  his  knowledge,  then  the  questions  most  likely 
to  arise  are:  1.  Was  the  act  of  the  agent  within  the  limits  of  his  powers? 
and  2.  If  so,  can  the  principal  be  subjected  to  exemplary  damages,  where, 
from  his  ignorance  of  what  was  done  in  his  name,  it  is  not  possible  to  impute 
to  him  actual  malice,  desire  to  injure  the  accused,  or  reckless  and  wanton 
disregard  of  the  latter's  rights  or  feelings?  With  respect  to  the  first  ques- 
tion, it  is  clear  that  the  agent  must  have  been  acting  in  the  business  of  his 
principal  and  within  the  power  delegated  to  him,  either  expressly  or  by  im- 
plication. Hence  where  the  ticket-seller  of  a  railway  corporation,  acting  at 
the  suggestion  of  a  police-officer,  and  with  a  view  of  aiding  in  the  apprehen- 
sion of  persons  engaged  in  passing  counterfeit  money,  sold  tickets  and  re- 
ceived payment  in  a  bank  bill  which  the  agent  believed  to  be  counterfeit  and 
worthless,  and  then  caused  the  arrest  of  the  ticket-buyer  while  he  was  yet 
in  the  station  waiting  for  his  train,  it  was  held,  by  a  divided  court,  that  in 
what  he  did  the  ticket-seller  was  not  transacting  the  business  committed  to 
him,  and  his  principal  was  not  answerable:  Mulligan  v.  New  York  etc  R.  R. 
Co.,  129  N.  Y.  506;  27  Am.  St.  Rep.  A  principal  is  not,  in  an  action  for 
a  malicious  prosecution,  necessarily  chargeable  with  whatever  knowledge  his 
agents  may  have  had.  "Actual  malice  implies  a  wrongful  purpose  or  intent 
in  the  mind  of  the  person  whose  conduct  is  in  question.  It  is  not  to  be  con- 
clusively presumed  or  legally  imputed  to  him  merely  because  of  the  mental 
condition  or  the  knowledge  of  another  person,  however  related  to  him":  Rei'san 
V.  Mott,  42  Minn.  49;  18  Am.  St.  Rep.  489.  To  render  one  liable  for  a  criminal 
prosecution,  where  he  acts  by  his  agent,  it  is  not  necessary  that  he  know  of  or 
contemplate  the  action  taken  by  the  agent,  if  it  was  within  the  power  dele- 
gated to  him,  or  though  not  within  that  power,  was  ratified  after  being  done: 
Kinsey  v.  Wallace,  36  Cal.  462;  Forbes  v.  Hagman,  lb  Va.  168;  in  each  of 
which  events  both  the  principal  and  the  agent  are  liable,  and  may  be  joined 
as  defendants  in  the  same  action:  Husseyv.  Norfolk  etc.  R.  R.  Co.,  98  N.  C. 
34;  2  Am.  St.  Rep.  312;  unless  the  agent,  in  what  he  did,  either  had  probable 
cause  or  acted  without  malice.  Therefore,  an  attorney  at  law  is  liable  as 
well  as  his  client  when  he  aided  in  a  prosecution  which  he  knew  to  be 
unfounded  and  malicious:  Staley  v.  Turner,  21  Mo.  App.  244;  Warjield  v. 
Ca7npl>ell,  35  Ala.  349;  Burnap  v.  Marsh,  13  111.  538.  On  the  other  hand,  an 
attorney  is  not  liable  who  does  not  know  that  the  action  is  groundless,  even 


Jan.  1891.]  Ross  v.  Uixon.  135 

though  he  is  aware  that  his  client  is  actuated  by  malice.  He  may  act  upou 
the  statemeut  of  facts  made  to  him  by  his  client,  and  is  not  under  a  duty  to 
institute  an  inquiry  for  the  purpose  of  verifying  his  statement  before  giving 
advice  thereon.  Therefore,  an  instruction  to  a  jury  that  an  attorney  is  liable 
if  he,  "by  the  exercise  of  reasonable  diligence,  might  have  known  that  there 
were  no  facts  sufficient  to  constitute  probable  cause  "  is  erroneous:  PecJc  v. 
Chouteau,  91  Mo.  13S;  60  Am.  Rep.  236;  Bichiell  v.  Dorion,  16  Pick.  478. 

Termination  of  Prosecution. — The  prosecution  on  which  the  action  is 
based  must  have  terminated  without  resulting  in  the  conviction  of  the  plain- 
tiff. It  is  sometimes  said  that  it  must  have  terminated  in  his  acquittal,  but 
this  is  not  true.  A  trial  on  the  merits  or  otherwise  is  not  essential.  It  is 
sufficient  that  the  prosecution  has  ended  so  that  it  cannot  be  reinstated  nor 
further  maintained  without  commencing  a  new  proceeding,  but  it  must  have 
terminated  in  some  of  the  several  modes  in  which  it  is  possible  for  a  criminal 
proceeding  to  reach  a  stage  beyond  which  the  accused  cannot  be  further 
prosecuted  therein:  Casebeer  v.  Drahoble,  13  Neb.  465;  McWillktms  v.  Uohan, 
42  Md.  56;  Blalockv.  Randall,  76  111.  224;  Gillespie  v.  Hudson,  11  Kan.  163; 
Schippel  V.  Norton,  38  Kan.  567.  The  propriety  of  this  rule  is  obvious,  for  if 
the  civil  action  could  l)e  maintained  before  the  termination  of  the  criminal 
prosecution,  it  might  happen  that,  after  the  defendant  had  been  called  upon 
to  res^jond  in  damages  as  a  malicious  prosecutor  acting  without  probable 
cause,  the  good  faitli  of  his  prosecution  would  be  vindicated  by  a  verdict  of 
the  jury  convicting  the  accused.  In  Texas,  as  we  have  already  shown,  the 
malicious  prosecution  of  criminal  cases  for  certain  purposes  has  been  made 
criminal.  As  the  Penal  Code  of  the  state  did  not  expressly  require  the  ter- 
mination of  the  malicious  prosecution  before  the  prosecution  of  the  prosecu- 
tor for  instituting  it,  an  information  against  the  defendant  for  instituting  a 
malicious  criminal  prosecution  need  not  aver  that  it  has  terminated:  Demp- 
sey  V.  State,  27  Tex.  App.  269;  11  Am.  St.  Rep.  193.  We  shall  now  refer  to 
the  different  means,  other  than  by  a  trial  on  the  merits,  by  which  a  criminal 
prosecution  may  so  terminate  as  to  support  a  civil  action. 

Dischnrije  hy  Contiuitting  Maijistrate.  —The  criminal  practice  in  most  of  the 
states  requires  the  accused,  if  the  offense  charged  is  of  a  serious  nature,  to  be 
brouglit  before  a  magistrate  for  a  preliminary  examination  for  the  purpose  of 
determining  whether  the  evidence  against  him  is  such  as  to  warrant  his  being 
held  to  answer  liefore  the  grand  jury,  or  before  some  court  having  jurisdic- 
tion to  try  him  after  the  information  shall  have  been  filed  by  the  proper 
prosecuting  officer.  If  the  examining  magistrate  finds  tliat  there  is  not  suffi- 
cient cause  to  hold  the  accused  to  answer,  and  therefore  discharges  him,  that 
prosecution  is  thereby  ended;  and  the  consideration  that  other  prosecutions 
maybe  brought  against  the  same  person  on  the  same  charge,  and  that  the  grand 
jur^',  on  its  presentation  to  them,  may  HtuI  an  in<lictment  thereon,  cannot  pre- 
vent the  action  of  tlie  magistrate  from  having  its  effect  as  a  termination  of 
the  proserution  before  him,  sufficient  to  support  the  civil  action:  Moyle  v. 
Drake,  Ul  Mass.  238;  Costdlo  v.  Kmijht,  4  MacUey,  65;  Fay  v.  O^Neill,  36 
N.  Y.  11;  yo//fs  V.  Finch,  84  Va.  204. 

Failure  of  Grand  Jury  to  Find  Indictment. — If  the  grand  jury  considers 
the  charge  against  the  accused,  whether  after  he  has  been  held  to  answer  or 
otherwise,  and  refuses  to  indict,  this  is  also  generally  regarded  as  a  final  ter- 
mination of  a  prosecution  authorizing  an  action  to  be  maintained  tiiereon,  if 
it  was  malicious  and  without  probable  cause:  Morgan  v.  Hw/hes,  2  Term 
Rep.  225;  Potter  v.  CaHerline,  41  N.  J.  L.  22;  Graces  v.  Datv^nn,  130  Mass. 
78;  39  Am.  Rep.  4L'9;  Apjar  v.   Woohton,  43  N.  J.  L.  57;  Stanriiffv.  Palmeter, 


136  Ross  V.  HixoN.  [Kansas, 

18  Ind.  321;  Hower  v.  Lewton,  18  Fla.  328;  Mitchell  v.  Williams,  11  Mees.  & 
W.  205;  12  L.  J.  Ex.  193;  though  ia  some  of  the  states  the  action  of  the 
grand  jury  must  be  supplemented  by  an  order  of  court  discharging  the  ac- 
cused from  custody  or  from  the  duty  of  further  appearing  to  answer  the 
charge  against  him:  Thomas  v.  De  Graffenreid,  2  Nott  &  McC.  143;  O'DriscoU 
V.  McBurney,  2  Nott  &  McC.  54;  Knott  v.  Sargent,  125  Mass.  95.  Whether 
an  order  of  court  is  necessary  or  not  depends  upon  the  practice  in  the  par- 
ticular state  in  which  the  question  arises.  It  is  not  the  mere  failure  of  the 
grand  jury  to  indict  at  any  particular  time  which  terminates  the  prosecution; 
for  their  non-action,  instead  of  proceeding  from  their  judgment  that  no  cause 
for  prosecution  exists,  may  be  the  result  of  their  not  being  able  to  secure  the 
attendance  of  the  requisite  witnesses,  and  their  consequent  postponement  of 
the  investigation  to  some  later  day,  in  which  event  it  is  clear  that  the  prose- 
cution is  not  yet  at  an  end:  Knott  v.  Sargent,  125  Mass.  95;  and  whenever,  by 
the  practice  in  the  state,  the  court,  notwithstanding  no  indictment  has  been 
made,  retains  the  right  to  refer  the  charge  to  another  grand  jury,  it  is  proba- 
ble that  a  formal  order  discharging  the  accused  is  a  condition  precedent  to 
the  maintenance  of  an  action  for  his  malicious  prosecution. 

Entry  of  Nolle  Prosequi.  —  There  has  been  a  disinclination  to  admit  that 
the  termination  of  a  prosecution  by  the  entry  of  nolle  prosequi  will  support  an 
action  for  malicious  prosecution,  and  some  cases  have  affirmed  in  general 
terms  that  it  cannot  be  so  supported:  Oaring  v.  Fraser,  76  Me.  37;  Parker  v. 
Farley,  10  Cush.  279;  Perher  v.  Hvmtinrfton,  2  Gray,  128;  Brown  v.  Lakeman, 
12  Cush.  482.  But  we  think  they  must  all,  as  to  this  extreme  view,  be  re- 
garded as  dicta.  If  some  action  or  proceeding  on  the  part  of  the  court,  or 
otherwise,  is  required  to  make  an  entry  of  nolle  prosequi  operative  as  a  final 
termination  of  a  prosecution,  then,  of  course,  such  action  or  proceeding  must 
supplement  such  entry;  but  when  it  is  manifest  that  the  prosecution  is  at  an 
end,  and  cannot  be  revived,  it  is  not  material  how  it  came  to  its  end,  and  the 
right  of  the  paity  injured  bj'  it  to  seek  redress  is  complete:  Kennedy  v.  Hal- 
laday,  25  Mo.  App.  503;  Lowe  v.  Wartman,  47  N.  J.  L.  413;  Broivn  v.  Ran- 
dall,  36  Conn.  56;  4  Am.  Rep.  35;  Yocum  v.  Polly,  1  B.  Mon.  358;  36  Am. 
Dec.  583;  Hatch  v.  Cohen,  84  N.  C.  602;  37  Am.  Rep.  630;  Briggs  v.  Bnrion, 
44  Vt.  124;  Graves  v.  Daw.'^on,  130  Mass.  78;  39  Am.  Rep.  429;  133  Mass. 
419;  Woodworth  v.  Mills,  61  Wis.  44;  50  Am.  Rep.  135;  Richter  v.  Koster,  45 
Ind.  440.  Perhaps  if  the  accused  procures  or  assents  to  the  entry  of  a  nolle 
prosequi,  he  thereby  waives  his  right  to  redress  by  civil  action  against  his 
prosecutor:  Langford  v.  Boston  etc.  R.  R.  Co.,  144  Mass.  431;  Parker  v.  Far' 
ley,  10  Cush.  279;  Cou-pal  v.   Ward,  106  Mass.  289. 

Other  Means  of  Terminating  Prosecution.  — The  only  reasonable  ground  for 
denying  that  the  termination  of  a  prosecution  by  the  entry  of  a  7iolle  prosequi 
will  support  an  action  for  malicious  prosecution  was,  that  there  had  been  no 
trial  on  the  merits,  and  therefore  no  acquittal  of  the  accused;  but  it  is  settled, 
as  we  think,  beyond  dissent  that  a  trial  on  the  merits  is  not  essential:  Schip- 
pel  V.  Norton,  38  Kan.  567;  Bell  v.  Matiheios,  37  Kan.  686;  Gilhert  v.  Emmons, 
A2  111.  143;  89  Am.  Dec.  412.  To  hold  it  essential  would  be  to  permit  a 
prosecutor  to  do  all  the  damage  which  a  malicious  prosecution  can  possibly 
effect,  and  then  deny  the  accused  the  opportunity  to  vindicate  himself  by 
a  trial,  by  having  the  proceeding  quashed  or  dismissed,  and  thus  escaping  all 
liability  for  the  wrong  unlawfully  inflicted.  Therefore,  any  mode  by  which 
a  prosecution  may  be  dismissed  or  ended,  though  without  a  trial,  is  sufficient. 
The  indictment  may  be  insufficient,  and  for  that  reason  may  be  quashed  be- 
fore trial,  or  upon  trial  may  require  the  jury  to  return  a  verdict  of  acquittaL 


Jan.  1891.]  Ross  v.  Hixon.  137 

In  either  event,  if  the  accused  is  discharged  by  the  court,  the  prosecution  is 
finally  terminated  in  the  sense  that  an  action  for  malicious  prosecution  may 
be  instituted  and  sustained,  though  there  is  nothing  to  prevent  the  finding 
of  another  indictment,  sufficient  in  form:  Hays  v.  Blizzard,  30  Ind.  457; 
Lytton  V.  Baird,  95  Ind.  349;  Wicks  v.  Fentham,  4  Term  Rep.  247;  Pi^>pet  v. 
Beam,  1  Dowl.  &  R.  256;  5  Barn.  &  AdoL  634.  A  prisoner  may  be  dis- 
charged from  custody  after  a  liearing  upon  a  writ  of  habeas  corpus.  If  the 
legal  effect  of  his  discharge  is  such  that  the  prosecution  against  him  can  be 
carried  no  further,  it  must  necessarily  be  such  a  termination  as  will  justify 
the  comuiencement  of  a  civil  action  for  redress:  Zehlcy  v.  Storey,  117  Pa.  St. 
478.  If,  on  the  other  hand,  the  prosecution  may  still  go  on  and  the  accused 
may  possibly  be  convicted,  his  discharge  on  linheas  corpus,  because  it  does  not 
relieve  him  from  the  duty  of  further  defending  himself,  cannot  support  his 
action  for  malicious  prosecution:  Walker  v.  Martin,  43  111.  508;  Merrimnn  v. 
Morgan,  7  Or.  68.  If,  before  a  trial,  the  prosecution  is  terminated  in  any  way, 
as  by  the  failure  of  the  prosecutor  to  appear,  or  by  the  entry  of  a  dismissal 
by  competent  authority,  the  civil  a.;tion  may  be  at  once  begun:  Leever  v. 
Hawill,  57  Ind.  423;  Kclley  v.  Sage,  12  Kan.  109;  Cleggv.  Waterhury,  88  Ind. 
21;  Stoensgaard  v.  Davis,  33  Minn.  308;  Broion  v.  Randall,  36  Conn.  56;  4  Am. 
Rep.  35;  Fay  v.  O'Neill,  .30  N.  Y.  11.  But  if  the  prosecutor  dismisses  his 
prosecution  for  the  purpose  of  recommencing  it  in  another  court,  and  pro- 
ceeds without  delay  to  execute  such  purpose,  it  is  said  that  the  action  for 
malicious  prosecution  cannot  be  maintained  until  the  second  prosecution  has 
been  disposed  of:  Schippel  v.  Norton,  38  Kan.  567.  Whether  the  fact  that 
the  judgment  has  been  appealed  from  will  destroy  its  efi'ect,  so  that  the  action 
for  malicious  prosecution  cannot  be  maintained  while  the  appeal  is  pending, 
is  unsettled;  some  of  the  courts  conceding  this  efi'ect  to  an  appeal:  Reynolds 
V.  De  Oeer,  13  111.  App.  113;  and  others  denying  it:  Marks  v.  Townf-end,  97 
N.  Y.  590. 

Prosecutions  Residting  in  Convictions.  — The  reason  already  suggested  for  re- 
quiring a  final  disposition  of  a  criminal  charge  before  permitting  any  civil  ac- 
tion to  be  maintained  for  having  instituted  the  prosecution  implied  that  if  such 
prosecution  should  not  result  in  favor  of  the  person  accused  he  could  under  no 
circumstances  recover  damages  on  the  ground  that  it  was  unfounded  and  ma- 
licious. His  conviction,  in  all  cases  where  he  had  an  opportunity  to  be  heard 
in  hia  defense,  is,  while  it  remains  in  force,  conclusive  against  him  that  his 
prosecution  was  not  without  probable  cause,  and  that  he  cannot  recover  dam- 
ages from  his  prosecution:  Severance  v.  Judkins,  73  Me.  376;  Grijjis  v.  Sellara, 
2  Dev.  &  B.  492;  31  Am.  Dec.  422.  If,  however,  the  proceeding  of  which 
plaintiff  complains  was  ex  parte,  or  one  in  which  the  court  was  obliged  to  act 
upon  the  accusation  alone,  as  where  an  affidavit  is  filed  to  require  a  party  to 
give  sureties  to  keep  the  peace,  upon  the  filing  of  which  it  is  the  duty  of  the 
magistrate  to  exact  such  sureties,  the  fact  that  they  were  exacted,  and  the 
accused  required  to  furnish  them,  is  not  conclusive  against  him  that  his  pros- 
ecutor did  not  proceed  without  proljable  cause:  Ste%oart  v.  Gromett,  29  L.  J. 
Com.  P.  170;  7  Com.  B.,  N.  S.,  191 ;  6  Jur.,  N.  S.,  776;  Hyde  v.  Greuch,  02  Md. 
577.  Commitments  to  an  insane  asylum,  though  not  necessarily  ex  parte,  do  not 
rank  as  final  adjudications  of  probable  cause,  nor  preclude  the  person  com- 
mitted from  sustaining  an  action  against  the  person  procuring  his  commit- 
ment: Kellogg  v.  Cochran,  87  Cal.  192.  In  civil  actions  the  defendant  may 
be  arrested  and  imprisoned,  maliciously  and  without  probable  cause,  and 
yet  the  plaintiff  have  a  right  to  judgment  on  the  cause  of  action  upon 
which  he  sued.      If   such   judgment  when   rendered   does  not   necessarily 


138  Ross  V.  HixoN.  [Kansas, 

affirm  the  exsitence  of  facts,  sustaining  and  warranting  the  arrest,  it  can- 
not estop  the  defendant  from  showing  that  his  arrest  and  detention  were 
malicious  and  without  probable  cause,  nor  from  recovering  damages  therefor: 
Fortman  v.  RoUier,  8  Oluo  St.  548;  72  Am.  Dec.  60G;  Bump  v.  Belts,  19 
Wend.  4-21. 

Gidltij  Person  cannot  Recover.  —  No  judgment  in  favor  of  the  plaintiff  is 
sustainable  if  it  appears  that  there  was  probable  cause  for  his  prosecution. 
Before  proceeding  to  consider  what  may  be  regarded  as  probable  cause  on  the 
part  of  a  prosecutor,  we  wish  to  remark  that  the  plaintiff,  notwithstanding 
his  acquittal,  must  always  be  regarded  as  tendering  the  issue  of  his  innocence, 
and  must  fail  in  his  action  if  that  innocence  can  be  disproved,  whether  the 
prosecutor  acted  from  malicious  motives  or  not,  and  whether  or  not  he  knew 
of  the  facts  establishing  plaintiff's  guilt.  An  action  for  malicious  prosecu- 
tion will  never  lie  in  favor  of  a  guilty  man:  Newton  v.  Weaver,  13  R.  I.  616; 
Parhhurst  v.  Mastelkr,  57  Iowa,  474;  Whitekurdv.  Ward,  12  Ala.  2G4;  Three- 
foot  V.  Nnckols,  68  Miss.  117;  Johni^on  v.  Chamhers,  10  Ired.  287;  Barber  v. 
Goiild,  20  Hun,  446;  Plummer  v.  Gheen,  3  Hawks,  66;  14  Am.  Dec.  572;  Ad- 
ams v.  Usher,  3  Blackf.  241;  25  Am.  Dec.  102;  except  that  one  prosecuted 
on  two  or  more  charges,  of  one  of  which  he  was  convicted,  may  recover  for 
his  prosecution  on  the  other  charge,  by  proving  that,  as  to  it,  his  prosecution 
was  without  probable  cause  and  malicious:  Reed  v.  Taylor,  4  Taunt.  616;  Ellis 
V.  Abrahams,  8  Q.  B.  709;  10  Jur.  593;  15  L.  J.  Q.  B.  221.  Sometimes  the 
courts  have  incautiously  said  that  probable  cause  did  not  depend  on  the  guilt 
or  innocence  of  the  accused:  Lytton  v.  Baird,  95  Ind.  349;  King  v.  Calvin,  11 
R.  I.  582;  Hazzard  v.  Flury,  120  N.  Y.  223;  Carl  v.  Ayers,  53  N.  Y.  14;  but 
when  they  have  so  said,  they  have  been  referring  to  the  fact  that  the  plaintiff 
had  urged  his  innocence  as  conclusive  in  favor  of  his  right  to  recover,  and 
have  merely  intended  to  affirm  that,  notwithstanding  such  innocence,  the 
action  of  the  prosecutor  may  have  been  justified  because  of  incriminatory  cir- 
cumstances known  to  him,  and  not  that  the  guilt  of  the  accused  could  co-exist 
with  a  right  on  his  part  to  recover  for  being  prosecuted  for  a  criminal  act  of 
which  he  was  guilty. 

Probable  Cause,  What  is.  — Numerous  definitions  of  probable  cause  have 
been  given,  some  of  which  will  be  here  quoted:  "  A  definition  of  probable 
cause  sufficiently  exact  to  meet  satisfactorily  every  possible  test  would  be 
difficult,  if  not  impossible,  to  furnish.  The  complete  legal  idea  expressed  by 
that  term  is  not  to  be  gathered  from  a  mere  definition.  But,  perhaps,  with 
reference  to  many  practical  cases,  it  may  be  nearly  accurate  to  say  that  prob- 
able cause  consists  of  a  belief  in  the  charge  or  facts  alleged,  based  on  suffi- 
cient circumstances  to  reasonably  induce  such  belief  in  a  person  of  ordinary 
prudence  in  the  same  situation  ":  Bocger  v.  Langenberg,  97  Mo.  390;  10  Am. 
St.  Rep.  322.  Probable  cause  is  "  the  existence  of  such  facts  and  circum- 
stances as  would  excite  belief  in  a  reasonable  mind,  acting  on  the  facts  within 
the  knowledge  of  the  prosecutor,  that  the  person  charged  was  guilty  of  the 
offense  for  which  he  was  prosecuted  ":  Dempsey  v.  State,  27  Tex.  App.  269;  11 
Am.  St.  Rep.  193;  Ramsey  v.  Arrott,  64  Tex.  320;  Glasgow  v.  Given,  69  Tex. 
167;  Wheeler  \.  Nesbitt,  24  How.  544;  Scott  v.  Shelor,  28  Gratt.  906;  Thomp- 
son V.  Beacon  Valley  Rubber  Co.,  56  Conn.  493.  "A  reasonable  ground  of  sus- 
picion supported  by  circumstances  sufficiently  strong  in  themselves  to  warrant 
a  cautious  man  in  believing  that  the  person  charged  is  guilty  of  the  offense 
charged  ":  Ames  v.  Snider,  69  111.  376;  Davie  v.  Wisher,  72  IlL  262.  "  Prob- 
able  cause  may  be  defined  to  be  that  apparent  state  of  facts  found  to  exist 
upon  reasonable  inquiry,  —  that  is,  such  inquiry  as  the  given  case  rendered 


Jan.  1891.]  Ross  v.  Hixox.  139 

convenient  and  proper,  —  which  would  induce  a  reasonably  intelligent  and 
prudent  man  to  believe  the  accused  person  had  committed,  in  a  criminal 
<;aae,  the  crime  charged,  and  in  a  civil  case,  that  a  cause  of  action  existed": 
Lacy  V.  Mitchell,  23  Ind.  67.  "  Wliere  the  facts  known  to  the  prosecutor,  or 
the  information  received  by  him  from  sources  entitled  to  credit,  are  such  as 
to  justify  the  belief,  in  the  mind  of  a  person  of  reasonable  intelligence  and  cau- 
tifin,  that  the  accused  is  guilty  of  the  crime  charged,  and  the  prosecution  ia 
induced  thereby,  such  a  state  of  facts  constitutes  probable  cause,  though  it 
may  subsequently  appear  that  the  accused  is  innocent  ":  Hays  v.  Dlizzurd,  30 
Ind.  457.  "Probable  cause  is  such  a  state  of  facts  in  the  mind  of  the  prose- 
•cutor  as  would  lead  a  man  of  ordinary  ciiution  and  prudence  to  believe,  or 
entertain  an  honest  and  strong  suspicion,  that  the  person  arrested  is  guilty": 
Mans  V.  Dnpont,  3  Wash.  C.  C.  31;  Baron  v.  Toivne,  4  Cush.  238;  Cole  v. 
■Ciirtis,  16  Minn.  195;  Casey  v.  Sevatson,  30  Minn.  516.  "If  the  apparent  facts 
are  such  that  a  discreet  and  prudent  person  would  be  led  to  believe  that  a 
crime  has  been  committed  by  the  person  charged,  he  will  be  justified,  though 
it  turns  out  that  he  was  deceived,  and  that  the  pafty  accused  was  innocent": 
Oarl  V.  Ayers,  53  N.  Y.  14;  Hazzird  v.  Flury,  120  N.  Y.  223.  "What  is 
probable  cause?  It  is  constituted  by  such  facts  and  circumstances  as,  when 
communicated  to  the  generality  of  men  of  ordinary  and  impartial  minds,  are 
sufficient  to  raise  in  them  a  belief  or  grave  suspicion  of  the  guilt  of  the  per- 
son ":  Griffis  V.  Sellars,  2  Dev.  &  B.  492;  31  Am.  Dec.  422.  To  constitute 
probable  cause,  "the  facts  must  be  such  as  would  reasonably  persuade  an 
impartial  and  reasonable  mind  not  merely  to  suspect  or  conjecture,  but  to 
believe,  the  plaintifif  guilty.  We  cannot  readily  perceive  how  there  can  be  a 
well-grounded  or  reasonable  suspicion  of  the  existence  of  a  fact,  without  there 
is  also  a  belief  of  it":  Stone  v.  Stevens,  12  Conn.  219;  30  Am.  Dec.  611.  By 
the  code  of  Georgia  it  is  declared  that  want  of  probable  cause  "shall  ex- 
ist when  the  circumstances  are  such  as  to  satisfy  a  reasonable  man  that  the 
accuser  had  no  ground  for  his  proceeding  but  his  desire  to  injure  the  accused." 
The  illustration  thus  given  by  the  code  has  not  been  treated  by  the  courts  of 
the  state  as  excluding  other  cases  of  want  of  probable  cause,  and  a  prosecutor 
is  still  liable  in  that  state  for  acting  without  probable  cause,  if  he  did  not  act 
with  ordinary  care,  nor  as  a  man  of  ordinary  prudence  would  under  like  cir- 
cumstances: Coleman  v.  Allen,  79  Ga.  637;  11  Am.  St.  Rep.  449. 

Prejudice  or  Partiality  of  the  Acctiser.  — There  are  definitions  of  probable 
cause  which  seem  to  exact  a  high  degree  of  impartiality  and  freedom  from 
prejudice  on  the  part  of  the  prosecutor,  but  the  circumstances  under  which  a 
prosecution  is  instituted  are  often  such  as  to  require  an  injured  person  to  act 
promptly,  and  while  smarting  from  loss  or  personal  injury,  and  therefore 
when  it  is  too  much  to  expect  of  him  that  he  can  free  himself  from  all  prejxi- 
dice  and  partiality.  Perhaps  a  definition  or  instruction  exacting  of  him 
freedom  from  partiality  and  prejudice  may  be  mitigated  so  as  to  do  him  no 
■wrong,  if  the  jury  is  properly  reminded  that  he  cannot  be  held  answerable 
unless  he  acts  with  malice.  The  more  prudent  courts  have,  however,  elim- 
inated from  their  definition  "impartiality  and  freedom  from  prejudice,"  and 
have  permitted  juries,  in  determining  the  question  of  probable  cause,  to  take 
into  consideration  the  circumstances  under  which  the  defendant  was  called 
upon  to  act,  and  considering  that  these  circumstances  might  be  such  as  to 
unavoidably  afifect  the  judgment,  have  said  that  "some  allowance  may  be 
made  when  the  prosecutor  is  so  injured  by  the  offense  that  he  could  not  likely 
draw  his  conclusions  with  the  same  impartiality  and  absence  of  prejudice 
that  a  person  entirely  disinterested  would  deliberately  do.     All  that  can  be 


140  Ross  V.  HixoN.  [Kansas, 

required  of  him  is,  that  he  shall  act  as  a  reasonable  and  prudent  man  would  be 
likely  to  do  in  like  circumstances  ":  Spear  v.  Hiles,  67  Wis.  350;  Cole  v.  Curtis, 
16  Minn.  182;  Carter  v.  Sutherland,  52  Mich.  597;  Casey  v.  Sevatson,  30 
Minn.  516. 

Belie f  of  the  Accuser, — Some  of  the  definitions  seem  to  make  the  question 
of  probable  cause  depend  entirely  upon  the  facts  and  information  upon  which" 
the  accuser  acted,  irrespective  of  the  efifect  which  they  had  upon  his  mind, 
and  to  give  no  weight  to  his  belief,  or  want  of  belief,  in  the  guilt  of  the  person 
prosecuted.  It  is  doubtless  true  that  the  mere  belief  on  the  part  of  the  prose- 
cutor in  the  truth  of  the  charge  made  by  him  does  not  constitute  probable 
cause,  for  it  may  be  engendered  by  facts  and  circumstances  which  would  not 
produce  belief  of  guilt  in  the  mind  of  a  reasonable  and  prudent  person,  and 
which  would,  on  the  contrary,  satisfy  a  reasonable  person  of  the  innocence 
of  the  accused:  Mowry  v.  Whipple,  8  R.  I.  360;  Hall  v.  Hawkins,  5  Humph. 
359;  Barron  v.  Mason,  31  Vt.  189;  Spear  v.  Hiles,  67  Wis.  361;  Lawrence,  v. 
Lanning,  4  Ind.  194;  Hays  v.  Blizzard,  30  Ind,  457;  Graeter  v.  Williams,  55 
Ind.  461;  Turner -v.  Walker,  3  Gill  &  J.  377;  22  Am.  Dec.  329;  Spalding  v. 
Lovx,  56  Mich.  366.  "  While  it  is  not  necessary  to  show  that  the  crime  has 
in  fact  been  committed,  it  is  necessary  to  show,  not  only  that  the  defendant 
had  reasonable  ground  to  believe,  but  that  he  did  in  fact  believe,  that  the 
crime  had  been  committed,  and  that  the  plaintiff  had  committed  the  crime  ": 
Ball  V.  Rawles,  93  Cal.  22-2;  27  Am.  St.  Rep.  "  It  is  claimed  by  appellant's 
counsel  that  the  defendant  is  not  liable  to  this  action  if  the  jury  found  that 
he  honestly  believed  the  plaintiff  guilty  of  the  offense  when  he  commenced 
the  prosecution  against  him.  Tliis  cannot  be  the  law.  No  man's  liberties  or 
rights  can  thus  be  measured  by  even  the  honest  belief  of  another.  The  honest 
belief  of  a  person  commencing  a  criminal  prosecution  against  another  in  the 
guilt  of  the  accused  is  an  essential  element  or  fact  for  him  in  showing  probable 
cause,  or  in  disproving  the  want  of  it;  but  he  must  also  show  such  reasonable 
ground  of  suspicion,  supported  by  circumstances  sufficiently  strong  in  them- 
selves to  warrant  a  cautious  man  in  that  belief,  before  his  belief  can  become  his 
vindication  or  shield.  If  he  should  show  such  ground  and  circumstances, 
and  yet  it  was  apparent  that  he  did  not  himself  believe  in  the  guilt  of 
the  accused,  they  would  not  protect  him.  Nor,  on  the  other  hand,  would 
he  be  liable,  if,  unknown  to  him,  and  beyond  the  range  of  inquiry  by  such 
cautious  man,  there  were  facts  which  would  negative  or  destroy  that  be- 
lief. The  belief,  therefore,  of  the  defendant,  is  a  proper  matter  for  inquiry 
in  making  out  his  defense,  but  does  not  of  itself  constitute  a  defense  ":  Shaul 
V.  Brown,  28  Iowa,  37;  4  Am.  Rep.  151.  His  belief  is  also  admissible  to  re- 
but the  idea  that  he  was  actuated  by  malice:  Lvnsford  v.  Deitrich,  86  Ala. 
250;  11  Am.  St.  Rep.  37.  That  the  prosecutor  did  not  believe  the  accused 
was  guilty,  or  did  not  believe  there  was  probable  cause  for  his  prosecution, 
is  certainly  a  very  material  circumstance,  whether  it  necessarily  negatives 
the  defense  of  probalde  cause  or  not.  Whether  circumstances  sufficient  to 
create  a  belief  in  the  mind  of  a  reasonable  man  that  the  accused  was  guilty  of 
the  crime  charged,  and  which,  if  believed  by  the  prosecutor,  would  sustain 
the  defense  of  probable  cause,  lose  their-power  to  shield  him  upon  proof  being 
made  that  they  did  not  generate  that  belief  in  his  mind,  is  not  clearly  settled, 
some  of  the  cases  indicating  that  his  want  of  belief  is  admissible  merely  to 
disprove  the  existence  of  probable  cause,  and  others  that  such  want  of  belief 
is  conclusive  against  this  defense:  Bell  v.  Pearcy,  5  Ired.  83;  Broad  v.  Ham, 
5  Bing.  722;  8  Scott,  40;  James  v.  Phelps,  11  Ad.  &  E.  483;  3  Perry  &  D, 
231;  Haddrick  v.  Heslop,  12  Q.  B.  267;  12  Jur.  600;  17  L.  J.  Q.  B.  313;  Shaut 


Jan.  1891. J  Ross  v.  Hixon.  141 

▼.  Broum,  28  Iowa,  37;  4  Am.  Rep.  151;  Stone  v.  Stevens,  12  Conn.  219;  30 
Am.  Dec.  611;  Ball  v.  Rawles,  93  Cal.  222;  27  Am.  St.  Rep. 

Proliable  Cause,  to  What  Extent  a  Question /or  the  Jm-y.  —  Undoubtedly,  when 
the  evidence  bearing  upon  the  question  of  probable  cause  is  conflicting,  it  ia 
the  province  of  the  jury  to  determine  which  of  the  witnesses  speak  the 
truth.  In  actions  for  malicious  prosecution,  as  in  other  civil  cases,  the  jury 
must  decide  all  questions  of  fact  and  the  court  all  questions  of  law,  but  the 
mode  of  submitting  the  question  of  fact  to  the  jury  may  be  somewhat  differ- 
ent from  that  employed  in  other  causes.  The  autliorities  agree  that  if  there 
is  no  dispute  concerning  the  facts,  the  court  must  determine  the  law,  and 
therefore  decide  whether  such  undisputed  facts  do  or  do  not  constitute 
probable  cause,  and  that,  on  the  other  hand,  to  the  extent  that  there  is  any 
dispute  upon  the  facts  arising  from  the  evidence,  such  dispute  must  be  sub- 
mitted to  the  jury:  Walbridge  v.  Pruden,  102  Pa.  St.  1;  Stewart  v.  Sonne- 
born,  98  U.  S.  187;  Stone  v.  Crocker,  24  Pick.  81;  Speck  v.  Judson,  63  Me. 
207;  Center  v.  Spring,  2  Iowa,  393;  Kidder  v.  Parkhurst,  3  Allen,  393;  Thanle 
V.  Krekeler,  81  N.  Y.  428;  Burton  v.  St.  Paul  etc.  R'y  Co.,  33  Minn.  189; 
Donnelly  v.  Daygett,  145  Mass.  314;  Oulf  etc.  R'y  Co.  v.  James,  73  Tex.  12; 
15  Am.  St.  Rep.  743;  Johnson  v.  Miller,  69  Iowa,  562;  58  Am.  Rep.  231; 
McNultyy.  Walker,  64  Miss.  198;  Medcalfe  v.  Brooklyn  etc.  Ins.  Co.,  45  Md. 
198;  Johnstone  v.  Stilton,  1  Term  Rep.  545;  1  Brown  Pari.  C.  76;  James  v. 
Phelps,  11  Ad.  &  E.  483;  Panton  v.  Williams,  1  Gale  &  D.  504;  2  Q.  B.  169; 
Turner  v.  Ambler,  10  Q.  B.  252;  6  Jur.  346;  11  L.  J.  Q.  B.  158;  Caldwell  v. 
Bennett,  22  S.  C.  1;  French  v.  Smith,  4  Vt.  303;  24  Am.  Dec.  616;  Ulmer  v. 
Leland,  1  Greenl.  135;  10  Am.  Dec.  48;  Nanh  v.  Orr,  3  Brev.  94;  5  Am.  Dec. 
547;  Plummer  v.  Gheen,  3  Hawks,  66;  14  Am.  Dec.  572;  Cockfield  v.  Bravehoy, 
2McMull.  70;  39  Am.  Dec.  123;  Coleman  v.  Heurich,  2  Mackey,  189;  Heldt 
V.  Welister,  60  Tex.  207.  In  some  of  the  states,  the  practice  sanctioned  by 
the  decisions  of  their  highest  courts  is,  when  the  evidence  is  conflicting,  to 
instruct  the  jurors  as  to  what  constitutes  probable  cause,  and  to  leave  them 
to  decide,  in  the  light  of  such  instruction,  whether  probable  cause  for  the 
prosecution  existed  or  not:  Landa  v.  Obert,  45  Tex.  539;  Gulf  etc.  R'y  Co.  v. 
James,  73  Tex.  12;  15  Am.  St.  Rep.  743;  Ash  v.  Marloio,  20  Ohio,  119;  Cole 
V.  Curtis,  16  Minn.  182.  In  other  states,  the  judgment  of  the  jurors  is  sought 
in  a  diS"erent  mode,  with  a  view  to  obtaining,  if  possible,  their  conclusions 
on  the  facts,  disconnected  from  their  conclusions  of  law.  They  are  tliere 
required  to  make  special  findings  of  fact,  or  the  cause  is  submitted  to  them 
upon  hypothetical  instructions  in  which  the  evidence  is  stated,  and  they  are 
told  that  if  they  believe  certain  evidence,  then  that  probable  causes  existed 
or  not,  as  the  case  may  be,  or  instructed  "that  if  they  find  the  facts  in  a 
designated  way,  then  that  such  facts,  when  so  found,  do  or  do  not  constitute 
probable  cause":  Eastin  v.  Stockton  Bank,  66  Cal.  123;  56  Am.  Rep.  77;  Ful- 
ton v.  Onesti,  66  Cal.  575;  Greiuwadev.  Mills,  31  Miss.  4GS;  Lcijiictty.  Blount, 
N.  C.  Term  Itep.  123;  7  Am.  Dec.  702;  Panton  v.  Williams,  1  Gale  &  D.  504; 
2  Q.  B.  109;  Bulkdey  v.  Ketdlas,  6  N.  Y.  387;  Bulkeley  v.  Smi^i.  2  Duer,  261; 
Granl  v.  Moore,  29  Cal.  644;  Chapman  v.  Heslop,  2  Com.  L.  Rep.  139;  18 
Jur.  348;  23  L.  J.  Q.  B.  49;  Lister  v.  Perry  mm,,  39  L.  J.  Ex.  177;  L.  R. 
4  H.  L.  521;  19  Week.  Rep.  9;  23  L.  T.,  N.  S.,  269.  And  in  some  of  the 
states,  the  giving  to  the  jury  of  any  definitions  or  instructions  upon  abstract 
propositions  relating  to  probable  cause  is  discouraged,  on  the  ground  that 
they  "are  apt  to  leail  the  jury  away  from  their  function  of  passing  upon  the 
effect  of  tlie  evidence  in  support  of  the  probative  facts  which  tlie  court  iiiay 
direct  them  to  find  in  order  to  determine  in  which  way  tln;ir  general  verdict 


142  Ross  V.  HixoN.  [Kansas, 

shall  be  rendered ":  Ball  v.  Rawles,  93  Cal.  222;  27  Am.  St.  Rep.  It  is 
well  known  that  there  are  many  instances  in  which,  though  evidence  is  ac- 
cepted, or  conceded  to  be  true,  dififerent  persons  may  honestly  draw  diverse  con- 
clusions from  it.  The  definitions  of  probable  cause  are  such  as  to  require  the 
prosecutor  to  act  as  a  reasonable  and  prudent  man  would  under  like  circum- 
stances. They  do  not  impose  liability  upon  him  for  mistaken  conclusions 
drawn  by  him,  if  they  were  such  as  a  reasonable  and  prudent  man  would 
draw  if  placed  in  the  same  situation  as  the  prosecutor.  The  evidence  may 
be  without  substantial  conflict,  and  the  witnesses  by  whom  it  was  given  not 
only  entitled  to  credit,  but  in  fact  implicitly  believed,  and  yet  one  jury  or 
court  might  reach  the  conclusion  that  the  prosecutor  acted  aa  a  reasonable 
and  prudent  man,  and  another  that  he  did  not  so  act.  In  such  a  contingency, 
is  the  jury  or  the  court  to  draw  the  inference  from  this  undisputed  evi- 
dence? We  have  seen  but  little  discussion  of  this  question,  but  the  author- 
ities which  unqualifiedly  assert  that  when  the  evidence  is  not  conflicting  the 
court  must  decide  whether  probable  cause  existed  implj  that  the  inference 
to  which  we  have  referred  must  be  drawn  by  the  court.  Nevertheless,  we 
think  it  should  be  submitted  to  the  jury:  Heyne  v.  Blair,  62  N.  Y.  19;  by 
some  mode  which  will  "leave  the  question  of  fact  to  the  jury  and  the  ab- 
stract question  of  law  to  the  judge  ":  Paiiton  v.  Williams,  1  Gale  &  D.  504; 
2  Q.  B.  192;  Ball  v.  Rawles,  93  Cal.  222;  27  Am.  St.  Rep.  If  there  is 
any  substantial  difference  between  the  two  modes  of  submitting  the  ques- 
tion of  probable  cause  to  the  jury,  the  one  which  exacts  special  findings 
of  fact  or  requires  the  case  to  be  submitted  to  the  jury  hypothetically  seems 
best  adapted  to  enable  the  court  to  draw  all  inferences  which  are  necessary 
to  determine  from  the  establislied  facts  whether  the  action  of  the  prosecutor 
was  "^hat  of  a  reasonable  and  prudent  man  or  not.  The  prosecutor's  belief 
or  want  of  belief  in  the  guilt  of  the  accused,  or  in  the  information  upon  which 
his  action  was  based,  is  often  an  issue  in  the  case  upon  which  the  mainte- 
nance of  his  defense  of  probable  cause  must  rest.  It  is  clear  that  this  issue 
must  be  submitted  to  the  jury:  Steioart  v.  Sonnehorn,  98  U.  S.  187. 

If  it  be  true  that  the  question,  What  is  probable  cause?  is  always  one  of 
law  for  the  court,  then  in  every  case  in  which  the  evidence  is  not  conflicting 
it  ought  to  be  possible  to  state  whether  or  not  it  establishes  probable  cause 
or  the  absence  of  it.  We  doubt  the  truth  of  the  assertion  that  probable  cause 
is  always  a  question  of  law,  even  when  there  is  no  conflict  in  the  evidence: 
Cochran  v.  Toher,  14  Minn.  385;  Anderson  v.  Keller,  67  Ga.  58;  Stewart  v. 
Sonnehorn,  98  U.  S.  187;  though  there  have  been  and  must  again  be  many 
cases  in  which  it  is  perfectly  clear  that  undisputed  evidence  does  or  does  not 
establish  proliable  cause.  We  shall  now  refer  to  cases  of  this  class,  showing 
many  instances  in  which  it  has  been  possible  for  the  court,  from  the  evidence 
before  it,  and  without  the  aid  of  the  jury,  to  determine  that  the  defense  of 
probable  cause  had  or  had  not  Iieen  prove<l. 

The  Conviction  of  the  Person  Prosecuted,  while  it  remains  in  force,  is  con- 
clusive evidence  of  probable  cause  on  the  part  of  the  person  prosecuting  him: 
Freeman  on  Judgments,  sees.  319,  417;  Griffis  v.  Sellars,  3  Dev.  &  B.  492;  31 
Am.  Dec.  422;  Herman  v.  Brookerhoff,  8  Watts,  240;  though  no  reniedy  by 
appeal  or  otherwise  could  have  been  resorted  to  by  the  accused  for  the  pur- 
pose of  reviewing  or  setting  aside  the  judgment  against  him  as  being  contrary 
either  to  the  law  or  to  the  evidence:  Bnsehe,  v.  Matihews,  36  L.  J.  M.  0.  93; 
L.  R.  2  Com.  P.  GS4;  15  Week.  Rep.  839;  16  L.  T.,  N.  S.,  417.  If  a  convic- 
tion has  been  set  aside  upon  appeal  or  by  the  granting  of  anew  trial,  either  in 
the  court  in  which  the  conviction  was  had  or  upon  appeal  to  some  higher 


Jan.  1S91.]  Ross  v.  Hixon.  143 

court,  it  is  doubtful  whether  the  judgment  does  not  still  continue  in  all  cases 
to  be  conclusive  evidence  of  probable  cause.  In  ordinary  circumstances,  its 
effect  as  evidence  of  probable  cause  is  not  diminislied  by  the  granting  of 
a  new  trial  or  the  reversal  upon  appeal,  though  it  be  sliowu  that  the  evi- 
dence on  which  the  original  conviction  was  procured  was  false  and  perjured: 
Parker  v.  Jluntiiujton,  7  Gray,  3(5;  GO  Am.  Dec.  455;  Whitney  v.  Peel-ham,  15 
Mass.  243;  Parker  v.  Farley,  10  Gush.  279;  Cloon  v.  Gerry,  13  Gray,  203; 
Adams  v.  Bicknell,  126  Ind.  210;  Grijjis  v.  Sdlars,  3  Dev.  &  B.  492;  31  Am. 
Dec.  422;  Welch  v.  Boiion  etc.  R.  R.  Co.,  14  R.  I.  609;  ReynokU  w.  Kennedy, 
1  Wils.  232;  Sjvinj  v.  Before,  12  B.  Mon.  551;  Phillips  v.  Kalamazoo,  53  Mich. 
33.  There  are  cases,  however,  declaring  that  a  conviction,  after  it  has  been 
set  aside,  no  longer  constitutes  conchisive  evidence  of  probable  cause,  tliough 
it  is  still  receivable  in  evidence  and  entitled  to  great  consideration  if  the  trial 
appears  to  have  been  a  fair  one:  Goodrich  v.  Warner,  21  Conn.  432;  Burt  v. 
Place,  4  Wend.  51il;  Moffatt  v.  Fisher,  4:1  Iowa,  474;  Bowman  y.  Brown,  52 
Iowa,  437.  In  our  judgment,  the  conviction  of  the  accused  must  be  accepted 
as  conclusive  evidence  of  probable  cause,  unless  the  circumstances  attending 
it  are  exceptional  in  their  character,  as  where  it  appears  to  have  been  founded 
on  evidence  suborned  by  the  prosecutor  or  known  to  him  to  be  false,  or  where 
it  appears  that  the  proceedings  in  the  court  in  which  he  was  tried  were  such 
as  to  give  him  no  op])ortunity  to  vindicate  himself:  Womack  v.  Circle,  29 
Gratt.  192;  32  Gratt.  324;  Kaye  v.  Kean,  18  B,  Mon.  839;  Spring  v.  Besore,  12 
B.  Mon.  555.  If  the  charge  was  of  a  felony,  and  the  accused  was  convicted 
of  a  lesser  crime  involved  in  the  charge,  and  this  conviction  on  appeal  was 
reversed  and  a  judgment  of  acquittal  entered,  the  judgment  of  conviction  is 
not  evidence  of  probable  cause  ia  making  the  charge  a  felony:  Labarv.  Crane, 
49  Mich.  561. 

Indictimj  or  Holding  Accused  to  Answer.  — If  the  examining  magistrate  de- 
cides that  the  evidence  is  such  as  to  warrant  the  holding  of  the  accused  to 
answer,  or  the  grand  jury  determines  that  it  is  sufficient  to  found  an  indict- 
ment upon,  or  the  jury  before  which  the  trial  takes  place  is  unable  to  agree, 
it  clearly  appears  that  other  persons  than  the  prosecutor  reached  the  same 
conclusion  that  he  did  respecting  the  guilt  of  the  accused;  and  the  fact  that 
they  did  reach  this  same  conclusion  is  admissible  in  favor  of  the  prosecutor, 
and  is  generally  treated  as  prima/acie  evidence  of  probable  cause:  Johnson  v. 
Miller,  63  Iowa,  529;  50  Am.  Rep.  758;  Sharpe  v.  Johnston,  76  Mo.  660;  Hale 
V.  Boylen,  22  W.  Va.  234;  Peck  v.  Chouteau,  91  Mo.  138;  60  Am.  Rep.  239; 
Eicordv.  Central  Pac.  R.  R.  Co.,  15  Nev.  167;  Bell  v.  Pearcy,  11  Ired.  233; 
Brown  v.  Orijjin,  1  Cheves,  32;  Ross  v.  Hixon,  46  Kan.  550;  ante,  p.  123. 
But  this  effect  is  not  conceded  to  the  finding  of  an  indictment  in  Alabama: 
Motes  V.  Bates,  80  Ala.  382. 

Advice  of  Counsel.  — It  has  been  said  that  the  fact  of  the  prosecutor's  con- 
Bulting  counsel,  and  obtaining  and  acting  upon  his  advice,  should  be  consid- 
ered rather  as  tending  to  rebut  malice,  than  as  bearing  upon  the  issue  of 
probable  cause:  Brewer  v.  Jacobs,  22  Fed.  Rep.  217;  and  that  there  is  a  sub- 
stantial difference  between  applying  the  evidence  of  such  advice  to  the  ques- 
tion of  malice,  and  applying  it  to  the  issue  of  probable  cause.  For  if  it  be 
regarded  as  tending  merely  to  disprove  malice,  it  must  rest  with  the  jurors 
to  give  it  such  effect  as  they  believe  proper;  while  if  it  be  admissible  as  evi- 
dence of  probable  cause,  it  may  require  the  court,  as  a  matter  of  law,  to  de- 
termine that  probable  cause  existed,  from  the  fact  that  the  prosecutor  in  good 
faith,  and  upon  a  full  disclosure  of  the  circumstances,  sought,  obtained,  and 
acted  upon  the  advice  of  disinterested  counsel  of  unquestionable  competency: 


144  Ross  V.  HixoN.  [Kansas, 

Paddock  v.  Watts,  116  Ind.  146;  9  Am.  St.  Rep.  832.     Perhaps  evidence  of 
this  character  may  properly  be  considered  by  the  jury  as  tending  to  disprove 
malice  as  well  as  to  establish  probable  cause,  but,  in  our  judgment,  ita  chief 
purpose  is  to  show  the  existence  of  probable  cause,  and,  when  entirely  satis- 
factory, it  must  induce  the  court  to  decide,  as  a  matter  of  law,  that  probable 
cause  did  exist,  and  therefore  that  the  prosecutor  cannot  be  liable  for  the 
prosecution.     As  we  shall  hereafter  show,  it  is  indispensable  that  the  prose- 
cutor act  in  good  faith  by  not  proceeding  against  one  whom  he  supposes  to  be 
innocent,  and  that  in  seeking  the  advice  of  counsel  he  must  make  a  full  and 
fair  disclosure  of  all  the  facta  and  circumstances  within  his  knowledge,  and, 
perhaps,  of  all  which  he  might  with  reasonable  diligence  have  discovered.    If 
his  counsel  then  advises  him  that  there  is  sufficient  cause  for  the  prosecution, 
and  he  acts  upon  such  advice,  the  majority  of  the  courts  will  protect  him  in 
thus  acting,  though  they  may  not  agree  as  to  whether  such  protection  is  to 
be  extended  to  him  because  probable  cause  for  his  action  is  established,  or 
malice  in  what  he  did  disproved:  Ravegna  v.  Macintosh,  4  Dowl.  &  R.  107;  2 
Barn.  &  C.  693;  1  Car.  &  P.  204;  Paddock  v.   Watts,  116  Ind.  146;  9  Am.  St. 
Rep.  832;  Adams  v.  Bichiell,  126  Ind.  210;  22  Am.  St.  Rep.  576;  Collins  v. 
Haijte,  50  111.  337;  99  Am.  Dec.  521;  Ross  v.  Innis,  26  III.  259;  Mm-phy  y. 
Larson,  11  111.  172;    Walter  v.  Sam-pie,  25  Pa.  St.  275;  McLeod  v.  McLeod,  IZ 
Ala.  42;  Anderson  v.  Friend,  71  111.  475;  Potter  v.  Casterline,  4!  N.  J.  L.  22; 
Donnelly  v.  Daggett,   145  Mass.  314;  Jones  v.  Jones,  71  Cal.  89;  Schippel  y. 
Norton,  38  Kan.  567;  Mesher  v.  Iddings,  72  Iowa,  553;  Stone,  v.  Swift,  4  Pick. 
389;  16  Am.  Dec.  349;  Bartlett  v.  Broion,  6  R.  I.  37;  75  Am.  Dec.  675;  White  v. 
Carr,  71  Me.  555;  36  Am.  Rep.  353;  Wicker  v.  Hotchkiss,  62  111.  107;  14  Am.  Rep. 
75;  Smithy.  Austin,  49 Mich.  286;  Emerson  v.  Cochran,  111  Pa.  St.  619;  Yocum 
V.  Polly,  1  B.  Mon.  358;  36  Am.  Dec.  583;  Coggsivell  v.  Bohn,  43  Fed.  Rep.  411; 
Dreyfuay.  Aid,  29  Neb.  191;  Motes  v.  Bates,  80  Ala.  382;  Blunk  v.  Atchison 
etc.  R.  R.  Co.,  38  Fed.  Rep.  311;  Smith  y.  Walter,  125  Pa.  St.  453;  Afoore 
V.  Northern  P.  R.  R.  Co.,  37  Minn.   147;  Oilbertson  v.  Fidler,  40  Minn.  413; 
Jackson  v.  Linnington,  47  Kan.  396;  27  Am.  St.  Rep.;  Ball  v.  Rawles,  93  Cal. 
222;  27  Am.  St.  Rep.     As  the  question  of  malice  is  for  the  jury,  if  it  be 
couceiled  that  evidence  of  the  advice  of  counsel  is  receivable  merely  to  dis- 
prove malice  or  to  prevent  the  jury  from  inferring  malice  from  the  absence 
of  probable  cause,  it  follows  logically  that  the  jury  may  disregard  evidence  of 
the  advice  of  counsel,  if,  notwithstanding  such  evidence,  they  still  believe  the 
prosecutor  to  have  been  actuated  my  malice.     Therefore,  in  those  states  ia 
which  this  evidence  is  applied  to  the  issue  of  malice,  it  does  not  necessarily, 
however  satisfactory  the  proof,  make  out  the  defense,  and  the  prosecutor  may 
be  liable  if  the  jury  think  proper  to  so  hold  him,  after  hearing  evidence  show- 
inc  that  he  in  good  faith  sought,  obtained,  and  acted  upon  the  advice  of  com- 
petent counsel:  Lemayy.  Williams,  32  Ark.  166;  Olasgoivv,  Owen,  69  Tex.  167; 
Gulf  etc.  R'y  Co.  v.  James,  73  Tex.  12;  15  Am.  St.  Rep.  743;  Ramsey  v.  Arrott, 
64  Tex.  320;  Shannon  v.  Jones,  76  Tex.  141;  Turner  v.  Walker,  3  Gill  &  J.  377; 
22  Am.  Dec.  329;  Griffin  v.  Chubb,  1  Tex.  603;  58  Am.  Dec.  85.     The  decisions 
in  Georgia  upon  this  subject  are  governed  by  the  code  of  that  state,  which,  as 
construed  by  its  courts,  does  not  admit  the  advice  of  counsel  as  a  defense  to 
the  action,  but  merely  as  a  circumstance  tending  to  show  absence  of  malice 
and  the  existence  of  probable  cause,  to  be  weighed  by  the  jury  with  other 
facts  in  the  case,  "as  well  as  to  mitigate  damages":  Fox  v.  Davis,  55 Ga.  298; 
Philadelphia  F.  Ass'n  v.  Fleming,  78  Ga.  733.     A   recent  New  York  case 
seems  to  create  an  exception  to  the  rule  that  the  advice  of  counsel  furnishes 
probable  cause  for  the  proceedings  taken  in  reliance  upon  it,  by  declaring 


Jan.  1891.]  Ross  v.  Hixon.  145 

that  when  the  facts  are  known  to  the  prosecutor,  but  do  not  constitute  the 
crime  charged  by  him,  then  that  tiie  advice  of  his  counsel  does  not  protect 
him  absolutely,  but  must  be  treated  as  bearing  only  upon  the  issue  of  malice. 
"Probable  cause,  "  said  the  court,  "may  be  founded  on  misinformation  as  to 
the  iacts,  but  not  as  to  the  law":  IJ'izzird  v.  Fluyy,  120  N.  Y.  227.  This 
decision  proceeds  upon  tlie  principle  that  to  the  prosecutor  must  be  imputed 
knowledge  of  the  law,  and  that  he  cannot  be  deemed  to  proceed  upon  prob- 
alde  cause,  whatever  be  the  advice  of  his  counsel,  when  the  facts  as  knowa 
by  him  would  "not  tend  to  cause  a  man  with  knowledge  of  the  law  to  sus- 
pect or  believe  that  it  had  been  violated."  But  for  what  purpose  are  lawyers 
consulted  more  legitimate  than  that  of  obtaining  their  opinions  upon  questions 
of  law?  Certainly,  if  the  prosecutor's  conduct  is  to  be  considered  upon  the 
assumption  that  he  knew  the  law,  the  advice  of  counsel  can  never  protect 
him.  For  if  the  advice  be  correct,  he  is  subject  to  no  liability,  and  needs  no 
protection;  but  if  incorrect,  he  is  by  this  decision  charged  with  knowledge 
of  its  incorrectness,  and  denied  the  defense  of  probable  cause. 

Character  of  Attorney. — In  sonae  of  the  opinions,  language  is  employed 
which  indicates  that  the  question  of  the  competency  of  the  attorney  giving 
the  advice  must  be  established,  or,  at  least,  that  it  may  be  disproved.  Where, 
however,  certain  persons  are  regularly  licensed  to  practice  law,  we  apprehend 
that  their  attainments  in  their  profession  can  rarely  or  nev6r  be  made  an 
issue  on  a  trial  for  malicious  prosecution,  for  the  purpose  of  showing  that 
their  professional  skill  was  not  such  as  to  justify  the  prosecutor  in  taking  or 
acting  upon  their  advice:  Home  v.  Sullivan,  83  111.  30;  though  it  may  be  that 
evidence  is  receivable  for  the  purpose  of  showing  that,  by  habits  of  intemper- 
ance and  the  like,  known  to  the  prosecutor,  they  had  ceased  to  be  regarded 
as  reputable  or  reliable  advisers:  Roy  v.  Goings,  112  111.  656.  On  the  other 
hand,  if  the  person  consulted  is  not  a  regular  or  licensed  attorney,  but  a 
mere  pettifogger,  or  other  person  practicing  law  or  undertaking  to  give  ad« 
vice  without  any  license  or  authority  to  do  so,  hia  advice  is  no  protection; 
Stanton  v.  Hart,  27  Mich.  539;  Murphy  v.  Larson,  77  111.  172;  Olmstead  v. 
Partridge,  16  Gray,  381;  Burgett  v.  Burgett,  43  Ind.  78.  If  the  person  con- 
sulted was  acting  as  an  attorney  at  law,  and  his  advice  was  sought  in  good 
faith,  evidence  of  it  may  be  "adndtted,  not  in  justification  of  the  action,  nor 
in  reduction  of  any  actual  damage  suffered,  but  in  mitigation  of  any  exem- 
plary damages  that  might  be  visited  upon  defendant ":  Murphy  v.  Larson^  77 
111.  172. 

Advice  of  Interested  or  Prejudiced  Attorney.  — While  it  would  be  very  unjust 
to  require  a  person  seeking  a  regularly  licensed  attorney  in  good  faith,  and  act- 
ing upon  his  advice,  to  determine  in  advance,  at  his  peril,  the  extent  of  the 
professional  skill  of  such  attorney,  yet  from  the  very  necessity  of  acting  in 
good  faith  the  client  must  not  disregard  facts  tending  to  bias  the  judgment 
of  the  attorney,  or*  otherwise  to  make  him  an  unfit  adviser  in  that  partic- 
ular case.  If  the  client  and  attorney  are  conspiring  together  for  the  pur- 
pose of  instituting  and  maintaining  a  malicious  prosecution,  of  course  the 
former  cannot  be  protected  by  the  advice  of  the  latter:  Hamilton  v.  Smith,  39 
Mich.  222.  The  prosecutor  cannot  be  sure  of  protection  if  he  acts  upon  the 
.  advice  of  an  attorney  whom  he  knows  to  be  interested,  and  therefore  prob- 
ably  biased  by  his  self-interest:  White  v.  Carr,  71  Me.  555;  36  Am.  Rep.  353; 
ana  where  the  attorney  consulted  was  also  acting  for  the  prosecutor  in  a  civil 
action  relating  to  the  same  transaction  out  of  which  the  prosecution  grew, 
the  court  may  leave  it  to  the  jury  to  decide  whether  the  attorney  selected 
was  a  proper  adviser  under  the  circumstances:  Walt  v.  Corey,  76  Me.  87. 
▲h.  St.  Kbp.,  Vol.  XXVI.— 10 


146  Ross  V.  HixoN.  [Kansas^ 

Advice  of  M'yijistrate.  — If  a  justice  of  the  peace  or  other  magistrate  before 
whom  the  criminal  charge  was  made  is  not  an  attorney  at  law,  he  is  not  a 
proper  person  to  seek  for  advice,  and  the  prosecutdr  is  not  protected  by  the 
fact  that  he  in  good  faith  fully  stated  all  the  facts  to  such  magistrate,  and 
was  by  him  advised  that  the  prosecution  would  be  sustained,  and  acted  in 
consequence  of  such  advice:  Brobtst  v.  Bitff,  100  Pa.  St.  91;  45  Am.  Rep.  358; 
Gee  V.  Culver,  12  Or.  22S;  Dolbe  v.  Norton,  22  Kan.  101;  Coleman  v.  Heurich, 
2  Mackey,  189;  Sutton  v.  MrConnell,  46  Wis.  269;  Straus  v.  Young,  36  Md. 
246.  Whether,  if  the  magistrate  were  also  a  licensed  attorney,  his  advice 
would  be  sufficient  to  shield  the  prosecutor,  is  a  question  upon  which  we  have 
been  unable  to  discover  any  judicial  opinion.  If  the  facts  are  correctly  stated 
to  a  magistrate,  and  he,  through  error  of  law,  erroneously  believes  that  they 
constitute  a  crime,  and  issues  his  warrant  accordingly,  the  prosecutor  is  not 
liable:  Hahn  v.  Schmidt,  64  Cal.  284;  Newman  v.  Davis,  58  Iowa,  447.  In  a 
very  recent  case  these  authorities  are  cited  as  establishing  the  right  of  a  pros- 
ecutor to  rely  on  the  advice  of  a  magistrate  to  the  same  extent  as  if  he  were 
an  attorney:  Ball  v.  Baiclex,  93  Cal.  235;  27  Am.  St.  Rep.;  but  the  learned 
judge  either  misapprehended  the  efiFect  of  these  decisions,  or  employed  lan- 
guage which  cannot  be  correctly  understood,  unless  considered  in  connection 
with  the  peculiar  facts  of  that  case.  The  statements  made  by  the  prosecutor 
to  the  justice,  orally  and  in  the  written  accusation,  were  confessedly  true. 
The  justice,  after  examining  the  penal  code  of  the  state,  reached  the  conclu- 
sion that  the  facts  so  stated  to  him  constituted  a  crime;  but  the  courts  subse- 
quently determined  that  the  accusation  did  not  charge  the  commission  of  any 
criminal  act.  In  other  words,  the  case  belonged  to  the  class  to  which  we 
have  referred,  in  which  there  was  abundant  cause  for  belief  in  the  truth  of 
the  acts  charged,  but  the  magistrate,  through  his  error  of  law,  mistook  inno- 
cent acts  for  crimes,  and  issued  his  warrant  solely  on  account  of  such  error. 
Doubtless,  the  advice  of  a  magistrate  is  admissible,  when  obtained  and  fol- 
lowed in  good  faith,  as  tending  to  rebut  the  presumption  of  malice:  Sisk  v. 
Hurst,  1  W.  Va.  53. 

The  Advice  of  Counsel  must  be  Sought  and  Acted  upon  in  Good  Faith.  — 
It  appears  to  be  essential  to  the  existence  of  the  good  faith  required  by  the 
authorities  that  the  advice  of  the  counsel,  together  with  the  facts  known  to 
the  prosecutor,  generate  in  his  mind  a  belief  in  the  guilt  of  the  accused. 
When  a  client  fully  and  fairly  states  the  case  to  his  attorney  for  the  purpose 
of  receiving  hia  advice  and  acting  upon  it,  we  think  he  should  be  protected 
by  the  opinion  given  him,  though  it  does  not  meet  his  concurrence.  He  con- 
sults the  attorney  because  he  supposes  him  to  be  learned  in  the  law,  and 
capable  of  forming  a  more  correct  opinion  than  himself,  and  therefore  he 
ought  to  be  protected  while  acting  upon  that  opinion,  though  he  does  not 
comprehend  it,  and  is  still  unable  to  surrender  his  own  previously  formed 
conclusion  upon  the  same  subject.  The  cases  are  infrequent,  but  so  far  as 
we  have  seen,  they  incline  towards  holding  the  prosecutor  answerable  if  he 
acted  upon  the  advice  of  an  attorney,  if  he  nevertheless  believed  that  the 
prosecution  would  fail,  or  that  the  accused  was  innocent:  Johnson  v.  Miller, 
47  N.  W.  Rep.  903  (Iowa);  especially  if  actuated  by  Jiostile  feelings:  SJiarpe 
Johnston,  76  Mo.  660. 

Failure  to  Disclose  All  the  Facts  to  the  Attorney.  — A  prosecutor  cannot  be 
acting  in  good  faith  when  he  proceeds  upon  the  advice  of  an  attorney  taken 
without  informing  him  of  all  the  facts  within  the  knowledge  of  the  prosecu- 
tor which  might  reasonably  be  supposed  to  affect  the  opinion  of  the  attorney. 
If  he  withheld  any  of  such  facts,  the  opinion  obtained  cannot  protect  him: 


Jan.  18'J1.]  lloss  v.  Hixon.  147 

Coinfemmt  v.  Cropper,  41  La.  Ann.  303;  Cntlihert  v.  Galloway,  35  Fed.  Rep. 
466;  Norrdlv.  Vojel,  39  Minn.  107;  Roy  v.  Goings,  112  111.  656;  Drei/fus  v. 
A  III,  29  Neb.  191;  Thurston  v.  Wri<jht,  77  Mich.  96;  Deidler  v.  Beirhaert,  25 
111.  App.  422;  Mesher  v.  Iddinrjs,  72  Iowa,  553;  Forbes  v,  Hagman,  75  Va. 
1(38;  Decora  v.  Zi>«.T,  23  La.  Ann.  392;  5^0fZ:  v.  Metiers,  33  La.  Ann.  776; 
Logan  v.  Maytag,  57  Iowa,  107;  Davie  v.  Wisher,  72  111.  262;  Kimmel  v. 
Henry,  64  111,  505.  The  omission  to  state  any  material  fact,  though  it 
resulted  from  an  honest  mistake  of  the  prosecutor  in  supposing  it  not  to 
be  material,  deprives  him  of  the  immunity  otherwise  obtainable  by  seeking 
the  advice  of  counsel.  If,  after  obtaining  the  advice  of  counsel,  and  before 
tlie  delivery  of  the  warrant  of  the  airest,  new  and  material  facts  come  to  the 
knowledge  of  the  prosecutor,  tending  to  lessen  the  probability  of  the  guilt  o£ 
the  accused,  the  prosecutor  should  communicate  such  facts  to  his  counsel  for 
his  furtlier  opinion  before  proceeding  to  the  execution  of  the  warrant:  Ash 
V.  Marloto,  20  Ohio,  119. 

Want  of  Diligence  in  not  Ascertaining  A  U  the  Facts.  —  A  number  of  authoritiea 
declare  that  the  prosecutor  is  not  protected  by  the  advice  of  his  counsel  un- 
less, in  addition  to  the  facts  known  to  him,  he  further  stated  all  facts  which 
he  could  have  ascertained  by  reasonable  diligence:  Sappington  r.  Watson,  50 
Mo.  83;  Cooper  v.  Utterhach,  37  Md.  282;  Hill  v.  Palm,  38  Mo.  13;  Pipkin  v. 
Hauche,  15  Mo.  App.  373;  Sharpe  v.  Johnston,  76  Mo.  600.  This,  however, 
is  probably  an  inaccurate  statement  of  the  law,  or,  at  least,  one  which  is 
inapplicable  when  the  prosecutor  was  acting  in  good  faith,  and  without  any- 
thing to  indicate  to  him  that  further  inquiry  might  reveal  to  him  circum- 
stances which,  if  disclosed  to  his  counsel,  w-ould  probably  affect  the  advice 
given.  Upon  this  subject  we  think  the  better  opinion  is  that  expressed  by 
the  supreme  court  of  Iowa  in  Johnson  v.  Miller,  69  Iowa,  562,  58  Am.  Rep. 
231,  as  follows:  "One  who  seeks  the  advice  of  counsel  with  reference  to  the 
commencement  of  a  criminal  prosecution  is  bound  to  act  in  good  faith  in 
the  matter.  Unless  he  does  this,  he  will  not  be  protected  from  liability  on  the 
ground  that  he  acted  upon  the  advice  given  him.  He  is  required  to  make  to 
counsel  a  full  and  fair  statement  of  all  the  material  facts  known  to  him.  If 
he  has  a  reasonable  ground  for  believing  that  facts  exist  which  would  tend  to 
exculpate  the  accused  from  the  charge,  good  faith  requires  that  he  shall  either 
make  further  inquiry  with  reference  to  those  facts,  and  comnmnicate  the  in- 
formation obtained  to  the  counsel,  or  that  he  shall  inform  him  of  his  belief  of 
their  existence,  in  order  that  he  may  investigate  with  reference  to  them, 
and  take  into  account,  in  forming  his  opinion,  the  information  attained  with 
reference  to  them.  But  he  is  not  required  to  do  more  than  this.  He  is  not 
required  to  institute  a  blind  inquiry  to  ascertain  whether  facts  exist  which 
would  tend  to  the  exculpation  of  the  party  accused.  But  if  he  honestly  be- 
lieves that  he  is  in  possession  of  all  the  material  facts,  and  makes  a  full  and 
fair  statement  of  those  facts  to  the  counsel,  and  acts  in  good  faith  on  the  ad- 
vice given  him,  he  ought  to  be  protected."  The  mere  statement  of  a  prose- 
cutor, in  giving  evidence  in  his  defense,  that  he  made  a  full  and  fair  disclosure 
of  all  the  facts  to  his  counsel  is  not  conclusive.  What  he  stated  should  be 
proved  by  him  or  other  competent  evidence,  and  the  jurors  left  to  draw  the 
conclusion  whether  the  statement  made  was  a  full  and  fair  one  or  not:  Mc- 
Leod  V.  McLeod,  73  Ala.  42. 

Instances  of  ProhaUe  Cause.  —  The  following  facts  have  been  held  to  consti- 
tute probable  cause:  The  stealing  of  coal  during  the  night.and  the  finding  of 
it  the  next  morning  in  a  place  where  the  accused  kept  his  coal,  though  he 
denied  all  knowledge  of  the  crime:  McDonald  v.  Atlantic  etc.  R'y  Co.,  21  Pac. 


148  Ross  V.  Hixo-v.  [Kansas, 

Rep.  338  (Ariz.);  prosecution  based  upon  statement,  apparently  truthfal, 
made  by  a  child  eleven  years  of  age,  who  claimed  to  have  seen  the  offense 
committed  by  the  accused:  Dwain  v.  DescaUo,  6(3  Cal.  415;  the  intentional 
killing  of  one  person  by  another,  though  the  accused,  on  his  trial,  was  ac- 
quitted on  the  ground  that  he  acted  in  self-defense:  Glaze  v.  Wlutlcy,  5  Or. 
164;  Dietz  v.  LaiKjJlU,  63  Pa.  St.  234;  prosecution  based  upon  information 
received  from  respectable  persons  believed  to  be  credible:  Ch'itfield  v.  Come^ 
ford,  4  Fost.  &  F.  1008;  or  upon  facts  and  circumstances  brought  to  the 
knowledge  of  the  prosecutor  through  the  usual  and  ordinary  business  chan- 
nels, believed  by  him  to  be  true,  ami  of  such  a  character  and  coming  from  such 
source  that  business  men  of  oriliiiar3'  care,  prudence,  and  discretion  would 
act  upon  them  under  similar  circumstances:  Gallaway  v.  Burr,  32  Mich.  332; 
or  upon  the  fact  that  the  prosecutor's  property  was  burned,  and  a  woman 
who  was  in  charge  of  it  pointed  out  the  accused  as  one  of  the  persons  by 
whom  it  was  fired:  Angela  v.  Faul,  85  111.  106;  or  upon  statements  of  a  per- 
son made  in  the  presence  of  the  prosecuting  attorney  of  tlie  state,  to  which 
statements  such  person  would  not  testify  on  the  trial  of  the  accused:  Ander- 
son  V.  Fnend,  85  111.  135;  or  upon  the  confession  of  a  convict  implicating 
himself  and  others,  giving  a  detailed  statement  of  the  facts  preceding,  attend- 
ing, and  following  the  crime,  when  the  party  to  whom  the  confession  was 
made  investigated  the  statements  and  found  them  to  be  substantially  correct, 
and  acted  upon  the  confession  thus  fortified  by  personal  investigation,  though 
the  persons  suspected  or  accused  were  not  notified  of  the  accusation  before 
taking  proceedii  gs  against  them:  Blunh  v.  Atrhison  etc.  R.  R.  Co.,  38  Fed. 
Rep.  311;  or  upon  information  that  tiie  accused  was  unlawfully  selling  lot- 
tery tickets,  verified  by  the  statement  of  a  person  sent  to  the  office  of  the 
accused  to  buy  such  tickets,  and  who  returned  with  one  which  he  stated  he 
had  bought  of  the  accused:  Plassan  v.  Louisiana  Lottery  Co.,  34  La.  Ann. 
246;  a  prosecution  of  a  mortagagor  for  secreting  personal  property  with  in- 
tent to  defraud  the  mortgagee,  where  it  appeared  that  such  property  had  been 
removed  to  some  place  unknown  to  the  mortgagee  or  his  agents;  that  he  was 
not  informed  of  any  intention  to  so  remove  it,  nor  of  the  place  to  which  it  had 
been  taken;  that  the  mortgagor  was  aljout  to  remove  to  another  state,  and  re- 
fused to  tell  an  agent  of  the  mortgagee  where  such  property  was,  though  he 
professed  a  willingness  to  inform  another  agent,  should  he  apply  for  such 
information:  Hooper  v.  Vernon,  Sup.  Ct.  Md.,  March,  1891.  Where  the  plain- 
tiff had  for  several  years  before  January  1,  1869,  been  employed  in  an  exten- 
sive mercantile  business,  and  had  received  large  shipments  of  goods  during  a 
large  part  of  the  month  of  December,  1868,  through  defendants  as  common 
carriers,  without  paying  freight  thereon,  and  he  also  received  through  them 
money  packages  of  considerable  value,  and  he  gave  defendants  checks  for 
freight,  all  of  which  were  dishonored  at  the  bank  for  want  of  funds,  and  oa 
January  3d,  demand  being  made  upon  plaintiff  for  payment  of  the  freight 
bills,  he  told  defendant's  agents  that  he  had  no  money,  and  since  January 
had  been  doing  business  as  agent,  it  was  held  that  these  facts  furnished 
probable  cause  for  swearing  that  the  plaintiff  had  within  two  years  fraudu- 
lently conveyed  and  assigned  his  property  to  hinder  and  defraud  his 
creditors:  Barrett  v.  Spaids,  70  111.  408.  There  is  probable  cause  for  a  prose- 
cution when  property  has  been  stolen  and  several  persons  have  told  the  prose- 
cutor that  they  had  seen  it  at  the  house  of  the  accused,  and  the  prosecutor 
himself  believed  he  had  seen  part  of  it  there,  and  made  an  affidavit  for  a 
search-warrant,  in  which  he  charged  the  property  to  have  been  stolen,  and 
ho,  at  the  time,  believed  his  charge  to  be  true:  Bailey  v.  Dodge,  28  Kan.  72, 


Jan.  1891.]  Ross  v.  Hixon.  149 

Instances  of  Want  of  Probable  Cause.  —  If  a  tenant  of  premises,  returning  at 
night  from  a  temporary  absence,  finds  the  entrance  thereto  barred,  and  removes 
the  obstruction  and  enters,  and  thereupon  the  landlord  appears,  and  in  a 
menacing  manner  orders  the  tenant  to  leave,  which  he  declines  to  do,  and  tells 
the  landlord  that  if  he  interferes  with  him,  he  will  kill  him,  and  the  landlord 
then  makes  an  affidavit  for  the  arrest  of  the  defendant,  charging  him  with 
breaking  into  the  premises  and  threatening  to  kill,  and  requests  the  warrant  to 
be  served  at  night  after  the  tenant  liad  gone  to  bed,  and  compels  him  to  be  taken 
to  jail  without  being  given  any  opportunity  to  procure  bail  for  his  appear- 
ance, the  action  of  the  landlord  is  without  probable  cause,  and  the  circum- 
stances are  such  as  to  justify  the  jury  in  regarding  it  as  malicious:  Ckapmanv. 
Caiurey,  50  111.  512.  The  foUosving  prosecutions  were  also  adjudged  to  be  with- 
out pr()l)able  cause:  A  prosecution  for  taking  and  withholding  a  package  from 
tlie  United  States  mail,  when  the  accused  had  not  done  anything  to  create  a 
suspicion  of  his  guilt,  and  the  belief  of  the  prosecutor  was  founded  upon  mis- 
take of  himself  and  his  assistants  in  overlooking  the  package  while  it  was  in 
the  mail-wagon:  Menia.m  v.  MHclidl,  13  Me.  439;  29  Am.  Dec.  514;  a  prose- 
cution for  larceny  in  disposing  of  mortgaged  chattels  when  the  mortgagee, when 
the  mortgage  was  being  drawn,  had  assented  that  the  mortgagor  might  sell  them 
whenever  fit  for  market:  Walker  v.  Camp,  09  Iowa,  741;  a  prosecution  for 
.breaking  into  a  store  with  intent  to  steal,  when  the  property  in  the  store  had 
been  attached  as  tlie  property  of  the  accused,  and  the  prosecutor  had  reason  to 
believe  that  the  breaking  into  the  store  was  done  under  a  claim  of  right  and 
without  felonious  intent,  there  being  no  attempt  at  secrecy  or  concealment,  or 
to  carry  away  goods:  liobsin  v.  Kingahury,  138  Mass.  538. 

Malice.  —  To  sustain  an  action  for  malicious  prosecution,  there  must  be 
a  concurrence  of  malice  and  want  of  probable  cause.  Neither,  however 
clearly  established,  will  support  an  action,  in  the  absence  of  the  other:  Far* 
mer  V.  Darling,  4  Burr.  1971;  Kelton  v.  Bevim,  Cooke,  90;  5  Am.  Dec.  670; 
Turner  v.  Walkn;  3  Gill  &  J.  377;  22  Am.  Dec.  329;  Leidig  v.  Ratoaon,  1 
Scam.  272;  29  Am.  Dec.  354;  Maloney  v.  Doane,  15  La.  278;  35  Am.  Dec. 
204;  Grant  v.  Deuel,  3  Rob.  (La.)  17;  38  Am.  Dec.  228;  Griffin  v.  Chuhb,  7 
Tex.  603;  58  Am.  Dec.  85;  Dickinson  v.  Maynard,  20  La.  Ann.  66;  96  Am. 
Dec.  379;  Dearmond  v.  St.  Amant,  40  La.  Ann.  374;  Girotv.  Graham,  41  La. 
Ann.  511;  McQarry  v.  Missouri  P.  R.  R.  Co.,  36  Mo.  App.  340;  Evam  v.  Thomp- 
son, 12  Heisk.  534;  Jordan  v.  Alabama  etc.  R.  R.  Co.,  81  Ala.  220;  Deitz  v. 
Langjitf,  63  Pa.  St.  234;  Turner  v.  O'Brien,  11  Neb.  108;  Stacy  v.  Emery,  97 
U.  S.  642;  Glaze  v.  Whitley,  5  Or.  164;  Murphy  v.  Martin,  58  Wis.  276.  We 
have  heretofore  shown  that  if  the  accused  was  guilty  he  cannot  recover  for 
his  prosecution,  however  malicious  the  motives  of  the  prosecutor.  But  his 
defense  does  not  require  proof  of  the  actual  guilt  of  the  accused.  It  is  suffi- 
cient that  there  was  probable  cause  for  the  prosecution,  and  if  that  be  found 
to  have  existed,  it  is  not  material  that  the  prosecutor  was  also  influenced  by 
malice  or  other  unlawful  motive.  Malice,  however  clearly  proved,  cannot 
support  the  action  if  there  was  probable  cause  for  the  prosecution,  nor  can 
it  be  so  extreme  in  its  character  or  manifestation  as  to  create  an  inference  or 
presumption  tliat  there  was  no  probable  cause:  Travis  v.  Smith,  1  Pa.  St.  234; 
44  Am.  Dec.  125;  Green  v.  Cochran,  43  Iowa,  544;  Krug  v.  Ward,  77  111.  603; 
Kaufman  v.  Wicks,  62  Tex.  234;  Meysenherg  v.  Engdke,  18  Mo.  App.  346; 
Ulnver  v.  Leland,  1  Greenl.  135;  10  Am.  Dec.  48;  Smith  v.  Zent,  59  Ind.  362; 
Bartlett  v.  Brorvn,  6  R.  I.  37;  75  Am.  Dec.  675;  Demp<ey  v.  State,  27  Tex. 
App.  2G9;  II  Am.  St.  Rep.  193;  Coleman  v.  Allen,  79  Ga.  637;  11  Am.  St. 
Rep.  449.     On  the  other  band,  while  the  absence  of  probable  cause  may  jus- 


150  Ross  V.  HixoN.  [Kansas, 

tify  the  jury  in  inferring  malice  or  in  not  exacting  any  other  evidence  of  it, 
yet  if  the  absence  of  probable  cause,  considered  iu  connection  with  all  the 
evidence  in  the  case,  does  not  satisfy  the  jury  that  the  prosecution  was  actu- 
ated by  malice,  the  verdict  should  be  for  the  defendant:  Schofield  v.  Ferrers, 
47  Pa.  St.  194;  86  Am.  Dec.  582;  McGarry  v.  Missouri  P.  R'y  Co.,  36  Mo. 
App.  340;  L^nsfordv.  Ddtrich,  86  Ala.  250;  11  Am.  St.  Rep.  37. 

Definitions  of  Malice.  — It  has  been  said  that  a  satisfactory  definition  of  the 
term  "malice"  "may  not  be  easy."  Of  course,  it  includes  all  cases  in  which 
the  prosecutor  has  ill-will  against  the  accused,  and  because  of  such  ill-will 
institutes  or  continues  the  prosecution  against  him;  but  it  is  not  necessary  to 
prove  any  actual  ill-will  or  grudge,  for  one  having  no  ill-will  against  another 
may  notwithstanding  be  guilty  of  the  malicious  prosecution  of  him:  Blunk 
V.  Atchison  etc.  R.  R.  Co.,  38  Fed.  Rep.  311.  "The  malice  necessary  to 
sustain  this  action  is  not  express  malice  or  specific  desire  to  vex  or  injure 
from  malevolence  or  motives  of  ill-will,  but  the  willful  doing  of  an  unlawful 
act  to  the  prejudice  of  another":  Johnson  v.  Ebberts,  6  Saw.  538;  11  Fed.  Rep. 
129.  "  Any  other  motive  than  a,  bona  fide  purpose  to  bring  the  accused  to 
punishment  as  a  violator  of  the  criminal  law,  or  associated  with  such  bona 
fide  purpose,  is  malicious.  There  need  be  no  personal  ill-will,  hate,  desire 
for  revenge,  or  other  base  or  malignant  passion.  Whatever  is  done  willfully 
and  purposely,  whether  the  motive  be  to  injure  the  accused,  to  gain  some 
advantage  to  the  prosecutor,  or  through  mere  wantonness  or  carelessness,  if 
it  be  at  the  same  time  wrong  and  unlawful  within  the  knowledge  of  the  actor, 
is  in  legal  contemplation  maliciously  done  ":  Lunsford  v.  Deitrich,  Ala.,  May, 
1891;  Jordan  v.  Alabama  etc.  R.  R.  Co.,  81  Ala.  220.  "The  malice  neces- 
sary to  be  shown  in  order  to  maintain  this  action  is  not  necessarily  re- 
venge or  other  base  or  malevolent  passion.  Whatever  is  done  willfully  and 
purposely,  if  it  be  at  the  same  time  wrong  and  unlawful,  and  that  known  to 
the  party,  is  malicious  ":  WilUi  v.  Noyes,  12  Pick.  324;  Pullen  v.  Olidden, 
66  Me.  202.  A  prosecution  brought  to  aid  in  the  collection  of  a  debt  or  to 
obtain  possession  of  property,  and  not  to  vindicate  justice,  is  malicious:  Rosa 
V.  Langworthy,  13  Neb.  492;  Krug  v.  Ward,  11  111.  603;  Kelley  v.  Sage,  12 
Kan.  109;  Gabelv.  Weisensee,  49  Tex.  131.  So  it  has  been  held  that  a  pros- 
ecution with  a  view  to  frightening  others,  and  thereby  deterring  them  from 
committing  depredations  on  the  property  of  a  corporation,  is  malicious:  Ste- 
vens V.  Midland  C.  R'y  Co.,  2  Com.  L.  Rep.  1300;  10  Ex.  352;  18  Jur.  932;  23 
L.  J.  Ex.  328;  though  it  is  obvious  that  this  motive  does  not  deprive  the 
prosecutor  of  the  protection  of  probable  cause,  nor  expose  him  to  liability 
when  he  had  reasonable  ground  for  believing,  and  did  believe,  in  the  guilt  of 
the  accused,  for  surely  the  deterring  of  others  from  the  commission  of  crime 
is  not  a  less  laudable  object  than  the  punishment  of  those  already  guilty: 
Coleman  v.  Allen,  79  Ga.  637;  11  Am.  St.  Rep.  449.  Malice,  in  its  legal 
sense,  is  any  improper  and  sinister  motive  not  necessarily  arising  from  spite 
or  hatred,  nor  prompted  by  a  corrupt  design,  towards  the  accused.  Any 
act  "  done  wrongfully,  and  without  reasonable  and  probable  cause  in  a  wan- 
ton disregard  of  the  rights  of  another,  is  malicious  in  law  ":  Mitchell  v.  Wall, 
111  Mass.  492;  Commomvealth  v.  Snelling,  15  Pick.  337.  "Malice  means 
wickedness  of  purpose,  or  a  wrongful  or  malevolent  design  against  another, 
a  piirpose  to  injure  another,  a  design  of  doing  mischief,  or  any  evil  design  or 
inclination  to  do  a  bad  thing,  or  a  reckless  disregard  of  the  rights  of  others, 
or  an  intent  to  do  injury  to  another,  or  absence  of  legal  excuse,  or  any  other 
motive  than  that  of  bringing  a  party  to  justice  ":  Shannon  v.  Jones,  76  Tex. 
141;  Dempsey  v.  State,  27  Tex.  App.  2G9;  11  Am.  St.  Rep.   193.      "Malice, 


Jan.  1891.]  Ross  v.  Hixon.  151 

then,  in  the  enlarged  sense  and  meaning  of  the  law,  is  not  restricted  only  to 
actual  anger,  hatred,  and  revenge,  but  includes  every  other  unlawful  and  un- 
justihable  motive.  So  that  it  may  be  said  that  any  motive  other  than  that 
of  simply  instituting  a  prosecution  for  the  purpose  of  bringing  a  person  to  jus- 
tice is  a  malicious  motive  ou  the  part  of  the  person  who  acts  under  the  influence 
of  it ":  Oee  v.  Culver,  13  Or.  598.  In  the  light  of  the  foregoing  definitious,  it 
clearly  appears  that  the  purposes  of  the  prosecution,  justly  rendering  it  sub- 
ject to  the  charge  of  being  malicious  and  unlawful,  may  be  infinite  in  variety, 
while  there  is  one  single  purpose  which  always  relieves  it  from  this  charge, 
and  this  is  the  purpose  of  bringing  to  justice  one  believed  to  be  guilty  of 
crime;  and,  tlierefore,  that  however  numerous  may  be  the  instances  or  speci- 
fications of  malice,  they  are  all  embraced  within  this  definition:  Malice  in  a 
criminal  prosecution  is  merely  the  instituting  or  maintaining  of  such  prose- 
cution without  being  induced  so  to  do  by  the  desire  to  bring  the  accused  to 
justice:  JSpeai- v.  Hiles,  67  Wis.  350;  Vinal  y.  Core,  18  W.  Va.  1;  Stevens  v. 
Midland  C.  R.  R.  Co.,  2  Com.  L.  Rep.  1300;  10  Ex.  352;  18  Jur.  93l';  33 
L.  J.  Ex.  328;  Johns  v.  Marsh,  52  Md.  323;  Alexander  v.  Harrison,  38  Mo.  258; 
90  Am.  Dec.  431.  If  this  design  is  present,  and  its  influence  controlling,  the 
action  of  the  prosecutor  is  not  malicious,  though  influenced  to  some  extent  by 
other  and  forbidden  considerations.  "If  the  selfish  element  is  only  inci- 
dental, it  cannot  be  regarded  as  evidence  of  malice,  for  it  can  hardly  be 
expected  that  all  selfish  aims  and  desires  can  be  eliminated  from  such  prose- 
cution ":  Thompson  v.  Beacon  Valley  Rubber  Co.,  56  Conn.  493.  Hence  one 
who  in  good  faith  and  upon  probable  cause  prosecutes  another  for  a  malicious 
trespass  is  not  rendered  answerable  for  a  malicious  prosecution  by  the  fact 
that  one  of  his  purposes  in  bringing  the  prosecution  was  to  prevent  the  ac- 
cused from  building  a  house  on  the  premises  on  which  the  trespass  was  alleged 
to  have  been  committed:  Jackson  v.  Linnington,  47  Kan.  396;  27  Am.  St. 
Rep. 

Malice  is  a  Question  for  the  Jvry.  — If  the  facts  are  such  as  t6  establish  want 
of  probable  cause,  then  the  issue  of  malice  on  the  part  of  the  prosecutor  must 
be  determined.  There  is  no  doubt  that  this  is  a  question  for  the  jury.  The 
court  is  not  permitted  to  determine  it  either  by  telling  the  jury  that  because 
of  the  absence  of  probable  cause,  they  should  find  for  the  plaintifiF,  nor  by  in- 
structing them  that  the  evidence  in  the  case  created  a  presumption  of  malice, 
or  made  such  presumption  conclusive.  Any  action  of  the  court  tending  to 
take  the  decision  of  this  question  from  the  jury  is  erroneous,  and  entitles  the 
defeated  party  to  a  new  trial:  Reisan  v.  Mnft,  42  Minn.  49;  18  Am.  St.  Rep. 
489;  Turner  v.  Walker,  3  Gill  &  J.  377;  22  Am.  Dec.  329;  Harkrader  v. 
Moore,  44  Cal.  144;  Levy  v.  Brannan,  39  Cal.  485;  Potter  v.  Seale,  8  Cal.  218; 
Oee  V.  Culver,  12  Or.  228;  Strirkler  v.  Greer,  95  Ind.  596;  Stewart  v.  Sonne- 
born,  98  U.  S.  187;  Mitchell  v.  Jenkins,  2  Nev.  &  M.  301;  5  Barn.  &  Adol. 
688;  S'hojield  v.  Ferrers,  47  Pa.  St.  194;  86  Am.  Dec.  532. 

Inferriwj  Malice.  — The  authorities  all  declare  that  malice  must  be  proved: 
Stone  V.  Stevens,  12  Conn.  219;  30  Am.  Dec.  611;  Fllckin,,er  v.  Wagner,  46  Md. 
681;  George  v.  Radford,  3  Car.  &  P.  4G4;  Turner  v.  Turner,  Gow,  50.  By 
this  is  not  meant  that  there  must  be  any  direct  or  specific  j)roof  of  ill-will,  or 
of  a  desire  to  injure  the  accused,  or  of  any  other  wrongful  motive.  While 
the  absence  of  probable  cause  does  not  render  the  prosecutor  liable  if  his  act 
was  not  malicious,  still  the  same  evidence  which  proves  the  absence  of  prob- 
able cause  for  the  prosecution  may  satisfy  the  jury  that  it  was  malicious,  and 
if  it  does  so  satisfy  them,  they  should  find  for  the  plaintiff.  Some  of  the 
authorities  say  that  malice  may  be  inferred  from  want  of  probable  cause: 


152  Ross  V,  HixoN.  [Kansas, 

Mitchell  V.  Jenkins,  2Nev.  &  M.  301;  5  Barn.  &  Adol.  588;  Williams  v.  Vanmeter, 
8  Mo.  339;  41  Am.  Dec.  644;  Yocum  v.  Polli/,  1  B.  Mon.  358;  36  Am.  Dec. 
583;  Griffin  v.  Chubb,  7  Tex.  603;  58  Am.  Dec.  85;  Boss  v.  Innis,  35  111.  487; 
85  Am.  De3.  373;  Bell  v.  Graham,  1  Nott  &  McC.  278;  9  Am.  Dec.  687; 
Turner  v.  Walker,  3  Gill  &  J.  377;  22  Am.  Dec.  329;  Merriam  v.  Mitchell,  13 
Me.  439;  29  Am.  Dec.  514;  Murphy  v.  Hobhs,  7  Col.  541;  49  Am.  Rep.  366; 
Heap  V.  Parrish,  104  Ind.  36;  Boy  v.  Goings,  112  111.  656;  Block  v.  Meyers,  33 
La.  Ann.  776;  Decoux  v.  Lieux,  23  La.  Ann.  392;  Harpham  v.  Whitney,  77 
111.  32;  and  others  that  it  may  be  inferred  from  the  same  facts  which  estab- 
lished the  want  of  probable  cause:  Sharpe  v.  Johnston,  76  Mo.  660.  The  dis- 
tinction is  not  material.  What  is  meant  by  either  form  of  expression  is,  that 
the  jury  may,  without  any  evidence  being  offered,  except  that  which  tends  to 
show  that  there  was  no  probable  cause  for  the  prosecution,  conclude  that  it 
was  malicious;  but  that  they  are  not  bound  to  draw  such  conclusion  as  a 
matter  of  law,  nor  at  all,  unless  it  is  generated  in  their  minds  from  the  evi- 
dence. They  should  not  be  instructed  to  draw  it,  but  left  free  to  infer  it,  or 
not,  as  from  the  evidence  to  them  shall  seem  to  be  true:  Harkrader  v.  Moore, 
44  Cal.  144;  Closson  v.  Staples,  42  Vt.  209;  1  Am.  Rep.  316;  Carson  v.  Edge- 
worth,  43  Mich.  241;  Strickler  v.  Greer,  95  Ind.  596;  Griffin  v.  Chuhb,  7  Tex. 
603;  58  Am.  Dec.  85;  Oliver  v.  Pate,  43  Ind.  132;  Greer  v.  Whitjield,  4  Lea, 
85. 

Plaintiff's  Pleadings.  — "Originally,  an  action  of  this  character  was  an 
action  on  the  case  in  the  nature  of  a  writ  of  conspiracy,  in  which  the  plain- 
tiff, in  the  declaration,  charged  the  defendant  with  having  falsely  and  mali- 
ciously caused  his  arrest.  The  defendant  in  his  plea  set  forth  the  grounds 
of  his  suspicion  under  which  he  caused  the  arrest,  the  sufficiency  of  which 
was  determined  by  the  court  upon  a  demurrer  to  the  plea:  Chambers  v.  Tay- 
lor, Cro.  Eliz.  900;  Coxe  v.  Wirrall,  Cro.  Jac.  193;  Com.  Dig.,  tit.  Pleader, 
2,  K;  Wear  v.  Wells,  3  Bulst.  284.  In  process  of  time  a  change  was  effected 
in  the  manner  of  pleading  the  cause  of  action,  by  which  the  plaintiff  antici- 
pated this  plea  by  averring  in  the  declaration  a  want  of  probable  cause: 
Savil  V.  Boberts,  1  Salk.  13;  1  Ld.  Raym.  374;  and  the  facts  were  presented 
under  the  general  issue":  Ball  v.  Bawles,  93  Cal.  229;  27  Am.  St.  Rep.  In 
actions  for  malicious  prosecution,  as  well  as  in  other  civil  actions,  the  sub- 
stantial elements  of  the  plaintiff's  complaint  or  declaration  may  be  ascer- 
tained by  considering  what  is  essential  to  the  maintenance  of  his  action. 
These  essentials  have  been  heretofore  stated,  and  each  of  them  must  ap- 
pear from  the  complaint  to  have  existed.  The  prosecution  of  the  plaintiff 
must  be  shown.  The  proceedings  need  not  be  set  out  in  full,  but  their 
substance  must  be  stated:  Closson  v.  Staples,  42  Vt.  209;  1  Am.  Rep.  316. 
The  jurisdiction  of  the  court  in  which  the  prosecution  took  place  need  not 
be  alleged  in  those  states  in  which  it  is  not  regarded  as  essential  to  the 
maintenance  of  the  action:  Morris  v.  Scott,  21  Wend.  281;  34  Am.  Dec. 
236.  It  must  also  appear  from  the  complaint  not  only  that  the  prosecu- 
tion has  been  terminated,  but  that  its  termination  was  such  as  to  entitle 
the  plaintiff  to  maintain  the  action,  as  that  he  has  been  acquitted,  or  dis- 
charged from  custod}',  so  that  no  further  prosecution  can  take  place  with- 
out making  a  new  accusation:  Fisher  v.  Bristow,  1  Doug.  215;  Morgan  v. 
Hughes,  2  Term  Rep.  225;  Johnson  v.  Finch,  93  N.  C.  205;  Hatch  v.  Cohen, 
84  N.  C.  602;  37  Am.  Rep.  630;  Wall  v.  Toomey,  52  Conn.  35;  Gorrell  v. 
Snow,  31  Ind.  215;  Hays  v.  BUzznrd,  30  Ind.  457;  Whitworth  v.  Hall,  2  Barn. 
&  Adol.  695;  Turner  v.   Walker,  3  Gill  &  J.  377;  22  Am.  Dec.  329. 


Jan.  1891.]  Ross  v.  Hixon.  153 

IVie  Existence  of  Probable  Cause  for  the  Prosecution  must  he  Denied  in  the 
Complaint:  Dennehey  v.  Woodsum,  100  Mass.  195;  Turner  v.  Turner,  85  Tena. 
387.  The  usual  form  of  making  this  denial  is  to  allege  that  the  prosecution 
was  without  reasonable  or  probable  cause:  Adams  v.  Lisher,  3  Blackf.  241; 
25  Am.  Dec.  102;  Scoiten  v.  Longfellow,  40  Ind.  23;  and  there  appears  to  be 
no  doubt  of  the  sufficiency  of  this  general  allegation,  and  that  there  is  no 
necessity  of  stating  the  facts  or  evidence  by  which  the  plaintiff  will  support 
it:  Benson  v.  Bacon,  99  Ind.  156;  though  if  such  facts  are  so  fully  stated  as 
to  show  that  the  prosecution  was  without  probable  cause,  the  general  allega- 
tion of  its  absence  may  be  omitted:  Wall  v.  Toomey,  52  Conn.  35.  As  it  is 
not  the  innocence  of  the  accused  or  the  failure  of  the  prosecution  which 
subjects  the  prosecutor  to  liability,  but  his  having  proceeded  in  the  absence 
of  probable  cause,  any  allegation  which  falls  short  of  showing  this  absence  ia 
insufficient.  Hence  a  complaint  is  defective  in  this  respect  which  merely 
alleges  that  the  charge  made  was  false  and  malicious:  Scotten  v.  Longfellow, 
40  lud.  23;  Kirtley  v.  Deck,  2  Munf.  10;  5  Am.  Dec.  445;  Young  v.  Gregorie, 
3  Call,  446;  2  Am.  Dec.  556;  Ziegler  v.  Powell,  54  Ind.  173.  The  complaint 
must  also  allege  that  the  charge  against  the  plaintiff  was  made  maliciously, 
as  well  as  without  probable  cause:  Turner  v.  Walker,  3  Gill  &  J.  377;  22 
Am.  Dec.  329;  and  if  the  recovery  of  special  damages  is  sought,  they  should 
be  stated  with  particularity:  Stanfeld  v.  Philiips,  78  Pa.  St.  73;  as  where 
plaintiff  wishes  to  enhance  damages  by  showing  his  mistreatment  while  in 
prison:  Miles  v.  Weston,  60  111.  361;  or  his  losses  in  his  business:  Uorne  v. 
Sullivan,  83  111.  30. 

Answer.  — In  an  early  South  Carolina  case  it  was  erroneously  stated  that 
the  defense  of  probable  cause  presents  new  matter,  and  therefore  is  not  ad- 
missible under  tlie  general  issue:  Fant  v.  McDanid,  1  Brev.  172;  2  Am.  Dec. 
660.  The  absence  of  probable  cause  is  one  of  the  grounds  of  action  neces- 
sarily alleged  in  the  plaintiff's  complaint,  and  anything  which  merely  dis- 
proves the  necessary  allegations  of  the  plaintiff's  complaint  is  not  new  matter, 
and  need  not  be  specially  alleged.  With  reference  to  the  various  matters 
which  we  have  shown  must  be  stated  in  the  complaint,  there  is  no  doubt 
that  they  may  be  put  in  issue  by  a  general  deilial,  and  that  all  evidence 
tending  to  counteract  or  contradict  the  evidence  required  to  be  offered  by 
plaintiff  in  support  of  his  complaint  is  admissible  under  the  general  issue,  and 
therefore  need  not  be  specially  pleaded.  Hence,  under  the  general  issue,  tiie 
defendant  is  entitled  to  prove,  if  he  can,  that  the  plaintiff  was  guiltj'  of  the 
crime  charged  against  him:  Bruleijv.  Rose,  bl  Iowa,  651;  or  that  the  prosecu- 
tion was  not  malicious:  Hitclicork  v.  North,  5  Rob.  (La.)  3-8;  39  Am.  Dec.  540; 
Sparling  v.  Conway,  75  Mo.  5l0;  or  was  upon  probable  cause:  Trogden  v. 
Dvcknrd,  45  Ind.  572;  Brigham  v.  Aldrkh,  105  Mass.  212;  Hitchcock  v.  North, 
5  Rob.  (La.). 328;  .39  Am.  Dec.  540;  Grifin  v.  Chuhh,  7  Tex.  603;  58  Am.  Dec. 
85;  and  as  part  of  his  defense  of  probable  cause,  the  advice  which  he  received 
from  his  counsel,  and  that  it  was  made  after  a  full  and  fair  disclosure  of  the 
facts:  Sparling  v.  Conway,  6  Mo.  App.  2S3;  75  Mo.  510;  Levy  v.  Brannan,  39 
Cal.  485;  Folger  v.    Washhurn,  137  Mass.  60. 

Evidence  —  Burden  of  Proof.  — As  it  is  essential  that  the  plaintiff  in  his 
complaint  affirmatively  allege  all  the  facts  necessary  to  support  his  action,  it 
follows  that  he  must  assume  the  burden  of  proof  in  respect  to  each  of  these 
allegations,  and  by  his  evidence  establish  to  the  satisfaction  of  the  court  and 
jury  that  he  has  been  prosecuteil  by  the  defendant,  that  the  prosecution  has 
terminated  in  his  favor,  that  it  was  malicious,  and  without  probable  cause; 
and  if  by  his  evidence  he  does  not  make  out  a  prima  facie  case  upon  all  of 


154  Ross  V.  HixoN.  [Kansas, 

these  issues,  he  must  fail:  Purcell  v.  MacNamara,  9  East,  S61;  1  Camp.  199j 
Lavender  v.  Hudgens,  32  Ark.  763;  Mitcliinson  v.  Cross,  58  111.  366;  Rosa  v. 
Innis,  35  111.  487;  85  Am.  Dec.  375;  Morton  v.  Young,  55  Me.  24;  92  Am, 
Dec.  565;  Jones  v.  Jones,  71  Cal.  89;  McNulty  v.  Walker,  64  Miss.  198;  Sta- 
ton  V.  Anderson,  103  Pa.  St.  151;  McFarland  v.  Washburn,  14  111.  App.  369; 
Palmer  v.  Richardson,  70  111.  544;  Z)ai;<e  v.  IFiAVter,  72  111.  262;  Caie/  v. 
Thomas,  81  111.  478;  Scott  v.  5/ie/or,  28  Gratt.  891;  Boeger  v.  Langenherg,  97 
Mo.  390;  10  Am.  St.  Rep.  322.  It  has  been  saiJ,  however,  that  after  proof 
of  malice,  slight  evidence  of  want  of  probable  cause  is  sufficient:  Orant  ▼. 
Deuel,  3  Rob.  (La.)  17;  38  Am.  Dec.  228;  and  because  it  involves  a  negative, 
that  only  such  proof  of  want  of  probable  cause  is  required  in  auy  case:  Wil- 
Hams  V.  Vanmeter,  8  Mo.  339;  41  Am.  Dec.  644.  We  shall  first  refer  to  the 
evidence  admissible  on  behalf  of  the  plaintiff  to  make  out  his  case,  and  next 
to  the  evidence  receivable  on  behalf  of  the  defendant  to  rebut  the  case  of 
the  plaintiff. 

Evidence  of  the  Proceedings  in  Court.  —  A  judicial  record  is  always  ad- 
missible to  prove  itself,  and  as  the  plaintiff's  cause  of  action  is  based  upon 
the  commencement  and  termination  of  the  prosecution  against  him  in  a  court 
of  justice,  he  must  necessarily  be  both  allowed  and  required  to  prove  such 
commencement  and  termination  by  the  best  evidence.  In  one  case  it  was 
very  strangely  said  that  the  record  of  the  plaintiff's  acquittal  is  not  admissi- 
ble in  evidence  in  his  favor:  Skidmore  v.  Bricker,  11  111.  164;  but  the  argu- 
ment used  against  its  admission  demonstrates  that  what  the  court  meant 
was,  that  it  was  not  admissible  for  the  purpose  of  proving  that  his  prosecu- 
tion was  malicious  or  without  probable  cause.  It  is  not  within  the  purpose 
of  this  note  to  consider  when  or  how  the  judicial  record  shall  be  authenti- 
cated or  proved.  When  desired  as  a  part  of  the  evidence  in  an  action  for 
malicious  prosecution,  it  must  doubtless  be  proved,  as  in  other  cases,  or  it 
•will  be  rejected:  Lun^iford  v.  Dietrich,  86  Ala.  250;  11  Am.  St.  Rep.  37; 
though  if  the  original  record  cannot  be  had,  its  contents  may  be  established 
by  secondary  evidence:  Brown  v.  Randall,  36  Conn.  56;  4  Am.  Rep.  35;  and 
when  proved  either  by  secondary  or  original  evidence,  so  that  it  would  be  ad- 
missible in  any  other  action  in  which  it  is  material,  it  must  necessarily  be 
admitted  in  an  action  for  malicious  prosecution  for  the  purpose  of  proving 
that  there  was  a  prosecution  and  when  and  how  it  ended:  Olmstead  v.  Part- 
ridge, 16  Gray,  381;  Winn  v.  Peckham,  42  Wis.  493;  .^fassv.  Meire,  37  Iowa,  97; 
Ames  V.  Snider,  69  111.  376;  Sweeney  v.  Perney,  40  Kan.  102;  Cooper  v.  Utter- 
bach,  37  Md.  282.  Its  effect  when  it  proves  a  conviction  as  well  as  a  prosecu- 
tion has  been  considered  at  page  142. 

Failure  to  Indict  or  to  Hold  the  Accused  to  Answer. — Whether  the  ac- 
quittal or  discharge  of  the  accused  may  be  considered  as  evidence  bear- 
ing upon  the  question  of  probable  cause  for  his  prosecution  or  not,  is  a 
question  upon  which  the  courts  are  not  in  entire  harmony.  The  majority  of 
the  decisions  upon  the  subject  affirm  tliat  the  failure  of  the  examining  magis- 
trate to  commit  or  the  grand  jury  to  indict  the  accused  is  admissible,  not 
merely  as  evidence  that  there  was  no  sufficient  proof  to  warrant  indicting 
him  or  holding  him  to  answer,  but  further,  that  the  prosecutor  did  not  have 
probable  cause  for  his  prosecution:  Sharpe  v.  Johnston,  76  Mo.  660;  Bornholdt 
V.  Souillard,  36  La.  Ann.  103;  Bi'/elow  v.  Sickles,  80  Wis.  98;  Frost  v.  Hol- 
land, 75  Me.  108;  Vi7ial  v.  Core,  18  W.  Va.  42;  Jones  v.  Finch,  84  Va.  204; 
Nicholson  V.  Coghill,  9  Dowl.  &  R.  13;  Johnson  v.  Chambers,  10  Ired.  2S7; 
Griffin  v.  Chuhb,  7  Tex.  603;  58  Am.  Dec.  85;  Sappimjton  v.  Watson,  50  Mo. 
83;  Cooper  v.  Utterbach,  37  Md.  282;  Strauss  v.  Young,  36  Md.  254;  Casperson 


Jan.  1891.]  Ross  v.  Hixon.  155 

V.  Sproule,  39  Mo.  39.  When  we  remember  that  the  commencement  of  the 
prosecution  must  precede  the  examination  before  the  magistrate  or  the  grand 
jury,  and  that  at  the  latter  the  accused  has  the  benefit  of  all  explanatory  cir- 
cu instances  which  have  been  disco veretl  since  the  charge  was  preferred 
against  him,  and  sometimes  of  such  evidence  as  he  can  procure  either  to  ex- 
plain or  contradict  that  upon  which  the  prosecutor  was  authorized  to  act,  it 
seems  remarkable  that  the  finding  of  the  examining  magistrate  or  of  the 
grand  jury,  even  though  it  be  conceded  to  be  evidence  of  the  want  of  probable 
cause  for  holding  the  accused  to  answer,  should  have  ever  been  received  as 
evidence  of  want  of  probable  cause  on  the  part  of  the  prosecutor  when  he 
instituted  the  prosecution.  It  is  not  disputed  that  the  jury  may  infer  the 
existence  of  malice  from  the  want  of  probable  cause.  If  the  absence  of 
probable  cause  may  be  inferred  from  the  failure  of  the  prosecution,  then  the 
tinal  result  is,  or  may  be,  that  the  prosecutor  may  be  held  liable  for  a  mali- 
cious prosecution  without  any  other  evidence  than  that  of  his  having  caused 
a  prosecution,  or,  at  least,  that  the  burden  of  proof  must  be  assumed  by  the 
defendant  after  the  plaintiflF  has  introduced  the  formal  evidence  of  his  prose- 
cution and  discharge.  Hence,  in  a  few  of  the  states,  the  decisions  declare 
that  the  discharge  of  the  accused  is  not  admissible  aa  evidence  of  probable 
cause,  and  that  the  eflFect  of  such  discharge  is  limited  to  proving  that  the 
prosecution  has  terminated:  Thompson  v.  Beacon  Valley  Ruhher  Co.,  5'j  Conn. 
493;  Heldt  v.  Webster,  60  Tex.  207;  Ganea  v.  Son'hern  Pac.  R.  R.  Co.,  51  Cal. 
140;  Frownian  v.  Smith,  Litt.  Sel,  Cas.  7;  12  Am.  Dec.  265;  Stauh  v.  Van 
Bethuysen,  36  La.  Ann.  467;  Apger  v.    Woolston,  43  N.  J.  L.  57. 

Acquittal  as  Evidence  of  Want  of  Probable  Cause.  — If  the  prosecution  ter- 
minated in  favor  of  the  accused  otherwise  than  by  his  discharge  by  the  grand 
jury  or  the  committing  magistrate,  the  decisions  agree  that  such  termination 
is  not  evidence  of  the  absence  of  probable  cause.  Hence,  though  he  proves 
a  verdict  of  acquittal  and  a  juilgment  in  his  favor  thereon,  he  must  still  ofiFer 
some  evidence  tending  to  show  that  his  prosecution  was  without  probable 
cause:  Orant  v.  Deuel,  3  Rol).  (La.)  17;  38  Am.  Dec.  228;  Bitting  v.  Ten  Eych, 
82  Ind.  421;  42  Am.  Rep.  505;  Griffin  v.  Chubb,  7  Tex.  603;  58  Am.  Dec.  85; 
Boefjer  v.  Lamjenbenj,  97  Mo.  390;  10  Am.  St.  Rep.  322;  Stewart  v.  Sonneborn, 
OS  U.  S.  187;  Ullmnn  v.  Ahranis,  9  Bush,  738;  Purccllv.  MacNarnarn,  9  East, 
361;  1  Camp.  199;  Sweeney  v.  Perney,  40  Kan.  102.  In  some  of  the  states, 
a  justice  of  the  peace,  or  other  magistrate  before  whom  a  criminal  prosecu- 
tion is  tried,  is  required,  if  he  finds  it  to  have  been  malicious  and  without 
probable  cause,  to  state  such  conclusion  in  his  docket,  and  to  assess  the  costs 
against  the  prosecutor.  The  effect  of  his  conclusion  is,  however,  limited  to 
the  imposition  of  such  costs,  and  his  finding  cannot  be  received  in  a  civil  action 
as  evidence  of  the  want  of  probable  cause:  Casey  v.  Seratson,  30  Minn.  516.  So 
the  abandonment  of  the  prosecution,  or  its  dismissal  on  the  entry  of  a  nolle  p7-0.se' 
qui,  at  the  instance  or  with  the  assent  of  the  prosecutor,  after  the  accused  has 
been  held  to  answer  by  a  magistrate  or  grand  jury,  is  not  evidence  of  the  want 
©f  probable  cause  for  the  commencement  of  tlie  prosecution:  FUckinger  y. 
Wagner,  46  Md.  580;  Yocum  v.  Folly,  1  B.  Mon.  358;  36  Am.  Dec.  583; 
■Cocifeldv.  Braoeboy,  2  McMiiU.  270;  39  Am.  Dec.  123;  Joiner  v.  Ocean  Stea7n- 
thipCo.,  86  Ga.  238;  Furcell  v.  MacNamara,  9  East,  361;  1  Camp.  199;  Green 
V.  Cochran,  43  Iowa.  544 

Eridenre  that  the  Proseculion  ivas  to  Accomplish  Some  Collateral  Purpose  or  to 
forward  some  private  interest  of  the  prosecutor  is  always  adniissil)le,  both  to 
show  the  absence  of  probable  cause  and  to  cre;ite  the  inference  that  it  was 
Ynalicious,  and  that  the  real  or  chief  object  of  the  prosecutor  was  to  obtain 


156  Ross  V.  HixoN.  [Kansas, 

possession  of  property,  or  the  payment  of  a  debt,  and  the  like:  Scliojield  v. 
Ferrers,  47  Pa.  St.  194;  86  Am.  Dec.  532;  Paddock  v.  Watts,  116  Ind.  146;  9 
Am.  St.  Rep.  832;  Kiuihall  v.  Bates,  50  Me.  308;  McDonald  v.  Booke,  2  Bing. 
N.  C.  207;  2  Scott,  359;  1  Hodges,  314;  Brooks  v.  War^^mck,  2  Stark.  389; 
Grundy  v.  Crescent  News  and  Hotel  Co.,  38  La.  Ann.  974;  Biatt  v.  Kmkaid,  28 
Neb.  721;  Tucker  v.  Cannon,  2S  Neb.  196. 

Beputation  of  the  Plaintiff.  —  In  a  couple  of  cases  decided  in  the  court  of  ap- 
peals of  Missouri,  it  was  asserted  that  the  plaintiff  in  an  action  for  malicious 
prosecution  ought  not  to  be  allowed  to  prove  that  his  reputation  before  such 
prosecution  was  good:  Kennedy  v.  HoUaday,  25  Mo.  App.  503;  Brennan  v. 
Tracy,  2  Mo.  App.  540;  and  in  Illinois  it  was  said  that  while  evidence  of  the 
plaintiff's  good  reputation  should  be  received  when  the  charge  against  him 
was  made  upon  information  and  belief,  for  the  purpose  of  showing  whether 
the  defendant  probably  believed  what  he  swore  he  did,  yet  that  it  was  not 
admissible,  where  the  charge  was  made  as  of  the  prosecutor's  own  knowl- 
edge: Skidmore  v.  Bricker,  77  111.  164.  Reason  or  autliority  in  support  of 
either  decision  we  have  not  heard  or  seen,  and  hope  to  be  spared  hearing  or 
seeing.  Certainly  a  reasonable  man  ought  to  pause  before  making  a  charge 
of  crime  against  one  whom  he  knows  to  bear  a  good  reputation,  and  to  have 
lived  a  blameless  life  in  the  community  in  which  he  resides.  For  the  pur- 
pose of  showing  that  his  prosecution  was  without  probable  cause,  the  plain- 
tiff may,  therefore,  offer  evidence  of  his  previous  good  reputation,  and  that 
it  was  known  to  his  accuser,  or,  from  the  latter's  long  acquaintance,  should 
have  been  known  to  him:  Mclntire  v.  Levering,  148  Mass.  546;  12  Am.  St. 
Rep.  594;  Ross  v.  fnnis,  35  111.  4S7;  85  Am.  Dec.  373;  Blizzard  v.  Bayes,  46 
Ind.  1G6;  15  Am.  Rep.  291;  Woodirorth  v.  Mdls,  61  Wis.  44;  50  Am.  Rep. 
135;  Israel  v.  Brooks,  23  111.  575. 

Evidence  Tending  to  Prove  Actual  Ill-will  on  the  part  of  the  prosecutor  tow- 
ards the  accused  is  always  admissible  for  the  purpose  of  raising  the  infer- 
ence that  the  prosecution  was  induced  by  malice:  Caddy  v.  Barlow,  1  Moody 
&  R,  275;  Thomas  v.  Norris,  64  N.  C.  780.  Such  ill-will  or  malice  may  be 
established  to  the  satisfaction  of  the  jury  from  the  conduct  as  well  as  language 
of  the  prosecutor,  and  without  showing  any  other  hostile  demonstrations  be- 
yond those  manifested  in  the  mode  of  prosecuting  or  preferring  the  charge, 
as  where  the  means  employed  by  the  prosecutor  were  unnecessarily  injurious: 
Thompson  v.  Force,  65  111.  370;  Turner  v.  Walker,  3  Gill  &  J.  377;  22  Am.  Dec. 
329;  or  the  value  of  the  property  the  accused  was  charged  with  taking  was, 
in  the  affidavit  for  his  arrest,  grossly  overstated:  Woodworth  v.  Mills,  61  Wis. 
44;  50  Am.  Rep.  135;  or  unusual  zeal  was  manifested  by  the  prosecutor: 
Oarvey  v.  Wayson,  42  Md.  178;  Straus  v.  Young,  36  Md.  246;  or  his  acts  were 
rash  and  wanton:  Travis  v.  Smith,  1  Pa.  St.  234;  44  Am.  Dec.  125;  Casebeer 
Bice,  18  Neb.  203;  or  a  false  statement  of  the  case  was  made  by  him  for  the 
purpose  of  procuring  advice  from  an  attorney,  favorable  to  the  arrest:  Wild 
V.  Odell,  56  Cal.  136. 

The  Facts  and  Circumstances  under  Which  the  Prosecutor  Acted  may  be  proved 
for  the  purpose  of  showing  that  he  could  not,  as  a  reasonable  man,  have  be- 
lieved in  the  truth  of  the  charge  made  by  him,  and  that  his  conduct  can  be 
imputed  to  nothing  but  malice.  Thus  plaintiff  may  prove  that  he  was  the 
owner  of  i)roperty  with  the  theft  of  which  he  was  charged,  and  that  the  pros- 
ecutor knew  of  such  ownership:  Lunsford  v.  Deitrich,  86  Ala.  250;  11  Am. 
St.  Rep.  37;  that  though  the  accused  was  charged  with  unlawfully  and  for- 
cibly defending  possession  of  property,  the  only  defense  made  by  him  was  iu 
lawful  resistance  of  an  attack  made  by  the  prosecutor:  Casebeer  v.  Bice,  18 


Jan.  1891.]  Ross  v.  Hixon.  157 

Neb.  203;  that  a  charge  of  larceny  was  preferred,  when  the  prosecutor  knew 
that  the  property  had  been  taken  up  under  the  estraj'  laws,  and  had  no  rea- 
son for  l)elieving  it  to  have  been  stolen:  Bauer  v.  Cloy,  8  Kan.  580;  that  the 
prosecutor  charged  the  coniini.ssion  of  the  crime  of  perjury  in  making  an 
aflBdavit  averring  his  insolvency,  when  he  must  have  known,  from  a  proper 
examination  of  his  affairs,  that  he  was  in  fact  insolvent,  and  that  the  charge 
of  insolvency  was  true:  Montros^y.  Bradxhy,  (iS  111.  185;  that  at  the  time  the 
accused  was  charged  with  having  fraudulently  disposed  of  mortgaged  chat- 
tels, he  had  a  large  amount  of  other  property  liable  to  be  taken  in  payment 
of  his  debts,  for  the  purpose  of  showing  that  his  prosecutor  could  not  have 
believed  that  the  disposal  of  the  mortgaged  property  was  for  the  purpose  of 
defrauding  the  mort-agee:  Reixan  v.  Mott,  42  Minn.  49;  18  Am.  St.  Rep.  480. 
As  bearing  upon  the  question  of  probable  cause,  the  plaintiff  may  offer  and 
the  court  receive  evidence  tending  to  show  that  the  person  upon  whose  infor- 
iTiation  the  prosecutor  acted  was  known  to  him  to  be  unreliable  or  to  have 
been  in  prison:  Mclntlre  v.  Levering,  148  Mass.  546;  12  Am.  St.  Rep.  594. 
It  is  not  evidence  of  the  absence  of  proUable  cause  that  the  prosecutor  did 
not  seek  the  accused  for  the  purpose  of  inquiring  whether  he  had  any  defense, 
or  of  giving  him  an  opportunity  to  explain  the  circumstances  creating  the 
belief  in  his  guilt:  Miller  v.  Chicago  etc.  R.  R.  Co.,  41  Fed.  Rep.  898;  and 
even  when  the  accused  is  sought  and  denies  his  guilt,  the  prosecution,  after 
such  denial,  is  not  without  probable  cause,  if  all  the  known  facts  in  the  case, 
including  the  denial,  were  sufficient  to  induce  a  reasonalde  ground  of  suspi- 
cion of  the  plaintiff's  gudt:  Chicago  etc.  R.  R.  Co.  v.  Krinki,  30  Neb.  215. 
The  fact  that  no  evidence  was  offered  by  the  prosecutor  to  sustain  his  charg« 
when  it  came  up  for  hearing  and  trial  may  be  proved  by  any  person  who  wa» 
present  at  the  trial  or  hearing,  for  the  purpose  of  showing  that  it  was  witlrout 
probable  cause:  John  v.  Bridgman,  27  Ohio  St.  22.  But  if  there  was  some 
evidence  offered,  the  judge  or  magistrate  will  not  be  permitted  to  state  his 
view  of  its  effect,  nor  that  he  discharged  the  accused  because  the  evidence 
was  insufficient  to  hold  him:  Dewpsey  v.  State,  27  Tex.  App.  269;  11  Am.  St. 
Rep.  193;  nor  are  any  of  the  observations  of  the  judge  or  magistrate  during 
the  trial  or  examination,  or  in  pronouncing  judgment,  admissible  against  the 
prosecutor:  WetzUirv.  Zachariah,  16  L.  T.,  N.  S.,  432;  Barker  v.  Augell,  2 
Moody  &  R.  371.  There  is  a  conflict  in  the  autliorities  as  to  whether  on  the 
trial  of  the  civil  action  for  malicious  prosecution  evidence  may  be  received 
for  the  purpose  of  showing  what  was  the  testimony  of  a  witness  at  the  hear- 
ing or  trial  of  the  criminal  charge.  On  the  one  side,  it  is  said  that  such  evi- 
dence is  inadmissible  either  to  show  probable  cause  or  the  want  of  it,  because 
it  is  not  the  best  evidence,  and  that  the  witnesses  examined  at  the  criminal 
trial,  if  their  testimony  is  again  desired,  must  be  called  aud  examined  at  the 
trial  of  the  civil  action:  Richards  v.  Foulke,  3  Ohio,  52;  Burt  v.  Place,  4 
Wend.  591;  but  a  slight  preponderance  of  the  authorities  dissents  from  this 
view,  and  maintains  that  upon  the  issue  of  probable  cause  it  is  competent 
for  either  party  to  show  what  was  testified  to  at  the  trial  of  the  criminal 
charge;  that  this  need  not  be  proved  by  the  testimony  of  the  witnesses  them- 
selves, for  they  may  have  forgotten  their  own  testimony,  or  may,  in  the  civil 
action,  testify  falsely  concerning  it,  and,  therefore,  that  it  is  competent,  either 
from  the  reporter's  notes  of  the  trial,  or  by  the  oral  testimony  of  any  other 
person  who  was  present  and  rememiicrs,  to  prove  what  was  said  by  any  wit- 
ness or  witnesses  upon  his  examination  on  the  trial  of  the  criminal  charge: 
Goodrich  y.  Warner,  21  Conn.  432;  Broxmv.  Willoitghhy,  5  Col.  1;  Bacon  v. 
Towne,  4  Cush.  238.     The  declarations  of  the  arresting  officer  are  not  admis* 


158  Ross  V.  HixoN.  [Kansas, 

sible  for  the  purpose  of  showing  the  malice  of  the  prosecutor,  where  they 
w^re  not  made  in  his  presence  or  hearintj,  nor  by  his  authority:  Reisan 
V.  Mott,  42  Minn.  49;  18  Am.  St.  Rep.  4S9;  nor  can  the  right  of  the  offi. 
car  to  represent  or  speak  for  the  prosecutor  or  the  existence  of  a  conspir- 
acy between  hira  and  the  officer  be  proved  by  the  latter's  declarations: 
Chiisman  v.  Carney,  33  Ark.  318.  The  plaintiff  ouglit  not  to  be  allowed  to 
give  evidence,  the  only  purpose  of  which  must  be  to  create  a  prejudice 
against  the  defendant  or  a  sympathy  for  the  plaintiff.  Hence  the  reception 
of  evidence  to  the  effect  that  the  character  of  the  defendant  was  bad*:  Walker 
V.  PiUman,  108  Ind.  341;  or  that  the  plaintiff  was  a  minor  when  he  was  prose- 
cuted, or  at  the  time  of  the  commission  of  the  supposed  crime  of  which  he 
was  charged,  is  erroneous:  Moles  v.  Bates,  74  Ala.  374. 

Evidence  for  Defendant — Judicial  Proceedings.  — The  record  of  the  criminal 
prosecution  is  also  evidence  for  the  defendant,  and  so  far  as  it  speaks  in  his 
favor  is  in  some  respects  more  efficient  than  when  it  is  received  on  behalf  of 
the  plaintiff.  What  its  effect  is  when  it  shows  a  conviction,  wliether  such  a 
conviction  has  been  vacated  or  not,  we  have  cimsidered  at  page  142.  If  any- 
thing appears  from  the  proceedings  against  the  plaintiff  which  may  be  con- 
strued as  an  admission  either  of  his  guilt,  or  of  there  being  probable  cause  for 
his  prosecution,  it  is  admissible  against  him.  Therefore,  it  has  been  heKl  that 
the  voluntary  waiver  by  the  accused  of  his  examination,  and  his  entering  into 
recognizance  for  his  appearance  to  answer  the  charge  against  him,  were  ad- 
missil)le  as  evidence  of  probable  cause  for  his  prosecution:  French  v.  Smith  4 
Vt.  363;  24  Am.  Dec.  616;  Vansickle  v.  Brown,  68  Mo.  627.  The  fact  that  the 
accused  was  held  to  answer  by  the  examining  magistrate,  or  was  indicted  by 
the  grand  jury,  is  generally  treated  as  prima  facie  but  never  as  conclusive  evi- 
rleiice  of  probable  cause:  Diemer  v.  Herher,  75  Cal.  287;  Ganea  v.  Southern 
Pac.  R.  R  Co.,  51  Cal.  140;  Hate  v.  Boylen,  22  W.  Va.  234;  Raleigh  v.  Cook; 
60  Tex.  438;  Graham  v.  Noble,  13  Serg.  &  R.  233;  Bacon  v.  Towne,  4  Cash! 
.217;  Ross  v.  Hixon,  46  Kan.  550;  Ricord  v.  Central  Pac.  R.  R.  Co.,  15  Nev, 
167;  Garrard  y.  Willet,  4  J.  J.  Marsh.  628;  Peck  v.  Chouteau,  91  Mo.  138;  60 
Am.  Rep.  236;  Bell  v.  Pearcy,  11  Ired.  233;  Broion  v.  Griffin,  Cheves,  32;  and 
the  principal  case;  though  this  effect  has  sometimes  been  denied  to  his  indict- 
ment: Motes  V.  Bates,  80  Ala.  382.  If  the  jury  or  the  court  entertained  doubt 
upon  the  subject  of  the  innocence  of  the  accused,  this  fact  is  generally  per- 
mitted to  be  proved,  as  tending  to  show  probable  cause.  If  there  were  two 
trials,  because  the  jury  on  the  first  trial  could  not  agree,  this  is  unquestionably 
evidence  of  probable  cause:  Johnson  v.  Miller,  63  Iowa,  529;  50  Am.  Rep.  758; 
and  though  the  jury  ultimately  concurred  in  a  verdict  of  acquittal  on  the 
first  trial,  it  has  been  held  that  parol  evidence  is  admissible  for  the  purpose 
of  showing  that  they  hesitated,  and  that  they  entertained  doubts  of  the  inno- 
cence of  the  accused  from  the  evidence  before  them:  Grant  v,  Detiel,  3  Rob. 
(La.)  17;  38  Am.  Dec.  228;  Smith  v.  Macdonald,  3  Esp.  7.  This  character  of 
evidence  concerning  the  deliberations  of  the  grand  jury  has  been  excluded, 
and  we  think  properly,  both  because  the  accused  may  not  have  had  any  oppor- 
tunity to  present  evidence  in  his  favor  before  them,  and  because  public  policy 
is  best  Bubser-ved  by  keeping  secret  the  votes  and  opinions  of  the  grand 
jurors:  Scotten  v.  Longfellow,  40  Ind.  23. 

Bad  Reputation  of  Plaintiff.  —  One  of  the  elements  of  damage  which  the 
jury  may  properly  consider  is  the  injury  to  the  reputation  of  the  plaintiff  by 
his  prosecution,  and  that  injury  is  manifestly  less  when,  before  the  prosecu- 
tion, he  had  little  or  no  reputation  to  lose.  So  one  is  more  likely  to  enter- 
tain a  reasonable  belief  in  the  guilt  of  a  person  of  bad  reputation  than  of  one 


Jan.  1891.]  Ross  v.  Hixon.  159 

whose  reputation  is  good.  Evidence  of  the  bad  reputation  of  the  plaintifiF 
before  the  charge  was  preferred  against  him  is  therefore  admissible  both  in 
mitigation  of  damages  and  to  sliow  that  his  prosecution  was  not  without 
probable  cause:  BosenJcransv.  Barker,  115  111.  331;  56  Am.  Rep.  169;  O'Brien 
V.  Fnuier,  47  N.  J.  L.  349;  54  Am.  Rep.  170;  Greijoi-y  v.  Chambers,  78  Mo. 
294;  Martin  v.  HnrJesf;/,  27  Ala.  458:  Cy2  Am.  Dec.  773;  FifZ'jMonv.  Brown, 
43  Me.  169;  Rodriiiiez  v.  Tadinire,  2  Esp.  721;  Miller  v.  Broivn,  3  Mo.  127; 
23  Am.  Dec.  693;  Gee  v.  Culver,  13  Or.  598;  Pulkn  v.  Glidden,  68  Me.  559. 
The  defendant  is  entitled  to  show  that  when  the  plaintiff  was  arrested  he 
was  in  the  company  of  a  person  of  bad  character,  and  that  he  harbored  and 
habitually  associated  with  persons  of  that  character,  and  thereby  exposed 
himself  to  suspicion:  Hitchcock  v.  North,  5  Rob.  (La.)  328;  39  Am.  Deo.  640;  or, 
though  the  prosecution  was  for  larceny,  that  the  plaintiff  had  the  reputation 
of  being  a  gambler  and  horse-racer:  Martin  v.  Hardesty,  27  Ala.  458;  62  Am. 
Dec.  773.  If  the  prosecution  was  for  the  purpose  of  compelling  plaintiff  to 
give  sureties  to  keep  the  peace,  the  defendant  may  show  not  only  that  the 
plaintiff  threatened  him,  but  that  his  reputation  was  that  of  a  violent  and 
quarrelsome  man:  Sherwood  v.  Beed,  35  Conn.  450;  95  Am.  Dec.  284.  From 
the  general  rule  that  the  bad  reputation  of  the  plaintiff  may  be  proved  by 
the  defeiiilant,  there  is  a  slight  and  feeble  dissent:  Oliver  v.  Pate,  43  Ind. 
132;  Exchbachv.  Hurtt,  47  Md.  61.  In  Wisconsin,  while  the  general  rule  ia 
conceded,  it  has  been  held  that  evidence  of  such  reputation  is  not  admissible 
nnder  the  general  issue:  Scheer  v.  Keown,  34  Wis.  349. 

Evidence  of  Other  Crimes.  — Though  the  plaintiff  must  be  prepared  to  defend 
his  general  reputation,  he  is  not  required  to  meet  charges  of  specific  offenses: 
Gregory  v.  Thomas,  2  Bibb,  286;  5  Am.  Dec.  608;  nor  can  the  prosecutor  sup- 
port his  defense  of  probable  cause  by  proving  that  though  the  plaintiff  did  not 
commit  the  crime  of  which  he  was  accused,  yet  that  he  did  at  or  about  the 
same  time  commit  another  and  entirely  different  offense:  Carson  v.  Edi/eworth, 
43  Mich.  241;  CUristnan  v.  Carney,  33  Ark.  316;  Patterson  v.  Garlock,  39 
Mich.  447;  Sutton  v.  McConnell,  46  Wis.  269.  When,  however,  a  guilty 
knowledge  is  essential  to  the  crime  of  which  plaintiff  was  accused,  the  de- 
fendant may  prove  facts  and  circumstances,  known  to  him  at  the  time  of  the 
prosecution,  sufficient  to  create  a  belief  in  the  mind  of  a  reasonable  man, 
and  in  fact  creating  a  belief  in  the  defendant's  mind,  that  the  accused  had 
committed  other  offenses  like  that  for  which  he  was  prosecuted:  Thdin  V. 
Dorsey,  59  Md.  539;  Thomas  v.  Russell,  9  Ex.  764. 

Df/endant's  Evidence  of  his  Motives.  —  The  defendant  in  those  states  in 
which  he  is  permitted  to  testify  in  his  own  behalf  is  allowed  to  give  direct 
evidence  of  his  motives  and  purposes  in  the  prosecution.  He  may  be  asked 
whether  he  was  actuated  by  malice  or  not,  whether  he  made  the  complaint 
against  the  accused  in  good  faith,  entertaining  an  honest  belief  in  his  guilt: 
Sherburne  v.  Rodman,  51  Wis.  474;  Greer  v.  Whitfield,  4  Lea,  85;  or  whether 
he  had  any  ill-feelings  against  him:  Vansickle  v.  Brown,  68  Mo.  627;  McCor- 
mickv.  Perry,  47  Hun,  71;  Coleman  v.  Heurich,  2  Mackey,  189;  or  whether 
from  all  the  facts  known  to  him  when  he  commences  the  prosecution,  taken 
in  connection  with  the  advice  of  his  counsel,  he  believed  the  charge  to  be 
true  and  the  accused  guilty:  Heap  v.  Parrish,  10+  Ind.  36;  Turner  v. 
O'Brien,  5  Neb.  542;  Spalding  v.  Lowe,  56  Mich.  366;  Sparling  v.  Conway,  76 
Mo.  510.  Of  course  the  testimony  on  this  point  ia  not  conclusive  in  his 
favor,  but  ia  to  be  weighed  in  connection  with  the  other  evidence  of  the  case, 
and  the  jury  must  determine  from  what  he  did  and  the  circumstances  under 
whicii  he  did  it,  as  well  as  from  his  present  testimony  concerning  his  motivea, 
whether  his  prosecution  was  without  probable  cause  and  malicious  or  not. 


160  Ross  V.  HixoN.  [Kansas, 

Facts  not  Knmm  to  the  Prosecutor. — Evidence  tending  to  prove  the  actual 
guilt  of  the  plaintiff  is  always  admissible  in  favor  of  the  defendant,  for  a 
guilty  man  will  not  be  permitted  to  recover  for  his  prosecution  whether  the 
facts  within  the  knowledge  of  the  prosecutor  at  the  time  the  charge  was 
made  were  or  were  not  sufficient  to  justify  the  making  of  it.  But  with  this 
exception,  the  defense  of  probable  cause,  so  far  as  it  is  made  to  depend  upon 
the  ground  that  there  were  circumstances  sufficient  to  excite  the  suspicion  of 
a  reasonable  and  prudent  man,  and  generate  in  his  mind  the  conviction  of  the 
guilt  of  the  accused,  is  restricted  to  facts  known  to  the  prosecutor  when  he 
preferred  his  charge.  It  may  be  that  there  were  other  existing  circum- 
stances of  which  he  afterwards  became  aware,  and  which,  had  he  known 
them  at  the  time,  would  have  strengthened  his  conviction  and  made  it  more 
reasonable,  but  as  he,  from  not  knowing  them,  could  not  have  acted  upon 
them,  evidence  of  them  should  not  be  received  to  justify  his  action:  Hark- 
rader  v.  Moore,  44  Cal.  144;  Delegal  v.  Highley,  3  Bing.  N.  C.  959;  Galloway 
V.  Stewart,  49  Ind.  156;  19  Am.  Rep.  677;  Turner  v.  Amhler,  10  Q.  B.  252;  6 
Jur.  346;  11  L.  J.  Q.  B.  158;  Threefoot  v.  Nnckols,  68  Miss.  116;  Bell  v. 
Pearcy,  5  Ired.  233;  Mchitire  v.  Levering,  148  Mass.  546;  12  Am.  St.  Rep. 
594;  Josselynv.  McAllister,  25  Mich.  45.  Nor,  on  the  other  hand,  can  the 
effect  of  circumstances,  known  to  the  prosecutor,  tending  to  establish  the  ex- 
istence of  probable  cause  be  weakened  by  other  explanatory  or  exculpatory- 
facts  of  which  he  had  no  knowledge  or  notice:  King  v.  Colvin,  11  R.  I.  582. 

Evidence  of  Facts  Justifying  the  Prosecutor. —In  a  preceding  part  of  this 
note  we  have  given  instances  of  prosecutions  deemed,  as  matter  of  law,  to 
be  upon  probable  cause,  and  of  others  from  which  probable  cause  was  ad- 
judged  to  be  absent.  What  was  there  said  should  be  considered  in  connec- 
tion with  what  we  shall  here  say  upon  the  subject  of  the  evidence  on  the 
part  of  the  defendant  tending  to  show  that  the  facts  and  circumstances  under 
which  he  acted  were  such  as  to  justify  his  action. 

Actions  for  malicious  prosecution  often  furnish  temptations  for  seeking  to 
bring  before  the  jury  evidence  of  extrinsic  matters  for  the  purpose  of  awaken- 
inf  their  prejudices  or  sympathies,  and  there  is  no  doubt  that  all  matters 
which  can  only  minister  to  this  purpose  ought  to  be  rigidly  excluded:  Brown 
V.  Smith,  83  111.  291.  But  when  the  defense  is,  that  the  prosecutor  acted  in 
good  faith,  and  as  a  prudent  and  reasonable  man  would  act  in  the  same  cir- 
cumstance's, it  is  evident  that  his  defense  cannot  be  fully  and  fairly  made 
unless  he  is  permitted  to  disclose  to  the  jury  all  the  facts  and  circumstances 
influencing  his  action,  and  which  were  such  as  a  prudent  and  law-abiding 
man  might  reasonably  and  lawfully  act  upon:  Collins  v.  Hayte,  50  III.  337; 
99  Am.  Dec.  521;  Collins  v.  Fisher,  50  111.  359. 

A  Mere  Suspicion  or  Belief  that  the  accused  had  committed  the  crime  of 
which  he  is  charged,  however  sincere,  is  not  evidence  of  probable  cause.  Nor  is 
it  material  that  other  persons  than  the  prosecutor  shared  in  such  belief.  Hence 
he  should  not  be  permitted  to  prove  his  own  belief  or  the  belief  of  others,  or 
that  he  had  been  told  by  others  that  the  accused  was  guilty,  or  that  there 
was  a  general  suspicion  of  such  guUt  in  the  comnmnity,  except  he  also  shows 
that  such  belief  was  based  upon  such  information  as  might  generate  it  in  the 
mind  of  a  prudent,  reasonable  man:  Brainerd  v.  Brackett,  33  Me.  580;  Hoi- 
hum  V.  Neal,  4  Dana,  1-20;  Carl  v.  Ayers,  53  N.  Y.  14;  Stone  v.  Stevens,  12 
Conn.  219;  30  Am.  Dec.  611;  Norvel  v.  Vogel,  39  Minn.  107;  Farnham  v. 
Feeley,  56  N.  Y.  451.  Some  of  the  courts  have,  however,  and  perhaps  cor- 
rectly' admitted  evidence  that  it  was  commonly  reported  in  the  neighborhood 
in  which  the  parties  lived  that  the  plaintiff  had  committed  the  crime  for 


Jan.  1891.]  Ross  v.  Hixon.  161 

which  he  was  prosecuted,  not  as  being  in  itself  sufficient  to  establish  probable 
cause,  but  as  lending  force  to  any  other  criminatory  facts  or  iuformatioa: 
Pullen  V.  Olidden,  68  Me.  559;  Baron  v.  iMasoii,  31  Vt.  201. 

7'he  Prosecutor  is  not  Required  to  Act  upon  his  Personal  Knowledge.  —  "Ac- 
tual knowledge  that  the  crime  was  committed  is  not  necessary,  nor  is  it  es- 
sential that  the  prosecutor  shall  know  the  facts  and  circumstances  upon 
wliich  he  predicates  his  belief.  He  may  act  upon  creditable  information  or  de- 
ceptive appearances  of  guilt,  if  he  acts  in  good  faith  ":  Brown  v.  Willouijhby, 
5  Col.  1;  Hoojpew.  Vernon,  Sup.  Ct.  Md.,  March,  1891.  While  the  prosecutor 
may  act  upon  information  received  from  others,  it  would  seem  to  be  bis 
duty  not  to  act  upon  mere  general  charges  of  the  commission  of  the  crime 
without  doing  anything  to  verify  their  truth  when  he  could  easily  do  so,  and 
especially  when  the  person  accused  bears  a  good  reputation:  Bornholdt  v. 
Souillard,  36  La.  Ann.  103.  What  was  said  or  told  to  the  defendant  must 
generally  be  admitted  in  evidence,  not  for  the  purpose  of  establishing  that 
what  was  told  was  true,  but  of  showing  whence  came  the  information  on 
which  he  acted;  and  if  the  source  was  apparently  reliable,  and  of  a  character 
to  induce  a  prudent,  cautious  man  to  believe  that  the  plaintiff  had  been  guilty 
of  the  offense  for  which  he  was  arrested,  and  the  defendant  did  so  believe, 
then  such  information  makes  out  tiie  defense  of  probable  cause:  Lamb  v, 
Galland,  44  Cal.  609.  If  the  person  from  whom  the  information  is  derived  is 
known  to  be  of  bad  reputation,  as  where  he  is  a  discharged  convict,  the  prose- 
cutor is  not  justified  in  acting  upon  such  information  without  taking  any  steps 
to  verify  it:  Anderson  v.  Friend,  71  111.  475;  Chapman  v.  Dunn,  56  Mich.  31; 
and  where  the  information  was  in  the  form  of  a  confession,  it  may  be  shown, 
to  break  its  force  as  evidence  of  probable  cause,  that  it  was,  in  effect,  ex- 
torted by  the  accused  from  the  person  making  it:  Ilarpham  v.  Whitney/.  77  111. 
32;  Dorsey  v.  Clapp,  22  Neb.  5G4.  Where  the  information  was  received  from  a 
person  of  bad  reputation,  of  which  the  prosecutor  and  his  counsel  were  not  in- 
formed, the  court  refused  to  decide,  as  a  matter  of  law,  that  they  were  guilty 
of  such  want  of  diligence  as  to  deprive  them  of  the  defense  of  probable  cause, 
from  the  fact  tliat  they  did  not  take  any  measures  to  ascertain  the  reputation 
of  their  informant,  as  they  might  readily  have  done:  Jordan  v.  Alabama  etc. 
li.  R.  Co.,  81  Ala.  220.  "However  suspicious  the  appearances  may  be  from 
existing  circumstances,  if  the  prosecutor  has  knowledge  of  facts  which  will 
tend  to  explain  the  suspicious  appearances  and  exonerate  the  accused  from 
the  criminal  charge,  he  cannot  justify  a  prosecution  by  putting  forth  the 
prima  facie  circumstances,  and  excluding  those  witliin  his  knowledge  which 
tend  to  prove  innocence  ":  Faynan  v.  Knox,  66  N.  Y.  525.  The  facts  and 
circumstances  upon  which  the  defense  relies  as  evidence  of  prol)abie  cause 
must  tend  to  show  the  commission  of  the  crime  charged.  It  is  not  sufficient 
that  they  existed  and  tended  to  prove,  or  proved,  a  wrongful  or  criminal  act, 
if  it  was  not  the  act  charged.  Hence  pi-obable  cause  for  a  prosecution  for 
larceny  is  not  shown  by  evidence  that  the  facts  upon  which  tlie  defendant 
proceeded  tend  to  prove  that  the  property  had  been  converted:  Turner  v. 
O'Brien,  5  Neb.  542;  Falrey  v.  Faxon,  143  Mass.  284;  Stone  v.  Sli-veiis,  12 
Conn.  219;  30  Am.  Dec.  6(51;  Bohsin  v.  Kiw/sbury,  138  Mass.  538;  nor  for 
perjury,  by  showing  that  the  accused  swore  falsely  in  a  matter  not  material 
to  the  issue  on  trial:  Plath  v.  Braunsdorff,  40  Wis.  107.  When,  by  mistake, 
a  charge  is  made  of  one  crime  or  against  a  certain  person,  when  the  prosecu- 
tor intended  to  cliarge  another  crime  or  another  person,  it  is  said  tliat  proof  of 
the  crime  intended  to  be  charged  may  be  received  in  mitigation  of  damages: 
Ripley  v.  McBarron,  125  Mass.  272;  0  Brien  v.  Frasier,  47  N.  J.  L.  349;  54  Am. 
AM.  ST.  Kkp.,  Vol.  XXVI.  — 11 


162  Ross  V.  HrxoN.  [Kansas, 

Rep.  170.  The  defendant  is  always  allowed  to  prove  that  he  acted  npon 
the  advice  of  counsel  taken  in  good  faith  and  upon  full  disclosure  of  facts: 
Wright  v.  Hanna,  98  Ind.  217;  Levy  v.  Brannan,  39  Cal.  4S5;  Williams  v.  Van- 
meter,  8  Mo.  339;  41  Am.  Dec.  644;  Workman  v.  Shelly,  79  Ind.  442;  and  may 
show  V  hat  opinion  the  latter  gave  him:  Collins  v.  Hayte,  50  111.  337;  99  Am. 
Dec.  521,  And  if  the  defendant  sought  to  obtain  the  advice  of  his  counsel 
before  commencing  the  prosecution,  but  was  unable  to  do  so  because  he  could 
not  find  him,  it  may  be  shown,  to  rebut  the  inference  of  malice,  and  in  miti- 
gation of  damages,  that  before  the  arrest  was  effected,  the  attorney  was  fouud 
and  consulted,  and  his  advice  followed:  Bopkin.s  v.  McGilUcuddy,  69  Me.  273. 
For  the  purpose  of  avoiding  the  effect  of  the  advice  given  by  the  attorney,  it 
may  be  shown,  either  upon  cross-examination  of  defendant's  witnesses,  or  by 
witnesses  for  the  plaintiflF  in  rebuttal,  what  facts  were  stated  to  the  at- 
torney, or  that  some  of  the  material  facts  were  omitted  from  the  state- 
ment: Cooper  V.  Utterhach,  37  Md.  282;  or  from  such  omission,  or  from  other 
facts  and  circumstances,  that  the  advice  of  the  attorney  was  sought  merely 
as  a  cover  to  protect  defendant,  and  not  in  good  faith  with  a  view  to  being 
guided  and  controlled  by  it:  McCarthy  v.  Kitchen,  59  Ind.  500. 

Damages.  —  The  amount  of  damages  to  be  awarded  the  injured  party  is, 
in  an  action  for  malicious  prosecution,  left  to  the  discretion  of  the  jury,  to  be 
determined  by  them  from  all  the  evidence  submitted  for  their  consideration. 
It  is  not  proper  to  permit  witnesses  to  testify  to  the  amount  of  such  damages: 
LuTVifordy.  Deitrich,  86  Ala.  250;  11  Am.  St.  Rep.  37.  It  is  their  province 
to  disclose  the  facts  and  circumstances  from  which  the  conclusion  of  the  jury 
is  to  be  drawn,  and  when  drawn,  it  will  not  be  reviewed  by  the  court  except 
in  extreme  cases:  Chapman  v.  Dodd,  10  Minn.  350;  Ross  v.  Innes,  35  111.  487; 
85  Am.  Dec,  373;  in  which  the  amount  of  the  recovery  is  so  disproport  onate 
to  the  injury  suffered  as  to  indicate  that  the  jury  must  have  been  actuated  by 
passion,  prejudice,  or  some  other  inadmissible  motive:  Loewenthal  v.  Streng, 
90  111.  74;  Walker  v.  Martin,  52  111.  347.  It  is  important,  however,  to  con- 
sider what  elements  of  damage  may  properly  influence  the  jury  in  reaching 
a  verdict,  for  without  determining  what  these  elements  are,  it  is  impossible 
to  decide  what  evidence  should  be  admitted  or  excluded,  or  what  injuries 
are  necessarily  redressed  by  a  verdict  and  judgment  in  favor  of  the  plaintiff, 
so  as  to  preclude  any  further  recovery  by  him.  Speaking  of  an  action  for 
malicious  prosecution,  the  supreme  court  of  Michigan  said:  "We  may  ob- 
serve, in  general  terms,  that  the  elements  of  damage  were  the  expenses  of 
the  plaintiff,  if  any,  in  and  about  the  prosecution  complained  of  "to  protect 
himself;  his  loss  of  time;  his  deprivation  of  liberty,  and  the  loss  of  his  soci- 
ety to  his  family;  the  injury  to  his  fame;  personal  mortification,  and  the 
smart  and  injury  of  the  malicious  arts  and  acts  of  oppression  of  the  parties  ": 
Hamilton  v.  Smith,  39  Mich.  222.  In  an  early  case,  it  was  said  that  for  a  ma- 
licious prosecution  the  plaintiff  may  recover  for  damages,  —  1.  To  his  fame; 
2.  To  his  person;  and  3.  To  his  property.  The  damages  to  his  fame  are 
of  the  same  character,  and  may  include  the  same  elements  as  if  the  action 
were  for  slander  or  libel.  The  damages  to  his  person  include  loss  of  his 
liberty,  and  the  danger  to  which  he  is  subjected  of  loss  of  life  or  liberty 
through  the  prosecution.  The  damages  to  his  property  embrace  his  losses  in 
defending  himself  against  the  charge  for  which  he  is  prosecuted:  Savile  v. 
Roberts,  1  Ld.  Raym.  374;  Lavender  v.  Hudijens,  32  Ark.  763.  There  is  no 
doubt  that  he  may  recover  for  each  of  these  three  elements  of  damage,  but 
probably  there  are  conceded  elements  of  damage  which  it  would  be  difficult 
to  include  in  either  of  these  classifications. 


Jan.  1S91.]  Ross  v.  HrxoN.  163 

Reputation,  Damage  to. — That  the  plaintiff  may  recover,  in  an  action  for 
malicious  prosecution,  for  injuries  resulting  to  his  reputation  from  the  mak* 
ing  of  the  charge  against  him  is  beyond  controversy;  and  therefore  he  can- 
not sustain  a  subsequent  action  of  slander  or  libel  for  preferring  the  charge 
against  him,  though  "if  the  cliarge  was  repeated  at  other  times,  a  separata 
action  may  be  sustained  for  the  damages  resulting  from  this  repetition: 
Sheldon  v.  Carpenter,  4  N.  Y.  678;  55  Am.  Dec.  301;  Rockwell  v.  Brown,  36 
N.  Y.  207. 

Mental  Suffei-ing,  — We  do  not  know  that  mental  suffering  can  properly  be 
regarded  as  an  injury  either  to  reputation,  person,  or  property,  but  the  au- 
thorities agree  that  the  indignity  of  being  charged  with  the  commission  of 
crime,  and  the  mental  suffering  occasioned  to  the  accused  thereby,  are  proper 
matters  to  be  considered  by  the  jury,  and  compensated  by  their  verdict: 
Parklturst  v.  MoAteller,  57  Iowa,  474;  Lnn^ford  v.  Deitrich,  86  Ala.  250;  11 
Am.  St.  Rep.  37;  McWilliams  v.  Hohan,  42  Md.  56. 

The  I/nprisonment  of  the  Pln'intiff  being  a  natural  consequence  of  his  pros- 
ecution, he  may  recover  such  damages  as  naturally  arise  therefrom.  They 
necessarily  include  compensation  for  wounded  pride  and  the  consequent  men- 
tal suffering,  injury  to  his  health,  including  insanity  and  mental  aberration; 
Plath  V.  Brannxdorff,  40  Wis.  107;  and  loss  of  time:  Hamilfon  v.  Smith,  39 
Mich.  222.  The  mode  in  which  plaintiff  was  treated  may  also  be  shown,  as 
that  he  suffered  from  cold,  or  the  want  cf  proper  food  and  bedding,  or  was 
kept  separate  from  his  wife:  Spear  v.  Hiles,  67  Wis.  350;  Abrahams  v.  Cooper, 
81  Pa.  St.  2.'52.  On  the  other  hand,  it  has  been  held  that  the  prosecutor  is 
not  answerable  for  the  mode  in  wliich  the  officers  of  a  prison  discharged  their 
duties;  and  therefore  that  in<lignities  and  neglects  of  theirs  ought  not  to  be 
permitted  to  enliance  the  damages  recoverable  by  the  sufferer:  Zchley  v.  StO' 
rey,  117  Pa.  St.  478. 

Attorneys'  Fees.  — Expenses  incurred  in  defending  himself  against  the  pros- 
ecution, which  he  claims  to  have  been  malicious,  may  be  recovered  by  the 
plaintiff,  including  a  reasonable  fee  for  his  counsel  in  such  criminal  prosecu- 
tion, whetlier  it  has  been  actually  paid  or  not:  Marsh(dlv.  Betner,  17  Ala, 
832;  Zeigler  v.  Poirell,  54  Ind.  17:^;  Gregory  v.  Chamhers,  78  Mo.  294;  Krug 
V.  Ward,  77  111.  603;  Walker  v.  Pittman,  108  Ind.  341;  Landa  v.  Obert,  45 
Tex.  539. 

The  Condition  of  the  Plaintiff's  Family  or  the  effect  of  his  prosecution  upon 
any  member  of  it  seems  not  to  constitute  an  element  of  damage  proper  for 
the  consideration  of  the  jury.  Hence  he  should  not  be  permitted,  for  the 
purpose  of  enhancing  his  damages,  to  prove  that  his  wife  was  dead  and  he 
had  four  children  to  support  and  care  for:  Reisan  v.  Mott,  42  Minn.  49;  18 
Am.  St.  Rep.  489;  nor  that  he  had  a  wife  living,  and  that  her  health  had  been 
injured  and  her  mind  unbalanced  by  his  prosecution:  Hampton  v.  Jones,  58 
Iowa,  317. 

Exemplary  Damages. — In  actions  for  malicious  prosecution,  as  in  other 
actions  for  tort,  there  is  a  difference  of  opinion  as  to  whether  damages  may  be 
allowed  by  way  of  punishment  or  exami)le,  the  one  side  insisting  "that  com- 
pensation to  the  plaintiff  is  the  purpose  in  view;  and  when  that  is  accorded, 
anything  beyond,  by  whatever  name  called,  is  unauthorized;  that  it  is  not 
the  province  of  the  jury,  after  full  damages  have  been  found  for  plaintiff,  so 
that  he  is  fully  compensated  for  the  wrong  committed  by  the  defendant,  to 
mulct  the  defendant  in  an  additional  sum,  to  be  handed  over  to  the  plaintiff, 
as  a  punishment  for  the  wrong  he  has  done  to  the  plaintiff":  Wilson  v. 
Bowen,  64  Mich.  133;  and  the  other  contending  that,  except  as  to  expenses 


164  Ross  V.  HixoN.  [Kansas, 

incarred  and  other  elements  of  damage  susceptible  of  preciae  proof,  "no 
measure  of  damages  cau  be  prescribed  except  the  eulighteiied  conscience  of 
impartial  jurors":  Coleman  v.  Allen,  79  Ga.  637;  11  Am.  St.  Rep.  449;  and 
that  as  the  action  is  not  maintainable  unless  the  comUict  of  the  defendant 
has  been  both  malicious  and  witliout  probable  cause,  the  jury  may  not  only 
compensate  plaintiflf  for  his  actual  damages,  but,  in  addition  thereto,  award 
a  further  sum  as  a  punishnient  of  defendant  for  his  wrongful  and  mali- 
cious act:  McWilliams  v.  HoUan,  42  Md.  5U;  Parklairsl  v.  Maatelkr,  57  Iowa, 
474.  To  warrant  the  giving  of  exemplary  damages,  the  courts  generally  re- 
quire that  the  evidence  be  such  as  to  justify  the  inference  of  actual  malice, 
or  the  "  prosecution  to  have  been  pursued  by  the  defendant  for  his  private 
ends  and  with  reckless  disregard  of  the  rights  of  plaintifif ":  Vinnl  v.  Core,  18 
W.  Va.  1;  Cooper  v.  Utttrbach,  37  Md.  284;  Spear  v.  Hiles,  C7  Wis.  350;  or 
"a  formed  design  to  injure  and  oppress":  Burnett  v.  Reed,  51  Pa.  St.  191. 
Hence  if  the  defendant  became  responsible  merely  by  approving  an  unlaw- 
ful arrest  after  it  had  been  made,  being  without  previous  knowledge  of  it,  and 
free  from  all  actual  malice,  he  cannot  be  subjected  to  exemplary  damages: 
Bosenkrans  v.  Barker,  115  111,  331;  56  Am.  Rep.  169;  Griind  v.  Van  Vkck, 
69  111.  478.  If  no  actual  damages  resulted  from  the  malicious  prosecution, 
there  can  be  no  award  of  exemplary  damages.  If  the  defendant  has  done 
no  actual  injury,  there  is  no  legal  reason  for  punishing  him:  ScJiippel  v,  Nor- 
ton, 38  Kan.  567. 

Wealth  of  Defendant. — The  injury  to  the  fame  or  reputation  of  the  ac- 
cused is  probably  greater  when  his  accuser  is  a  person  of  wealth  than  when 
he  is  of  humble  or  indigent  circumstances,  and  this  consideration  might  jus- 
tify the  admission  of  evidence  of  the  defendant's  pecuniary  condition  in  all 
cases;  but  at  all  events,  where  it  is  conceded  that  the  jury  may  award  exem- 
plary damages  by  way  of  punishment,  evidence  of  the  wealth  of  defendant 
must  necessarily  be  received  to  enable  them  to  determine  what  would  operate 
as  a  sufficient  punishment  in  the  case  before  them;  for  a  penalty  adequate  as 
a  punishment  of  a  man  of  small  or  moderate  fortune  would  have  no  punish- 
ing or  deterring  effect  upon  a  defendant  of  great  wealth:  Peck  v.  Small,  35 
Minn.  465;  Spear  v.  Hiles,  67  Wis.  350;  Wearer  v.  Page,  6  Cal.  681;  Cole- 
man V.  Allen,  79  Ga.  637;  11  Am.  St.  Rep.  449;  Whitfield  v.  Westhrook,  40 
Miss.  311;    Winnv.  Peckham,  42  Wis.  493. 

Mitigation  of  Damages.  — With  reference  to  the  actual  damages  suffered  by 
plaintiff,  there  can  generally  be  no  mitigation;  for  if  he  is  entitled  to  recover 
at  all,  he  is  entitled  to  compensation  for  whatever  he  has  suffered,  and  the 
amount  of  his  recovery  cannot  be  diminished  by  proof  of  defendant's  good 
faith,  or  of  anything  else  not  sufficient  to  make  out  a  complete  defense:  Fen- 
elon  V.  Butts,  63  Wis.  344;  Wilson  v.  Young,  31  Wis.  574.  The  previous  bad 
reputation  of  the  plaintiff  may  be  proved  in  mitigation,  because  the  injury 
resulting  to  him  from  the  prosecution  was  probably  less  than  if  his  reputa- 
tion had  previously  been  unquestioned:  Fitzgihhon  v.  Brovm,  43  Me.  169; 
Bacon  v.  Towne,  4  Gush.  247;  O'Brien  v.  Frasicr,  47  N.  J.  L.  349;  54  Am. 
Rep.  170;  Bosenkrans  v.  Barker,  115  111.  331;  56  Am.  Rep.  169.  All  evi- 
deuce  tending  to  disprove  malice  is  also  admissible  in  mitigation  of  exem- 
plary damages.  Therefore,  evidence  of  the  excitement  under  which  defendant 
labored  when  he  instituted  the  prosecution,  and  all  other  facts  and  circum- 
stances which  may  legitimately  be  considered  in  determining  whether  and 
to  what  extent  he  should  be  punished,  are  admissible  in  mitigation  of  damages: 
Carter  v.  StUJterland,  52  Mich.  697;  Bradner  v.  Faulkner,  93  N.  Y.  515. 


AMERICAN  STATE  REPOETS. 

Vol.   XXVII,   Packs  542-568. 
PEOPLE  V.  WEMPLE. 

[181  New  York,  64.] 

Taxation  of  foreign  corporations. 


542  People  v.  Wemple.  [New  York, 

question  were  in  the  old  code,  no  reference  to  those  of  the  pres- 
ent code  is  called  for;  but  the  latter,  in  the  respect  under  con- 
sideration, do  not  modify  the  rule  applicable  to  the  present 
case. 

These  views  lead  to  the  conclusion  that  the  defendant  was 
justified  in  his  refusal  to  accept,  under  the  contract,  the  title 
wliich  the  plaintififs  were  able  to  convey,  and  that  the  judg- 
ment should  be  affirmed.         

Abatement  of  Action  by  Death  of  Plaintiff.  —  At  common  law,  in  all 
actions  where  there  were  two  or  more  plaintififs,  the  death  of  one  of  them, 
pending  the  action,  was  an  abatement  of  the  action:  Haven  v.  Brown,  7 
Greenl.  421;  22  Am.  Dec.  208.  Gainer  v.  Oainer,  30  W.  Va.  390,  is  a  case 
in  which  the  action  abated  by  the  death  of  the  plaintiff.  Judicial  writs  do 
not  generally  abate  by  the  death  of  a  party,  but  it  is  otherwise  as  to  the 
original  writ:  Hanson  v.  Barnes,  3  Gill  &  J.  359;  22  Am.  Dec.  322,  and  note. 


People  v.  Wemple. 

[131  New  York,  64.1 

Taxation  —  Jurisdiction.  —  A  Corporation  Created  by  the  Laws  of 
Another  State,  but  doing  business  in  this  state,  is  subject  to  the  juris- 
diction of  the  oflQcer  whose  duty  it  is  to  determine  and  assess  the  amount 
of  taxes  which  the  corporations  are  bound  to  pay  to  the  state,  and  is  sub- 
ject to  taxation  as  well  as  a  domestic  corporation. 

Taxation  —  Jukisdiction  —  Tax  on  Foreign  Corporations. — If  a  corpo- 
ration created  by  the  laws  of  a  sister  state  employs  the  whole  or  any  part 
of  its  capital  here,  and  thus  has  the  benefit  and  protection  of  the  govern- 
ment and  laws  of  the  state  to  the  extent  of  the  capital  so  employed, 
there  is  no  reason  why  it  should  not  be  subject,  to  the  extent  of  such 
capital,  to  the  same  burdens  and  obligations  as  a  domestic  corporation. 
The  tax  is  imposed  for  the  privilege,  which  is  extended  to  it  by  the  stat- 
ute, of  doing  business  here  as  a  corporation  and  in  its  corporate  name. 

Constitutional  Law  —  Regulation  of  Commerce. — A  Statdte  Impos- 
ing A  Tax  upon  Corporations  created  in  another  state,  the  basis  of 
which  is  the  amount  or  portion  of  their  capital  in  use  in  this  state  in  the 
transaction  of  their  ordinary  business,  is  not  in  conflict  with  the  provis- 
ion of  the  constitution  of  the  United  States  conferring  upon  Congress  the 
power  to  regulate  commerce  between  the  states.  When  the  state  per- 
mits a  foreign  corporation  to  transact  business  within  its  limits  in  its 
cor[orate  name,  and  imposes  taxes  on  it  for  the  privilege,  this  is  not  a 
regulation  of  interstate  commerce,  but  a  lawful  exercise  of  the  power  of 
taxation  upon  a  corporation  that  for  the  time  being  is  within  its  juris- 
diction for  that  purpose. 

William  W.  MacFarland,  for  the  appellant. 
Charles  F.  Tabor,  attorney-general,  for  the  appellee. 


Feb.  1892.]  People  v.  Wemple.  543 

O'Brien,  J.  The  relator  is  a  corporation  organized  under 
the  laws  of  New  Jersey,  having  an  authorized  capital  of  five 
million  dollars,  four  million  of  which  has  been  issued.  On 
September  2,  1890,  the  comptroller  of  this  state,  in  pursuance 
of  chapter  361  of  the  Laws  of  1881,  fixed  and  determined  the 
amount  of  taxes  due  from  the  relator  to  the  state  for  the  three 
years  ending  November  1,  1889,  at  $2,303.42,  and  in  arriving 
at  this  result,  he  found  that  the  amount  of  its  capital  stock 
employed  by  the  relator  within  this  state  was  $100,000  for  the 
year  1887,  $1,333,333  for  the  year  1888,  and  $121,212  for  the 
year  1889.  No  question  appears  to  be  made  by  the  relator  in 
regard  to  the  correctness  of  the  comptroller's  action  in  estimat- 
ing and  fixing  the  amount  of  its  capital  in  use  in  this  state, 
or  in  determining  the  amount  of  the  tax  thereon,  if  it  is  liable 
for  any  tax  at  all.  The  relator's  sole  contention  on  this  branch 
of  the  case  is,  that  it  is  not  doing  business  within  the  state,  and 
hence  is  not  within  the  statute.  If  the  relator  is  within  the 
statute,  and  the  comptroller  had  jurisdiction  to  inquire  and 
determine  whether  the  relator  was  employing  any  part  of  its 
capital  in  business  within  this  state,  and  if  so,  the  amount, 
we  do  not  understand  that  the  relator  complains  of  the  dispo- 
sition made  of  the  facts  bearing  on  the  questions  of  value.  In 
regard  to  the  facts  bearing  on  the  question  whether  the  relator 
is  doing  business  within  this  state,  the  return  to  the  writ  of  cer- 
tiorari brought  to  review  the  action  of  the  comptroller  states 
that  it  "  consisted  in  part  of  maintaining  a  sales  agency  in  the 
city  of  New  York,  and  in  selling  the  product  of  its  mills  in 
this  state,  and  in  refining  crude  oil  within  this  state,  and  deliv- 
ering the  same  to  purchasers  therein,  and  maintaining  a  depot 
or  warehouse  in  the  state  of  New  York  for  the  storage  of  its 
products  therein,  and  in  keeping  on  deposit,  in  the  banks  in 
the  city  of  New  York,  large  sums  of  money  for  the  use  of  the 
relator  and  for  the  carrying  on  of  its  business;  that  during 
the  year  1887,  nearly  forty  per  cent  of  the  total  sales  of  prod- 
ucts by  the  relator  were  sales  made  in  the  state  of  New  York; 
and  during  the  year  1888,  over  thirty-three  and  one  third  per 
cent  of  the  total  sales  of  relator's  products  were  made  in  the 
state  of  New  York;  and  during  the  year  1889,  over  three  per 
cent  of  its  total  sales  were  made  in  the  state  of  New  York." 
It  further  appears  that  the  relator's  business  is  the  manufac- 
ture and  production  of  oil  from  cotton-seed,  and  refining  and 
Billing  the  same.  Its  principal  office  is  at  Camden,  New  Jer- 
sey, but  it  has  an  ofiice  or  agency  in  the  city  of  New  York. 


544  People  v.  Wemple.  [New  York, 

During  the  year  1888,  it  kept  in  banks  of  this  state,  for  use  in 
the  transaction  of  its  business,  $15,124,  and  during  the  year 
1889,  $88,773.74.  During  the  three  years  for  which  the  tax 
was  assessed,  it  sold  in  this  state  about  one  third  of  its  whole 
product.  There  can  be  no  doubt  that  a  corporation  created  by 
the  laws  of  another  state,  but  doing  business  in  this  state,  is 
subject  to  the  jurisdiction  of  the  officer  whose  duty  it  is,  under 
the  act  of  1881,  to  determine  and  assess  the  amount  of  taxes 
which  corporations  are  bound  to  pay  to  the  state,  and  is  sub- 
ject to  taxation  as  well  as  a  domestic  corporation.  The  basis 
of  the  tax  is  the  amount  or  portion  of  its  capital  in  use  here  in 
the  transaction  of  its  ordinary  business.  How  much  that  may 
be  in  any  particular  case  is  generally  a  question  of  fact,  to  be 
determined  by  the  comptroller  under  the  procedure  pointed 
out  by  the  statute.  There  is  no  injustice  or  hardship  in  such 
a  law.  If  a  foreign  corporation  or  a  corporation  created  by  the 
laws  of  a  sister  state  employs  the  whole  or  a  portion  of  its  cap- 
ital here,  and  thus  has  the  benefit  and  protection  of  the  gov- 
ernment and  laws  of  the  state  to  the  extent  of  the  capital  so 
employed,  there  is  no  reason  why  it  should  not  be  subjected, 
to  the  extent  of  the  capital  so  employed,  to  the  same  burdens 
and  obligations  as  a  domestic  corporation.  The  tax  is  not 
imposed  upon  its  property,  but  for  the  privilege  which  is  ex- 
tended to  it  by  the  state  of  doing  business  here  as  a  corpora- 
tion and  in  its  corporate  name.  Since  the  statute  has  been 
amended  so  as  to  make  the  amount  of  capital  used  in  this 
state  the  basis  of  the  tax,  the  amount  of  business  transacted 
here  is  of  much  less  importance  than  formerly.  If  but  a  very 
small  part  of  the  corporate  business  is  done  here,  and  but  a 
small  part  of  the  capital  employed  here,  then  the  tax  is  corre- 
spondingly light.  The  facts  in  this  case  show  that  during  the 
year  for  which  the  assessment  was  made,  the  relator  employed 
a  portion  of  its  capital  and  conducted  a  substantial  part  of  its 
business  operations  within  this  state,  and  that  was  enough  to 
subject  it  to  the  obligation  to  defray  some  part  of  the  public 
burdens.  The  statute  in  question,  in  its  application  to  corpo- 
rations created  by  the  laws  of  another  state  and  doing  busi- 
ness here,  has  been  frequently  construed  by  this  court,  and  the 
principles  applicable  to  such  cases  stated.  The  facts  of  this 
case  bring  it  within  the  rule  of  liability  enunciated  in  these 
cases:  People  v.  Equitable  Trust  Co.,  96  N.  Y.  387;  People  v. 
Horn  Silver  Mining  Co.,  105  N.  Y.  76;  People  v.  Wemple,  129 
N.  Y.  548. 


Feb.  1892.]  People  v.  Wemple.  545 

The  statute  under  which  the  tax  in  question  was  imposed  is 
not  in  conflict  with  the  provisions  of  the  federal  constitution, 
wliich  confers  upon  Congress  the  exclusive  power  to  regulate 
conamerce  between  the  states.  Though  the  relator  is  a  New 
Jersey  corporation,  its  principal  manufacturing  operations  are 
carried  on  in  the  southern  or  cotton-producing  states.  For 
the  purpose  of  disposing  of  its  product,  it  is  necessary  or  con- 
venient to  establish  and  keep  an  agency  in  the  city  of  New 
York,  and  to  employ  some  part  of  its  capital  here,  though  it 
may  be  a  comparatively  small  part,  and  to  sell  a  considerable 
part  of  the  product  of  its  factories  here.  All  this  it  does  in  its 
corporate  name  and  character.  Tlie  state  has  the  power  to 
exclude  corporations  of  other  states  from  doing  business  within 
its  jurisdiction.  If,  however,  it  permits  them  to  come  here 
and  transact  their  business,  it  may  impose  a  tax  upon  them  for 
this  privilege,  and  this  is  not  a  regulation  by  the  state  of  inter- 
state commerce,  but  a  lawful  exercise  of  the  power  of  taxation 
upon  corporate  bodies  that  for  the  time  being  are  within  its 
jurisdiction  for  that  purpose.  If  the  contention  of  the  learned 
counsel  for  the  relator  should  prevail,  then  any  manufacturing 
corporation  in  other  states,  or  even  in  a  foreign  country,  could 
come  here  and  establish  an  office  or  agency,  and  transact  a  part, 
or  even  the  whole,  of  its  business  here,  and  escape  taxation 
entirely,  upon  the  ground  that  it  was  engaged  in  selling  some 
part  of  its  product  in  other  states  or  in  foreign  countries,  and 
therefore  was  engaged  in  interstate  or  foreign  commerce, 
within  the  meaning  of  the  federal  constitution.  The  com- 
mercial clause  of  the  federal  constitution  does  not  preclude 
the  states  from  exercising  the  power  of  taxation  in  such  a  case 
as  is  disclosed  by  this  record.  The  cases  in  which  statutes 
enacted  by  the  states  have  been  held  invalid  as  regulations  of 
commerce  were  stated  by  Mr.  Justice  Field  in  Sherlock  v. 
Ailing^  93  U.  S.  102.  As  those  legislative  acts  which  "im- 
posed a  tax  upon  some  instrument  or  subject  of  commerce, 
or  exacted  a  license  fee  from  parties  engaged  in  commercial 
pursuits,  or  created  an  impediment  to  the  free  navigation  of 
some  public  waters,  or  prescribe  conditions  in  accordance  with 
which  commerce  in  particular  articles,  or  between  particular 
places,  was  required  to  be  conducted."  They  are  all  cases 
which  operate  directly  upon  commerce.  In  another  part  of  the 
same  opinion  the  learned  judge  explains  the  scope  and  mean- 
ing of  the  provision  conferring  upon  Congress  exclusive  power 
Am.  St.  Kkp.,  Vol.  XXVII.  —  3') 


546  People  v.  Wemple.  [New  York, 

to  regulate  commerce.  "In  conferring  upon  Congress  the  reg- 
ulation of  commerce,  it  was  never  intended  to  cut  the  states  off 
from  legislating  on  all  subjects  relating  to  the  health,  life,  and 
safety  of  its  citizens,  though  the  legislation  might  indirectly 
affect  the  commerce  of  the  country.  Legislation  in  a  great 
variety  of  ways  may  affect  commerce,  and  persons  engaged  in 
it,  without  constituting  a  regulation  of  it,  within  the  meaning 
of  the  constitution."  The  only  limitation  upon  the  power  of  a 
state  to  exclude  a  foreign  corporation  from  doing  business 
within  its  limits,  or  to  exact  conditions  for  such  a  privilege, 
arises  where  the  corporation  is  in  the  employ  of  the  federal 
government,  or  where  its  business  is  strictly  commerce,  inter- 
state or  foreign:  Pensncola  Tel.  Co.  v.  Western  Union  Tel.  Co.j 
96  U.  S.  12;  Pembina  etc.  Mining  Co.  v.  Pennsylvania,  125 
U.  S.  181,  190. 

The  cases  are  numerous  in  the  highest  federal  court  where 
legislation  such  as  that  now  under  consideration  has  been 
held  to  be  valid,  and  none  of  the  cases  cited  by  the  learned 
counsel  for  the  relator  hold  that  a  state  statute  imposing  a  tax 
upon  a  manufacturing  corporation  of  another  state  for  the 
privilege  of  doing  business  here  is  invalid:  Stale  Freight  Tax 
Cases.,  15  Wall.  232;  State  Tax  on  Gross  Receipts,  15  Wall.  284; 
Delaivare  R.  R.  Tax  Case,  18  Wall.  208;  Erie  R'y  Co.  v.  Pennsyl- 
vania, 21  Wall.  492;  Philadelphia  Fire  Ass'n  y.  New  York,  119 
U.  S.  119;  Smith  v.  Alabama,  124  U.  S.  482;'  Home  Ins.  Co.  v. 
New  York,  134  U.  S.  599;  Marye  v.  Baltimore  and  Ohio  R.  R., 
127  U.  S.  123.  The  property  of  a  foreign  corporation  engaged 
in  foreign  or  interstate  commerce  may  be  taxed  equally  with 
like  property  of  a  domestic  corporation  engaged  in  the  same 
business;  but  a  tax  or  other  burden  imposed  upon  the  prop- 
erty of  either  corporation  because  it  is  used  to  carry  on  that 
commerce,  or  upon  the  transportation  of  persons  or  property, 
or  for  the  navigation  of  the  public  waters  over  which  the 
transportation  is  made,  is  invalid  and  void,  as  interference 
with  and  obstruction  of  the  power  of  Congress  in  the  regula- 
tion of  commerce:  Gloucester  Ferry  Co.  v.  Pennsylvania,  114 
U.  S.  211. 

The  obligation  imposed  upon  the  relator  by  the  act  of  1881, 
to  pay  a  tax  to  the  state  treasury  as  a  condition  of  enjoying 
the  privilege  of  transacting  business  here,  does  not,  in  our 
opinion,  conflict  with  any  provision  of  the  federal  constitution. 

The  judgment  of  the  general  term  should  be  aflSrmed, 
with  costs. 


Feb.  1892]  People  v.  Wemple.  547 

Interstate  Commerce,  Constitutionality  of  State  Regulations  of.  — 
Cojifitil utional  Provisions.  —  One  of  the  powers  conferred  upon  the  Conf;ress  of 
thf  'Jiiited  States  by  section  8  of  article  1  of  the  national  constitution  is  that 
of  ret;ulating  commerce  "  with  foreign  nations,  and  among  the  several  states, 
and  with  the  Indian  tribes."  Among  the  limitations  of  the  powers  of  the  in- 
dividual states  contained  in  section  10  of  the  same  article  are,  "that  no  state 
sliall,  without  the  consent  of  the  Congress,  lay  any  imposts  or  duties  on  im- 
ports or  exports,  except  what  may  be  absolutely  necessary  for  executing  its 
inspection  laws,  and  the  net  produce  of  all  duties  and  imposts  laid  by  any 
state  on  imports  or  exports  shall  be  for  the  use  of  the  treasury  of  the  United 
States,  and  all  such  laws  shall  be  subject  to  the  revision  and  control  of  Con- 
gress," and  "no  state  shall,  without  the  consent  of  Congress,  lay  any  duty 
on  tonnage."  The  object  of  this  note  is  to  aid  in  determining  what  legisla- 
tion on  the  part  of  the  states  may  be  disregarded  and  pronounced  invalid, 
either  because  it  is  upon  a  subject  committed  to  Congress  by  section  8.  or 
upon  which  the  states  are  expressly  forbidden  to  act  by  section  10;  in  other 
words,  in  determining  what  state  legislation  is  invalid  for  the  reason  that  it 
interferes  with  interstate  commerce  or  with  commerce  with  a  foreign  nation. 

Concur  I  eiit  Authority  of  Congress  and  of  the  State  Lcijid<ilures.  — One  of  the 
most  difficult  questions  to  decide  was,  whether  or  not  the  clauses  of  the  con- 
stitution which  we  have  quoted  left  any  concurrent  power  in  the  states  over 
the  subjects  to  which  those  clauses  relite.  With  respect  to  the  prohibitions 
mentioned  in  section  10,  there  could  be  no  doubt  that  they  excluded  or  an- 
nulled all  state  action  except  upon  the  conditions  there  prescribed.  But  the 
power  giveu  Congress  by  section  8,  "  to  regulate  commerce  with  foreign  na- 
tions, and  among  the  several  states,  and  with  the  Indian  tribes,"  is  not  in 
terms  exclusive;  and  if  the  power  of  the  states  to  act  upon  tlie  same  subject 
is  excluded,  or  to  the  extent  to  which  it  is  excluded,  the  exclusion  results 
from  the  impossibility  of  there  existing  two  sovereigns  having  at  the  same 
time  the  right  to  regulate  and  control  the  same  subject-matter.  There  can 
never  have  been  any  reasonable  doubt  that  when  Congress  exercised  to  any 
extent  the  power  given  it  to  regulate  commerce,  whatever  it  did  within  the 
limits  of  the  power  conceded  to  it  was  paramount  to  any  state  action  and 
be^'ond  the  reach  of  any  state  annulment.  But  many  regulations  which 
directly  or  indirectly  affect  commerce  with  foreign  nations  or  among  the 
several  states  may  be  enacted  which  do  not  conflict  with  any  pre-existincr 
regulation  of  commerce,  and  against  the  policy  of  which  the  national  legisla- 
ture has  never  spoken.  Do  these  regulations  remain  in  force  until  the  na- 
tional legislature  prescribes  some  rule  inconsistent  with  them  ?  or  does  the 
mere  grant  of  the  power  to  Congress  exclude  all  state  action,  whether  Con- 
gress thinks  proper  to  exercise  its  powers  or  not?  "The  doctrine  now  firmly 
established  is,  tliat  where  tlie  3ul)ject  upon  which  Congress  can  act  under  its 
commercial  power  is  local  in  its  nature  or  sphere  of  operation,  such  as  harbor 
pilotage,  the  improvement  of  harbors,  the  establishment  of  beacons  and  bunys 
to  guide  vessels  in  and  out  of  port,  the  construction  of  bridges  over  navigable 
rivers,  the  erection  of  wliarves,  piers,  and  docks,  and  the  like,  which  can  be 
properly  regulated  only  by  s[)ecial  provisions  adapted  to  their  localities,  the 
state  can  act  until  Congress  interferes  and  supersedes  its  authority;  but  where 
the  subject  is  national  in  its  character,  and  admits  and  requires  uniformity 
of  regulation,  affecting  alike  all  the  states,  such  as  transportation  between 
the  states,  including  the  importation  of  goods  from  one  state  into  another. 
Congress  can  alone  act  upon  it  and  provide  the  needed  regulations.  The 
absence  of  any  law  of  Congress  on  the  subject  is  equivalent  to  its  declaration 


548  People  v.  Wemple.  [New  York, 

that  commerce  in  that  matter  shall  be  free.  Thus  the  absence  of  regulations 
as  to  interstate  commerce  with  reference  to  any  particular  subject  is  taken 
as  a  declaration  that  the  importation  of  that  article  into  the  states  shall  be 
unrestricted":  Bowmanv.  Chicago  etc.  RyCo.,  125  U.  S.  507;  Lekyv.  Hardin, 
135  U.  S.  108;  Welton  v.  State  of  Missouri,  91  U.  S.  275;  Gorinty  of  Mohile  v. 
Kimball,  102  U.  S.  691;  Bayg  v.  Wilmington  etc.  R.  R.  Co.,  109  N.  C.  279;  26 
Am.  St.  Rep.  569. 

Considering  the  objections  made  to  a  statute  of  the  state  of  Mississippi,  pro- 
viding for  the  improvement  of  the  river,  harbor,  and  bay  of  Mobile,  Mr.  Jus- 
tice Field,  sppaking  for  the  supreme  court  of  the  United  States,  said:  "The 
objection  that  the  law^  of  the  state,  in  authorizing  the  improvement  of  the 
harbor  of  Mobile,  trenches  upon  the  commercial  power  of  Congress,  assumes 
an  exclusion  of  state  authority  from  all  subjects  in  relation  to  which  that 
power  may  be  exercised,  not  warranted  by  the  adjudications  of  this  court, 
notwithstanding  the  strong  expressions  used  by  some  of  its  judges.  That 
power  is  indeed  without  limitation.  It  authorizes  Congress  to  prescribe  the 
conditions  upon  which  commei'  e  in  all  its  forms  shall  be  conducted  between 
our  citizens  and  the  citizens  or  su^jjcts  of  other  countries,  and  between  citizens 
of  the  several  states,  and  to  adopt  measures  to  promote  its  growth  and  insure  its 
safety.  And  as  coiniiierce  enibi-aces  navigation,  the  improvement  of  harbors  and 
bays  along  our  coast,  and  of  navigable  rivers  within  the  states  connecting  with 
them,  falls  within  the  power.  The  subjects,  indeed,  upon  which  Congress 
can  act  under  this  power  are  of  infinite  variety,  requiring  for  their  successful 
management  different  plans  or  modes  of  treatment.  Some  of  them  are  na- 
tional in  their  character,  and  admit  and  require  uniformity  in  their  regula- 
tion, affecting  alike  all  the  states;  others  are  local,  or  are  mere  aids  to 
commerce,  and  can  only  be  properly  regulated  by  provisions  adapted  to  their 
special  circumstances  and  localities.  Of  the  former  class  may  be  mentioned 
all  that  portion  of  commerce  with  foreign  countries  or  between  the  states 
which  consists  in  the  transportation,  purchase,  sale,  and  exchange  of  com- 
modities. Here  there  can,  of  necessity,  be  only  one  system  or  plan  of  regu- 
lations, and  that  Congress  alone  can  prescribe.  Its  non-action  in  such  cases, 
with  respect  to  any  particular  commodity  or  mode  of  transportation,  is  a 
declaration  of  its  purpose  that  the  commerce  in  that  commodity  or  by  that 
means  of  transportation  shall  be  free.  There  would  otherwise  be  no  security 
against  conflicting  regulations  of  different  states,  each  discriminating  in  fa.  or 
of  its  own  products  and  citizens,  and  against  the  products  and  citizens  of 
other  states.  And  it  is  a  matter  of  public  history  that  the  object  of  vesting 
in  Congress  the  power  to  regulate  commerce  with  foreign  nations  and  among 
the  states  was  to  insure  unitormity  of  regulation  against  conflicting  and  dis- 
criminating state  legislation  ":  Mobile  County  v.  Kimball,  102  U.  S.  696. 

There  may,  in  some  instances,  be  a  difficulty  in  determining  whether  the 
regulation  in  question  is  upon  a  subject  "national  in  its  character, "  and 
which  "admits  and  requires  uniformity  of  regulation,  affecting  alike  all  the 
states  ";  but  if  it  is  ascertained  to  belong  to  that  class,  then  it  is  now  estab- 
lished that  it  must  be  disregarded.  "  As  the  grant  of  power  to  regulate  com- 
merce among  the  states,  so  far  as  one  system  is  required,  is  exclusive,  the 
states  cannot  exercise  that  power  without  the  consent  of  Congress,  and  in  the- 
absence  of  legislation,  it  is  left  for  the  courts  to  determine  wlien  state  action 
does  or  does  not  amount  to  such  exercise;  or  in  other  words,  what  is  or  is  not 
a  regulation  of  such  commerce.  When  that  is  determined,  the  controversy 
is  at  an  end  ":  Leisy  v.  Hardin,  135  U.  S.  100. 

Speaking  upon  the  same  topic,  Mr.  Justice  Bradley,  in  Brotvn  v.  Houston,. 


Feb.  r  )2.]  People  v.  Wemple.  549 

114  U.  S.  630,  said:  "The  power  to  regulate  commerce  among  the  several 
states  is  granted  to  Congress  in  terms  as  absolute  as  is  the  power  to  regulate 
commerce  with  foreign  nations.  If  not  in  all  respects  an  exclusive  power,  if 
in  the  abaeuce  of  congressional  action  the  states  may  continue  to  regulate 
matters  of  local  interest  only  incidentally  affecting  foreign  and  interstate 
commerce,  such  as  pilots,  wharves,  harbors,  roads,  bridges,  tolls,  freights, 
etc.,. still,  according  to  the  rule  laid  down  in  Cooky  v.  Board  of  Wai-dens,  12 
How.  319,  the  power  of  Congress  is  exclusive  wherever  the  matter  is  national 
in  its  character,  or  admits  of  one  uniform  sj'stem  or  plan  of  regulation;  and 
is  certainly  so  far  exclusive  that  no  state  has  power  to  make  any  law  or  regu- 
lation which  will  affect  the  free  and  unrestrained  intercourse  and  trade 
between  the  states,  as  Congress  has  left  it,  or  which  will  impose  any  dis- 
criminating burden  or  tax  upon  the  citizens  or  products  of  other  states  com- 
ing or  brought  within  its  jurisdiction.  All  laws  and  regulations  are  restrictive 
of  natural  freedom  to  some  extent,  and  where  no  regulation  is  imposed  by 
the  government  which  has  the  exclusive  power  to  regulate,  it  is  an  indication 
of  its  will  that  the  matter  shall  be  left  free.  So  long  as  Congress  does  not 
pass  any  law  to  regulate  commerce  among  the  several  states,  it  thereby  indi- 
cates its  will  that  that  commerce  shall  be  free  and  untrammeled;  and  any 
regulation  of  the  subject  by  tlie  states  is  repugnant  to  such  freedom.  " 

The  following  state  regulations  have  been  held  to  affect  matters  national 
in  their  character,  and  admitting  and  requiring  uniformity  of  regulation,  and 
therefore  to  be  invalid,  though  not  in  conflict  with  any  regulation  prescribed 
by  Congress:  Imposing  taxes  on  any  passenger  from  a  foreign  country  landing 
at  a  port  of  this  state:  People  v.  Coinjmijide  Generale,  107  U.  S.  59;  prohibit- 
ing common  carriers  from  bringing  intoxicating  liquors  from  any  other  state 
or  territory  witliout  first  being  furnished  with  a  certificate  as  prescribed 
in  the  state  statute:  Bowman  v.  Chicat/o  Jc  N.  W.  Railway,  12.5  U.  S.  508;  exact- 
ing the  payment  of  a  specific  sum  per  week  or  month  from  all  persons  selling 
merchandise  by  sample:  Bobbins  v.  Shelby  Taxing  District,  120  U.  S.  498;  taxing 
freight  transported  from  state  to  state:  State  Freight  Tax  Cases,  15  Wall.  232; 
granting  exclusive  rights  to  establish  and  maintain  electric  telegraph  lines: 
Pensacola  Tel.  Co.  v.  W.  U.  Tel.  Co.,  9(5  U.  S.  1;  or  to  navigate  all  the  waters 
within  the  jurisdiction  of  the  states,  with  boats  moved  by  lire  or  steam:  Oib- 
bonsv.  Ogden,  9  Wheat.  1;  requiring  all  persons  engaged  in  the  transportation 
of  passengers  among  the  states  to  give  all  persons  traveling  within  the  state, 
upon  vessels  employed  in  such  business,  equal  rights  and  privileges  in  all 
parts  of  the  vessel,  without  distinction  on  account  of  race  or  color:  /{all  v. 
De  Ciiir,  95  U.  S.  485;  imposing  a  tax  on  the  gross  receipts  of  railroads  for  the 
carriage  of  freight  and  passengers  into,  out  of,  or  through  the  state:  Fargo  v. 
Michigan,  121  U.  S.  230;  or  upon  the  gro^s  receipts  of  a  steamship  company, 
derived  from  the  transjiortation  of  persons  and  property  by  sea  between  dif- 
ferent states:  Philadelphia  S.  S.  Co.  v.  Pennsylvania,  122  U.  8.  32(i.  Various 
other  regulations  of  the  character  here  under  consideration  are  reierred  to  in 
other  parts  of  this  note,  umler  appropriate  headings.  The  views  ultimately 
prevailing  in  the  supreme  court  of  the  United  States  upon  this  subject  were 
tirst  most  distinctly  promulgated  by  Judge  Curtis  i  i  his  opinion  in  Coolei/  v. 
Boardof  Wardens,  12  How.  318,  in  which  he  said:  "  'J'he  diversities  of  opniini, 
therefore,  which  have  existed  upon  this  subject,  have  arisen  from  the  different 
views  taken  of  the  nature  of  this  power.  But  when  tlie  nature  of  a  power 
like  this  is  spoken  of,  when  it  is  said  that  tiie  nature  of  the  power  requires 
that  it  should  be  exercised  exclusively  by  Co  i^rcss,  it  must  be  intended  to 
refer  to  the  subjects  of  that  power,  and  to  say  they  are  of  such  a  nature  as 


550  People  v.  Wemple.  [New  York, 

to  require  exclusive  legislation  by  Congress.  Now,  the  power  to  regulate 
commerce  embraces  a  vast  field,  containing  not  only  many,  but  exceedingly 
various,  subjects,  quite  unlike  in  their  nature;  some  imperatively  demanding 
a  single  uniform  rule,  operating  equally  on  the  commerce  of  the  United  States 
in  every  port;  and  some,  like  the  sul)ject  now  in  question,  as  imperatively 
demanding  that  diversity  which  alone  can  meet  the  local  necessities  of  navi- 
gation. Either  absolutely  to  affirm  or  deny  that  the  nature  of  this  power 
requires  exclusive  legislation  by  Congress  ia  to  lose  sight  of  the  nature  of 
the  subjects  of  this  power,  and  to  assert,  concerning  all  of  them,  what  ia 
really  applicable  but  to  a  part.  Whatever  subjects  of  this  power  are  in  their 
nature  national,  or  admit  only  of  one  uniform  system  or  plan  of  regulation, 
may  justly  be  said  to  be  of  such  a  nature  as  to  require  exclusive  legialatioa 
by  Congress." 

The  ultimate  views  of  the  supreme  court  upon  this  subject,  together  with 
the  authorities  supporting  them,  are  well  represented  by  the  following  extract 
from  the  opinion  of  Mr.  Justice  Bradley,  speaking  for  the  court  in  Rohbins  v. 
Sltelhy  Taxing  D'lst.,  120  U.  S.  492:  "  1.  The  constitution  of  the  United  States 
having  given  to  Congress  the  power  to  regulate  commerce,  not  only  with  for- 
eign nations,  but  among  the  several  states,  that  power  is  necessarily  exclusive 
whenever  the  subjects  of  it  are  national  in  their  character,  or  admit  only  of 
one  uniform  system  or  plan  of  regulation.  This  was  decided  in  the  case  of 
Cooley  V.  Board  of  Wardens  of  the  Port  of  Philadelphia,  12  How.  299,  319,  and 
was  virtually  involved  in  the  case  of  Gibbons  v.  Ojden,  9  Wheat.  1,  and  has 
been  confirmed  in  many  subsequent  cases,  amongst  others  in  Brown  v.  Mary- 
land, 12  Wheat.  419;  The  Passeng'^r  Ca^es,  7  How.  283;  Crandall  v.  Nerada, 
6  Wall.  35,  42;  Ward  v.  Maryland,  12  Wall.  418,  430;  State  Freight  Tax  Cases, 
15  Wall.  232,  279;  Henderson  v.  Mayor  of  New  York,  92  U.  S.  259,  272;  Rail- 
road Co.  V.  Husen,  95  U.  S.  465,  469;  Mobile  v.  Kimball,  102  U.  S.  691,  697; 
Gloucester  Ferry  Co.  v.  Penn^yloaida,  114  U.  S.  196,  203;  Wabash  etc.  R'y  Co. 
V.  Illinois,  118  U.  S.  557.  2.  Another  established  doctrine  of  tbis  court  is, 
that  where  the  power  of  Congress  to  regulate  is  exclusive,  the  failure  of  Con- 
gress to  make  express  regulations  indicates  its  will  that  the  subject  shall  be 
left  free  from  any  restrictions  or  impositions;  and  any  regulation  of  the  sub- 
ject by  the  states,  except  in  matters  of  local  concern  only,  as  hereafter  men- 
tioned, is  repugnant  to  such  freedom.  This  was  held  by  Mr.  Justice  Johnson 
in  Gibbon's  v.  Ogden,  9  Wheat.  1,  222,  by  Mr.  Justice  Grier  in  the  Passenger 
Cases,  7  How.  283,  462,  ami  has  been  affirmed  in  subsequent  cases:  State 
Freight  Tax  Cases,  15  Wall.  232,  279;  Railroad  Co.  v.  Husen,  95  C.  S.  465, 
469;  Welton  v.  Missouri,  91  U.  S.  275,  282;  Mobile  v.  Kimball,  102  U.  S.  691, 
697;  Brotonv.  Houston,  114  U.  S.  622,  631;  Walling  v.  Michigan,  116  U.  S. 
446,  455;  Pickard  v.  Pullman  Southern  Car  Co.,  117  U.  S.  34;  Wabash  etc 
R'y  Co.  V.  Illinois,  118  U.  S.  557.  3.  It  is  also  an  established  principle,  as 
already  indicated,  that  the  only  way  in  which  commerce  between  the  states 
can  be  legitimately  affected  by  state  laws  is,  when,  by  virtue  of  its  police 
power,  and  its  jurisdiction  over  persons  and  property  within  its  limits,  a 
state  provides  for  the  security  of  the  lives,  limbs,  health,  and  comfort  of  per- 
sons and  the  protection  of  property;  or  when  it  does  those  things  which  may 
otherwise  incidentally  affect  commerce,  such  as  the  establishment  and  regu- 
lation of  highways,  canals,  railroads,  wharves,  ferries,  and  other  commercial 
facilities;  the  passage  of  inspection  laws  to  secui'e  the  due  quality  and  meas- 
ure of  products  and  commodities;  the  passage  of  laws  to  regulate  or  restrict 
the  sale  of  articles  deemed  injurious  to  the  health  or  morals  of  the  commu- 
nity; the  imposition  of  taxes  upon  persons  residing  within  the  state  or  belong- 


Feb.  1892.]  People  v.  Wemple.  551 

ing  to  its  population,  and  npon  avocations  and  employments  pursued  therein, 
not  directly  connected  with  foreign  or  interstate  commerce,  or  with  some 
other  employment  or  business  exercised  under  authority  of  the  coustitutioa 
and  laws  of  the  United  States;  and  the  imposition  of  taxes  upon  all  property 
within  the  state  mingled  with  and  forming  part  of  the  great  mass  of  prop- 
erty therein.  But  in  making  such  internal  regulations,  a  state  cannot  impose 
taxes  upon  persona  passing  through  the  state,  or  coming  into  it  merely  for 
a  temporary  purpose,  especially  if  connected  with  interstate  or  foreign  com- 
merce; nor  can  it  impose  such  taxes  upon  property  imported  into  the  state 
from  abroad  or  from  another  state,  and  not  yet  become  part  of  the  commoa 
mass  of  property  therein;  and  no  discrimination  can  be  made,  by  any  such 
regulations,  adversely  to  the  persons  or  property  of  other  states;  and  no  reg- 
alations  can  be  ma'le  directly  affecting  interstate  commerce.  Any  taxation 
or  regulation  of  the  latter  character  would  be  an  unauthorized  interference 
with  the  power  given  to  Congress  over  the  subject." 

Among  the  state  regulations  incidentally  affecting  interstate  commerce, 
which  have  been  held  to  be  enforceable  and  valid,  on  the  ground  that  they 
were  local  rather  than  national  in  their  scope  and  object,  or  related  generally 
to  the  riglits,  duties,  and  liabilities  of  citizens,  and  afifected  the  operations 
of  foreign  or  interstate  commerce  only  indirectly  or  remotely,  are  the  follow- 
ing: Statutes  creating  liabilities  for  marine  torts,  and  permitting  their  enforce- 
ment after  the  death  of  the  person  injured:  Sherlock  v.  Ailing,  93  U.  S.  99; 
Steamboat  Co.  v.  Ch'ise,  16  Wall.  522;  or  prohibiting  the  floating  of  loose  saw- 
logs  in  a  navigable  river  within  the  state,  **  without  the  same  being  rafted  or 
joined  together  or  inclosed  in  boats,  and  under  the  control,  supervision,  and 
pilotage  of  men  especially  placed  in  charge  of  the  same  and  actually  thereon  ": 
Craig  v.  Kline,  65  Pa.  St.  399.  Other  local  regulations  which  are  permitted 
to  incidentally  affect  interstate  and  foreign  commerce  are  mentioned  in  dif- 
ferent parts  of  this  note,  tlie  principal  of  which  may  be  found  under  the 
headings,  "Navigation  —  Rivers,  Obstruction  of,"  "Ferries,"  "Wharfage 
Fees,"  "Pilots  and  their  Charges,"  "Regulation  of  Common  Carriers," 
"The  Police  Power  and  Interstate  Commerce,"  "Quarantine  Laws,"  etc. 

I^eio  Subjects  and  Instrumentalities  of  Commerce.  —  The  power  given  to  Con- 
gress to  regulate  commerce  is  not  restricted  to  commerce  and  its  instru- 
mentalities existing  at  the  time  of  the  adoption  of  the  constitution,  but 
extends  to  all  subjects  of  commerce  and  all  means  of  carrying  it  on,  whether 
known  or  anticipated  when  the  constitution  was  adopted  or  not.  Hence, 
though  an  invention  is  recent,  yet  if  it,  as  in  the  case  of  the  electric  telegraph, 
becomes  one  of  the  instrumentalities  of  commerce,  any  state  regulation  of  it, 
or  of  its  use  which  amounts  to  a  regulation  of  commerce,  is  prohibited:  Pensa^ 
cola  Tel.  Co.  v.  Wedern  Union  Td.  Co.,  96  U.  S.  1;  Ratter  man  v.  Western 
Union  Tel.  Co.,  127  U.  S.  411;  Western  Union  TeL  Co.  v.  Atlantic  Tel.  Co.,  5 
Nev.  102;  Yates  v.  Milwaukee,  10  Wall.  497. 

What  is  Commerce.  —  "  Commerce  undoubtedly  is  traffic,  but  it  is  something 
more:  it  is  intercourse.  It  describes  the  commercial  intercourse  between 
nations  and  parts  of  nations,  in  all  its  branches,  and  is  regulated  by  pre- 
scribing rules  for  carrying  on  that  intercourse";  and  it  therefore  includes 
navigation  by  or  through  which  commerce  is  carried  on  between  two  or  more 
states  or  with  a  foreign  nation:  Oibbons  v.  Ogden,  9  Wheat.  1;  Moor -v.  Veazie, 
32  Me.  343;  52  Am.  Dec.  655;  Veazie  v.  Moor,  14  How.  568.  "Commerce  is 
a  term  of  tlie  largest  import.  It  comprehends  intercourse  for  the  purposes  of 
trade  in  any  and  all  its  forms,  including  transportation,  purchase,  sale,  and 
exchange  of  commodities  between  the  citizens  of  our  country  and  the  citixens- 


^-32  People  v.  Wemple.  [New  York, 

or  subjects  of  other  countries,  or  between  citizens  of  different  states.  The 
power  to  regulate  it  embraces  all  the  instruments  by  which  such  commerce 
may  be  conducted  ":  Welton  v.  State  of  Missouri,  ^\  U.  S.  280.  "Commerce 
is  the  interchange  or  mutual  change  of  goods,  productions,  or  property  of  any 
kind,  between  nations  or  individuals.  Transportation  is  the  means  by  which 
commerce  is  carried  on;  without  transportation,  there  could  be  no  commerce 
between  nations  or  among  states.  Any  regulation  of  the  transportation  of 
interstate  commerce,  whether  it  be  upon  the  high  seas,  the  lakes,  the  rivers, 
or  upon  railroads  or  other  artificial  channels  of  communication  affecting  cotn- 
merce,  operates  as  a  regulation  of  commerce  itself ":  Council  Bluffs  v.  Kansas 
City  etc.  R.  R.  Co.,  45  Iowa,  338;  24  Am.  Rep.  773.  It  is  obvious  that  if  the 
several  states  could  regulate  transportation  or  the  other  means  by  which 
commerce  must  be  or  is  ordinarily  carried  on,  they  could  thereby  indirectly 
regulate  commerce  itself.  Therefore  no  state  regulation  of  the  instrumen- 
talities of  interstate  commerce  is  admissible.  Hence  a  vessel  engaged  in 
navigation  between  different  states,  or  telegraph  or  telephone  companies  em- 
ployed in  interstate  commerce,  are,  except  as  to  purely  domestic  commerce, 
not  affected  by  state  regulations  unless  local  in  their  character,  and  such  as 
must  necessarily  be  included  with  the  police  powers  of  the  state:  The  Daniel 
Ball,  10  Wall.  557;  Leloup  v.  Mobile,  127  U.  S.  640;  In  re  Pennsylvania  Tele- 
jihone  Co.,  48  N.  J.  Eq.  91;  ante,  p.  462. 

Commerce  when  Begins  so  as  to  Protect  Subjects  of.  —  The  fact  that  articles 
or  a  class  of  articles  are  proper  subjects  of  interstate  commerce,  or  that  they 
are  intended  to  be  employed  in  such  commerce,  does  not  relieve  them  from 
the  authority  of  the  state  to  make  regulations  concerning  them.     When  they 
begin  to  move  from  one  state  to  another  as  articles  of  trade,  then  commerce 
commences:  Tlie  Daniel  Ball,  10  Wall.  557.     If  goods  are  in  course  of  trans- 
portation through  a  state,  though  detained  within  it  by  some  cause  of  delay, 
"  they  are  in  the  course  of  commercial  transportation,  and  are  clearly  under 
the  protection  of  the  constitution.     There  must  be  a  point  of  time  when  they 
cease  to  be  governed  exclusively  by  the  domestic  law,  and  begin  to  be  gov- 
erned and  protected  by  the  national  law  of  commercial  regulation,  and  that 
moment  seems  to  us  to  be  the  legitimate  one  for  this  purpose,  in  which  they 
commence  their  final  movement  for  transportation  from  the  state  of  their 
oiigin  to  that  of  their  destination  ":  Coe  v.  Errol,  116  U.  S.  525.     Until  this 
moment  arrives,  they  cannot  be  within  the  protection  "of  the  national  law 
of  commercial  regulation,"  though  there  is  an  intention  to  export  them,  and 
they  have  been  brought  from  the  place  of  their  growth  or  manufacture  to 
some  point  or  station  for  the  purpose  of  exporting  them  thence  by  railroad  or 
some  other  means  of  transportation  there  available:  Coer.  Errol,  116  U.  S. 
517;  Turpin  v.   Burgess,  117  U.  S.  504;  Turner  v.  Maryland,  107  U.  S.  38. 
If  an  article  of  commerce  is  such  that  the  state,  in  the  lawful  exercise  of  its 
police  powers,  may  prohibit  its  manufacture  within  the  state,  on  the  ground 
that  it  is  injurious  to  the  health  or  morals  of  its  inhabitants,  or  for  some 
other  sufficient  reason,  the  exercise  of  the  police  power  cannot  be  avoided  or 
invalidated  by  the  claim,  whether  true  or  false,  that  the  articles,  if  their 
manufacture  is  allowed  by  law,  will  become  subjects  of  interstate  commerce: 
Beer  Co.  v.  Massachusetts  97  U.  S.  25;  Kansas  v.  Zeiholt,  123  U.  S.  623;  Kidd 
v.  Pearson,  128  U,  S.  1;  Powell  v.  Pennsylvania,  127  U.  S.  678. 

Commerce,  Termination  of  Bight  of  Subjects  of,  to  Protection.  —  While  the 
commencement  of  transportation  is  also  the  commencement  of  the  right  of  the 
articles  transported  to  protection  as  articles  of  interstate  commerce,  the  com- 
pletion of  such  transportation  does  not  terminate  the  right  to  such  protection. 


Feo.  1892.]  People  v.  Wemple.  553 

It  is  manifest  that  the  right  to  regulate  commerce  as  soon  as  the  subjects  of 
it  reach  a  state,  or  place  in  the  state,  where  their  owners  desire  to  sell  or 
engage  in  traffic  witli  them  would  be  equivalent  to  a  right  to  regulate  com- 
merce between  states,  and  to  impose  regulations  at  variance  witli  those  im- 
posed by  Congress,  or  to  enforce  restrictions  where  Congress  intended  all 
should  be  free  from  restraint.  Therefore,  though  an  article  is  such  that  the 
state,  in  the  exercise  of  its  police  powers,  may  forbid  its  manufacture  in  the 
state,  or  its  sale  if  there  manufactured,  still  if  it  is  an  article  of  commerce, 
the  state  has  no  power  to  impose  any  regulation  or  restriction  which  will  pre- 
vent its  being  brought  within  the  state,  or  its  sale  at  any  time  after  its  ar- 
rival, and  while  it  remains  in  original  packages:  Leisr/  v.  Hardin,  135  U.  S. 
100;  Lyng  v.  Michigan,  135  U.  S.  1(51;  Stale  v.  Intoxicating  TAqnors,  83  Me.  158. 
The  protection  to  the  importer  ceases  when  he  has  so  acted  that  the  prop- 
erty imported  becomes  "incorporated  and  mixed  up  with  the  general  mass 
of  property  in  the  country,  which  happens  when  the  original  package  is  no 
longer  such  in  his  hands":  Brown  v.  Mari/land,  12  Wheat.  419;  Loio  v. 
Austin,  13  Wall.  29;  Keith  v.  State,  91  Ala.  1.  The  only  question  remaining 
to  be  finally  determined  is,  What  is  an  original  package,  and  the  breaking 
thereof,  within  the  meaning  of  these  decisions  ?  As  to  size  or  quantity,  there 
can  be  no  doubt  that  the  importer  may,  in  the  absence  of  congressional 
legislation  to  the  contrary,  make  it  as  large  or  small  as  to  him  may  seem 
convenient  or  desirable  for  accomplishing  the  purpose  he  has  in  view  of 
transporting  his  property  from  one  state  and  making  it  a  subject  of  sale  or 
exchange  in  another. 

Original  Packages.  —  "  Evidently  the  '  original  package  '  referred  to  in  these 
decisions  was  and  is  the  package  of  the  importer  as  it  existed  at  the  time  of 
its  transportation  from  one  state  into  the  otlier.  The  whole  subject  has  rela- 
tion to  commerce  and  to  interstate  commerce,  and  to  nothing  else.  Hence  the 
words  must  mean  the  package  as  transported  by  the  importer  himself,  or  by 
his  agent,  either  a  common  carrier  or  a  private  carrier,  for  the  purposes  of 
commerce;  and  therefore  it  would  seem  that  it  is  for  the  importer  to  deter- 
mine how  large  or  how  small  the  package  should  be,  and  the  manner  ia 
which  the  package  should  be  made  up,  and  the  materials  used  in  making  it 
up.  Certainly  an  importer  has  as  much  right,  under  the  federal  constitu- 
tion, to  import  into  a  state  and  sell  against  its  laws  a  single  gill  of  intoxi- 
cating liquor  as  he  has  to  import  into  such  state  and  sell  against  its  laws  a 
gallon  or  a  barrel  or  a  hogshead  of  the  same  interdicted  article.  In  some 
cases  of  interstate  commerce  it  would  scarcely  seem  necessary  that  any  pack- 
age should  be  used.  For  instance,  in  the  transportation  of  live-stock,  the 
individual  articles  transported  might  be  horses,  cows,  sheep,  or  hogs,  and 
these  articles  might  be  very  large  or  very  small,  even  little  pigs,  and  none 
of  them  placed  in  packages  ":  State  v.    Winters,  44  Kan.  7-8. 

An  importer  of  articles  of  commerce  from  one  state  into  another  may,  if  he 
chooses,  ship  them  in  small  boxes  or  bottles,  and  the  smallness  of  the  box  or 
bottle  cannot  prevent  it  from  being  entitled  to  protection  as  an  original  pack- 
age: In  re  Beine,  42  Fed.  Rep.  545;  Keith  v.  State,  91  Ala.  1.  But  he  may, 
on  the  other  hand,  find  it  more  convenient,  or  that  his  property  is  less  liable 
to  breakage  or  destruction,  when  he  incloses  two  or  more  bottles  or  boxes 
within  something,  as  with  a  cord,  a  paper  wrapper,  or  a  larger  box.  Oa 
what  principle  are  the  articles  thus  protected  or  united  to  be  treated  dififer- 
ently  from  the  treatment  applicable  to  them  when  they  are  shipped  sepa- 
rately? If  two  or  more  bottles  happen  to  be  tied  together  with  a  cord,  or 
inclosed  in  a  paper  or  other  wrapper,  does  the  cutting  of  the  cord  or  the 


554  People  v.  Wemple.  [New  York, 

tearing  of  the  wrapper  deprive  their  owner  of  the  protection  of  the  constitu- 
tion ?  And  what  is  there  in  the  language  of  the  constitution  to  indicate  that 
one  transporting  goods  from  one  state  to  another  shouhi  not  be  entitled  to 
sell  them  by  retail  as  well  as  by  wholesale,  or  tliat  his  right  to  sell  in  either 
manner  should  be  dependent  on  the  form  or  size  of  the  package  in  which  he 
happens  to  ship  them.  We  think  that  the  use  of  the  term  "  original  pack- 
age "  was  merely  intended  to  furnish  one  of  tlie  tests  by  which  it  could  easily 
be  ascertained  whether  the  articles  in  question  were  the  same  articles  im- 
ported, and  to  assert  that  because  they  were  still  in  such  packages,  they 
could  not  have  been  commingled  with  other  articles,  and  were  therefore  un- 
doubtedly still  entitled  to  protection.  But  there  is  no  reason  why  this  test 
should  be  exclusive,  nor  have  we  seen  any  case  in  the  national  courts  in 
which  articles  still  in  the  possession  and  ownership  of  the  importer  have  been 
denied  protection  because,  when  imported,  they  were  boxed  up  or  inclosed 
with  other  articles  from  which  they  have  since  been  separated;  but  in  some 
of  the  state  courts,  bottles  of  intoxicating  liquors,  which  had  they  been 
shipped  separately  would  have  been  treated  as  in  original  packages  and  en- 
titled to  protection,  have  been  decided  to  have  lost  their  immunity  because 
taken  out  of  the  boxes  in  which  they  were  shipped  before  being  exposed  for 
sale:  Smith  v.  State,  54  Ark.  248;  Keith  v.  State,  91  Ala.  2;  Wade  v.  State,  63 
Vt.  80. 

Navigation  —  Rivers,  Obstruction  of,  —  While,  as  we  have  heretofore  shown, 
the  power  to  regulate  commerce  includes  the  power  to  regulate  navigation, 
and,  as  a  general  rule,  that  any  state  regulation  of  navigation  which  afiFects 
interstate  commerce  is  so  far  inoperative  and  void,  still  there  are  regulations 
of  a  local  character  which  a  state  may  lawfully  enact  and  enforce,  which  in- 
directly affect  navigation,  and  through  it  interstate  commerce,  and  which 
are  nevertheless  upheld.  Thus  the  construction  and  maintenance  of  a  bridge 
across  a  navigable  stream,  while  it  tends  to  interfere  with  navigation,  and  to 
that  extent  to  obstruct  commerce,  may  aid  transportation  across  the  stream, 
and  the  advantage  which  it  affords  commerce  may  exceed  the  detriment  to  it 
arising  from  the  obstructions  to  navigation.  The  local  legislature,  in  the  ab- 
sence of  any  congressional  action  upon  the  subject,  is  permitted  to  determine 
whether  commerce  is  best  promoted  by  a  bridge  or  not,  and  therefore  any 
enactment  by  the  state  upon  this  subject  is  controlling,  unless  it  conflicts 
with  national  legislation:  Oilman  v,  Philadelphia,  3  Wall.  713;  Veazie  v. 
Moor,  14  How.  568;  Willamette  Iron  Bridge  v.  Hatch,  125  U.  S.  1;  Escanaba 
Go.  V.  Chicago,  107  U.  S.  678;  Cardwell  v.  Amencan  Bridge  Co.,  113  U.  S. 
205;  Hamilton  v.  Vicksburg  R.  R.  Co.,  119  U.  S.  280;  Huse  v.  Olover,  119 
U.  S.  543;  State  v.  LeighCon,  83  Me.  419,  So  there  are  instances  where  dams 
across  navigable  streams  may  promote  rather  than  hinder  commerce,  as  where 
by  such  dams  the  capacity  of  rivers  for  water  carriage  is  increased.  "In 
order  to  develop  their  greatest  utility  in  that  regard,  it  is  often  essential  that 
such  structures  as  dams,  booms,  piers,  etc.,  should  be  used,  which  are  sub- 
stantially obstructions  to  general  navigation,  and  more  or  less  so  to  rafts 
and  barges.  But  to  the  legislature  of  the  state  may  be  most  appropriately 
confided  the  authority  to  authorize  these  structures  where  their  use  will  do 
more  good  than  harm,  and  to  impose  such  regulations  and  limitations  in  their 
construction  and  use  as  will  best  reconcile  and  accommodate  the  interest  of 
all  concerned  in  the  matter  ":  Pound  v.  Turck,  95  U.  S.  459. 

When,  however,  Congress  interposes  to  sanction  or  condemn  an  obstruction 
to  navigation,  its  authority  is  paramount  and  its  action  conclusive.  Hence, 
after  it  has  authorized  the  maintenance  of  a  bridge,  it  can  no  longer  be  pro- 


Fu'u.  1692.]  People  v.  Wkmple.  555 

(v'oded  against  as  unlawful,  and  when,  on  tlie  other  hand,  it  condemns  a 
liriilire  or  a  particular  class  of  bridges,  or  other  obstructions,  they  can  no 
longer  be  defended  as  innocent  and  lawful:  Newport  <&  C.  Bridi/e  Co.  v.  United 
Stales,  105  U.  S.  471,  499;  The  CluUon  Bridye,  10  Wall.  454;  Aliller  v.  Mayor, 
109  U.  S.  385.  "The  power  to  regulate  commerce  comprehends  the  control 
for  that  purpose,  and  to  the  extent  uecessary  of  all  the  navigable  rivers  of 
the  United  States  which  are  accessible  from  a  state  other  than  those  in  which 
they  lie.  For  this  purpose  they  are  the  public  property  of  the  nation,  and 
sul)ject  to  all  the  requisite  legislation  by  Congress.  This  necessarily  includes 
the  power  to  keep  these  open  and  free  from  any  obstruction  to  their  naviga- 
tion interposed  by  the  states,  or  otherwise;  to  remove  sucli  obstructions 
wliere  they  exist;  and  to  provide,  by  such  sanctions  as  tliey  may  deem 
proper,  against  the  occurrence  of  the  evil  and  for  tlie  punishment  of  the 
offenders.  For  these  purposes  Congress  possesses  all  the  powers  which  ex- 
isted in  the  states  before  tlie  adoption  of  the  national  constitution,  and  which 
have  always  existed  in  the  Parliament  of  England  ":  South  Carolina  v.  Georgia, 
93  U.  S.  4;  Oilman,  v.  Philadelphia,  3  Wall.  724;  Thames  Bank  v,  Lwell,  18 
Conn.  500;  46  Am.  Dec.  332. 

Riverx,  Improvements,  Chargiwj  TolUfor  Use  of.  —  The  legislature  of  a  state 
may  authorize  the  improvement  of  a  river  within  its  limits  by  opening,  widen- 
ing, deepening,  or  straightening  it,  or  changing  its  general  course,  and  may 
authorize  tolls  to  be  charged  all  persons  using  it,  as  compensation  for  the 
advantage  derived  by  them  from  its  use  in  its  improved  condition:  Withers 
V.  Buckley,  20  How.  84;  Sa)ids  v.  Manistee  River  Improvement  Co.,  123  U.  S. 
2S8;  Buggies  v.  Improvenvnt  Co.,  123  U.  S.  297;  Huse  v.  Glover,  119  U.  S. 
543;  McRey nobis  v.  Smullhouse,  8  liush,  447;  Thames  Bank  v.  Lovell,  18 
Conn.  500;  46  Am.  Dec.  332;  Wisconsin  11.  etc.  Co.  v.  Manson,  43  Wis.  255;  28 
Am.  Rep.  542;  Carondelel  Canal  Co.  v.  Parker,  29  La.  Ann.  430;  29  Am. 
Rep.  339. 

Ferries.  — Tiie  earlier  cases  in  the  national  courts  indicate  that  the  states 
have  the  right  to  grant  ferry  licenses,  and  the  privilege  of  maintaining  ferries 
over  navigable  waters  within  their  limits,  although  the  opposite  shore  on 
w  hich  tlie  ferry  must  land  is  in  another  state,  and  tliat  a  license  fee  may  be 
imposed  on  the  keepers  of  ferries  living  in  a  state,  for  boats  owned  by  them 
and  used  in  ferrying  passengers  and  goods  from  a  landing  in  the  state  across 
a  navigable  stream  to  a  landing  in  another  state:  Carroll  v.  Campbell,  17  S.  W. 
Rep.  8S4;  Mo.,  Dec.  1891;  The  Lnltawanna,  'Jl  Wall.  577;  Fanning  v.  Gregoire, 
16  How.  534;  Conivay  v.  Taylor's  Ex'rs,  1  Black,  603;  Wiggins  Ferry  Co.  v. 
East  St.  Louis,  107  U.  S.  305.  Nor  do  we  understand  the  later  decisions  as 
denying  "that  the  privilege  of  keeping  a  ferry,  with  a  right  to  take  tolls  for 
passengers  and  freight,  is  a  franchise  grantable  by  the  state,  to  be  exercised 
within  such  limits  and  under  such  restrictions  as  may  be  required  for  the 
safety,  comfort,  and  convenience  of  the  public  ";  but  they  do  make  it  clear 
that  no  taxes  can  be  imposed  upon  the  property  used  in  the  business  of  main- 
taining and  operating  a  ferry  between  two  or  more  states,  the  effect  of  which 
may  be  to  regulate  interstate  commerce,  and  that  such  property  is  exempt 
"  from  charges  other  tlian  such  as  are  imposed  by  way  of  compensation  for 
the  use  of  the  property  employed,  or  for  facilities  afforded  for  its  use,  or  .is 
ordinary  taxes  upon  the  value  of  the  property  ":  Gloucester  Ferry  Co.  v.  Penn- 
sylvania, 114U.  S.  196. 

Wharfage  Fees.  —  A  city  or  state  may  liave  improved  landings  or  erected 
wharves  on  a  navigal)le  stream  or  in  a  harbor.  If  so,  it  may  charge  for  tim 
use  of  such  landing  or  wharf,  and  may  declare  that  the  compensation  for  such 


556  People  v.  VVemple.  [New  York, 

use  shall  be  proportionate  to  the  size  or  tonnage  of  the  vessel,  and  the  regu- 
lation imposing  and  enfoiciag  such  compensation  is  not  objectionable  either 
as  a  regulation  of  commerce  or  as  a  tax  on  tonnage:  Worsley  v.  Second  Munid- 
■pality,  9  Rob.  (La.)  324;  41  Am.  Dec.  .333;  Sweeney  v.  Otis,  37  La.  Ann.  520; 
Cincinnati  etc.  Co.  v.  Catlettsburg,  105  U.  S.  559.  "A  duty  on  tonnage  is  a 
charge  for  the  privilege  of  entering  or  trading  or  lying  in  a  port  or  harbor; 
wharfage  is  a  charge  for  the  use  of  a  wharf  ";  and  if  a  city  owning  a  wharf 
adopts  an  ordinance  whereby  specific  charges  "  for  landing  at  or  using  it  are 
imposed  as  and  for  wharfage,"  such  charges  cannot  be  avoided  or  the  ordi- 
nance declared  invalid  on  the  grountl  that  tliey  are  excessive,  and  "  constitute 
but  a  duty  on  tonnage,  in  the  name  and  under  the  pretext  of  wharfage."  The 
intent  of  the  legislative  body  imposing  charges  professedly  for  wharfage 
cannot  be  ascertained  and  thwarted  by  extrinsic  evidence:  Parkershurg  etc. 
Trans.  Co.  v.  Parkershurg,  107  U.  S.  601;  Ouachita  P.  Co.  v.  Aiken,  121  U.  S. 
444;  Bobbins  v.  Shelby  Tax  Dist.,  120  U.  S.  489.  If,  however,  an  ordinance 
or  statute  imposing  wharfage  discriminates  between  vessels  laden  with  the 
products  of  different  states,  it  cannot  be  sustained;  as  where  vessels  laden 
with  the  products  of  tlie  state  are  exempt  from  charges  to  which  vessels  bear- 
ing the  products  of  other  states  are  subject:  Guy  v.  Baltimore,  100  U.  S.  434 
With  the  exception  that  discriminations  will  not  be  allowed  which  might 
in  tliemselves  operate  as  regulations  of  interstate  or  of  foreign  com  nerce, 
"  wharfage,  the  matter  now  under  consideration,  is  governed  by  the  local 
state  laws;  no  act  of  Congress  has  been  passed  to  regulate  it.  By  the  state 
laws  it  is  generally  required  to  be  reasonable,  and  by  those  laws  its  reason- 
ableness must  be  judged.  If  it  does  not  violate  them,  as  before  said,  the 
United  States  courts  cannot  interfere  to  prevent  its  exaction.  Of  course, 
neither  a  state  nor  any  municipal  corporation  under  its  authority  can  lay 
duties  on  tonnage;  for  that  is  expressly  forbidden  by  the  constitution;  but 
charges  for  wharfage  may  be  graduated  by  the  tonnage  of  the  vessels  using  a 
wharf,  and  that  this  is  not  a  duty  on  tonnage  within  the  meaning  of  the  con- 
stitution has  been  distinctly  held  in  several  cases  ":  Ouachita  P.  Co.  v.  Aiken, 
121  U.  S.  448. 

Tonnage,  What  Forbidden  as  a  Charge  upon.  —  Although  the  decisions  of  the 
national  courts  sanction  charges  for  wharfage,  and  the  exaction  of  port  charges 
for  various  services  which  may  be  rendered  to  vessels  engaged  in  commerce, 
and  receiving  benefits  from  the  facilities  afforded  to  them  by  the  erection  of 
wharves  and  the  like,  it  must  not  be  forgotten  that  the  national  constitution 
declares  that  "no  state  shall,  without  the  consent  of  Congress,  lay  any  duty 
on  tonnage,"  and  that  any  state  exaction  which  amounts  to  such  a  duty  can- 
not be  enforced.  Any  system  of  taxing  vessels  which,  instead  of  taking  their 
value  as  a  basis  of  taxation,  imposes  a  tax  to  be  computed  upon  and  accord- 
ing to  their  tonnage  is  unconstitutional:  State  Tonnage  Tax  Cases,  12  Wall. 
204.  Because  the  authorities  show  that  where  a  vessel  is  chargeable  with 
wharfage  or  for  other  services  remlered  to  it  such  charge  may  be  proportioned 
to  its  tonnage,  it  is  often  ditficult  to  determine  whether  a  charge  to  be  ascer- 
tained from  the  tonnage  of  the  vessel  chargeable  is  invalid  as  an  exaction  of 
tonnage,  or  sustainable  as  a  compensation  due  for  services  rendered.  But  if 
the  charge  attempted  to  be  imposed  is  one  which,  by  the  terms  of  the  statute 
or  ordinance  imposing  it,  may  become  due  from  the  vessel,  without  any  ser- 
vices being  rendered  to  it,  and  from  the  mere  fact  that  it  has  arrived  in  a 
port  of  the  state,  it  is  a  charge  on  tonnage,  and  therefore  not  collectible. 
'*It  is  perfectly  clear  that  a  duty  or  tax  or  burden  imposed  under  the  au- 
thority of  the  state,  which  is,  by  the  law  imposing  it,  to  be  measured  by  the 


Feb.  1892.]  People  v.  Wemple.  657 

capacity  of  the  vessel,  and  ia,  in  its  essence,  a  contribution  claimed  for  the 
privilege  of  arriving  or  departing  from  a  port  of  the  United  States,  is  withia 
the  prohibition  ":  Camion  v.  New  Orleans,  20  Wall.  581;  Inman  Steamship  Co. 
V.  Tinker,  di  U.  S.  238.  Nor  can  an  exaction  be  enforced  on  the  ground  that 
it  is  intended  as  wharfage,  and  entitles  the  vessel  charged  with  it  to  the  use 
of  a  wharf,  if  it  ia  equally  chargeable  whether  a  wharf  is  used  by  it  or  not. 
"  A  tax  wliich  is,  by  its  terms,  due  from  all  vessels  arriving  and  stopping  in 
a  port,  without  regard  to  the  place  where  they  may  stop,  whether  it  be  in 
the  channel  of  a  stream  or  out  in  a  bay,  or  landed  at  a  natural  river  bank, 
cannot  be  treated  as  compensation  for  the  use  of  the  wharf ":  Cannon  v.  New 
Orleans,  20  Wall.  581;  Inman  Slea,m}iip  Co.  v.  Tinker,  94  U.  S.  238.  While 
the  states  have  power  to  establish  quarantine  laws  and  regulations,  and  to 
provide  the  revenue  necessary  for  their  enforcement,  this  power  must  be  ex- 
ercised in  subordination  to  the  constitution  of  the  United  States,  and  the 
requisite  revenue  cannot  be  raised  by  charges  imposed  upon  vessels,  to  be 
computed  upon  their  respective  tonnages:  Peete  v.  Morgan,  19  Wall.  581. 
The  essential  test  of  a  tax  on  tonnage  "is,  that  it  is  imposed,  whatever  be 
the  subject,  solely  according  to  the  rule  of  weight,  either  as  to  capacity  to 
carry  or  the  actual  weight  of  the  thing  itself ":  Inman  Steamship  Co.  T. 
Tinker,  94  U.  S.  238. 

I'ilots  and  their  Charges.  — That  the  regulation  of  pilots  and  pilotage  is  a 
regulation  of  commerce  is  conceded.  "A  pilot  is  as  much  a  part  of  the  com- 
mercial marine  as  is  the  hold  of  the  ship  and  tlie  helm  by  which  it  is  guided"; 
and  there  is  no  doubt  that  Congress  may,  whenever  it  chooses,  take  full  con- 
trol of  the  matter  of  regulating  pilots  and  pilotage;  and  a  statute  of  a  state 
will  not  be  permitted  to  make  any  exaction  or  discrimination  in  conflict  with 
the  national  legislation:  The  Alameda,  31  Fed.  Rep.  3'o6;  Freeman  v.  The 
Undunnied,  2>1  Fed.  Rep.  66'2.  In  the  absence  of  any  action  on  the  part  of 
Congress,  each  state  has  power  to  enforce  regulations  concerning  pilots 
and  pilotage  ia  and  approaching  its  harbors:  Cooley  v.  Board  of  Wardens, 
12  How.  299.  Congress  has  sometimes  expressly  given  its  consent  to  such 
regulations,  and  at  other  times  has  made  regulations  of  its  own  with  re- 
spect to  certain  matters;  but  the  decisions  concur  in  declarinw^  that,  except 
to  the  extent  that  Congress  has  acted,  each  state  may  act  for  itself:  Ex  parte 
McNeil,  13  Wall.  236;  Wil>^on  v.  McNamee,  102  U.  S.  572;  Spraiguev.  Thomp- 
son, 118  U.  S.  90.  A  statute,  however,  declaring  that  the  master  and  port- 
wardens  of  a  port  within  the  state  shall  be  entitled  to  demand  and  receive  a 
specified  sum,  whether  called  upon  to  perform  any  service  or  not,  from  every 
vessel  arriving  in  that  port,  has  been  held  void,  both  as  a  regulation  of  com- 
merce and  as  a  duty  on  tonnage.  Tiiis  statute  was  thought  to  differ  essen- 
tially from  the  statutes  imposing  charges  for  pilotage,  because  pilots  are  not 
by  this  statute  allowed  to  recover  compensation,  except  for  services  either 
performed  or  tendered,  while  the  statutes  declared  void  created  a  liability 
against  vessels,  whether  services  were  performed  or  tendered,  or  not:  St'-amship 
Co.  V.  Port'wardens,  6  Wall.  31.  A  statute  making  it  the  duty  of  the  master 
and  wardens  of  a  port  to  offer  their  services,  and  make  a  survey  of  the  hatches 
of  all  sea-going  vessels  which  should  arrive  at  that  port,  and  declaring  that 
no  persons  other  than  such  master  or  wardens,  or  their  deputies,  should  make 
any  such  survey  or  any  survey  of  damaged  gootls  coming  on  board  such  ves- 
sels, or  give  certificates  or  orders  for  the  sale  of  such  goods  at  auction,  was 
also  adjudged  to  be  void  as  a  regulation  both  of  foreign  and  interstate  com- 
merce: Foster  v.  Master  etc.  of  New  Orleans,  94  U.  S.  246. 

Discriminations  in  Favor  qf  the  Products  or  Manu/aclurea  of  the  State, 


558  People  v.  Wemplk.  [New  York, 

One  of  the  most  natural  attempts  at  the  indirect  regulation  of  commerce  is 
to  impose  some  restriction  or  prohibition,  or  to  grant  some  privilege  or  exemp- 
tion, which  will  probably  or  certainly  especially  encourage  the  manufactures 
or  products  of  one  state,  or  discourage  the  introduction,  sale,  or  use  of  the 
products  or  manufactures  of  some  other  state.  Instances  of  legislation  of 
this  character  which  have  been  held  void  include  the  following:  Statutes  pro- 
hibiting all  persons  from  selling  wine  in  the  state,  but  excepting  from  their 
provisions  persons  who  grow  grapes  or  berries,  and  make  wine  therefrom,  and 
sell  it  on  the  premises  where  such  grapes  or  berries  are  grown,  or  in  any 
other  place  where  the  sale  of  intoxicating  liquors  is  licensed:  State  v.  DeS' 
champ,  53  Ark.  490;  Bogan  v.  State,  84  Ala.  449;  or  imposing  taxes  on  per- 
sons engaged  in  the  business  of  selling  liquors  at  wholesale,  or  taking  orders 
for  such  liquors  to  be  shipped  into  the  state  from  any  place  out  of  the  state 
not  having  their  principal  pi  ice  of  business  in  the  state,  and  not  imposing  a 
like  tax  on  persons  engaged  in  a  like  business  in  reference  to  liquors  manufac- 
tured within  the  state:  WnUiiig  v.  Michigan,  116  U.  S.  446;  or  levying  taxes 
on  persons  selling  liquors  not  manufactured  within  the  state:  Tiernan  v. 
Rinker,  102  U.  S.  123;  or  requiring  any  person  who  shall  sell  or  oflfer  for  sale 
the  manufactured  articles  or  machines  of  other  states  or  territories,  unless  he 
be  the  owner  thereof  and  taxed  as  a  merchant,  to  take  out  a  license,  and  to 
pay  a  specified  sum  therefor:  Wc'/her  v.  Virginia,  103  U.  S.  344. 

Restrictions  upon  Transportation.  —  State  legislation  may  also  attempt  to 
discourage  or  prohibit  the  transportation  of  articles  of  commerce  into,  out 
of,  or  across  the  state  in  professed  exercise  of  the  police  power,  or  upon  some 
other  ground  supposed  to  be  tenable.  Of  course,  any  such  interference  with 
transportation  necessarily  interferes  with  commerce.  There  may  be  circum- 
stances which  will  justify  it  as  an  exercise  of  the  police  power,  and  whether 
and  when  this  is  so  we  shall  consider  hereafter.  But  it  is  generally  true,  that 
the  police  power  of  the  states  will  not  be  suffered,  without  the  permission  of 
Congress,  to  interpose  any  restriction  amounting  to  a  regulation  of  commerce, 
either  among  the  states  or  with  a  foreign  nation.  A  statute  imposing  a  tax 
or  charge  on  the  landing  of  passengers:  Henderson  v.  Mayor  of  New  York,  92 
U.  S.  259;  Chy  Lung  v.  Freeman,  92  U.  S.  275;  Smith  v.  Turner,  7  How.  283; 
or  a  charge  against  persons  or  property  going  out  of  or  coming  within  a  state, 
or  any  prohibition  against  the  arrival  or  departure  of  persons  or  property,  or 
tending  to  prevent  the  receipt  or  sale  of  property  while  in  the  original  pack- 
ages in  which  it  was  imported,  — is  void,  because  it  is  an  attempted  regulation 
of  commerce:  State  v.  Stilsing,  52  N.  J.  L.  517;  Bowman  v.  Chicago  ds  N.  W. 
R'y,  125  U.  S.  465;  State  v.  Saunders,  19  Kan.  127;  Bennett  v.  American  Exp. 
Co.,  83  Me.  236;  23  Am.  St.  Rep.  774;  State  v.  Intoxicating  Liquors,  83  Me.  158. 
Natural  gas  is  an  article  of  commerce,  subject  to  purchase  and  sale,  and  to  be 
transported  from  one  place  to  another.  A  statute,  therefore,  declaring  it  to 
be  unlawful  for  any  person  "  to  pipe  or  conduct  natural  gas  from  any  point 
within  this  state  to  any  point  or  place  without  this  state,"  and  that  any  per- 
son or  corporation  permitting  sucli  gas  to  be  carried  through  its  pipes  to  any 
place  without  the  state,  shall  forfeit  all  right,  title,  and  interest  in  and  to 
the  real  property  used  or  held  for  the  purpose  of  mining  for  natural  gas,  is 
unconstitutional:  State  v.  Indiana  etc.  Co.,  120  Ind.  575. 

The  Regulation  of  Common  Carriers  necessarily  includes  transportation,  and 
therefore  commerce;  and  when  such  regulation  ia  undertaken  by  a  state,  its 
operation  cannot  extend  to  interstate  commerce  or  commerce  with  a  foreign 
nation.  Therefore,  a  statute  fixing  rates  for  the  transportation  of  freight  or 
passengers:    Wabash  etc.  R'y  v.  Illinois,  118  U.  S.  557;  Hardy  v.  Atkinson  etc^ 


Feb.  1892.]  People  v.  Wemple.  559 

B.  R.  Co.,  32  Kan.  698;  State  v.  Chicago  etc.  R.  R.  Co.,  40  Minn.  267;  12  Am. 
St.  Rep.  730;  State  v.  Chicago  etc.  R.  R.  Co.,  70  Iowa,  162;  S.  C.  R.  R.  Comm'ra 
V.  R.  R,  Co.,  22  S.  (J.  220;  Commonwealth  v.  Houmtonic  R.  R.  Co.,  143  Mass. 
264;  Oulf  etc.  R'l/  v.  Dwyer,  75  Tex.  572;  16  Am.  St.  Rep.  926;  or  declaring 
that  certain  discriminations  shall  or  shall  not  be  made  between  certain  classes 
of  passengers:  Hall  v.  De  Cuir,  95  U.  S.  485,  —  is  invalid  if  construed  as  apply- 
ing,' to  interstate  commerce,  and  is  valid  if  restricted  by  its  terms  or  by  the 
decision  of  the  state  court  to  commerce  transacted  wholly  within  the  state: 
Riihoad  Commission  Cases,  116  U.  S.  307;  Doionham  v.  Akxundria  Council' 
10  Wall.  173;  Louisville  etc.  R.  R.  Co.  v.  Mississippi,  133  U.  S.  5S7.  But  it  is 
said  that  "where  the  state  legislature,  without  discrimination,  passes  a  law 
wliich  operates  uniformly  in  aid  of  domestic  and  interstate  trade  alike,  and 
Congress  has  not  acted,  or  has  not  the  autliority  to  afford  so  complete  a  rem- 
edy for  the  evil  as  the  state  legislature,  there  can  be  no  question  about  the 
validity  of  such  legislation,  or  the  duty  of  the  state  courts  to  enforce  it,"  and 
therefore,  that  a  state  may  by  statute  impose  a  penalty  upon  all  railway  com- 
panies for  a  failure  to  ship  freight  within  five  days,  though  such  statute 
operates  alike  upon  freight  to  be  shipped  outside  as  well  as  inside  the  state: 
Baggy.   Wilmington  etc.  R.  R.  Co.,  109  N.  C.  279;  26  Am.  St.  Rep.  569. 

*'  A  Tehgrapli  Compani/  occupies  the  same  relation  to  commerce  as  a  carrier 
of  messages  that  a  railroad  conlpany  does  as  a  carrier  of  goods.  Both  com- 
panies are  instruments  of  commerce,  and  their  business  is  commerce  itself. 
They  do  their  transportation  in  different  ways,  and  their  liabilities  are  in  some 
respects  different,  but  they  are  both  indispensable  to  those  engaged  to  any 
considerable  extent  in  commercial  pursuits  ":  Telegraph  Co.  v.  Texas,  105 
U.  8.  464;  Pensacola  T.  Co.  v.  Western  Union  Tel.  Co.,  96  U.  S.  1.  There- 
fore, a  state  cannot  tax  each  message  sent  out  of  the  state:  Telegrayh  Co.  v. 
Texas,  105  U.  S.  460;  nor  can  it  regulate  "the  transmission  or  delivery  of 
interstate  telegrams,  even  within  its  own  borders."  "The  whole  subject  of 
the  transmission  and  delivery  of  interstate  telegrams  is,  it  seems,  a  subject 
national  in  its  character  and  admits  safely  of  only  one  uniform  plan  of  regu- 
lation. But  howevir  it  may  be  as  to  the  regulation  by  a  stale  of  the  trans- 
mission and  delivery  of  such  telegrams  within  its  own  boundaries,  it  seema 
certain  that  no  power  exists  in  a  state  to  regulate  the  mode  and  order  of 
transmission  and  delivery  of  interstate  telegrams,  starting  from  points  withia 
its  own  territory,  after  such  telegrams  have  passed  the  state  line  and  are 
within  the  bounilaries  of  other  states":  Western  Union  Tel.  Co.  v.  Pendleton, 
122  U.  S.  355.  "These  principles  are  as  applicable  to  messages  by  telephone 
as  to  merchandise.  There  can  be  no  reasonable  distinction  between  the  office 
of  common  carrier  of  telephone  and  the  office  of  a  common  carrier  of  goods 
by  railway  or  steamboat":  In  re  Pennsylvania,  Telephone  Co.,  48  N.  J.  tq.  91; 
ante,  p.  462. 

Taxes  on  Subjects  of  Commerce.  —  A  tax  imposed  upon  the  subjects  of  inter- 
state or  foreign  commerce,  or  a  license  fee  exacted  of  persons  engaged  in  such 
commerce,  might  not  merely  discourage  such  commerce,  but  in  extreme  cases 
be  equivalent  to  its  prohibition.  "The  power  to  tax  includes  the  power  to 
destroy,"  and  therefore  the  taxation  of  interstate  or  foreign  commerce  with- 
out restriction  cannot  be  conceded  without  at  the  same  time  conceding  the 
power  to  destroy  it.  Doubtless  every  form  of  taxation  diretitly  imposed  upon 
interstate  or  foreign  commerce,  or  its  instrumentalities  or  operations,  is  pro- 
hibited to  the  states,  and  the  only  question  is,  how  far  it  may  be  incidentally 
imposed  without  falling  within  the  inhibition  implied  from  the  exclusive 
Dower  of  Congress  to  regulate  such  commerce.     A  tax  cannot   be  laid  by  a 


560  People  v.  Wemple.  [New  York, 

state  on  the  amonnt  of  sales  made  by  auctioneers,  and  requiring  the  sum  pay- 
able to  be  greater  in  the  case  of  articles  grown  or  manufactured  in  other 
states  than  upon  articles  which  are  grown  or  manufactured  in  the  state 
wherein  they  are  sold:  Cooh  v.  Pennsylvania,  97  U.  S.  566;  nor  upon  passen- 
gers departing  from  {Grandall  v.  Nevada,  6  Wall.  35)  or  coming  within  the 
state:  People  v.  Compagnie  Generale,  107  U.  S.  59;  Henderson  v.  Mayor  of  New 
York,  92  U.  S.  259;  whether  aliens  or  not;  nor  upon  messages  sent  by  a  tele- 
graph or  telephone  corporation  out  of  the  state  or  received  within  the  state 
from  another  state:  Battennan  v.  Western  Union  Tel.  Co.,  127  U.  S.  411;  Le- 
hup  V.  Port  of  Mobile,  127  U.  S.  640;  In  re  Pennsylvania  Telephone  Co.,  48 
N.  J.  Eq.  91;  ante,  p.  462;  nor  can  a  statute  imposing  a  tax  upon  the  grosa 
receipts  of  persons  or  corporations  engaged  in  transportation  be  enforced 
against  a  corporation  engaged  in  interstate  commerce.  If  a  railroad  corpora- 
tion transports  goods  from  one  portion  of  a  state  to  another,  but  in  so  doing 
necessarily  passes  through  part  of  another  state,  it  is  not  engaged  in  inter- 
state commerce,  and  a  state  tax  levied  upon  such  transportation  is  not  in- 
valid: Lehigh  Valley  R.  R.  Co.  v.  Pennsylvania,  145  U.  S.  192. 

Taxes,  ivhen  may  be  Levied  on  Subjects  or  Instrumentalities  of  Comwerce.  — On 
the  other  hand,  it  is  no  objection  to  a  tax  that  it  may  fall  upon  subjects  of 
interstate  commerce,  or  affect  persons  engaged  in  such  commerce,  if  these  re- 
sults are  incidental,  and  do  not  flow  from  apparent  attempts  to  regulate  com- 
merce or  the  persons  transacting  it,  but  from  the  fact  that  such  subjects  or 
persons  are  affected  in  the  same  way  or  to  the  same  extent  as  other  persons 
or  subjects  are  affected.  A  tax  upon  all  the  sales  of  goods  made  within  a 
state  is  valid,  and  may  be  enforced  against  persons  who  have  sold  goods 
imported  from  other  states  or  territories,  though  such  goods  remain  in  the 
original  packages  in  which  they  were  imported,  though  such  taxes  are  not 
enforceable  against  the  importers  themselves  in  making  the  first  sale  after 
importation:  Woodruff  v.  Parham,  8  Wall.  123;  Waring  v.  Mayor,  8  Wall.  110; 
Hinson  v.  Lott,  8  Wall.  148.  A  tax  may  be  levied  on  all  peddlers  of  sewing- 
machines,  and  one  cannot  escape  such  tax  by  proving  that  the  machines  which 
he  sells  were  manufactured  in  another  state:  Machine  Co.  v.  Gage,  100  U.  S. 
676.  If  a  man  has  mr-neys  on  hand  on  the  day  when  they  are  assessed,  ho 
cannot  escape  taxation  on  the  ground  that  he  usis  his  capital  in  interstate  or 
foreign  commerce  by  investing  it  in  cotton  for  exportation  to  foreign  coun- 
tries: People  V.  Commissioners,  104  U.  S.  466.  The  owners  of  property  are 
not  entitled  to  have  it  exempted  from  state  or  local  taxation  because  of  its 
employment  in  interstate  commerce:  Delaware  Railroad  Tax,  18  Wall.  206; 
Horn  S.  M.  Co.  v.  New  York,  143  U.  S.  305.  Taxes  may  be  imposed  on 
railroads  though  established  by  Congress:  Railroad  Co.  v.  Peniston,  18  Wall. 
5;  though  not  on  franchises  granted  to  such  railroads  by  the  United  States: 
California  v.  Central  Pacific  R.  R.  Co.,  127  U.  S.  1.  "It  is  well  settled  that 
there  is  nothing  in  the  constitution  or  laws  of  the  United  States  which  pre- 
vents a  state  from  taxing  personal  property  employed  in  interstate  or  foreign 
commerce,  like  other  personal  property  within  its  jurisdiction.  Ships  or  ves- 
sels, indeed,  engaged  in  interstate  or  foreign  comnaerce  upon  the  high  seas,  or 
other  waters  which  are  a  common  highway,  and  having  their  home  port  at 
which  they  are  registered  under  the  laws  of  the  United  States  at  the  domicile 
of  their  owners  i«  one  state,  are  not  subject  to  taxation  in  another  state  at 
whose  ports  they  incidentally  and  temporarily  touch  for  the  purpose  of  de- 
livering or  receiving  passengers  or  freight.  But  that  is  because  they  are  not, 
in  any  proper  sense,  abiding  within  its  limits,  and  have  no  continuous  pres- 
ence or  actual  situs  within  its  jurisdiction,  and  therefore  can  be  taxed  only 


Feb.  1892.]  People  v.  Wemple.  561 

at  their  legal  situs,  their  home  port  and  the  domicile  of  their  owners:  Pullman 
Car  Co.  V.  Pennvjliiania,  141  U.  S.  23.  In  other  words,  property  employed 
in  interstate  commerce  is  subject  to  taxation  by  the  states,  though  there 
may  be  some  difficulty  in  determining  in  what  state  it  may  be  taxed,  or  the 
extent  to  which  it  may  be  taxed  in  several  different  states.  The  business  in 
which  it  is  employed  makes  necessary  its  frequent  passage  from  one  state  to 
another,  so  that  during  each  fiscal  year  it  may  be  at  different  times  in  several 
states,  or  even  in  all  the  states  of  the  Union.  To  tax  it  in  each  state  might 
paralyze  interstate  commerce,  and  to  altogether  exempt  it  from  taxation  would 
be  to  exempt  from  the  burdens  of  local  government  vast  amounts  of  property 
well  able  to  share  such  burdens,  and  constantly  in  need  and  receipt  of  protec- 
tion afforded  by  the  state  and  municipal  governments,  and  paid  for  out  of  the 
fruits  of  state  and  municipal  taxation.  A  subject  of  commerce,  or  an  instru- 
mentality of  carrying  it  on,  is  not  liable  to  taxation  in  the  state  from  the  mere 
fact  that  it  happens  to  pass  through,  or  even  to  rest  for  a  short  time  therein, 
while  in  process  of  transport '*: ion:  State  Freljht  Tax  Cases,  15  Wall.  2.S2. 
But  as  to  these  instrumentalities  of  commerce  which  are  constantly  passing 
from  state  to  state,  whether  they  are  wholly  taxable  in  one  state  or  not,  some 
system  may  be  employed  which  will  subject  them  to  taxation  iu  the  states 
through  whicli  they  pass,  so  far  as  may  be  just  under  the  circumstances.  Thus, 
if  a  sleeping-car  corporation  is  engaged  in  running  its  cars  in,  through,  and  out 
of  a  state,  and  has  at  all  times  a  number  of  such  cars  within  its  territory,  it  is 
subject  to  a  statute  applicable  to  all  corporations  engaged  in  the  transporta- 
tion of  freight  or  passengers,  and  requiring  them  to  pay  taxes  based  upon  an 
assessment,  the  basis  of  which  is,  "such  proportion  of  the  capital  stock  of 
the  company  as  the  number  of  miles  over  which  it  ran  cars  within  the  state 
bore  to  the  whole  number  of  miles  iu  that  and  other  states  over  which  its 
cars  were  run.  This  was  a  just  and  equitable  method  of  assessment,  and  if 
it  were  adopted  by  all  the  states  through  which  these  cars  ran,  the  company 
would  be  assessed  upon  the  full  amount  of  its  capital  stock,  and  no  more  ": 
Pullman  Car  Co.  v.  Penmylvania,  141  U.  S.  23;  Pullman  Car  Co.  v.  Hayward, 
141  U.  S.  3();  State  v.  Pullman  Car  Co.,  Ct  Wis.  89.  So  a  state  may  impose 
taxes  upon  each  corporation  doing  business  within  the  state,  for  the  privilege 
of  there  exercising  its  franchise,  to  be  determined,  when  the  corporation  is 
engaged  in  transportation,  by  the  gross  amount  of  its  receipts,  and  that  when 
tlie  corporation  is  doing  business  partly  within  and  partly  without  the  state, 
the  tax  should  be  equal  to  the  proportion  of  the  gross  receipts  of  the  state, 
to  be  ascertained  as  follows:  "The  gross  transportation  receipts  of  such  rail- 
road line  or  system,  as  tiie  case  may  be,  over  its  whole  extent  within  and 
without  the  state,  shall  be  divided  by  the  number  of  miles  operated,  to  obtain 
the  average  gross  receipts  per  mile,  and  the  gross  receipts  in  this  state  shall 
be  taken  to  be  the  average  gross  receipts  per  mile  multiplied  by  the  number 
of  miles  operated  in  this  state."  This  statute  was  sustained,  on  the  ground 
that  it  was  not  a  tax  upon  interstate  commerce,  and  that  the  means  adopted 
were  intended  solely  for  the  purpose  of  determining  the  amount  of  business 
transacted  within  the  state,  and  of  levying  a  tax  thereon:  Maine  v.  Orand 
Trunk  R'y  Co.,  142  U.  S.  217. 

Licennes  Which  Slate  may  Exact.  — The  principles  to  which  we  have  referred 
as  applicable  to  taxation  are  equally  applicable  to  license  fees  exacted  for  the 
privdege  of  doing  business  within  a  state.  A  state  may  exact  a  license  fee 
from  persons  carrying  on  business  within  its  territory,  without  rendering  its 
action  in  so  doing  subject  to  the  objection  that  it  is  attemi)ting  to  regulate 
interstate  or  foreign  co'nmerce,  provided  it  does  not  discriminate  iu  favor  of 
AM.  St.  Rep..  Vol.  XXVU.  —  86 


562  People  v.  Wemple.  [New  York, 

its  people,  products,  or  manufactures,  nor  charge  persons  importing  articles 
of  commerce  witliin  the  state  for  the  privilege  of  there  disposing  of  them. 
"  No  doubt  can  be  entertained  of  the  right  of  a  state  legislature  to  tax  trades, 
professions,  or  occupations,  in  the  absence  of  inhibitions  in  the  state  constitu- 
tion in  that  regard;  and  where  a  resident  citizen  engages  in  general  business 
subject  to  a  particular  tax,  the  fact  that  the  business  done  chances  to  consist, 
for  the  time  being,  wholly  or  partly  in  negotiating  sales  between  resident  and 
non-resident  merchants  of  goods  situated  in  another  state,  does  not  involve  the 
taxation  of  interstate  commerce,  forbidden  by  the  constitution  ":  Ficklen  v. 
Shelby  Co.,  145  U.  S.  1.  A  license  tax  may  be  exacted  of  persons  buying  and 
selling  on  commission  or  otherwise  doing  Ijusiness  within  the  state,  and  esti- 
mated, when  they  have  no  capital  invested,  on  their  gross  yearly  commissions 
or  charges,  though  the  business  transacted  by  them  was  for  principals  resid- 
ing in  other  states,  and  the  goods  sold  by  them  for  such  principals  were  to 
be  shipped  into  the  state  in  which  the  brokers  did  business:  Ficklen  v,  Shelby 
Co.,  145  U.  S.  1.  A  tax  imposed  on  merchants  and  other  dealers,  of  one  tenth 
of  one  per  cent  of  their  purchases,  whether  made  within  or  without  the  state, 
except  on  purchases  of  farm  products  from  the  producer,  has  been  sustained, 
on  the  ground  that  such  tax  was  a  valid  license  or  occupation  tax  for  the 
privilege  of  doing  business  within  the  state:  State  v.  French,  109  N.  C.  722; 
26  Am.  St.  Rep.  590;  State  v.  Steien.wn,  109  N.  C.  730;  26  Am.  St.  Rep.  595. 
So  a  tax  may  be  imposed  on  the  keepers  of  ferries,  "although  their  boats 
ply  between  landings  lying  in  two  different  states ":  Wigf/ijis  F.  Co.  v. 
East  St.  Louis,  107  U.  S.  365.  One  who  has  imported  goods  from  another 
state  or  a  foreign  country  has,  while  they  remain  in  the  original  packages,  a 
right  to  sell  them,  and  no  state  can  require  that  he,  as  a  condition  precedent 
to  the  exercise  of  this  right,  shall  take  out  any  license  or  pay  any  license  fee 
or  other  charge:  Brown  v.  Maryland,  12  Wheat.  441,  442.  It  appears  equally 
certain  that  sncli  importers  need  not  make  their  sales  in  person,  and  that  no 
license  may  be  exacted  of  persons  whom  they  may  employ  to  effect  sales  for 
them.  Therefore  a  statute  declaring  that  all  drummers  or  persons  not  bav- 
in cf  a  place  of  business  in  the  taxing  district,  offering  for  sale  or  selling  goods 
therein  by  sample,  shall  be  required  to  pay  a  specific  sum  per  week  or  month 
for  that  privilege  cannot  be  enforced  against  one  who  was  employed  and 
acting  for  merchants  doing  business  in  another  state,  and  for  whom  he  exhib- 
ited samples  for  the  purpose  of  effecting  sales:  Rabbins  V.  Shelby  Taxing 
Dist.,  120  U.  S.  489;  Corson  v.  Maryland,  120  U.  S.  502.  So  one  who  is  act- 
ing as  agent  in  one  state  of  a  line  of  railroad  between  points  in  two  other 
states,  for  the  purpose  of  inducing  persons  going  from  the  point  at  which  he 
acted  as  such  agent  to  points  in  other  states  to  take  the  road  which  he  rep- 
resented, but  not  selling  tickets  for  the  road  nor  receiving  or  disposing  of 
rrioneys  on  account  of  it,  is  engaged  in  interstate  commerce,  and  cannot  be 
required  to  pay  a  license  tax:  Norfolk  etc.  R.  R.  Co.  v,  Pennsylvania,  136  U.  S. 
114;  McCall  v.  C  ilifomia,  136  Q.  S.  104.  We  are  not  sure  that  we  appre- 
hend the  distinction  between  the  cases  of  the  class  last  cited  and  F  cklen  v, 
Shelby  Co.,  145  U.  S.  1,  but  probably  it  is  this,  that  a  license  tax  imposed  by 
a  state  upon  an  occupation  may  be  enforced  against  persons  engaged  in  that 
occupation  and  having  the  rigiit  under  the  license  to  transact  all  business 
falling  within  the  line  of  their  occupation,  whether  domestic,  interstate, 
or  foreign,  though  they,  as  a  matter  of  fact,  do  not  transact  any  business 
whatever,  except  such  as  constitutes  interstate  or  foreign  commerce,  but  that 
if  they  are  employed  by  a  person  engaged  solely  in  interstate  or  foreign  com* 
merce,  and  represent  him  to  the  extent  that  taxes  upon  them  necessarily  oper- 


Feb.  1892.]  People  v.  Wemple.  563 

ate  as  taxes  upon  him  and  his  transactions,  then  they  cannot  be  required  to 
take  out  and  pay  for  a  state  or  local  license:  McLaughlin  v.  South  Bend,  126 
Ind.  471;  Asher  v.  Texas,  128  U.  S.  129;  StoiUenhurgh  v.  Hennkk,  129  U.  S. 
141;  State  v.  Agee,  83  Ala.  110;  Fort  Scott  v.  Pelton,  39  Kan.  764;  Fecheimer 
V.  Louisrille,  84  Ky.  30G;  Slate  v.  Bracco,  103  N.  C.  349;  Simmoris  Co.  v.  J/c- 
Guire,  39  La.  Ann.  848;  Ex  parte  Roxenhlatt,  19  Nev.  439;  Ex  parte  Thomas, 
71  Cal.  204;  Corson  v.  Maryland,  120  U.  S.  502;  Crutcher  v.  Kentucky,  141 
U.  S.  47. 

Licenses,  Discrimination  in  Favor  of  State  Products. — Of  course  any  system 
of  license  taxes  which  discriminates  between  the  products  or  manufactures  of 
different  states:  IVeltonv.  Missouri,  91  U.  R.  275;  Tiernan  v.  Jiinker,  102  U.  S. 
123;  Webber  v.  Virginia,  103  U.  S.  344;  Walling  v.  Michigan,  116  U.  S.  446; 
or  gives  a  citizen  or  resident  of  the  state  a  riglit  to  carry  on  commerce  on 
more  favorable  terms  than  are  accorded  to  citizens  of  other  states,  —  cannot  be 
sustained:  Ward  v.  Maryland,  12  Wall.  418;  State  v.  Wiggin,  64  N.  H.  508. 
A  statute  imposing  a  license  tax  upon  peddlers  of  articles  manufactured  out- 
side of  the  state  is  invalid,  because  it  is  an  attempted  discrimination  in  favor 
of  the  manufactures  of  the  state:  Welton  v.  Missouri,  91  U.  S.  275;  State  v. 
Pratt,  59  Vt.  590;  Bodgers  v.  McCoy,  6  Dak.  238;  Wrought  Iron  Co.  v.  Johnscyn, 
84  Ga.  754;  MarshalUown  v.  Blum,  58  Iowa,  184;  43  Am.  Rep.  115;  Vines  v. 
State,  67  Ala.  73;  State  v.  Browning,  62  Mo.  591;  but  a  license  tax  may  be  im- 
posed upon  all  peddlers,  or  upon  peddlers  of  a  particular  class  of  goods,  and 
when  imposed,  uo  peddler  can  escape  from  its  payment  on  the  ground  that  the 
articles  he  happens  to  sell  were  wholly  or  partly  manufactured  or  produced 
in  another  state:  State  v.  Emert,  103  Mo.  241;  23  Am.  St.  Rep.  874;  State  v. 
Smithson,  106  Mo.  149;  Ex  parte  Bulin,  28  Tex.  App.  304;  and  it  has  been 
held  that  a  state  may  prohil)it  all  sales  by  peddling  within  its  limits:  Com- 
monwealth  v.  Gardner,  133  Pa.  St.  284;  19  Am.  St.  Rep.  645. 

License  Fee  Exacted  of  Inter st(Ue  Commerce. — A  state  cannot  first  declare 
that  the  carrying  on  of  some  portion  of  interstate  commerce  is  a  privilege, 
and  then  impose  a  license  tax  for  the  exercise  of  such  privilege.  It  is  obvious 
that  to  do  this  is  equivalent  to  the  power  to  tax  all  interstate  commerce  out 
of  existence.  Therefore  a  statute  imposing  a 'license  tax  on  each  sleeping- 
car  not  owned  by  the  road  upon  which  it  is  run  within  the  state  is  uncon- 
stitutional: Pichard  v.  Pullman  Car  Co.,  117  U.  S.  34;  Tennessee  v.  Pullman 
Car  Co.,  1 17  U.  S.  51.  A  license  tax  cannot  be  imposed  upon  persons  owning 
and  running  tow-boats  to  and  from  the  Gulf  of  Mexico  and  the  city  of  New 
Orleans,  because  to  permit  its  imposition  might  enable  the  state  to  regulate 
interstate  commerce,  and  tlie  license  fee  is  in  effect  a  charge  upon  "the  price 
of  the  privilege  of  navigating  the  Mississippi  River  between  New  Orleans  and 
the  gulf,  in  the  coastwise  trade":  Moran  v.  New  Orleans,  112  U.  S.  74. 

According  to  tlie  ordinary  course  of  business,  a  bill  of  lading  "  is  invariably 
associated  with  every  cargo  of  merchandise  exported  to  a  foreign  country, 
and  consequently  a  duty  upon  that  is,  in  substance  and  effect,  a  duty  upon 
the  article  imported."  A  statute  imposing  a  stamp  duty  on  bills  of  lading 
for  gold  or  silver  transported  from  a  port  within  to  a  port  without  the  state 
is  therefore  void:  Alniy  v.  CaUfornia,  24  How.  169.  If  a  statute  of  a  state 
imposes  an  excise  tax  upon  tobacco,  but  exempts  from  such  tax  tobacco  in- 
tended for  export,  and  requires  every  package  intended  for  export  to  have 
affixed  to  it  an  engraved  stamp  imiicative  of  such  intention,  and  allows  the 
sum  of  twonty-ffve  cents  to  be  charged  for  affixing  each  of  such  stamps,  such 
statute  merely  provides  a  mode  of  identifying  tlie  articles  intended  for  export, 
and  of  securing  their  exemption  from  the  tax  to  which  they  would  otherwise 


664  People  v.  Wemple.  [New  York, 

be  liaMe,  anrl  is  therefore  constitutional:  Pare  v.  Burgess,  92  U.  S.  372; 
Turi>in  v.  Burgess,  117  U.  S.  504;  Coe  v,  Errol,  116  U.  S.  517. 

Corporations.  — In  the  note  to  Stale  v.  Goodwill,  25  Am.  St.  Rep.  873,  we 
considered  the  right  of  a  state  to  discriminate  against  corporations  formed  in 
other  states,  and  reached  the  conclusion  that  a  state  might  exclude  them 
from  doing  business  within  its  territory,  or  impose  upon  them  such  restric- 
tions as  it  thought  proper:  S<.'e  also  Pmi'/ina  M.  Co.  v.  Pennsylvania,  125 
U.  S.  181;  Pacific  E.  Co.  v.  Seihert,  142  U.  S.  339.  From  this  general  rule 
must  be  excepted  corporations  formed  for  the  purpose  of  engaging  in  inter- 
state commerce.  The  state  has  no  power  to  prevent  their  doing  such  business 
within  its  territory,  nor  can  it  impose  upon  them  restrictions  or  obligations 
beyond  its  power  to  impose  upon  natural  persons  engaged  in  the  same  busi- 
ness under  like  circumstances:  Pensacola  T.  Co.  v.  Western  Union  Tel.  Co., 
96  U.S.  1;  Cooper  Mfg.  Co.  v.  Ferguson,  113  U.  S.  727;  Paul  v.  Virginia,  8 
Wall.  183;  Western  Union  Tel.  Co.  v.  Massachusetts,  125  U.  S.  530;  Leloiip  v. 
Mobile,  127  U.  S.  640;  Norfolk  Je  W.  R.  R.  v.  Pennsylvania,  136  U.  S.  114 

The  Police  Poioer  and  Interstate  Commerce. —  The  implied  prohibition  against 
the  regulation  of  interstate  and  foreign  commerce  by  any  state,  like  most 
other  constitutional  inhibitions,  cannot  be  properly  considered  without  re- 
meniberiug  the  police  power  vested  in  the  several  states,  though  the 
more  recent  decisions  of  the  national  courts  affirm  that  no  exercise  of  this 
power  can  be  sustained  which  results  in  the  regulation  of  such  commerce: 
Railroad  Co.  v.  Hmen,  95  U.  S.  465;  Minnesota  v.  Barber,  136  U.  S.  313; 
Brimmer  v.  Rehman,  138  U.  S.  78;  Bowman  v.  Chicago,  125  U.  S.  460;  Leisy 
V.  Hardin,  135  U.  S.  100.  "  By  the  settled  doctrines  of  this  court,  the  police 
power  extends,  at  least,  to  the  protection  of  the  lives,  the  health,  and  the 
property  of  the  community  against  the  injurious  exercise  by  any  citizen  of 
his  own  rights.  State  legislation,  strictly  and  legitimately  for  police  pur- 
poses, does  not,  in  the  sense  of  the  constitution,  necessarily  intrench  upon 
any  autliority  which  has  been  confided,  expressly  or  by  implication,  to  the 
national  government":  Patterson  v.  Kentucky,  97  U.  S.  504;  License  Cases,  5 
How.  583.  "  But  it  does  not  follow  that  everything  which  the  legislature  of 
a  state  may  deem  essential  for  the  good  order  of  society  ami  the  well-being 
of  its  citizens  can  be  set  up  against  the  exclusive  power  of  Congress  to  regu- 
late the  operations  of  foreign  and  interstate  commerce.  We  have  lately  ex- 
pressly decided  in  the  case  of  Leisy  v.  Hardin,  135  U.  S.  100,  that  a  state 
law  prohibiting  the  sale  of  intoxicating  liquors  is  void  when  it  comes  in  con- 
flict with  the  express  or  implied  regulation  of  interstate  commerce  by  Con- 
gress, declaring  that  the  traffic  in  such  liquors  as  articles  of  merchandise 
between  the  states  shall  be  free.  There  are,  undoubtedly,  many  things  which 
in  their  nature  are  so  deleterious  or  injurious  to  the  lives  and  health  of  the 
people  as  to  lose  all  benefit  of  protection  as  articles  or  things  of  commerce, 
or  to  be  able  to  claim  it  only  in  a  modified  way.  Sucli  things  are  properly 
subject  to  the  police  power  of  the  state.  Chief  Justice  Marshall,  in  Broum 
V.  Maryland,  12  Wheat.  419,  443,  instances  gunpowder  as  clearly  subject  to- 
the  exercise  of  the  police  power  in  regard  to  its  removal  and  the  place  of  its 
storage;  and  he  adds:  'The  removal  or  destruction  of  infectious  or  unsound 
articles  is,  undoubtedly,  an  exercise  of '  that  power,  and  forms  an  express 
exception  to  the  prohibition  we  are  considering.  Indeed,  the  laws  of  the 
United  States  expressly  sanction  the  health  laws  of  a  state.'  Chief  Justice- 
Taney,  in  the  License  Cases,  5  How.  504,  576,  took  the  same  distinction  when 
he  said:  'It  has,  indeed,  been  suggested,  that  if  a  state  deems  the  traffic 
ia  ardent  spirits  to  be  injurious  to  its  citizens,  and  calculated  to  introduce 


Feb.  1892.]  People  v.  Wemple.  565 

immorality,  vice,  and  pauperism  into  the  state,  it  may  constitutionally  refuse 
to  permit  its  importation,  notwithstanding  the  laws  of  Congress;  and  that  a 
state  may  do  this  upon  the  same  principles  that  it  may  resist  and  prevent  the 
introduction  of  disease,  pestileuce,  and  pauperism  from  abroad.  But  it  must 
be  remembered  tliat  disease,  pestilence,  aud  pauperism  are  not  subjects  of 
commerce,  although  sometimes  among  its  attendant  evils.  They  are  not 
things  to  be  regulated  and  tr;ifficked  in,  but  to  be  prevented,  as  far  ashumaa 
foresight  or  human  means  can  guard  against  them.  But  spirits  aud  distilled 
liquors  are  universally  admitted  to  be  subjects  of  ownership  and  property, 
and  are  therefore  subjects  of  exchange,  barter,  and  traffic,  like  any  other 
commodity  in  which  a  right  of  property  exists.'  But  whilst  it  is  only  such 
things  as  are  clearly  injurious  to  the  lives  and  health  of  the  people  that 
are  placed  beyond  the  protection  of  the  commercial  power  of  Congress,  yet 
when  that  power,  or  some  other  exclusive  power  of  the  federal  government, 
is  not  in  question,  the  police  power  of  the  state  extends  to  almost  everything 
within  its  borders,  —  to  the  suppression  of  nuisances;  to  the  prohibition  of 
manufactures  deemed  injurious  to  the  public  health;  to  the  proliibition  of 
intoxicating  drinks,  their  manufacture  or  sale;  to  the  prohibition  of  lotter- 
ies, gambling,  horse-racing,  or  anything  else  that  the  legislature  may  deem 
opposed  to  the  public  welfare:  BaHemeyer  v.  Iowa,  IS  Wall.  129;  Beer  Com- 
pani/  V.  Ma^sachusi'ttx,  97  U.  S.  25;  Fertilizing  Co.  v.  Hyde  Park,  97  U.  S.  659; 
Stone  V.  Mississippi,  101  U.  S.  814;  Foster  v.  Kansas,  112  U.  S.  201;  Mugler 
V.  Kansas,  123  U.  S.  623;  Powell  v.  Pennsylnania,  127  U.  S.  678;  Kidd  v. 
Pearson,  128  U.  S.  1;  KimmM  v.  Ball,  129  U.  S.  217.  It  is  also  within  the 
undoubted  province  of  the  state  legislature  to  make  regulations  with  regard 
to  the  speed  of  railroad  trains  in  the  neighborhood  of  cities  and  towns;  with 
regard  to  the  precautions  to  be  taken  in  the  approach  of  such  trains  to  bridges, 
tunnels,  deep  cuts,  and  sharp  curves;  and  generally,  with  regard  to  all  op- 
erations in  which  the  Kvesand  health  of  the  people  maybe  endangered,  evea 
though  such  regulations  affect  to  some  extent  the  operations  of  interstate 
commerce.  Such  regulations  are  eminently  local  in  their  character,  and  in 
the  absence  of  congressional  regulations  over  the  same  subject,  are  free  from 
all  constitutional  objections,  aud  unquestionably  valid  ":  Crutcher  v.  Kentucky, 
141  U.  S.  59. 

One  of  the  undoubted  subjects  of  the  police  power  is  the  protection  of  the 
public  from  imposition  aud  fraud,  and  a  state  may,  therefore,  in  the  exercise 
of  that  power,  ordinarily  provide  against  the  manufacture  or  sale  of  adulter- 
ated articles  of  food,  or  articles  manufactured  and  put  up  in  such  a  form  as 
to  impose  upon  purchasers,  and  lead  them  to  believe  they  are  purchasing  a 
different  article  from  that  in  fact  sold  to  them.  Principally,  upon  this  ground, 
8tat\ites  proliibiting  the  manufacture  and  sale  of  oleomargarine  have  been  sus- 
tained by  the  national  courts;  but  in  the  case  in  which  the  question  was  pre- 
sented, the  court  did  not  consider  whether  such  a  statute  might  not  be 
objectionable  as  a  regulation  of  interstate  commerce:  Powell  v.  Pennsi/loania, 
127  U.  S.  678.  In  two  states  in  which  the  question  has  arisen,  tiieir  courts 
have  affirmed  the  power  of  the  state  to  protect  the  public  agaiust  deception, 
and  have  therefore  denied  the  right  to  sell  oleomargarine  when  in  such  a 
form  as  to  deceive  purchasers  into  the  belief  that  it  was  butter,  though  it  liad 
been  imported  from  anotlier  state  and  remained  in  the  original  packages: 
Connnomvealth  v.  Huntley,  30  N.  E.  Rep.  1127  (Mass.,  May  2,  1892);  Waterlmry 
▼.  Newton,  50  N.  J.  L.  534;  contra.  State  v.  Oooch,  44  Fed.  Rep.  276. 

Inspertion  Laws.  — Some  of  the  states  have,  from  time  to  time,  passed  in- 
spection laws,  the  purpose  of  which  generally  was  to  prepare  products  of  the 


566  People  v.  Wemple.  [New  York, 

state  for  exportation,  and  to   this  extent  the  validity  of   inspection  laws 
has  not  been  seriously  contested,  and  when  contested,  has  been  affirmed: 
Turner  v.  Maryldnd,  107  U.  S.  38.     Perhaps  there  may  also  be  state  inspec- 
tion laws  applicable  to  property  imported  into  the  state,  but  if  so,  they  must 
apply  to  all  property  of  the  same  class,  and  not  subject  to  inspection  the  pro- 
ducts or  manufactures  of  other  states,  while  those  of  the  state  are  exempt: 
Vo/ght  V.  Wri'jht,  141  U.  S.  (32.     A  statute  of  Kentucky  required  the  guaging 
and  inspection  of   all  oils  and  fluids,  the  products  of   coal,  petroleum,  or 
other  bituminous  substances  intended  for  use  for  illuminating  purposes,  and 
provided  that  such  oils  as  ignite  or  permanently  burn  at  a  less  temperature 
than  130  degrees  Fahrenheit  should  be  condemned  as  unsafe  for  such  pur- 
poses, and  the  casks  or  barrels  in  which  they  were  contained  should  be 
branded  as  unsafe,  and  all  persons  selling  oils  the  casks  or  barrels  of  which 
were  so  branded  should  be  subject  to  a  penalty  prescribed  by  the  statute. 
A  particular  oil,  the  exclusive  right  to  manufacture  which  was  protected  by 
letters  patent,  having  been  condemned,  and  notwithstanding  the  condemna- 
tion sold,  a  conviction  of  the  vendor  was  sustained,  on  the  ground  that  the 
statute  was  an  ordinary  police  regulation  providing  a  proper  inspection  for 
the  purpose  of  determining  whether  articles  were  dangerous,  and  therefore 
uutit  for  use;  and  the  court  affirmed  the  general  authority  of  each  state  to  pro- 
tect its  citizens  against  the  introduction  within  its  limits  of  infected  mer- 
chandise, paupers,  convicts,  or  persons  likely  to  become  a  public  charge,  or 
animals  having  contagious  diseases,  and  "the  necessity  growing  out  of  the 
fundamental  conditions  of  civil  society  of  upholding  such  state  regulations 
enacted  in  good  faith,  and  which  had  appropriate  and  direct  connection  with 
that  protection  to  life,  health,   and  property  which  each  state  owes  to  its 
citizens  ":    Patterson  v.  Kentucky,  97  U.   S.  501.     No  inspection  law  can  be 
sustained  if  its  operation  must  be  to  exclude  from  one  state  the  products  of 
another  by  imposing  conditions  with  which  it  is  not  possible  to  comply  with- 
out incurring  such  inconvenience  or  expense  as  no  importer  could  atford  to 
incur.     Tlierefore,  a  statute   providing  that  no   fresli    meats  shall  be  sold 
within  the  state  unless  from  animals  inspected  therein  within   twenty-four 
hours   before  being  killed,    or  from  animals  slaughtered  within  a  hundred 
miles  from  the  place  where  their  meat  is  exposed  for  sale,  unless  such  meat 
is  inspected,  and  a  charge  of  one  cent  per  pound  is  paid  for  such  inspection,  is 
invalid,  because  its  practical  operation  must  be  to  exclude  from  sale  the  flesh 
of  all  cattle,  whether  healthy  or  not,  not  killed  within  the  state  in  the  one 
case,  or  slaughtered  within  one  hundred  miles  from  the  place  of  sale  in  the 
other:   Minnesota  v.  Barber,  136  U.  S.  313;  Statev.  Klein,  126  lud.  68;  Brim- 
mer V.  Rehman,  138  U.  S.  78. 

Health,  Regulations  to  Secure  and  Protect.  — Regulations  imposed  in  good  faith 
by  a  state,  for  the  purpose  of  promoting  and  better  securing  the  health  of  its 
citizens  and  protecting  them  from  contagion,  may  doubtless  incidently  aflect 
or  regulate  interstate  or  foreign  commerce  without  being  unconstitutional. 
This  is  one  of  the  subjects  upon  which  the  local  authorities  may  act,  at  least 
until  Congress  has  taken  some  action.  Thus  a  dam  on  a  navigable  stream 
••  passing  through  a  deep,  level  marsh  "  may  be  authorized  by  the  state  when 
"the  value  of  the  property  on  its  banks  must  be  enhanced  by  excluding  the 
water  from  the  marsh,  and  the  health  of  the  inhabitants  probably  improved; 
measures  calculated  to  produce  these  objects,  provided  they  do  not  come 
into  collisitjii  with  the  powers  of  the  general  government,  are  undoubtedly 
within  those  reserved  to  the  states  ":  Willson  v.  Blackbird  Creek  Marsh  Co.,  2 
Pet.  245. 


Feb.  1892.]  People  v.  Wemple.  667 

The  Enactment  of  Quarantine  Laws  is  confessedly  "within  the  province  of 
the  states  of  the  Union."  Whether  an  enactment  of  this  character  can  pre- 
vail against  any  act  of  Congress  regulating  commerce  it  has  not  yet  beeu 
necessary  to  determine,  but  we  have  no  doubt  that  the  national  courts  will 
sustain  and  enforce  national  regulation  of  this  subject,  whenever  it  comes  ia 
conflict  with  any  state  regulation.  A  statute  of  Louisiana,  requiring  the 
examination  of  all  vessels  passing  a  certain  quarantine  station,  and  allowing 
the  examining  officer,  for  making  the  inspection  and  granting  a  certificate,  cer- 
tain fees,  designated  in  the  statute,  was  sustained,  on  the  ground  that  "quar- 
antine laws  belong  to  that  class  of  legislation  which,  whether  passed  with 
intent  to  regulate  commerce  or  not,  must  be  admitted  to  have  that  effect, 
and  which  is  valid  until  displaced  or  contravened  by  some  legislation  of 
Congress."    Morgan  etc.  Co.  v.  Louisiana  etc.  Board  of  Health,  118  U.  S.  455. 

Live-stock,  forming  part  of  the  property  of  citizens  of  a  state,  may,  as 
well  as  their  owners,  be  liable  to  contract  contagious  diseases  brought  from 
other  states  or  countries.  May  this  property  be  protected  by  appropriate 
state  regulations  tending  to  exclude  contagion,  or  at  least  to  render  its 
introduction  into  the  state  less  probable  ?  A  state  cannot  prohibit  the  intro- 
duction witliin  its  lines  of  all  cattle  from  certain  otlier  states  during 
certain  spec  fied  months  during  the  year,  for  this  is  exclusion  rather  than 
protection,  and  is  an  indiscriminate  condemnation  of  healthy  as  well  as  dis- 
eased cattle:  Hannibal  <fc  St.  J.  R.  R.  Co.  v.  Husen,  95  U.  S.  465;  (Trton  v. 
Sherlock,  75  Mo.  247;  Sahemtein  v.  Mavis,  91  111.  391.  A  different  result 
would  probably  have  been  reached,  had  it  been  shown  that  all  cattle  coming 
from  the  localities  named,  "during  the  months  mentioned,  were  infected 
with  disease,  or  that  such  cattle  were  so  generally  infected  that  it  would 
have  been  impossible  to  separate  the  healthy  from  the  diseased  ";  and  it  is 
settled  that  there  is  no  constitutional  objection  to  a  state  statute  making  a 
person  having  in  his  possession  Texas  cattle  liable  for  any  damage  accruing 
from  their  running  at  large,  and  thereby  spreading  the  disease  known  as 
"Texas  fever":  Kimmish  v.  Ball,  129  U.  S.  217. 

Reijulations  for  the  Observance  of  Common  Carriers  may  also  be  prescribed 
by  the  state,  and  enforced  against  persons  and  corporations  engaged  in  inter- 
state commerce,  where  they  are  intended  merely  to  secure  good  and  prompt 
service,  and  to  diminish  the  danger  to  which  passengers  and  others  are  ex- 
posed. Hence  locomotive  engineers  may  be  required  to  pass  examinations 
designed  to  test  their  competency  for  the  duties  which  their  employment 
devolves  upon  them,  and  to  take  out  a  license  showing  that  they  have  suc- 
cessfully passed  such  examination,  and  to  pay  a  reasonable  charge  for  the 
services  rendered  in  making  the  examination  and  issuing  the  license:  Smith 
V.  Alabama,  124  U.  S.  465;  Dent  v.  West  Vinjinia,  129  U.  S.  114;  Nashville 
etc.  R.  R.  Co.  V.  Alabama,  128  U.  S.  96.  On  the  ground  that  natural  gas, 
under  a  high  pressure,  is  dangerous,  it  has  been  held  that  a  statute  prohibit- 
ing its  being  subjected  to  a  pressure  of  more  than  three  hundred  pounds  to 
the  square  inch  is  valid,  and  may  be  enforced  against  a  corporation  sul)ject- 
ing  gas  to  a  greater  pressure  while  being  carried  out  of  the  state  in  pipes: 
Jamiesonv.  Indiana  etc.  Co.,  12S  Ind.  555.  Many  other  regulations  of  common 
carriers  have  been  upheld  by  the  state  courts,  though  undoubtedly  affecting 
commerce,  of  which  the  following  are  instances:  Making  railroads  liable  for 
fires  started  by  sparks  from  their  locomotives:  Smith  v.  Boston  <t  M.  R.  R. 
Co.,  63  N.  H.  25;  prescribing  the  times  when  ticket  offices  shall  be  open: 
Hall  v.  S.  C.  R.  R.  Co.,  25  S.  C.  5154;  imposing  a  penalty  for  refusing  to 
deliver  freight:  Gulf  etc.  R.  R.  Co.  v.  Dwyer,  75  Tex.  572;  16  Am.  St.  Rep. 


568  People  v.  Wemple.  [New  York, 

926;  requiring  connecting  railroads  to  transfer  freight  and  passengers:  Coun- 
cil Bluffs  V.  Kansas  etc.  R.  R.  Co.,  45  Iowa,  338;  24  Am.  Rep.  773;  or  through- 
trains  to  stop  within  the  state:  Chicago  etc.  R.  R.  Co.  v.  People,  105  111,  657; 
or  separate  accommodations  to  be  provided  for  white  and  colored  persons, 
but  not  attempting  to  apply  this  rule  to  interstate  passengers:  Louisville  etc 
R.  R.  Co.  V.  3i;ssl>:sippi,  133  U.  S.  5S7;  66  Miss.  662;  14  Am.  St.  Rep.  599; 
but  a  state  statute  umlertaking  to  prescribe  wiiat  accommodations  shall  be 
furnished  for  either  freight  or  passengers  is  inapplicable  to  interstate  com- 
merce: Stanley  v,   Wabash  etc.  R.  R.  Co.,  100  Mo.  435. 

Statutes  Forbidding  the  Manufacture  or  Sale  of  Intoxicating  Liquors  within 
a  state  do  not  ordinarily  directly  interfere  with  interstate  commerce,  and 
when  they  do  not,  are  sustainable:  Kidd  v.  Pearson,  128  U.  S.  1;  Mugler  v. 
Kanms,  123  U.  S.  623.  It  was  finally  held  by  the  supreme  court  of  the 
United  States,  three  justices  dissenting,  that  a  state  could  not,  in  the  exer- 
cise of  its  police  power,  prevent  the  importing  of  intoxicating  liquors  from 
another  state:  Bowman  v.  Chicago  etc.  R.  R.  Co.,  125  U.  S.  465;  nor  deny  to 
the  importer  the  right,  after  such  importation,  to  sell  them  while  in  the 
original  packages:  Leisy  v.  Hardin,  135  U.  S.  100.  So  great  was  the  dissatis- 
faction created  by  this  decision  that  Congress  interposed,  and  by  a  statute, 
enacted  Augusts,  1890,  subjected  all  fermented,  distilled,  or  other  intoxicat- 
ing liquors  imported  into  any  state  or  territory  to  the  operation  and  effect  of 
the  laws  of  such  state  or  territory,  enacted  in  the  exercise  of  its  police 
powers,  to  the  same  extent  and  in  the  same  manner  as  though  produced  in 
such  state  or  territory,  and  this  congressional  legislation  has  been  pronounced 
constitutional:  In  re  Rahrer,  140  U.  S.  545.  Before  the  enactment  of  this 
statute  the  supreme  court  of  Pennsylvania  had  sustained  a  statute  forbidding 
the  sale  of  intoxicating  liquors,  though  still  in  the  original  packages,  to  per- 
sons of  known  intemperate  habits:  Commonwealth  v.  Zelt,  138  Pa.  St.  615; 
Com>iwinivalth  v.  Swlhart,  138  Pa.  St.  629;  Commonwealth  v.  Bishmnn,  138 
Pa.  St.  639;  Commonwealth  v.  Silverman,  138  Pa.  St.  642;  Commonwealth  v. 
Pewlergast,  138  Pa.  St.  633. 

Commerce  ivithin  the  State.  —  It  seems  proper  to  here  remind  the  reader  that 
as  to  that  commerce  which  is  neither  interstate  nor  foreign,  each  state  has 
complete  control  of  so  much  of  it  as  takes  place  within  its  territorial  limits, 
or  at  least,  that  whenever  state  control  is  limited  it  must  be  by  some  constitu- 
tional inhibition  different  from  any  we  have  been  considering.  "We  pro- 
ceed to  remark,  that  a  glance  at  the  commerce  clause  of  the  constitution 
discloses  at  once,  what  has  often  been  a  source  of  comment  in  this  court  and 
out  of  it,  that  the  power  to  regulate  there  conferred  on  Congress  is  limited 
to  commerce  with  foreign  nations,  commerce  among  the  states,  and  com- 
merce with  the  Indian  tribes;  and  while  bearing  in  mind  the  liberal  con- 
struction that  commerce  with  foreign  nations  means  commerce  between 
citizens  of  tlie  United  States  and  citizens  and  subjects  of  foreign  nations,  and 
that  commerce  among  the  states  means  commerce  between  individual  citi- 
zens of  different  states,  there  still  remains  a  very  large  amount  of  commerce, 
perhaps  the  largest,  which,  being  trade  or  traffic  between  citizens  of  the 
same  state,  is  beyond  the  control  of  Congress":  Trade-mark  CaS';s,  100  U.  S. 
82;  Moor  v.   Veazie,  32  Me.  343;  52  Am.  Dec.  655;  affirmed,  14  How.  568. 


AMERICAN  SI  AlK  REPORTS. 

Vol.   XX Vm,   Packs  -nD-^iWi. 
CHES.  (Slc.  TEi;.   ro.   r.   MM'KMSyAK. 

Telegraph  and  Telephone  poles  across  private 
property. 


CASES 

IN  THB 

SUPREME    COURT 

ov 

MARYLAND. 


Chesapeake  and  Potomac   Telephone   Company 

V,  Mackenzie. 

[74  Maryland,  36.J 

Tblephone  Company  —  Ereci'Ion  of  Pole  in  Street  —  Injunction. — A 
declaration  alleging  that  plaintiff  is  possessed  of  a  valuable  warehouse, 
and  that  defendant,  a  telephone  company,  without  his  authority  or  con- 
sent, and  without  making  or  offering  to  make  compensation  therefor,  has 
planted  a  large  and  unsightly  pole  in  front  of  such  warehouse,  which  ob- 
structs and  prevents  the  comfortable,  reasonable,  and  beneficial  enjoy- 
ment and  use  of  such  premises,  without  alleging  the  mode  and  manner  of 
such  obstruction  and  interference,  states  a  cause  of  action,  and  may  prop- 
erly include  a  prayer  for  injunction. 

Pleading  —  Demurrer  —  iNJaNcrioN. — The  question  as  to  whether  tho 
additional  relief  asked  by  way  of  injunction  is  appropriate  or  not,  under 
the  facts  disclosed  by  the  declaration,  must  be  raised  by  special  demur- 
rer, and  a  general  demurrer,  whether  interposed  directly  to  the  declara- 
tion or  to  some  subsequent  pleading,  will  not  be  sufficient  to  raise  that 
question. 

TiiRPHONE  Company — Authority  to  Plant  Poles  cannot  bk  En- 
larged BY  Ordinance.  — The  planting  of  a  telegraph  or  telephone  pole 
in  a  liighway  or  street  is  not  a  public  nuisance  when  sanctioned  by  stat- 
ute; but  tlie  right  to  so  plant  such  pole  is  derived  from  and  depends 
solely  on  such  statute,  and  cannot  be  enlarged  by  municipal  ordinance. 

Telephone  Company  —  Planting  Polk  in  Strbet  —  Additional  Servi- 
tude. —  When  the  fee  in  the  bed  of  a  street  or  highway  is  in  the  abut- 
ting land-owner,  the  planting  of  a  telegraph  or  telephone  pole  therein  is 
an  additional  servitude  imposed  upon  the  land,  for  which  such  owner  is 
entitled  to  compensation  of  which  he  cannot  be  deprived  by  statute. 

Telephone  Company  —  Planting  Polk  in  Street —Damages  for  Spe- 
cial Injury  —  iNjaNCXiON.  — When  land  has  been  acquired  for  streets 
by  the  exercise  of  the  right  of  eminent  domain,  and  has  been  appropri- 
ated by  a  corporation  for  the  planting  of  telegraph  or  telephone  poles, 
under  legislative  and  municipal  sanction,  so  as  to  unreasonably  abridge 

219 


'2j..)      Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     [Maryland^ 

the  right  of  adjacent  lot-owners  to  the  use  of  the  street  as  a  means  of 
ingress  and  egress,  or  otherwise,  they  are  thereby  deprived  of  a  right 
without  compensation,  and  may  maintain  an  action  against  such  corpora- 
tion for  the  recovery  of  the  immediate  and  direct  damages  sustained  by 
them.  In  an  appropriate  case  an  injunction  may  be  procured  to  prevent 
a  coiitinuance  of  the  interference  with  the  use  of  the  street. 

Telephone  Company  —  Planting  Pole  in  Street — MsAsaRE  o»  Dam- 
ages. —  In  an  action  by  an  abutting  owner  on  a  street  or  highway  to 
recover  of  a  telephone  company  for  placing  a  pole  in  front  of  his  premises, 
the  measure  of  damages  is  not  what  a  particular  individual  would  be 
willing  to  charge  for  having  the  pole  put  up  or  remain,  nor  the  amount 
some  other  person  might  consider  the  rental  value  was  depreciated  for 
the  purpose  of  his  business;  but  when  plaintiff's  land  is  not  actually 
taken  nor  his  soil  invaded,  the  measure  of  damages  is  the  extent  to 
which  the  rental  or  usable  value  of  the  particular  property  has  been 
diminished  by  the  erection  of  the  pole,  or  the  difiference  in  the  value  of 
the  property  before  the  erection  of  the  pole  and  afterwards,  if  the  de- 
preciiitioa  has  been  caused  by  its  erection. 

Pleadings  —  Instruction.  —  When  a  complaint  alleges  the  possession  by 
plaintiff  of  a  warehouse,  and  an  interference  with  his  use  and  enjoyment 
thereof  by  the  erection  of  a  telephone  pole,  without  alleging  a  reversion- 
ary interest  in  the  warehouse,  and  the  proof  shows  that  the  premises 
were  in  the  possession  of  a  tenant  of  the  plaintiff,  a  prayer  for  an  instruc- 
tion that  plaintiff  is  not  entitled  to  recover  damages  for  the  erection  of 
the  pole,  without  making  any  reference  to  the  pleadings,  is  properly  re- 
fused, if  the  evidence  is  sufficient  to  sustain  any  action  by  plaintiff  as  the 
owner  of  the  reversion  in  the  warehouse. 

Charles  J.  M.  Gwinn,  for  the  appellant. 
George  Norbury  Mackenzie  and  John  V.  L.  Findlay,  for  the 
appellee. 

McSherry,  J.  The  declaration  in  this  case  alleges  "  that 
the  plaintifif  is  possessed  of  a  lot  of  ground,  with  the  improve- 
ments thereon,  being  valuable  warehouse  property,  known  as 
No.  22  South  Charles  Street,  and  while  so  possessed  the  de- 
fendant, without  her  authority  or  consent,  and  without  making 
or  offering  to  make  compensation  therefor,  planted  a  large  and 
unsightly  pole  in  the  footway  in  front  of  said  premises,  which 
obstructs  and  prevents  the  comfortable  and  reasonable  and 
beneficial  enjoyment  and  use  of  the  said  premises,  and  though 
repeatedly  notified  to  remove  the  said  pole,  refuses  so  to  do, 
although  a  reasonable  time  for  the  removal  of  the  same  has 
elapsed,"  etc.  There  is  added  an  application  for  an  injunction 
under  section  117  of  article  75  of  the  code.  The  defendant  filed 
three  pleas.  The  second  was  the  plea  of  not  guilty,  and  the 
first  and  third  are  as  follows,  viz.:  "  That  the  defendant,  at  the 
time  of  the  alleged  trespass,  was  duly  incorporated  as  a  tele- 
phone company  under  the  laws  of  the  state  of  Maryland,  and 


March,  1891.]     Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     221 

was  entitled  as  a  corporation  so  formed,  in  the  prosecution  of 
its  business,  and  for  the  purpose  thereof,  to  erect  and  maintain 
the  pole  upon  the  footway  of  South  Charles  Street,  in  the  city 
of  Baltimore,  in  front  of  the  warehouse  of  the  plaintiff,  com- 
plained of  in  the  declaration  of  the  plaintiff,  without  making, 
or  offering  to  make,  compensation  therefor  to  the  plaintiff; 
and  that  the  alleged  trespass  complained  of  in  the  declaration 
of  the  plaintiff  was  a  use  by  the  defendant  of  its  said  right"; 
3.  "  That  the  plaintiff  ought  not  further  to  have  or  maintain 
her  aforesaid  action  against  it,  because  it  says  that  by  a  cer- 
tain ordinance  of  the  mayor  and  city  council  of  Baltimore, 
approved  on  the  ninth  day  of  May  in  the  year  1889,  and  since 
the  institution  of  the  suit  in  this  cause,  it,  the  said  defendant, 
was  and  is  authorized  to  maintain  its  said  pole  in  and  upon 
the  footway  of  Soutli  Charles  Street,  in  the  city  of  Baltimore, 
in  front  of  the  warehouse  of  the  plaintiff  complained  of  in  the 
declaration  of  the  plaintiff,  for  the  period  of  two  years  after 
the  said  date  of  the  approval  of  said  ordinance,  and  so  long  as 
said  pole  ia  necessary  to  be  maintained  by  the  defendant  for 
the  purpose  of  making  distribution  of  and  forming  connections 
between  any  wire  or  wires  forming  part  of  the  underground 
wire  cables  authorized  by  said  ordinance  to  be  laid  within  the 
limits  of  the  city  of  Baltimore."  To  these  pleas,  —  the  first 
and  third, —  the  plaintiff  demurred,  and  the  court  of  common 
pleas  sustained  the  demurrer.  It  is  insisted  by  the  appellant, 
the  defendant  below,  that  as  the  demurrer  mounted  to  the  first 
fault  in  the  pleading,  the  court  ouglit  to  have  ruled  the  decla- 
ration to  be  bad,  and  its  failure  to  do  so  is  assigned  as  the  first 
error  for  review  on  this  appeal.  We  are,  of  course,  confined 
to  the  declaration  itself  in  determining  its  legal  sufficiency. 
Neither  the  averments  of  the  pleas  nor  the  evidence  in  the' 
record  can  be  looked  to  or  considered  in  passing  upon  that 
question.  The  forms  of  pleading  have  been  materially  changed 
by  legislation,  and  since  the  adoption  of  the  simplification  act, 
which  is  substantially  incorporated  in  the  code,  nothing  more 
is  needed  in  a  declaration  than  a  plain  statement  of  the  facts 
which  are  relied  on  to  sustain  a  recovery:  Code,  art.  75,  sec. 
3.  Whilst  it  does  not  appear  from  the  narr.  whether  the  foot- 
way in  front  of  the  warehousepreniises  is  a  public  thoroughfare 
or  not,  or  whether  the  title  to  it  is  in  the  plaintiff,  it  is  dis- 
tinctly alleged  that  the  plaintiff  is  possessed  of  a  valuable 
warehouse  property,  and  that  without  her  authority  or  consent 
the   defendant   planted  a  large  and    unsightly  pole  in  front 


222      Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     [Maryland, 

thereof,  which  obstructs  and  prevents  the  comfortable  and  rea- 
sonable and  beneficial  enjoyment  and  use  of  the  premises.  As 
framed,  the  narr.  alleges  a  direct  interference  by  the  defendant 
with  the  use  and  enjoyment  by  the  plaintiflf  of  her  property. 
And  it  further  alleges  that  this  interference  was  without  her 
authority  or  consent.  If  these  facts  be  true,  why  do  they  not 
furnish  a  ground  of  action?  That  the  appellee  had  the  right  to 
the  comfortable,  reasonable,  and  beneficial  use  and  enjoyment 
of  her  property  is  undeniably  true,  unless  the  contrary  be 
averred  and  shown.  That  the  unauthorized  obstruction  of  or 
interference  with  that  right  is  a  wrong  which  will  support  an 
action  for  damages  cannot  be  open  to  controversy.  Though  it 
might  have  been  more  artificial  pleading  had  the  mode  and 
manner  of  the  obstruction  and  interference  been  set  forth  in 
the  declaration,  they  were  not  necessarily  elements  of  the  in- 
jury complained  of,  but  rather  matters  of  proof,  showing  the 
character  and  extent  of  that  injury.  The  narr.,  on  its  face, 
does  not  declare  for  an  obstruction  of  the  footway  or  the  street; 
and  it  was,  therefore,  not  necessary  to  allege  that,  by  reason 
of  the  plaintiff's  possession  of  the  premises,  she  was  entitled 
to  the  way,  in  the  exercise  of  which  she  was  interfered  with 
by  the  defendant.  The  averment  is,  that  the  pole  thus  planted 
in  the  footway  obstructed,  not  the  footway,  but  the  plaintiff's 
use  and  enjoyment  of  the  property  in  her  possession,  —  her 
warehouse;  and  that  averment,  it  seems  to  us,  is,  under  the 
code,  sufficient,  if  proved,  to  sustain  an  action.  This  conclu- 
sion is  founded,  of  course,  exclusively  and  solely  upon  the  face 
of  the  declaration,  without  any  reference  to  other  parts  of  the 
record. 

It  has  been  further  insisted,  as  a  reason  for  holding  the 
^declaration  bad,  that  the  prayer  for  an  injunction  was  im- 
properly included  therein,  because,  so  it  is  alleged,  the  facts 
disclosed  by  the  narr.  do  not  justify  the  application  of  that 
remedy.  Sections  116  to  and  including  128  of  article  75  of 
the  code  make  provision  for  the  issuing  of  writs  of  injunction 
and  mandamus  by  courts  of  law  in  certain  actions  instituted 
in  these  courts.  Under  these  provisions,  the  prayer  for  an  in- 
junction to  restrain  the  appellant  from  continuing  the  pole  in 
its  place,  and  to  order  the  removal  thereof,  was  added  to  the 
declaration.  By  section  119  it  is  provided  that  "the  defend- 
ant may  demur  to  so  much  of  the  plaintiff's  declaration  as 
claims  such  writ,  and  such  demurrer  shall  raise  the  question 
whether  the  facts  stated  as  the  ground  of  such  claim  disclose 


March,  1891.]     Chesapeake  etc.  Ti?.L.  Co.  r.  Mackenzie.     223 

any  such  legal  duty  as  that  so  sought  to  be  enforced,  but  shall 
be  subject  to  all  rules  governing  general  demurrexs  at  law, 
both  as  to  the  proceedings  thereon  and  thereafter."  Now,  it 
was  argued  that  the  general  demurrer  filed  by  the  plaintiff  to 
the  defendant's  first  and  third  pleas  mounted,  according  to 
the  well-settled  rule,  not  only  to  the  declaration  proper,  but 
also  to  the  prayer  for  relief  by  injunction.  Whether  this  view 
is  correct  or  not  depends  upon  the  meaning  of  the  section  from 
which  we  liave  just  quoted.  The  remedy  by  injunction  from 
a  court  of  law  is  a  purely  statutory  remedy.  The  mode  to  be 
pursued  for  obtaining  it  is  defined  and  pointed  out  in  the  code. 
If  the  facts  stated  in  the  declaration  do  not  disclose  a  case 
which  will  justify  the  issuing  of  such  a  writ,  the  defendant 
may  demur  "to  so  much  of  the  plaintiff's  declaration  as 
claims  such  writ,"  and  the  statute  expressly  declares  what 
question  that  demurrer  shall  raise.  It  is  consequently  a  spe- 
cial demurrer  that  is  thus  provided  for,  notwithstanding  the 
antecedent  provision  in  section  6  of  the  same  article  that  no 
special  demurrer  shall  be  allowed  in  civil  cases.  Can  a  gen- 
eral demurrer  be  treated  as  equivalent  to  or  the  same  as  this 
special  demurrer?  If  so,  then  the  general  demurrer  to  the 
pleas  would  reach  any  defect  in  the  prayer  for  injunctive  re- 
lief in  the  narr.  Inasmuch  as  the  demurrer  prescribed  by  the 
statute  is  a  special  demurrer,  it  seems  to  us  quite  apparent 
that  a  general  demurrer  would  not  answer,  if  interposed  by 
the  defendant  directly  to  the  narr.  Of  course,  therefore,  a 
general  demurrer  interposed  by  the  plaintiff  to  pleas  of  the 
defendant  could  not  serve  any  other  or  wider  purpose,  or  raise 
any  other  question,  than  a  general  demurrer  filed  by  the  de- 
fendant to  the  declaration  would  itself  have  done,  unless  the 
clause  declaring  that  the  special  demurrer  "  shall  be  subject 
to  all  rules  governing  general  demurrers  at  law,  both  as  to  the 
proceedings  thereon  and  thereafter,"  was  intended  to  convert 
the  special  into  a  general  demurrer.  No  such  intention  is 
manifested  by  the  language  used  as  we  read  it.  The  special 
demurrer  is  declared  to  be  subject  to  the  rules  governing  gen- 
eral demurrers,  only  so  far  as  respects  the  proceedings  on  a 
general  demurrer,  and  the  proceedings  after  a  ruling  is  made 
thereon.  In  other  words,  when  a  special  demurrer  under  this 
statute  is  interposed  to  the  declaration,  the  same  proceedings 
shall  be  had  as  are  provided  by  the  rules  of  law  with  reference 
to  proceedings  on  and  after  a  general  demurrer.  That  is  to 
say,  the  right  to  amend  if  the  demurrer  be  sustained,  and  the 


224      Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     [Maryland, 

right  to  plead  over  if  it  be  overruled,  are  preserved,  precisely 
as  in  the  qase  of  similar  rulings  on  a  general  demurrer.  This, 
and  this  only,  is  the  effect  of  the  clause  just  quoted  from  the 
code.  Our  interpretation  of  the  statute,  then,  is  this:  If  a  de- 
fendant desires  to  raise  a  question  as  to  whether  the  additional 
relief  by  way  of  injunction  or  mandamus  is  appropriate  under 
the  facts  disclosed  by  the  declaration,  he  must  do  so  by  spe- 
cial demurrer,  and  a  general  demurrer,  whether  interposed  di- 
rectly to  the  declaration  or  to  some  subsequent  pleading,  will 
not  be  sufficient  to  raise  that  question. 

We  now  come  to  the  consideration  of  the  ruling  of  the  court 
sustaining  the  demurrer  to  the  first  and  third  pleas  filed  by 
the  defendant.  These  pleas  present  some  of  the  principal 
questions  discussed  in  the  argument  at  the  bar.  They  rely, 
as  a  defense  to  the  action,  upon  an  authority  which  the  appel- 
lant claims  to  have  under  the  code,  and  under  an  ordinance 
of  the  mayor  and  city  council  of  Baltimore,  to  plant  in  its 
present  position  the  pole  complained  of,  without  making  or 
offering  to  make  compensation  to  the  appellee.  By  sections 
224  and  232  of  article  23  of  the  code,  telegraph  and  telephone 
companies,  incorporated  under  the  general  corporation  law  of 
this  state,  are  empowered  to  construct  their  lines  along  and 
upon  any  postal  roads  and  postal  routes,  roads,  streets,  and 
highways,  provided  their  fixtures,  posts,  and  wires  do  not 
"  interfere  with  the  convenience  of  any  land-owner  more  than 
is  unavoidable."  It  is  expressly  provided  in  section  224  that 
"the  said  corporation  shall  be  responsible  for  any  damages 
which  any  person  or  corporation  may  sustain  by  the  erection, 
continuance,  and  use  of  such  fixtures."  It  is  further  provided, 
that  in  any  action  brought  for  the  recovery  of  damages,  the 
company  may  elect  to  have  included  the  damages  for  allow- 
ing the  said  fixtures  permanently  to  continue.  The  following 
proviso  is  then  added:  "  Provided,  that  no  person  or  body  poli- 
tic shall  be  entitled  to  sue  for  or  recover  damages,  as  afore- 
said, until  the  said  corporation,  after  due  notice,  shall  have 
failed  or  refused  to  remove,  in  reasonable  time,  the  fixtures 
complained  of."  It  is  not  necessary  to  allude  to  the  ordinance 
of  the  mayor  and  city  council  of  Baltimore,  for  the  reason  that 
whatever  authority  the  appellant  possesses,  in  reference  to  the 
planting  and  maintenance  of  the  pole  in  question,  must  be  de- 
rived from  and  depend  on  the  act  of  assembly.  The  ordi- 
nance could  not  enlarge  that  authority.  To  what  extent, 
then,  does  the  statute  justify  the  action  of  the  appellant,  and 


March,  1891.]     Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     225 

protect  it  from  liability?  The  planting  of  a  telegraph  or  tele- 
phone pole  in  a  highway  or  street  is  not  a  public  nuisance, 
because  the  legislature  has  declared  that  it  shall  not  be;  but 
the  general  assembly  was  powerless  to  subject  the  reversionary 
interest  in  the  bed  of  such  highway  or  street  to  an  additional 
servitude,  without  making  appropriate  provision  for  just  com- 
pensation to  the  owner:  Phipps  v.  Western  Maryland  R.  R.  Co., 
66  Md.  319;  American  Teleplione  and  Telegraph  Co.  v.  Pearce, 
71  Md.  585.  In  the  case  last  referred  to,  this  court  held  that 
planting  telephone  poles  upon  the  right  of  way  acquired  by  a 
railroad  company  was,  when  the  telephones  were  used  for  pur- 
poses other  than  the  operation  of  the  road,  an  additional  ser- 
vitude imposed  upon  the  soil,  which  entitled  the  owner  of  the 
reversion  to  an  injunction  against  the  telephone  company  to 
restrain  it  from  so  appropriating  the  land  until  compensation, 
to  be  ascertained  in  the  method  prescribed  in  section  40,  article 
3,  of  the  constitution  of  the  state,  should  be  first  paid  or  ten- 
dered. And  so  the  condemnation  of  private  property  for  a 
higiiway  subjects  the  land  so  taken  merely  to  an  easement  in 
favor  of  the  pul)lic,  and  does  not  divest  the  owner  of  the  fee: 
Thomas  v.  Ford,  63  Md.  346;  52  Am.  Rep.  513.  Planting 
telephone  or  telegraph  posts  upon  a  public  highway  in  the 
country  is  an  appropriation  of  private  property,  and  unlawful 
unless  the  right  to  do  so  is  acquired  by  contract  or  condemna- 
tion: Western  Union  Tel.  Co.  v.  Williams,  86  Va.  696;  19  Am. 
St.  Rep.  908;  Broome  v.  New  York  and  New  Jersey  Tel.  Co.,  42 
N.  J.  Eq.  141. 

Tlie  use  to  which  streets  in  a  town  or  city  may  be  lawfully 
put  are  greater  aud  more  numerous  than  in  the  case  of  an 
ordinary  road  or  highway  in  the  country.  With  reference  to 
the  latter,  as  we  have  just  observed,  all  tlie  public  acquires  is 
the  easement  of  passage  and  its  incidents;  and  hence  the 
owner  of  the  soil  parts  with  this  use  only,  retaining  the  soil, 
and  by  virtue  of  this  ownership  is  entitled,  except  for  the  pur- 
poses of  repair,  to  the  earth,  timber,  and  grass  growing  thereon, 
and  to  all  minerals,  quarries,  and  springs  below  the  surface. 
But  with  respect  to  streets  in  populous  places,  the  public  con- 
venience requires  more  than  the  mere  right  of  way  over  and 
upon  them.  They  may  need  to  be  graded,  and  therefore  the 
municipal  authorities  may  not  only  change  the  surface,  but 
cut  down  trees,  dig  up  the  earth,  and  may  use  it  in  improving 
the  street,  and  may  make  culverts,  drains,  and  sewers  upon 
or  under  the  surface.     Pipes  may  also  be  laid  under  the  sur- 

Am.  St.  Kep.,  Vol.  XXVIII.  —  15 


226      Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     [Maryland, 

face  when  required  by  the  various  agencies  adopted  in  civi- 
lized life,  such  as  water,  gas,  electricity,  steam,  and  other  things 
capable  of  that  mode  of  distribution:  2  Dillon  on  Municipal 
Corporations,  sees.  656  a,  688.  Subject  to  these  and  other  like 
rights  of  the  municipality  and  the  public  to  the  use  of  a  street 
for  street  purposes,  the  owner  of  the  fee  in  the  bed  of  the  street 
possesses  the  same  right  to  demand  compensation  for  addi- 
tional servitudes  placed  thereon  that  the  owner  of  the  bed  of 
a  highway  in  the  country  is  entitled  to.  If,  then,  the  fee  in 
the  bed  of  the  street  be  in  the  appellee,  the  planting  of  the 
pole  was  an  additional  servitude  imposed  upon  her  land,  for 
which  she  could  claim  compensation,  and  the  act  of  assembly 
could  not  deprive  her  of  it.  But  in  many  instances  the  beds 
of  the  streets  are  owned  in  fee  by  the  city,  and  in  others  the 
fee  is  vested  in  the  original  owners  of  the  land  or  their  heirs, 
and  does  not  belong  to  the  owners  of  the  lots  abutting  on  the 
streets.  If  the  fee  be  in  the  city,  or  in  some  third  person,  then, 
—  1.  What  are  the  rights,  in  a  case  like  this,  of  the  owner 
of  a  lot  abutting  on  the  street?  and  2.  How  are  those  rights 
affected  by  the  provisions  of  the  code  relied  on  in  the  pleas? 
There  is  some  diversity  of  opinion  in  the  decided  cases  upon 
the  first  of  these  questions,  but  all  agree  in  going  at  least  this 
far,  —  and  we  are  not  required  to  go  any  farther  in  deciding 
this  appeal,  —  that  where  the  fee  or  legal  title  has  passed  from 
the  original  proprietor,  as  in  cases  where  the  land  has  been 
acquired  for  streets  by  the  exercise  of  the  right  of  eminent 
domain,  the  adjoining  owner  cannot  maintain  an  action  for 
injuries  to  the  soil,  or  ejectment,  but  he  nevertheless  has  a 
as  remedy  for  any  special  injury  to  his  rights  by  the  unauthor- 
ized acts  of  others.  Hence,  if  an  appropriation  of  a  street  by 
a  person  or  body  corporate,  even  under  legislative  and  muni- 
cipal sanction,  unreasonably  abridges  the  right  of  adjacent 
lot-owners  to  use  the  street  as  a  means  of  ingress  and  egress, 
or  otherwise,  they  are  thereby  deprived  of  a  right  without  com- 
pensation; and  an  action  will  lie  against  the  person  or  corpora- 
tion guilty  of  usurping  such  unreasonable  and  exclusive  use 
for  the  recovery  of  such  immediate  and  direct  damages  as  the 
abutter  may  sustain:  Elizabeth  etc.  R.  R.  Co.  v.  Combs,  10  Bush, 
382;  19  Am.  Rep.  67;  Schurmeier  v.  St.  Paul  etc.  R.  R.  Co.,  10 
Minn.  82;  88  Am.  Dec.  59;  affirmed  in  7  Wall.  272;  Cooley 
on  Constitutional  Limitations,  556.  Indeed,  this  is  merely 
the  application  of  familar  principles  of  the  common  law. 
Whether,  then,  the  appellee  be  the  owner  of  the  reversion  in 


March,  1891.]     Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     227 

the  bed  of  the  street,  or  only  entitled  to  the  rights  of  an  abut- 
ter on  the  street,  the  pleas  demurred  to  set  forth  no  facts 
which  furnish  a  defense  to  the  action;  because,  as  against  the 
owner  of  the  fee,  the  provisions  of  the  code  relied  on  in  the 
pleas  are  inoperative  for  the  reasons  we  have  given;  and  as 
respects  the  owner  of  a  lot  abutting  on  the  street,  they  ex- 
pressly reserve,  and  they  could  not  have  validly  denied,  his 
right  to  recover  for  such  direct  and  immediate  injuries  as  he 
might  sustain  by  the  construction  of  a  line  of  telegraph  and 
telephones  upon  a  public  street  or  thoroughfare.  Whetlier 
the  damages  to  be  recovered  shall  be  upon  the  basis  of  the 
permanent  occupation  of  the  premises,  or  only  for  the  period 
up  to  the  bringing  of  the  suit,  is  left  to  the  election  of  the 
company;  and  it  would  necessarily  follow,  if  the  recovery 
should  be  limited  at  its  instance  to  the  latter  period,  that  sub- 
sequent suits  could  be  brought;  and  in  an  appropriate  case  an 
injunction  could  be  procured  to  prevent  a  continuance  of  the 
interference.  It  results,  then,  that  neither  the  rights  of  the 
owner  of  the  reversion  nor  those  of  the  abutter  upon  a  street 
are  abridged  by  the  statute,  and  that,  in  so  far  as  that  statute 
attempts  or  was  intended  to  effect  that  result,  it  is  nugatory 
and  inoperative.  As  a  consequence,  whatever  rights  the  ap- 
pellant did  acquire  under  the  statute  are  subordinate  to  the 
property  rights  of  the  appellee,  and  tiie  pleas  which  rely  upon 
the  statute  and  the  ordinance  as  giving  the  appellant  author- 
ity to  plant  and  maintain  its  posts  and  wires,  without  regard 
to  the  injury  caused  the  appellee,  were  very  properly  declared 
to  be  no  answer  to  the  action. 

The  remaining  questions  involved  are  presented  by  the  ex- 
ceptions taken  to  the  admission  of  evidence,  and  to  the  rulings 
of  the  court  on  the  prayers  for  instructions  to  the  jury.  There 
are  twelve  of  these  exceptions.  Eleven  of  them  relate  to  the 
admissibility  of  evidence  adduced  by  the  appellee  upon  the 
question  of  damages,  and  the  twelfth  to  the  granting  of  the  ap- 
pellee's second  prayer,  and  the  rejection  of  the  appellant's 
first. 

It  is  not  necessary  to  discuss  separately  the  exceptions 
which  relate  to  the  measure  of  damages,  for  they  all  present 
the  same  question,  substantially.  The  appellee  proved  by 
several  witnesses  the  amount  which,  if  they  owned  the  prop- 
erty, they  would,  in  their  opinion,  give  not  to  have  the  pole 
placed  where  it  is,  and  the  amount  they  would  give  to  have  it 
taken    away.     She  further  proved   by  another   witness   that, 


228      Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     [Maryland, 

with  the  pole  removed,  he  would  be  willing  to  pay  more  rent 
for  the  property  than  he  would  with  the  pole  standing  where 
it  is;  and  by  still  another,  that  for  the  purposes  of  his  business 
he  would  make  a  difference  of  five  hundred  dollars  in  the 
rental  value  of  the  premises.  None  of  this  testimony  was  ad- 
missible. The  true  measure  of  damages  in  such  a  case  as  this 
is  not  what  a  particular  individual  would  be  willing  to  charge 
for  having  the  pole  put  up  or  remain,  nor  the  amount  some 
other  person  might  consider  the  rental  value  was  depreciated 
for  the  purposes  of  his  business;  but  where  the  land  of  the 
plaintiff  is  not  taken  nor  his  soil  actually  invaded,  the  meas- 
ure of  damages,  as  adjudged  in  many  cases,  is  either, — 1.  The 
extent  to  which  the  rental  or  usable  value  of  the  particular 
property  has  been  diminished  by  the  trespass  or  injury  com- 
plained of:  Baltimore  etc.  R.  R.  Co.  v.  Boyd,  67  Md.  41 ;  1  Am. 
St.  Rep.  362;  Wood  v.  State,  66  Md.  61;  or  2.  The  difference  in 
the  value  of  the  property  before  the  construction  of  the  pole 
and  its  value  afterwards,  if  the  depreciation  in  value  has  been 
caused  by  the  erection  and  maintenance  of  the  pole:  Shepherd 
V.  Baltimore  etc.  R.  R.  Co.,  130  U.  S.  426. 

Lastly,  with  regard  to  the  prayers.  There  was  no  error  in 
rejecting  the  first  prayer  of  the  appellant,  because  the  prayer 
failed  to  refer  or  point  to  the  pleadings.  The  correctness  of 
this  ruling  must  depend,  not  upon  the  state  of  the  pleadings, 
but  upon  the  evidence  to  which  alone  the  prayer  makes  refer- 
ence: Giles  v.  Fauntleroy,  13  Md.  136.  The  declaration  counts 
upon  a  possession,  by  the  plaintiff,  of  the  warehouse,  and  an 
interference  with  her  use  and  enjoyment  thereof,  and  the  proof 
shows  that  the  premises  were  in  the  occupancy  and  possession  of 
a  tenant  of  the  plaintiff,  and  not  in  the  possession  of  the  plain- 
tiff, who  was  only  entitled  to  the  reversion.  For  an  injury  to 
the  possession,  the  tenant  in  possession  alone  can  sue,  though 
if  the  same  injury  affects  the  reversion,  the  reversioner  may 
sue  in  case:  1  Ch.  PI.  63.  The  evidence  in  the  record  shows 
that  the  appellee  does  not  own  the  reversion  in  the  bed  of 
Charles  Street;  and  it  further  shows  that  no  damage  was 
done  to  the  plaintiff's  possession,  because  she  was  not  in  pos- 
session. The  narr.  does  not  declare  for  an  injury  to  the  rever- 
sionary interest  in  the  warehouse,  as  it  might  have  done,  and 
the  prayer  did  not  point  to  the  pleadings;  but  if  the  evidence 
adduced  was  sutiicienl  to  sustain  any  action  by  the  appellee, 
it  would  have  been  error  in  the  court  to  grant  a  prayer  declar- 
ing that  there  was  no  evidence  that  the  plaintiff  had  sustained 


March,  1891.]     Chesapeake  etc.  TiiL.  Co.  ■».  Mackenzie.     229 

damage  by  the  erection  of  the  pole,  unless  the  prayer  had 
made  reference  to  the  pleadings. 

There  is  nothing  in  the  appellee's  granted  prayer  of  which 
the  appellant  can  complain.  Taken  in  connection  with  the 
appellant's  third  instruction,  the  recovery  was  limited  to  the 
time  that  suit  was  brought. 

For  the  error  in  admitting  the  evidence  objected  to  in  the 
first  eleven  exceptions,  the  judguient  must  be  reversed,  and  a 
new  trial  must  be  awarded. 


Telegraph  and  Telephone  Poles  and  Wirea  In  Streets  and  Highways  and 
Across  Private  Property.* 

Poles,  Erection  of,  without  A  xtthoritij. — The  principle  is  universally  recognized, 
that  in  the  absence  of  legislative  or  municipal  sanction,  tlie  erection  of  tele- 
graph or  telephone  poles,  and  the  stringing  of  wires  thereon,  in  the  public 
streets  or  highways  is  a  public  nuisance,  which  may  be  abated  at  the  in- 
stance of  an  abutting  land-owner,  if  the  poles  obstruct  or  prevent  the  free 
passage  of  carriages,  horses,  or  foot-passengers:  Rej/ina  v.  United  Kingdom 
Electric  Tel.  Co.,  31  L.  J.  M.  C.  156;  2  Best  &  S.  647;  9  Cox  C.  C.  174. 

Legislative  Power  to  Authorize  Uxe  of  Highways.  — Although  the  legislature 
has  authority,  in  the  exercise  of  the  police  power  of  the  state,  to  determine  that 
the  erection  of  poles  and  the  stringing  of  wires  of  telegraph  or  telephone  cor- 
porations is  a  public  use,  not  inconsistent  with  the  use  of  the  street  for  street 
purposes,  yet  the  interesting,  perplexing,  and  doubtful  proposition  is  involved, 
as  to  whether  the  legislature  may  authorize  such  use  of  the  street  or  high- 
way without  providing  for  compensation  to  the  abutting  land-owner.  In 
other  words,  the  question  is  necessarily  involved  as  to  whether  or  not,  when 
the  public  has  acquired  an  easement  in  land  for  a  street  or  highway,  by 
taking  it  under  the  right  of  eminent  domain,  or  by  dedication,  prescription, 
or  grant,  a  new  use  and  an  ailditioiial  servitude  is  to  be  deemed  as  imposed 
by  appropriating  the  street  or  highway,  under  legislative  sanccion,  for  the 
use  of  a  line  of  electric  telegraph  or  telephone,  by  the  erection  of  poles  and 
wires  above  the  surface  of  the  ground,  so  that  the  owner  of  an  abutting  es- 
tate, or  of  the  soil  to  the  center  of  the  street,  is  entitled  to  further  compen- 
sation therefor,  or  is  such  use  included  by  implication  in  the  purposes  for 
which  the  land  was  condemned,  dedicated,  or  granted. 

Compensation,  whether  Legislature  may  Deprive  Land-owner  of  Right  to.  — 
The  adjudged  casei  upon  this  subject  present  an  irrecoucilable  conflict  of 
authority,  and  seem  to  be  about  equally  divided.  The  topic  is  new,  and  al- 
though it  may  not  be  safe  to  hazard  an  opinion  as  to  how  it  will  be  finally 
settled,  still  it  may  be  stated  that  the  later  cases,  and  it  seems  the  weight  of 
authority,  sustain  the  doctrine,  without  qualilioation,  that  a  telegraph  or 
telephone  line  along  a  public  street  or  highway  is  no  part  of  the  equipment 
of  the  street,  but  is  foreign  to  its  use,  and  the  imposition  of  an  additional 
servitude,  for  which  the  abutting  owner  must  be  compensated;  and  also  that 
the  legislature  has  no  power  to  authorize  the  imposition  of  such  servitude, 

•  BKFKRBNCB  TO  MONOGRAPHIC  N0TK8. 

Telegraph  and  telephone  companies,  right  to  erect  and  maintain  poles  and  wires 
In  public  streets  mud  highways,  and  proceedings  to  abate  the  same:  54  Am.  Rep.  290, 
293;  67  Am.  Kep.  40»-il2;  10  Am.  St.  Rep.  130, 131;  16  Am.  St.  Kep.  6i4. 


230      Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     [Maryland, 

except  on  condition  that  due  compensatioa  shall  be  made  therefor  to  such 
abutting  owner.  Under  this  rule  the  abutting  owner  is  entitled  to  an  in- 
junction restraining  the  maintenance  or  erection  of  a  line  of  telegraph  or 
telephone  poles  and  wires  in  front  of  his  premises,  unless  he  is  first  compen- 
sated therefor,  or  bis  consent  thereto  is  in  some  manner  obtained. 

Cases  Holding  that  AhuUimj  Owner  is  not  Entitled  to  Additional  Compensation. 
—  The  courts  of  Missouri  have  uniformly  maintained  that  the  erection  of  tel- 
egraph and  telephone  poles  and  wires  in  public  streets  or  highways  does  not 
impose  a  new  and  additional  servitude  thereon;  that  this  is  simply  a  new  use 
to  which  the  street  may  be  put,  under  legislative  sanction,  without  the  con- 
sent of  the  abutter;  that  he  has  no  right  to  restrain  such  use  by  injunction, 
or  to  have  the  poles  removed  as  a  nuisance;  and  that  the  legislature  has 
power  to  authorize  such  use  without  providing  for  compensation  therefor  to 
the  abutting  land-owners.     This  doctrine  -was  first  announced  in  Gay  v.  J/m- 
tual  Union  Telegraph  Co..  12  Mo.  App.  485,  followed  and  affirmed  in  Julia 
Building  Associdtion  v.   Bell   Telephone  Co.,  88  Mo.  258,  57  Am.   Rep.  398, 
and  in  City  of  St.  Louis  v.  Bell  Telfphone  Co.,  96  Mo.  623;  9  Am.  St.  Rep. 
370;  and  State  v.  Flad,  23  Mo.  App.  185.     The  court,  in  Julia  Building  Asso- 
ciation V.  Bell  Telephone  Co..  88  Mo.  258,  57  Am.  Rep.  398,  based  its  decision  on 
the  following  reasons:  "These  streets  are  required  by  the  public  to  promote 
trade,  and  facilitate  communications  in  the  daily  transaction  of  business  be- 
tween the  citizens  of  one  part  of  the  city  with  those  of  another,  as  well  as  to 
accommodate  the  public  at  large  in  these  respects.     If  a  citizen  living  or  do- 
ing business  on  one  end  of  Sixth  Street  wishes  to  communicate  with  a  citizen 
living  and  doing  business  on  the  other  end  or  at  any  intermediate  point,  he  is 
entitled  to  the  use  of  the  street,  either  on  foot,  on  horseback,  or  in  a  carriage 
or  other  vehicle,  in  bearing  his  message.     The  defendants  in  this  case  propose 
to  use  the  street  by  making  the  telephone  poles  and  wires  the  messenger  to 
bear  such  communications  instantaneously,  and  with  more  dispatch  than  any 
of  the  above  methods,  or  any  other  known  method  of  bearing  oral  communi- 
cations.    Not  only  would  suoh  communications  be  borne  with  more  dispatch, 
but  to  the  extent  of  the  number  of  communications  daily  transmitted  by  it, 
the  street  would  be  relieved  of  that  number  of  footmen,  horsemen,  or  carriages. 
If  a  thousand  messages  were  daily  transmitted  by  means  of  telephone  poles, 
wires,  and  other  appliances  used  in  telephoning,  the  street  through  these 
means  would  serve  the  same  purpose  which  would  otherwise  require  its  use, 
either  by  a  thousand  footmen,  horsemen,  or  carriages,  to  efiFectuate  the  same 
purpose.     In  this  view  of  it,  the  erection  of  telephone  poles  and  wires  for  the 
transmission  of  oral  messages,  so  far  from  imposing  a  new  and  additional  ser- 
vitude, would,  to  the  extent  of  each  message  transmitted,  relieve  the  street 
of  a  servitude  or  use  by  a  footman,  horseman,  or  carriage.     If  it  be  true,  as 
laid  down  by  the  authorities  herein  cited,  that  when  the  public  acquires  the 
right  to  a  street,  either  by  dedication,  grant,  or  condemnation,  the  munn-i- 
pality  has  the  power  to  appropriate  it,  not  only  to  such  uses  as  are  common 
and  in  vogue  at  the  time  of  its  acquisition,  but  also  to  such   new  uses  as  ad- 
vanced civilization  may  suggest  as  conducive  to  the  public  good,  the  conclu- 
sion is  inevitable,  that  the  use  of  Sixth  Street   in   the  manner  and   for   the 
purposes  proposed  is  allowable,  for  it  cannot,  with  any  show  of  reason,  be  de- 
nied that  the  means  these  appliances  would  afford  for  the  instantaneous  trans- 
mission of  communications  for  the  transaction  of  business,  without  resorting 
to  the  slower  and  common   methods  of  bearing  them,  would  be  conducive 
to  the  public  good,  and  make  the  street  by  these  means  serve  one  of  the 
chief  purposes  for  which  it  was  dedicated.     But  it  is  argued  that  the  erection 


March,  1891.]    Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     231 

of  two  telephone  polea,  each  eighteen  inches  at  the  bottom,  with  a  gradual 
taper  to  the  top,  would  obstruct  the  street,  and  deny  to  the  public  the  complete 
and  unrestricted  use  of  the  street.  This  argument,  I  think,  is  more  specious 
than  sound.  It  is  true  that  to  the  extent  of  the  space  of  eighteen  inches, 
each  of  the  poles  proposed  to  be  erected  would  be  an  obstruction,  but  the  same 
could  be  said  of  lamp-posts  erected  on  the  streets  of  a  city,  the  necessities  of 
which  might  require  its  streets  to  be  lighted  with  oil,  gas,  or  electric  lights; 
and  yet  no  one  would  be  heard  to  complain  that  the  lamp-posts  constituted 
such  an  obstruction  or  impediment  to  the  free  use  of  the  streets  as  to  demand 

their  removal If  the  conclusions  announced  in  the  foregoing  part  of 

this  opinion,  that  all  the  uses  to  which  a  street  may  properly  be  devoted  are 
to  be  regarded  as  permitted  by  and  included  in  the  original  appropriation  or 
dedication  of  the  street,  and  that  the  erection  and  maintenance  of  telephone- 
poles  as  proposed  is  one  of  these  uses,  and  that  in  digging  holes  through  the 
stone  slabs  and  stone  walks  in  which  to  plant  them,  there  is  no  taking  of  pri- 
vate property  of  the  abutting  lot-owner  entitling  him  to  compensation,  are 
correct,  it  would  seem  logically  to  follow  that  damages  resulting  from  such 
use  need  not  be  compensated  for.  If,  by  reason  of  the  dedication,  the  pnblio 
have  the  right  to  apply  the  private  property  of  the  plaintiff  to  the  use  pro- 
posed without  his  being  entitled  to  compensation,  how  can  it  be  that  it  be- 
comes entitled  to  compensation  for  damages  flowing  as  an  incident  from  an 
act  which  the  dedicator  by  his  dedication  has  authorized  to  be  done?  If  the 
dedication  of  the  street  is  sufiSciently  operative  to  allow  private  property  in 
the  soil  of  the  street  to  be  actually  invaded,  and  physically  taken  for  a  street 
use  without  compensation,  why  is  it  not  suflBciently  operative,  if  in  such  tak- 
ing damages  ensue,  to  relieve  the  taker  from  the  payment  of  such  damages? 
If,  by  dedicating  property  for  a  street,  the  dedicator  gives  up  his  right  to 
compensation  for  the  uses  included  in  the  dedication,  how  can  it  be  said 
that  he  does  not  also  give  up  his  right  to  compensation  for  damages  to  adja- 
cent property  not  taken,  resulting  from  the  application  of  the  street  to  a  use 
which,  by  his  dedication,  he  authorized  it  to  be  put?  " 

The  views  above  announced  are  ably  and  forcibly  refuted  by  Mr.  Justice 
Henry,  in  a  dissenting  opinion,  which  is  reported  in  a  note  to  the  principal 
case  in  57  Am.  Rep.  409.  In  McCormick  v.  DisMct  of  Columbia,  4  Mackay, 
396,  54  Am.  Rep.  284,  it  was  also  decided  that  the  erection  of  telegraph 
poles  and  wires  in  the  street  was  not  such  a  private  nuisance  as  would  bo 
restrained  by  injunction  at  the  suit  of  an  abutting  lot-owner.  And  in  Pierce 
V.  Dreio,  136  Mass.  75,  49  Ain.  Rep.  7,  it  was  determined  that  the  above 
rule  was  law,  and  that  the  legislature  might  authorize  their  erection  on  the 
line  of  a  public  highway  without  providing  for  compensation  to  the  owner 
of  the  fee  therein.  In  this  case  the  court  said:  "  When  the  land  was  taken 
for  a  highway,  that  which  was  t  tken  was  not  merely  the  privilege  of  travel- 
ing over  it  in  the  then  known  vehicles,  or  of  using  it  in  the  then  known 
methods  for  either  the  conveyance  of  property  or  transmission  of  intelligence. 
....  The  discovery  of  the  telegraph  developed  a  new  and  valuable  mode 
of  communicating  intelligence.  Its  use  is  certainly  similar  to,  if  not  iden- 
tical with,  that  public  use  of  transmitting  iuforniation  for  which  the  high- 
way was  originally  taken,  even  if  the  means  adopted  are  quite  different  from 

thepost-boy  or  the  mail-coach Weare  therefore  of  opinion  that  the  use 

of  a  portion  of  a  highway  for  the  public  use  of  companies  organized  under  the 
laws  of  the  state  for  the  transmission  of  intelligence  by  electricity,  and  sub- 
ject to  the  supervision  of  the  local  municipal  authorities,  which  has  been 
permitted  by  the  legislature,  is  a  public  use  similar  to  that  for  which  the 


232      Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     [Maryland, 

highway  was  originally  taken,  or  to  which  it  was  originally  devoted,  and  that 

the  owner  of  the  fee  is  entitled  to  no  further  compensation That  it 

was  the  intent  of  the  statute  to  grant  to  those  corporations,  formed  under  the 
general  incorporation  laws  for  the  purpose  of  transmitting  intelligence  by 
electricity,  the  right  to  construct  lines  of  telegraph  upon  and  along  highways 
and  public  roads,  upon  the  locations  assigned  them  by  the  oflScera  of  the  mu- 
nicipalities wherein  such  ways  are  situated,  cannot  be  doubted There 

remains  the  inquiry,  whether  there  ia  any  objection  to  the  statute  because  it 
does  not  provide  a  sufficient  remedy  for  the  owners  of  property  near  to  or  ad- 
joining the  way,  who  may  be  incidentally  injured  by  the  structures  which  the 
telegraph  companies  may  have  been  permitted  to  erect  along  the  line  of  the 

highway  and  within  its  limits The  only  compensation  to  which  such 

owner  is  entitled  is  that  which  the  legislature  deems  just,  when  it  permits  the 
erection  of  these  structures.  The  legislature  may  provide  for  compensation  to 
the  adjoining  owners,  but  without  such  provision  there  can  be  no  legal  claim 
to  it,  as  the  use  of  the  highway  is  a  lawful  one."  The  same  rule  is  announced 
in  fi-win  V.  Great  Southern  Telephone  Co.,  37  La,  Ann.  63,  where  it  was  de- 
cided that  the  state  and  municipal  corporations,  in  the  exercise  of  the  right  of 
eminent  domain  and  of  the  police  power,  may  authorize  telephone  companies 
to  use  the  streets  and  sidewalks  of  a  city  for  the  purpose  of  erecting  poles  and 
other  works  necessary  for  the  transmission  of  intelligence,  and  can  impose 
terms  and  conditions  for  the  enjoyment  of  the  privilege;  but  the  adjoining 
owners  in  front  of  whose  premises  such  poles  have  been  so  erected  ha\e  no 
right  to  require  the  removal  of  the  same  as  nuisances,  when  the  poles  do  not 
materially  obstruct  them  in  the  free  use  of  their  property,  or  inflict  on  them 
some  injury  which  is  not  common  to  all  other  persons. 

In  Roake  v.  American  Telephone  etc.  Co.,  41  N.  J.  Eq.  33,  an  injunction  was 
refused  an  abutting  owner  to  restrain  a  telegraph  and  telephone  company 
from  stretching  its  wires  over  the  laud  in  the  street  in  front  of  his  property. 
The  court  said:  "The  city  claims  the  right  to  use  the  streets  for  the  purpose 
of  telegraphic  or  telephonic  communication;  that  such  use  is  part  of  the  pub- 
lic uses  to  which  the  streets  of  a  city  may  lawfully  be  put  by  the  city  au- 
thorities, without  the  consent  of  the  owners  of  lots  abutting  on  the  streets,  or 
making  compensation  to  them.  The  legislature  of  this  state  appears  to  have 
considered  that  tlie  use  of  the  street,  so  far  as  the  wires  are  concerned,  was 
not  a  violation  of  the  rights  of  the  owner  of  the  soil  in  the  street;  for  while 
it  recognizes  such  rights  as  to  the  erection  of  poles,  it  does  not  do  so  as  to 
the  wires.  It  is  laid  down  that  if  telegraph  posts  be  erected  within  the  limits 
of  a  street  or  highway  without  legislative  authority,  they  are  nuisances,  but 
if  the  erection  be  thus  authorized  they  are  not.  In  the  case  in  hand  the 
company  does  not,  as  before  stated,  intend  to  erect  poles  on  the  land  in  front 
of  complainant's  lot,  but  means  merely  to  stretch  its  wires  along  the  front, 
at  least  twenty-five  feet  above  the  ground,  on  poles  erected  on  adjacent  or 
neigliboring  property.  The  present  injury  from  such  use  cannot  be  great. 
It  certainly  is  not  so  great  as  to  warrant  a  preliminary  injunction." 

A  railroad  company  may,  for  its  own  use  in  operating  its  road,  construct  a 
telegiaph  or  telephone  line  over  and  along  its  right  of  way,  and  in  so  doing 
may  cut  down  trees,  if  necessary,  thereon  standing,  or  in  any  other  way  use 
its  right  of  way  for  such  purpose,  without  subjecting  itself  to  any  additional 
claim  by  the  original  land-owner  for  compensation.  But  if  the  line  is  not 
constructed  for  such  purpose,  it  will  be  a  new  servitude,  putting  an  additional 
burden  on  the  land,  for  which  the  original  owners  of  the  land  are  entitled  to 


March,  1 891.]     Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     233 

be  compensated:   Western  Union  Tel.  Co.  v.  Rich,  19  Kan.  517;  27  Am.  Rep. 
159;  American  Telephone  etc.  Co.  v.  Pearce,  71  Md.  535. 

Cases  Holding  Abutting  Owner  Entitled  to  Additional  Compensation. — The 
cases  which  maintain  that  the  erection  of  a  line  of  telegraph  or  telephone 
poles  and  wires  on  a  street  or  highway  is  foreign  to  its  use,  and  the  imposi- 
tion of  a  new  and  additional  servitude,  which  the  adjoining  owner  has  the 
right  to  restrain  by  injunction,  unless  his  consent  is  first  obtained  or  he  is 
compensated  therefor,  may  be  grouped  as  follows:  Board  of  Trade  Telegraph, 
Co.  V.  Barnett,  107  111.  507;  47  Am.  Rep.  453;  Broome  v.  New  York  etc.  Tele- 
phone Co.,  42  N.  J.  Eq  141;  State  etc.  Tele]>hone  Co.  v.  Mayor  of  Newark,  49 
N.  J.  L.  344;  Westn-n  Union  Telrgraph  Co.  v.  Williams,  86  Va.  696;  19  Am.  St. 
Rep.  908;  Willis  v.  Erie  Telegraph  etc.  Co.,  37  Minn.  347;  Sfowersv.  Postal  Tele- 
graph etc.  Co.,  68  Miss.  559;  24  Am.  St.  Rep.  290;  Dusenhnry  v.  Mutual  Tele- 
graph  Co.,  11  Abb.  N.  C.  440;  Metropolitan  Telephone  etc.  Co.  v.  Colwell  Lead  Co., 
67  How.  Pr.  365;  50  N.  Y.  Sup,  Ct.  488;  Pacific  Postal  Telegraph  etc.  Co.  v. 
Irvine,  49  Fed.  Rep.  113.  The  majoritj'  of  th-^sc  cases  maintain  that  neither  the 
legislature  nor  any  municipal  corporation  can  authorize  the  erection  of  a  line 
of  posts  and  wires  in  a  street  or  highway  without  providing  for  compensation 
to  the  abutting  owner,  whether  the  fee  is  in  him  or  in  the  public:  Stowers  v. 
Postal  Telegraph  etc  Co.,  68  Miss.  559;  24  Am.  St.  Rep.  290,  and  cases  cited. 
But  there  is  some  difference  of  opinion  on  this  point,  although  it  may  be 
questionable  if  any  sound  reason  therefor  exists.  This  distinction  is  shown 
by  the  case  of  Pacific  Postal  Telegraph  Co.  v.  Irvine,  49  Fed.  Bep.  113,  where 
it  was  said:  "  It  appears  that  the  poles  and  wires  were  erected  by  complainant 
under  a  grant  from  the  board  of  supervisors  so  to  do,  but  without  the  con- 
sent and  against  the  protest  of  the  defendants.  The  right  of  way  granted 
to  the  supervisors  was  for  a  public  road,  that  is  to  say,  a  way  to  be  used  by 
the  public  for  ordinary  travel.  Where  the  fee  of  the  highway  is  vested  in 
the  public,  there  is  no  valid  legal  objection  to  the  grant  .by  the  puldic  of  a 
right  to  erect  such  poles  and  wires,  without  regard  to  the  adjacent  property 
holders;  but  where,  as  here,  the  fee  of  the  highway  remains  in  the  adjacent 
owner,  and  its  use  for  purposes  of  public  travel  has  been  granted,  I  think  it 
clear  that  every  use  of  the  highway  not  in  the  line  of  such  travel  is  an  addi- 
tional burden,  for  which  the  proprietor  of  the  fee  is  entitled  to  additional 
compensation,  and  which  cannot  be  constitutionally  taken  from  him  with- 
out his  consent,  e.Kcept  by  proceedings  regularly  instituted  and  prosecuted 
according  to  law. "  In  Western  Union  Telegraph  Co.  v.  Williams,  86  Va.  696, 
19  Am.  St.  Rep.  90S,  916,  the  court  said:  "That  the  erection  of  a  telegraph 
line  upon  a  higliway  is  an  additional  servitude  is  clear  from  the  authorities. 
That  it  is  such  is  equally  clear  upon  principle,  in  the  light  of  the  Virginia 
cases  cited  above.  If  the  right  acquired  by  the  commonwealth  in  the  condem- 
nation of  a  highway  is  only  the  right  to  pass  along  over  the  highway  for  the 
public,  then,  if  the  untaken  [)arts  of  the  land  are  his  private  property,  to  dig  up 
the  soil  is  to  dig  up  his  soil;  to  cut  down  the  trees  is  to  cut  down  his  trees; 
to  destroy  the  fences  is  to  destroy  his  fences;  to  erect  any  structure,  to  affix 
any  pole  or  post,  in  and  upon  his  land,  is  to  take  possession  of  his  land;  and 
all  these  interfere  with  his  free  and  unrestricted  use  of  his  property.  If  the 
commonwealth  took  this  without  just  compensation  it  would  be  a  violation  of 
the  constitution.  The  commonwealth  cannot  constitutional!}'  grant  it  to  an- 
other. It  is  true  that  the  use  of  tlie  tclegrapli  company  is  a  public  use;  that 
the  company  is  a  public  corporation,  as  to  which  the  public  has  right  which  the 
law  wdl  enforce.  But  tlie  public  rights  can  only  be  obtained  by  paying  for 
them.     The  use,  while  in  one  sense  public,  is  not  for  the  public  generally;  it- 


234      Chesapeake  e^j.  Tel.  Co.  v.  Mackenzie.     [Maryland, 

is  for  the  private  profit  of  the  corporation.  It  is  its  business  enterprise,  en- 
gaged in  for  gain.  Its  services  can  only  be  obtained  upon  their  being  paid  for. 
There  is  no  reason,  either  in  law  or  common  justice,  why  it  should  not  pay  for 
wliat  it  needs  in  the  prosecution  of  its  business.  Upon  this  burden  being 
placed  upon  it,  it  can  complain  of  no  hardship;  it  is  the  common  lot  of  all.  If 
the  said  company  has  use  for  the  private  property  of  a  citizen  of  this  common- 
wealth, and  it  is  of  advantage  to  it  to  have  the  same,  it  is  illogical  to  argue 
that  the  property  is  of  smiU  value  to  plaintiff,  and  in  the  aggregate  a  great 
matter  to  the  plaintiff  in  error.  This  argument  is  not  worth  considering;  it 
cuts  at  the  very  root  of  the  rights  of  property.  It  would  apply  with  equal 
force  to  all  the  transactions  of  life.  It  is  sufficient  to  say,  the  ceyis  of  the 
constitution  is  over  this  as  over  all  other  private  property  rights,  and  there 
is  no  power  which  can  divest  it  without  just  compensation."  In  Broome  v. 
New  York  etc.  Tde'phone  Co.,  42  N.  J.  Eq.  141,  a  mandatory  injunction  re- 
quiring a  telephone  company  to  remove  its  poles  from  the  highway  in  front- 
of  complainant's  preinises,  and  forbidding  it  to  erect  ot'.iers  there,  wr.s 
granted,  and  in  this  case  the  court  said:  "The  defendants,  a  telephone  com- 
pany, without  any  leave  or  license  from  or  consent  by  the  complainant,  but, 
on  the  other  hand,  against  his  protest  and  remonstrance,  and  in  disregard 
of  his  warning  and  express  prohibition,  and  without  condemnation,  or  any 

steps  to  that  end,  set  up  their  poles  upon  his  land It  is  enough  to 

say  that  it  does  not  appear  that  the  road  board  had  any  power  to  authorize 
any  one  to  set  up  poles  in  the  land  of  the  highway,  and  thus  subject  the 
land  to  an  additional  servitude  besides  that  for  which  it  was  condemned. 
What  has  been  said  is  sufBcient,  of  itself,  to  establish  the  right  of  the  com- 
plainant to  relief;  for  in  order  to  justify  the  defendants  in  setting  up  the 
poles,  it  is  necessary  for  them  to  show  that  they  have  acquired  the  right 
to  do  so,  either  by  consent  or  by  condemnation  from  the  owner  of  the  soil. 
The  designation  by  the  city  or  town  authorities  of  the  streets  where  the  poles 
may  be  set  up  is  not  enough."  In  Board  of  Trade  Telegraph  Co.  v.  Bariielt, 
107  111.  507,  47  Am.  Rep.  453,  it  was  announced  that  legislative  authority  to 
telegraph  companies  to  erect  poles  in  the  public  street  is  subject  to  the  liability 
to  make  just  compensation  to  the  adjacent  land-owners  for  the  use,  and  the 
couro  said:  "Tlie  position  taken  by  the  defendant  is,  that  the  state  can  right- 
fully, as  it  has  done,  authorize  the  county  board  to  permit  defendant  to  con- 
Banict  its  line  of  telegraph  upon  the  highway  without  the  consent  of  the 
abutting  land-owner,  tliat  it  imposes  no  new  or  additional  burden  thereon, 
and  that  wlien  the  public  acquire  an  easement  over  land,  for  a  compensa- 
tion fully  paid,  the  public  obtain  all  the  rights  the  land-owner  had,  and 
the  state  may  authorize  any  use  of  it  not  inconsistent  with  its  use  as  a  high- 
way. On  the  other  hand,  it  is  insisted  the  proprietary  rights  of  plaintiff  liad 
been  interfered  with  in  a  manner  detrimental  to  his  interests  as  the  owner 
of  the  fee,  and  that  the  action  of  defendant  in  taking  possession  of  his  land 
forcibly  and  against  his  will  comes  within  the  constitutional  inhibition, 
'private  property  shall  not  be  taken  or  damaged  without  just  compensation.' 
The  latter  position  is  the  one  best  sustained  by  authority,  and  rests  on 
sounder  principles.  It  is  for  the  reason  the  construction  anil  maintenance  of 
a  telegraph  line  upon  the  highway  is  a  new  and  additional  burden  upon  the 
fee  to  which  it  was  not  contemplated  it  should  be  subjected,  and  for  which  the 
owner  is  entitled  to  additional  compensation.  The  principle  is,  neither  the 
state  nor  a  municipal  corporation  has  any  rightful  authority,  under  the  con- 
s'itution,  to  grant  away  the  private  property  of  the  citizen;  and  if  corpora, 
tions  quasi  public,  in  the  exercise  of  the  right  of  eminent  domain  with  which 


March,  1891.]     Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.    235 

ihey  are  clothed  by  the  sovereign  power  of  the  state,  seek  to  appropriate  it, 
BO  that  they  may  have  a  benefit  therefrom,  every  principle  of  justice  de- 
mands they  should  make  just  compensation,  whether  the  property  taken  or 
damaged  is  of  little  or  great  value."  A  railway  upon  a  highway  is  an  addi- 
tional servitude,  and  "in  the  same  sense,  the  construction  of  a  line  of  tele- 
graph on  the  highway  is  an  additional  servitude,  to  which  the  fee  of  the  land 
had  not  before  been  subject.  The  servitude  differs  more  in  degree  tlian  in 
charvcter,  and  whether  the  damages  are  great  or  small,  the  corporation  ask- 
ing for  or  appropriating  to  itself  the  benefit  of  such  new  servitude  must 
mike  just  compensation  to  the  owner  of  the  fee." 

Invasion  of  Private  Property  is  Unlawful,  and  may  he  En}oin''d.  — The  inva- 
sion of  private  property  in  which  the  public  has  obtained  no  easement,  for 
the  purpose  of  erecting  telegraph  or  telephone  poles,  or  for  stringing  wires, 
is  unquestionably  unlawful,  and  may  be  restrained  by  injunction.  This  ques- 
tion is  decided  in  American  Telephone  etc.  Co.  v.  Peirce,  71  Md.  535,  where  it 
was  determined  that  a  telegraph  or  telephone  company  is,  with  respect  to  the 
right  to  construct  its  lines  over  private  ])roperty,  ^ust  as  much  subject  to 
the  constitutional  prohibition  against  taking  private  property  for  public  use 
without  just  compensaiiou  as  is  a  railway  or  any  other  corporation  clotlied 
with  the  power  of  taking  private  property  for  public  use;  and  the  averment 
that  such  company  is  proceeding,  or  threatens  to  proceed,  to  construct  its 
line  of  poles  or  wires  on  and  over  the  complainant's  land  without  his  leave 
or  license,  and  without  paying  or  tendering  him  compensation  for  the  use  of 
his  land  for  this  purpose,  is  sufficient  to  entitle  him  to  an  injunction.  Under 
a  license  from  a  municipal  corporation  for  the  erection  of  a  telephone  line, 
or  a  fire-alarm  telegraph,  there  is  no  authority  to  enter  private  property  and 
cut  off  the  limbs  of  trees,  although  they  project  over  the  line  of  the  sidewalk 
on  the  street:  Tissot  v.  Great  Southern  Telegraph  etc.  Co.,  39  La.  Ann.  996; 
4  Am.  St.  Rep.  248;  Memphis  Bell  Telephone  Co.  v.  Hunt,  16  Lea,  456;  57  Am. 
Rep.  237. 

Electric-car  Poles  and  Wires  on  Streets  and  Highways  not  an  Ad- 
ditional Servitude.  —  A  question  closely  allied  to  the  one  above  considered 
is,  whether  or  not  the  erection  of  poles  and  stringing  wires  in  the  street  tor 
the  purpose  of  propelling  electric  street-cars  imposes  an  additional  serviiude 
for  which  the  adjoining  owner  is  entitled  to  compensation;  and  wiiether  or 
not  a  failure  to  obtain  such  compensation,  and  an  attein^jt  to  appropriate  the 
street  to  such  use  without  his  consent  and  against  his  expressed  wish,  will 
entitle  him  to  an  injunction.  The  autliorities  seem  to  be  unanimous  in  an- 
swering this  question  in  the  negative,  and  to  the  elTect  tiiat  the  placing  of 
poles  and  wires  in  the  street  for  the  purpose  of  using  electricity  for  street- 
car propulsion  does  not  impose  a  new  servitude  on  the  land  in  the  street, 
and  may  be  authorized  by  legislative  or  nmiiiciijal  autliority  without  compen- 
sation to  the  abutting  owner  of  the  land;  Detroit  City  Railway  v.  MilU,  85 
Mich.  634;  Halsey  v.  Rapid  Transit  etc.  H'y  Co.,  47  N.  J.  Eq.  380;  Potter  v, 
Saijinaw  Union  etc.  Railway,  83  Mich.  285;  Barber  v.  Saginaw  Union  etc.  Rail- 
way, 83  Mich.  299;  Tai/(jart  v.  Newport  Street  R'y  Co.,  IG  11. 1.  608;  Williams 
V.  (Jily  Electric  Street  R'y  Co.,  41  Fed.  Rep.  556,  in  whicli  the  foUowing  syl- 
lihus  was  prepared  by  the  court.  '"The  operation  of  a  street-railroad  by 
mechanical  power,  when  authorized  by  law,  on  a  public  street  is  not  an  addi- 
tioiial  servitude  or  burden  on  land  already  dedicated  or  condemned  to  the 
use  of  a  public  street,  and  is  therefore  not  a  taking  of  private  property,  but 
is  a  modern  and  improved  use  only  of  the  street  as  a  public  highway,  and 
iiU'ords  to  the  owner  of  the  abutting  property,  though  he  m  ly  own  the  fee  of 


236      Chesapeake  etc.  Tel.  Co.  v.  Mackenzie.     [Maryland, 

the  street,  no  legal  ground  of  complaint."  In  Tagijnrt  v.  Neivpoi-t  Street  R'y 
Co.,  16  R.  I.  668,  the  court  said:  "The  street  railway  here  complained  of  is 
operated  by  electricity.  It  does  not  appear,  however,  that  it  occupies  the 
streets  or  highways  any  more  exclusively  than  if  it  were  operated  by  horse 
power.  The  answer  avers  that  '  electricity,  besides  being  as  safe  and  as  easily 
managed  as  horse  power  for  the  propulsion  of  street-cars,  is  more  quiet,  more 
cleanly,  and  more  convenient  than  horses,  both  for  residents  on  the  streets 
used  by  said  cars  for  the  public  generally,  and  also  causes  much  less  wear 
and  injury  to  the  streets  and  highways  than  is  occasioned  by  street-cars  of 
which  horses  are  the  motive  power.'  These  averments,  the  case  being  heard 
on  bill  and  answer,  must  be  taken  as  true.  We  see  no  reason  to  doubt  their 
truth.  It  is  urged  that  electricity  is  a  dangerous  force,  and  that  the  court 
will  take  judicial  notice  of  its  dangerousness.  The  court  will  take  notice 
that  electricity,  developed  to  some  high  degree  of  intensity,  is  exceedin<:ly 
dangerous,  and  even  fatally  so,  to  men  or  animals,  when  brought  in  contact 
with  them;  but  the  court  has  no  judicial  knowledge  that,  as  used  by  the 
defendant  company,  it  is  dangerous.  The  answer  denies  that  it  is  dangerous 
to  either  life  or  property.  It  is  also  urged  that  the  cars,  moving  apparently 
without  external  force,  alarm  and  frighten  horses.  This,  so  far  as  it  is  al- 
leged in  the  bill,  is  denied  in  the  answer.  We  see  no  reason  to  suppose  that 
this  danger  is  so  great  that  on  account  of  it  the  railway  should  be  regarded 
as  an  additional  servitude.  The  answer  alleges  that  many  street-railways, 
operated  by  electricity  in  the  same  manner  as  the  defendant's,  are  in  use  in 
different  states,  and  that  many  more  are  in  process  of  construction.  Refer- 
ence has  been  made  to  cases  which  hold  that  telegraph  or  telephone  poles 
and  wires  erected  on  streets  or  highways  constitute  an  additional  servitude, 
entitling  the  owners  of  the  fee  to  additional  compensation,  and  from  these 
cases  it  is  argued  that  the  railway  here  complained  of  is  an  additional  servi- 
tude by  reason  of  the  poles  and  wires  which  communicate  its  motive  power. 
There  are  cases  which  hold  as  stated,  and  there  are  cases  which  bold  other- 
wise. But  assuming  that  telegraph  and  telephone  poles  and  wires  do  add 
a  new  servitude,  we  do  not  think  it  follows  that  the  poles  and  wires  erected 
and  used  for  the  service  of  said  street-railway  likewise  add  one.  Telegraph 
and  telephone  poles  and  wires  are  not  used  to  facilitate  the  use  of  the  streets 
where  they  are  erected  for  travel  and  transportation,  or  if  so,  very  indirectly 
so;  whereas  the  poles  and  wires  here  in  question  are  directly  ancillary  to  the 
uses  of  the  streets  as  such,  in  that  they  communicate  the  power  by  which 
the  street-cars  are  propelled." 


l^ 


AMERICAN  STATE  REPOIITS. 

Vol.   XXX,   Pages  373-413. 

i.   GODDARD  7'.    INHABITANTS   OF    HARFS- 

WELL. 

[84  Maink,  4V)9.] 

Municipal  Corporations,  liability  of. 


May,  1892.]     Goddard  v.  Inhabitants  of  Harpswell.      373 


GoDDAED  V.  Inhabitants  op  Harpswell. 

[81  Maine,  499.J 
Municipal  Corporations  —  Liability  of.  —  When  a  public  oflScer,  in  the 
line  of  his  duties,  does  a  public  work  within  a  town,  for  the  public  bene- 
fit or  use,  the  town,  in  the  absence  of  any  direction  to  him,  is  not  liable 
for  his  misconduct  in  such  work,  though  it  appointed  him,  and  is  obliged 
to  pay  the  costs  of  the  work,  and  therefore  a  town  ia  not  answerable  to 
one  whose  property  was  taken  an  I  used  in  the  construction  of  a  high- 
way by  a  highway  surveyor,  char^^ed  with  the  duty  of  opening  and  keep- 
ing in  repair  all  public  highways,  and  who  is  appointed  and  paid  by  the 
town. 

C  W.  Larrahee,  for  the  plaintiff. 
Weston  Thompson,  for  the  defendants. 

Emery,  J.  The  county  commissioners  of  Cumberland 
County,  upon  an  appeal  from  the  refusal  of  the  selectmen, 
laid  out  a  town  road  in  Harpswell.  This  action  of  the  com- 
missioners was,  upon  appeal,  affirmed  by  this  court,  and  the 
certificate  of  affirmance  sent  down  May  31,  1886.  Within 
the  limits  of  the  road  thus  located,  the  plaintiff  had,  prior  to 
the  location,  placed  some  amount  of  stone,  timber,  and  earth, 
with  the  consent  of  the  owners  of  the  land,  for  the  purpose  of 
constructing  a  road  and  bridge,  along  the  same  line  after- 
ward located  by  the  commissioners. 

After  the  location  and  establishment  of  the  road  by  the 
commissioners,  as  affirmed  by  this  court,  the  road  and  the 
necessary  bridge  therein  were  constructed,  and  the  stone,  tim- 
ber, and  earth  of  the  plaintiff,  found  within  tlie  limits  of  the 
location,  were  used  in  such  construction.  The  plaintiff,  as- 
suming that  this  taking  and  using  of  his  material  wore  by 
the  direction  of  the  town,  or  by  its  authorized  agents,  brought 
this  action  of  trover  against  the  town  for  such  conversion. 
He  recovered  a  verdict,  which  the  town  has  moved  the  court 
to  set  aside  as  against  law  and  evidence. 

There  is  no  evidence  in  the  case  that  the  town  ever  voted 
to  open  or  build  the  road  or  bridge,  or  appropriated  any 
money  or  appointed  any  agents  for  that  purpose,  or  gave  any 
instructions  to  any  oflicers,  or  in  any  way  ever  even  consid- 
ered the  question.  Nor  is  there  any  evidence  that  the  munici- 
pal officers  ever  in  any  way  tooii  any  direction  or  cognizance 
of  the  matter.  Counsel  and  witnesses  spoke  incidentally 
of  the  road  and  bridge  having  been  built  by  the  town,  and 
now  the  plaintiff  asks  us  to  assume  that  the  town  built  the 


374  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine, 

road  and  bridge,  inasmuch  as  it  was  the  town's  duty  to  do  bo, 
and  we  may  assume  that  it  did  its  duty.  He  means  for  us 
to  assume  that  the  town  directly,  by  vote,  assumed  charge, 
appointed  agents,  and  gave  directions  in  the  matter. 

But  in  the  absence  of  any  evidence  showing  any  action  of 
the  town  or  its  municipal  officers  in  the  premises,  we  cannot  as- 
sume anything  more  than  that  the  road  and  bridge  were  built 
by  the  usual  public  officer  (in  this  case  the  highway  surveyor 
of  the  district),  in  accordance  with  the  directions  of  the  statute 
and  the  commissioners.  This  assumption  gives  full  effect  to 
any  presumption  of  duty  done,  and  indeed  such  acts  of  pub- 
lic officers  are  commonly  spoken  of  as  acts  of  the  town,  though 
not  technically  or  legally  so. 

Giving  the  plaintiff  the  full  benefit  of  this  assumption,  is 
the  town  proven  guilty  of  the  unlawful  conversion  of  his  ma- 
terial ? 

It  is  settled  law  that  when  a  public  officer,  in  the  line  of 
his  duty,  does  a  public  work  within  a  town,  for  the  public 
benefit  or  use,  the  town,  in  the  absence  of  any  directions  to 
him,  is  not  liable  for  his  misconduct  in  such  work,  even 
though  it  appointed  him,  and  is  obliged  to  pay  the  cost  of  the 
work:  Small  v.  Danville,  51  Me.  359;  MitcJiell  v.  Rockland,  52 
Me.  118;  Cobb  v.  Portland,  55  Me.  381;  92  Am.  Dec.  598; 
Woodcock  V.  Calais,  66  Me.  234;  Farrington  v.  Anson,  77  Me. 
406;  Bulger  v.  Eden,  82  Me.  352. 

A  highway  surveyor  is  a  public  officer,  charged  with  a  pub- 
lic duty  "  to  open  and  keep  in  repair  "  public  ways  legally 
established  within  his  district.  He  is  appointed  and  paid  by 
the  town,  and  the  town  supplies  him  with  the  necessary  funds 
for  the  performance  of  his  duty.  But  the  town  does  all  this 
as  a  public  duty,  not  for  its  own  peculiar  gain.  It  has  no 
proprietorship  in  the  roads  and  bridges  built  and  maintained 
by  taxes  upon  its  inhabitants.  The  roads  and  bridges  belong 
to  the  public. 

In  appointing  highway  surveyors,  in  raising  and  expending 
money  for  roads  and  bridges,  the  town  acts  simply  as  the 
political  agent  of  the  state,  and  should  have  no  more  pecuni- 
ary liability  for  the  misconduct  of  such  officer  than  should 
the  governor  for  the  misconduct  of  a  public  officer  bearing  his 
commission.  Of  course,  the  statute  may  impose  such  a  liabil- 
ity on  a  town,  as  it  may  on  the  governor,  but  no  such  statute 
is  invoked  or  cited  in  this  case. 

It  was  in  accordance  with  these  principles  that  Small  v. 


May,  1892,]     Goddard  v.  Inhabitants  op  Harpswell.     375 

Danville,  51  Me.  359,  was  decided.  In  that  case  the  plaintiff 
had  some  split  stones  lying  upon  the  land  taken  fora  highway 
when  the  way  was  located.  In  building  a  culvert  in  this 
highway,  the  highway  surveyor  of  the  town  used  this  split 
stone,  and  the  plaintiff  brought  an  action  of  trespass  against 
the  town.  It  was  conceded  that  tlie  using  of  the  stone  con- 
stituted a  trespass,  but  it  was  held  that  the  town  was  not  lia- 
ble. That  case  was  very  like  this  in  its  facts.  The  surveyor 
was  evidently  opening  and  making  a  road  just  located.  The 
principle  there  established  is  decisive  of  this  case. 

The  plaintiff  cites  several  cases  from  Massachusetts,  which 
should  be  noticed.  In  Hawks  v.  Charlemont,  107  Mass.  414, 
the  town  voted  to  take  charge,  and  appointed  its  selectmen  as 
agents  with  full  discretion.  It  did  not  leave  the  work  to  the 
higliway  surveyors.  In  Deane  v.  Randolph,  132  Mass.  475, 
the  town  voted  to  put  the  selectmen  in  charge  of  the  work, 
and  they  assumed  such  charge,  hiring  men,  etc.  In  Waldron 
V.  Haverhill,  143  Mass.  582,  the  city,  "  instead  of  leaving  the 
duty  of  keeping  the  highways  in  repair  to  be  performed  by 
the  officers  and  in  the  methods  provided  by  the  general  laws," 
assumed  to  perform  it  by  means  of  its  own  agents.  In  Doherty 
V.  Braintree,  148  Mass.  495,  the  town  voted  to  take  charge  of 
the  work,  and  appointed  a  committee  of  five  to  act  with  the 
selectmen,  all  as  agents  of  the  town. 

On  the  other  hand,  in  the  later  case  in  the  same  state, 
Prince  v.  Lynn,  149  Mass.  193,  the  same  court  reiterated  the 
doctrine  that  the  municipality  was  not  liable  for  the  miscon- 
duct of  its  highway  surveyors  while  engaged  in  their  public 
duties.  In  the  still  later  case  of  Hennessey  v.  New  Bedford, 
153  Mass.  260,  the  city  voted  a  specific  sum  of  money  for  the 
improvement  of  a  particular  street.  The  mayor  and  street 
commissioner,  without  special  instructions,  assumed  the  care 
of  the  work.  Held,  that  the  city  was  not  liable  for  their  mis- 
conduct in  the  premises. 

The  distinction  between  the  two  classes  of  cases  is  clear. 
In  the  one  class,  the  municipality  has  interfered  by  giving 
directions,  or  taking  charge  of  the  work  by  its  own  agents,  as 
in  Woodcock  v.  Calai:^,  66  Me.  234.  In  the  other  class,  the 
municipality  has  not  interfered,  "but  has  left  the  work  to  be 
performed  by  the  proper  public  officers,  in  the  methods  pro- 
vided by  the  general  laws." 

Upon  a  new  trial  the  plaintiff  may  be  able  to  adduce  evi- 
dence which  will  bring  the  case  within  the  former  class,  but 


376  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine, 

upon  the  evidence  now  before  us,  the  case  is  clearly  within 
the  latter  class. 

The  exceptions  do  not  need  to  be  considered. 

Motion  sustained.     New  trial  granted. 


Liability  of  Cities  for  the  Negrligrence  and  Other  Misconduct  of  their 
Officers  and  Agents.* 

The  Purpose  of  Thin  Note  is  to  consider  the  liability  of  miiDicipal  corpo- 
rations for  the  wrongful  acts  and  omissions  of  their  servants  and  agents. 
These  corporations,  like  other  corporations  aggregate,  cannot  act  or  omit  to 
act  except  through  and  by  their  officers  and  agents,  and  therefore,  in  every 
instance  in  which  they  have  been  held  answerable  for  any  wrongful  act  or 
omission,  it  must  necessarily  have  been  a  wrongful  act  or  omission  on  the 
part  of  one  or  more  of  their  officers  or  agents,  or  of  some  person  who,  though 
not  strictly  occupying  the  relation  of  an  officer  or  agent,  yet  is  one  to  whom 
the  municipality  has  deputed  the  performance  of  some  duty,  and  has  thus 
made  itself  answerable  for  his  wrongful  act  or  omission  relating  thereto. 

With  RenTpect  to  the  General  Principles  by  which  the  liability  of  municipal 
corporations  must  be  determined,  the  divergence  of  judicial  opinion  is  not 
greater  than  might  naturally  be  expected,  where  the  subject  is  so  difficult 
and  important,  and  the  circumstances  to  which  the  principles  are  to  be  ap- 
plied are  so  variant.  These  corporations  are  regarded,  with  reference  to  some 
of  their  duties  and  functions,  as  representing  and  acting  for  the  state  or  sov- 
ereign, and  with  reference  to  others,  as  acting  for  themselves,  somewhat  as 
private  corporations,  and,  generally,  when  acting  in  the  former  capacity  they 
are  not  answerable  for  the  acts  or  omission  of  their  officers  or  agents,  while 
when  acting  in  the  latter  capacity  their  liability  is  ordinarily  the  same  as 
that  of  a  private  person  or  corporation.  The  great  difficulty  and  the  great 
divergence  of  judicial  opinion  arise  from  the  fact  that  no  test  has  been  for- 
mulated by  which  to  decide  with  unerring  accuracy  whether  a  particular  act 
or  omission  occurred  in  the  discharge  of  governmental  or  of  quasi  private 
duties. 

General  Test  of  Municipal  Liability.  — If  the  duty  in  respect  to  which  there 
has  been  a  wrongful  act  or  omission  is  one  resting  primarily  upon  the  mu- 
nicipality, and  is  not  a  mere  governmental  duty,  the  performance  of  which 
has  been  delegated  to  the  municipality  by  competent  legislative  authority, 
then  the  liability  of  the  municipality  is  substantially  that  of  a  private  corpo- 
ration. Hence  one  of  the  tests  formulated  and  applied  by  the  courts  of  New 
York  is  as  follows:  *'  To  determine  whether  there  is  municipal  responsibility, 
the  inquiry  must  be,  whether  the  department  whose  misfeasance  or  non- 
feasance is  complained  of  is  a  part  of  the  machinery  for  carrying  on  the  mu- 
nicipal government,  and  whether  it  was  at  the  time  engaged  in  the  discharge 
of  a  duty  or  charged  with  a  duty  primarily  resting  upon  the  municipality  ": 
Ehrgott  V.  Mayor,  96  N.  Y.  273;  48  Am.  Rep.  622;  Pettengill  v.  Yonkers,  116 
N.  Y.  558;  15  Am.  St.  Rep.  442.     "Whenever,"  said  the  supreme  court  of 


*  EKFERENCE  TO  MONOGRAPHIC   NOTES. 

Liability  of  cities  for  neglect  to  repair  streets:  63  Am.  Dec.  o50-357. 

Liability  of  cities  for  unauthorized  acts  of  their  oifieers:  100  Am.  Dec.  358-360 

Liability  of  Cities  for  defects  in  and  want  of  repair  of  sewers:  29  Am.  St.  Rep.  737- 
741. 

Tests  for  determining  city's  liability  for  damages  occasioned  in  the  execution  of 
governmental  or  sovereign  powers:  66  Am.  Dec.  43i-442. 


May,  1892.]     Goddard  v.  Inhabitants  of  Harpswell.     377 

Georgia,  "the  negligence  or  non-feasance  of  the  ordinary  agents  and  servants 
of  the  corporation,  as  distinguished  from  that  of  its  officers,  causes  the  injury, 
or  when  tlie  loss  results  from  acts  merely  ministerial,  as  distinguished  from 
such  as  are  legislative  and  governmental  in  character,  exercised  for  the  sole 
and  immediate  benefit  of  the  public,  or  where  the  corporation  is  exercising, 
as  a  corporation,  its  private  franchise  powers  and  privileges,  which  belong  to 
it  for  its  immetliate  corporate  benefit,  or  is  dealing  with  property  held  by  it 
for  its  corporate  advantage,  gain,  or  eniolunient,  though  inuring  ultimately  to 
the  benefit  of  the  general  public,  then,  and  only  then,  it  becomes  liable  for 
the  negligent  exercise  of  such  powers  precisely  as  are  individuals  ":  Wi'iyht  v. 
Aii'jnsta,  78  Ga,  241;  6  Am.  St.  Rep.  256,  258.  In  an  action  against  the 
representatives  of  the  city  of  New  York  to  recover  for  injuries  resulting  from 
alleged  negligence  in  keeping  open  an  excavation  in  the  street  unguarded 
and  unlighted  at  night,  the  court  of  appeals  of  that  state  said:  "The  corpo- 
ration of  the  city  of  New  York  possesses  two  kinds  of  powers, —  one  govern- 
mental and  public,  and  to  the  extent  they  are  held  and  exercised,  is  clothed 
with  sovereignty;  the  other  private,  and  to  the  extent  they  are  held  and 
exercised,  is  a  legal  individual.  The  former  are  given  and  used  for  public 
purposes,  the  latter  for  private  pnrposes.  While  in  the  exercise  of  the  for- 
mer, the  corporation  is  a  mutiicipal  government,  and  while  in  the  exercise  of 
the  latter,  is  a  corporate,  legal  individual.  The  distinction  between  these 
two  classes  of  powers  is  obvious,  and  has  been  frequently  recognized  and 
established  in  our  courts:  Wilson  v.  Mayor  etc.  of  New  York,  1  Denio,  595; 
43  Am.  Dec.  719;  Baileij  v.  Mayo?-  etc.  of  New  York,  3  Hill,  531;  38  Am.  Dec. 
609;  Mayor  etc.  of  New  York  v.  Bailey,  2  Denio,  450,  opinion  of  Hand,  S. ; 
Eochrsler  White  Lead  Co.  v.  City  of  Rochester,  3  N.  Y.  4G3;  53  Am.  Dec.  316. 
Although  the  difference  between  the  two  kinds  of  powers  is  plain  and  marked, 
yet,  as  they  approximate  each  other,  it  is  oftentimes  difficult  to  ascertain  the 
exact  line  of  distinction.  When  that  line  is  ascertained,  it  is  not  difficult 
to  determine  the  riglits  of  parties;  for  the  rules  of  law  are  clear  and  explicit 
which  establish  the  rights,  immunities,  and  liabilities  of  the  appellants  when 
in  the  exercise  of  each  class  of  powers.  All  that  can  be  done,  probably,  with 
safety  is  to  determine,  as  each  case  arises,  under  which  class  it  falls  ":  Lloyd 
V.  Mayor  etc.  of  Neiv  York,  5  N.  Y.  369;  55  Am.  Dec.  347. 

Liable  in  liespect  to  Municifal  Dutie.fonly.  — Doubtless  many  decisions  may 
be  found  in  which  the  liability  of  municipal  corporations  for  the  acts  or 
omissions  of  their  officers  or  agents  is  compared  to  that  of  private  persons  or 
corporations,  and  language  is  used  from  which  the  inference  might  be  drawn 
that  whenever  the  latter  are  liable  the  former  are  equally  so:  Cline  v.  Crescent 
City  R.  R.  Co.,  41  La.  Ann.  1031;  Ros.'i  v.  Madison,  1  Ind.  281;  48  Am.  Dec. 
3G1;  Wallace  v.  Mnscatine,  4  G.  Greene,  373;  61  Am.  Dec.  131;  Tcmplin  v. 
Iowa  City,  14  Iowa,  59;  81  Am.  Dec.  455;  Rochester  While  Lead  Co.  v.  Roches- 
ter,Zl^.  Y.  403;  53  Am.  Dec.  310;  Aldrich  v.  Tripp,  11  R.  I.  141;  23  Am.  Rep. 
434;  Cotes  V.  City  of  Davenport,  9  Iowa,  227;  Mayor  of  Helena  w.  Thompson,  29 
Ark.  509,  573;  Denver  v.  Dummore,  7  Col.  328;  Denver  v.  Dean,  10  Col.  375; 
3  Am.  St.  Rep.  594;  Greencastle  v.  Martin,  74  Ind.  449;  39  Am.  Rep.  93;  Plalz 
V.  Cohoe.s,  89  N.  Y.  219;  42  Am.  Rep.  286.  These  decisions,  like  all  others, 
must,  however,  be  considered  and  construed  in  connection  with  the  attendant 
facts,  and  then  they  will  generally  not  be  found  inconsistent  with  the  princi- 
ple hereinbefore  stated,  and  which  restricts  the  liibility  of  municipalities  to 
acts  or  omissions  relating  to  the  discharge  of  quasi  private  duties.  It  is  true 
that  nearly  every  duty  that  a  municipality  is  i)y  law  called  upon  to  discharge 
affects,  or   may   atl'cct,   many   persons,  and   may    without   impropriety   be 


378  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine, 

styled  "a  public  duty  ";  and  the  fact  that  the  duty  is  to  some  extent  a  pub- 
lic one  may  not  exclude  municipal  liability,  if  the  city,  in  contemplation  of 
law,  has  undertaken  the  performance  of  the  duty  in  consideration  of  the 
privileges  and  emoluments  granted  by  its  charter,  or  for  the  purpose  of  gain 
or  profit  for  itself.     Hence,  if  a  public  improvement  is  maintained  by  a  mu- 
nicipality, for  the  use  of  which  it  has  the  right  to  exact  tolls,  there  is  no 
question  of  its  liability  to  respond  in  damages  for  injuries  resulting  from  the 
negligence  of  its  officers  or  agents  in  respect  to  such  improvement;  and  though 
no  protit  is  to  be  realized  by  the  municipality  from  the  performance  of  a  duty 
confided  to  it,  there  are  many  authorities  supporting  the  view  that  its  ac- 
ceptance of  the  charter  imposing  such  duty  is  equivalent  to  an  agreement  on 
its  part  that  it  will  perform  it,  and  hence,  that  liability  results  from  its  non- 
performance or  negligent  performance,  and  is  enforceable  by  any  one  injured 
thereby:  City  of  Denver  v.  Dunsmore,  7  Col.  332;  Henly  v.  Mayor  of  lyyme,  5 
Bing.  9 1 ;  Mersey  Docks  v.  Gihbs,  11  H.  L.  Cas.  686;  Scott  v.  Manchester,  2  Hurl. 
&  N.  204;  26  L.  J.  Ex.  406;  Coivley  v.  Sunderland,  6  Hurl.  &  N.  665;  30  L. 
J.  Ex.  127.     "These  decisions  proceed  on  the  ground  that  where  a  municipal 
corporation  acts  in  the  exercise  of  powers  or  the  discharge  of  duties,  in  no  wise 
discretionary  or  governmental,  but  purely  ministerial  in  their  character,  it  in- 
curs,like  a  private  person, the  common-law  liability  for  the  acts  of  its  servants; 
and  that  it  does  not  matter,  as  was  once  intimated,  if  there  be  the  absence 
of  special  rewards  or  advantages,  it  being  considered  and  allowed  that  such 
gratuitous  function  is  to  be  regarded  as  a  burden  accepted  under  the  charter 
in  consideration  of  its  privileges  ":  City  of  Richmond  v.  Long,  17  Gratt.  375; 
94  Am.  Dec.  464;  Barton  v.  Syracuse,  36  N.  Y.  54;  City  of  Galveston  v.  Posmain- 
sky,  62  Tex.  118,  128;  50  Am.  Rep.  517;  Baugusv.  Atlanta,  74  Tex.  629;  Klein 
V.  Dallas,  71  Tex.  280.     If  the  duty  imposed  by  the  charter  is  clearly  defined, 
and  the  municipality  has  no  discretion  to  do  or  to  omit  it,  as  in  the  judgment 
of  its  officers  may  seem  proper,  it  is  generally  characterized  as  a  ministerial 
duty,  and  the  city  is  held  answerable  for  wrongful  acts  or  omissions  in  its  per- 
formance: Barton  v.  Syracuse,  36  N.  Y.  55;  Clayhunjh  v.  Chicarjo,  25  111.  535; 
79  Am.  Dec.  346;  City  of  Elgin  v.  Eaton,  83  111.  537;  25  Am.  Rep.  412;  Claik  v. 
Washington,  12  Wheat.  40;  Weightman  v.    Washington,  1  Black,  40;  Orme  v. 
Richmond,  79  Va.  86.     And  unless  the  duty  of  the  corporation  is  in  this  sense 
ministerial,  no  municipal  liability  can  result  from  its  non-performance,  or  from 
its  performance  in  a  negligent  or  insufficient  manner:  City  of  Anderson  v.  East, 
117  Ind.  126;  10  Am.  St.  Rep.   35.     Therefore,  in  ascertaining  whether  a 
city  is  liable  for  a  given  wrongful  act  or  omission,  the  inquiry  must  be, 
whether  the  duty  of  the  municipality  was,  within  the  meaning  of  the  de- 
cisions upon  the  subject,  ministerial  or  not.     In  this  connection  it  should  be 
remembered  that  the  officers  of  a  city  may  be  charged  with  many  duties 
which  are  not  duties  of  the  municipality,  by  the  non-performance  or  negli- 
gent performance  of  which  it  and  some  or  all  of  its  citizens  may  be  damni- 
fied.     When  such  is  the  case,  the  city  is  not  in  default,  though  its  officer 
may  be,  and  he,  instead  of  it,  is  liable  to  indemnify  persons  injured  by  his 
misfeasance  of  non-feasance.     "If  the  act  of  the  officer  or  the  subordinate  of 
the  officer  is  done  in  the  attempted  performance  of  a  duty  laid  by  law  upon 
him,  and  not  upon  the  municipality,  then  the  municipality  is  not  liable  for 
his  negligence  therein  ":  Maxniilian  v.  Mayor,  62  N.  Y.  160;  20  Am.  Rep. 
468. 

Classification  of  Cases  of  Non-liahiUty.  — The  cases  in- which  municipalities 
are  not  answerable  for  injuries  resulting  from  their  wrongful  acts  or  omis- 
sions, or  that  of  their  officers  or  agents  acting  by  their  sanction,  resolve 


May,  1892.]     Goddard  v.  Inhabitants  op  Harpswell.     379 

themselves  into  three  classes,  to  wit:  1.  Cases  ia  which  the  alleged  duty  was 
discretionary,  and  its  performance  could  not  be  compelled  or  controlled  at  tha 
instance  of  a  citizen,  tax-payer,  or  other  person,  but  might  or  might  not  ba 
undertaken,  as  the  governing  authorities  of  tlie  municipality  should  deter« 
mine;  2.  Cases  in  which,  while  it  was  the  duty  of  the  officers  of  the  mu- 
nicipality to  act  in  a  mode  prescribed  by  the  law,  yet  in  such  action  they  were 
discharging  a  governmental  duty  delegated  to  the  municipality  by  the  legis- 
lature, out  of  which  no  liability  could  have  arisen  had  such  authority  not 
been  delegated,  and  its  performance  had  been  entered  upon  by  some  other 
governmental  agency;  3,  Cases  in  which  the  officer,  though  acting  in  his 
official  capacity,  is  not  discharging  any  municipal  duty,  as  where  a  city  sur- 
veyor is  called  upon  to  make  a  survey,  or  a  city  marshal  or  other  officer  to 
levy  a  writ.  In  respect  to  these  duties  he  is  no  more  the  agent  or  servant 
of  the  city  than  if  he  were  an  officer  of  the  county  or  state,  or  were  a  mere 
private  person  voluntarily  undertaking  their  performance. 

In  the  first  class  are  included  all  those  actions  in  which  a  recovery  is  sought 
upon  the  ground  that  the  municipality,  by  adopting  some  ordinance  or  regu- 
lation, might  have  prevented  the  injury  complained  of.  Thus  when  a  plain- 
tifif  alleged  that  he  was  injured  by  the  explosion  of  a  manufactory  of  fire- works 
while  assisting  in  extinguishing  a  fire,  and  that  it  was  the  duty  of  the  city 
in  which  such  works  were  operated  to  have  suppressed  them  by  exercising 
the  power  granted  to  it  to  prohibit  the  manufacture,  sale,  or  exposure  of  fire- 
works, or  other  inflammable  or  dangerous  articles,  the  allegation  was,  upoa 
demurrer,  held  to  be  insufficient  to  establish  any  liability  against  the  city,  be- 
cause no  person  had  any  right  to  demand  that  the  power  vested  in  the  muni- 
cipality be  exercised  in  any  particular  way:  McDade  v.  Chester  City,  117  Pa. 
St.  414;  2  Am.  St.  Rep.  681.  When  a  discretion  exists  as  to  doing  or  omitting 
the  performance  of  any  alleged  duty,  or  as  to  the  manner  in  which  it  shall  ba 
performed,  and  the  exercise  of  such  discretion  involves  legislative  or  judicial 
action,  there  can  be  no  recovery  of  the  municipality  because  it  failed  to  act, 
or  acted  in  a  particular  manner.  In  one  thing  the  authorities  "all  unite,  and 
that  is,  in  affirming  that  no  recovery  can  in  any  event  be  had  where  the  neg- 
ligence of  the  municipal  corporation  consists  in  failing  to  perform  a  legis- 
lative, judicial,  or  discretionary  duty,  or  in  simply  performing  such  a  duty  in 
an  improper  method  ":  Anderson  v.  Eafit,  117  Ind.  120;  10  Am.  St.  Rep.  35; 
Carr  v.  Northern  Liberties,  35  Pa.  St.  321;  78  Am.  Dec.  342;  Dooby  v.  Sulli- 
van, 112  Ind.  451;  2  Am.  St.  Rep.  209;  Kiley  v.  City  of  Kansas,  87  Mo.  103; 
56  Am.  Rep.  443;  Moffitt  v.  Asherille,  103  N.  C.  237;  14  Am.  St.  R .p.  810. 
Therefore,  in  no  in.stance  can  a  recovery  be  sustained  on  the  ground  that  the 
injuries  complained  of  arose  out  of  the  failure  of  the  municipality  to  enact  an 
ordinance,  the  enactment  of  which  was  within  the  powers  granted  to  its 
common  council:  Wheeler  v.  Pli/mouth,  Ilti  Ind.  158;  9  Am.  St.  Ivep.  837; 
City  of  Lafayette  v.  Timherlake,  88  Ind.  330.  Nor  on  the  ground  that  it  had 
enacted  an  ordinance  permitting  the  doing  of  the  act  complained  of,  unless 
such  act  was  necessarily  injurious  or  unlawful:  Bnrford  v.  Grand  Bapids,  53 
Mich.  98;  51  Am.  Rep.  105;  Forsyth  v.  Atlanta,  45  Ga.  152;  12  Am.  Rep. 
576;  Rivers  v.  Awjiista,  65  Ga.  376;  38  Am.  Rep.  787;  Hill  v.  Charlotte,  72 
N.  C.  55;  21  Am.  Rep.  451.  As  to  licensing  acts  necessarily  dangerous  or 
unlawful,  see  Little  v.  Madison,  42  Wis.  643;  24  Am.  Rep.  435;  Stanley  v. 
Davenport,  54  Iowa,  463;  37  Am.  Rep.  216. 

Plan  of  Work,  Error  in.  — As  a  general  rule,  when  to  a  municipality  is 
delegated  the  authority  of  determining  how  a  duty  shall  be  performed, 
its  erroneous  determination  cannot  result  in  its  liability.     For  instance,  if 


880  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine, 

it  determines  to  construct  works  of  a  public  character  and  for  the  public  bene- 
fit, and  in  deciding  upon  the  plan  for  their  construction  errs,  so  that  when 
they  are  constructed  in  accordance  with  such  plan  they  are  insufficient  to 
accomplish  the  purpose  intended,  and  from  such  insufficiency  a  private  per- 
son is  injured,  he  is  without  redress:  City  of  Denver  v.  Capelli,  4  Col.  25;  34 
Am.  Rep.  62;  Child  v.  Boston,  4  Allen,  41;  81  Am.  Dec.  680;  Fair  v.  Phila- 
delphia, 88  Pa.  St.  309;  32  Am.  Rep.  455;  Merrijield  v.  Worcester,  110  Mass. 
216;  14  Am.  Rep.  592;  Van  Pelt  v.  Davenport,  42  Iowa,  308;  20  Am  Rep. 
622;  Johnston  v.  District  of  Columbia,  118  U.  S.  19;  Stackhouse  v.  Lafayette, 
26  Ind,  17;  89  Am.  Dec.  450. 

To  the  rule  exempting  municipalities  from  liability  for  injuries  resulting 
from  the  plan  of  a  public  work,  some  limitation  is  essential,  and  must  be  con- 
ceded. For  instance,  if  it  is  a  part  of  the  plan,  or  a  necessary  consequence 
of  its  execution,  that  private  property  must  be  invaded  or  destroyed,  its 
owner  is  not  without  redress;  for  such  invasion  or  destruction  is  not  an 
object  for  the  accomplishment  of  which  the  municipality  is  authorized  to 
plan.  So,  doubtless,  any  plan  of  a  public  work  which,  if  faithfully  executed, 
must  obviously  result  in  the  creation  and  maintenance  of  a  nuisance  cannot 
be  so  executed  without  creating  a  right  of  action  in  favor  of  one  specially 
damaged  thereby.  Hence  if  the  plan  for  a  public  sewer  requires  its  contents 
to  be  discliarged  upon  private  property,  the  municipality  must  respond  in 
damages:  Lehn  v.  San  Francisco,  66  Cal.  76;  Weis  v.  City  of  Madison,  75  Ind. 
241;  39  Am.  Rep.  135.  To  hold  otherwise  would  enable  municipal  author- 
ities, under  the  pretense  of  exercising  their  discretion  in  planning  a  public 
improvement,  to  willfully  destroy  private  rights  of  property.  In  some  of  the 
cases  the  liability  is  said  to  result  from  negligence  in  exercising  the  power  of 
devising  and  adopting  plans:  City  of  Evansville  v.  Decker,  84  Ind.  325;  43 
Am.  Rep.  86.  But  if  the  liability  of  the  municipality  can  result  from  negli- 
gence in  devising  a  plan,  we  apprehend  that  the  negligence  must  be  gross. 
In  other  words,  that  it  must  be  such  as  to  indicate  a  willful  iudifiference  to 
probable  injurious  consequences;  and  perhaps  the  liability  of  the  city,  how- 
ever unskillfully  devised  and  inadequate  the  plan  may  be,  must  be  limited 
to  cases  where  the  execution  of  the  plan  "  must  necessarily  cause  an  injury  to 
private  property  equivalent  to  an  appropriation  of  some  enjoyment  thereof 
to  which  the  owner  is  entitled."  In  such  a  case  the  right  of  the  owner  to 
redress  by  civil  action  must  necessarily  be  affirmed:  Detroit  v.  Bechnan,  34 
Mich.  125;  22  Am.  Rep,  507;  Perry  v.  Worcester,  6  Gray,  544;  66  Am.  Dec. 
431;  Stoddard 'V.  Saratoga  Springs,  I'll  N.  Y.  261;  Rochester  White  Lead  Co. 
V.  City  of  Rochester,  3  N.  Y.  463;  53  Am.  Dec.  316;  Ashley  v.  Port  Huron, 
35  Mich.  296;  24  Am.  Rep.  552;  Seymour  v.  Cummins,  119  Ind.  148. 

Classification  of  Cases  of  Non-liability,  though  Duty  is  not  Discretionary.  — In 
the  second  and  third  class  of  cases  are  included  those  in  which  the  municipality 
or  its  officers  or  agents  have  been  guilty  of  some  wrongful  act  or  omission  of 
which  it  cannot  be  truly  said  that  they  had  a  discretion  to  act  or  to  omit  to  act, 
as  in  their  judgment  seemed  best,  but  in  respect  to  which  the  immunity  from 
liability  rests  either  upon  the  ground  that  the  municipality  was  but  a  mere 
instrumentality  of  the  state,  or  the  officer  whose  wrongful  act  or  omission 
has  caused  the  injury  was,  though  not  acting  in  the  discharge  of  any  govern- 
mental function,  charged  with  a  duty  prescribed  and  limited  by  law,  and  in 
respect  to  which  he  was  the  servant  and  agent  of,  and  controlled  by  the  law, 
and  not  the  agent  or  servant  of  nor  contrnlled  by,  the  municipality.  Speak- 
ing upon  this  subject,  the  supreme  court  of  South  Carolina  said:  "There  is 
no  statute  in  this  state  authorizing  an  action  against  a  municipal  corporation 


May,  1892.]     Goddakd  v.  Inhabitants  of  Harpswell.      381 

for  non-feasance  as  to  a  puljlic  duty.  The  general  doctrine  is,  that  civil  or  mu- 
nicipal corporations  are  public  in  their  nature,  but  instrumentalities  of  the 
state  which  incorporates  them  to  assist  the  state  in  more  effectually  dischar- 
ging its  duty.  The  powers  conferred  on  such  corporations  are  not  always 
uniform,  but  they  generally  relate  to  the  administration  of  justice,  the  sup- 
port of  the  poor,  the  establishment  and  repairs  of  highways,  etc.,  all  of  which 
are  matters  of  state  as  distinguished  from  local  concern.  It  seems  to  have 
been  considered,  that  as  the  state  cannot  be  sued,  these  governmental  agents 
of  the  state  should  not  be  liable  in  an  action  of  tort  for  either  non-feasance 
or  misfeasance;  that  they  are  not  liable  in  case,  or  trespass,  or  other  form  of 
civil  action  for  neglect  of  public  duty,  unless  such  liability  be  expressly  de- 
clared by  statute  ":  Black  v.  City  of  Columbia,  19  S.  C.  412;  45  Am.  Rep.  785, 
790;  Fowle  v.  Alexandria,  3  Pet.  :^98. 

Public  Duties,  Liability  in  Di^dianje  of.  —  As  already  remarked,  the  fact  that 
A  duty  is  partly  public  does  not  necessarily  exonerate  the  municipality  from 
liability,  for  the  reason  that  there  are  some  public  duties  which  municipal- 
ities are  deemed  to  have  assumed  in  consideration  of  the  privileges  conferred 
by  their  charters,  and  it  is  not  probable  that  any  test  can  be  fornmlated  upon 
which  all  the  courts  will  agree,  and  from  which  one  can  always  determine 
whether  a  duty  is  public  in  the  sense  that  relieves  a  municipality  from 
liability  for  negligence  consisting  either  in  its  non-performance  or  its  per- 
formance in  a  careless  and  injurious  manner.  If  the  duty  of  performance 
arises  from  the  special  provisions  of  the  municipal  charter,  instead  of  from 
general  laws  applicable  to  all  municipalities,  this  fact  may  sometimes  be  de- 
cisive, the  inclination  of  the  courts  being  to  exonerate  the  municipality  from 
liability  where  the  duty  is  not  imposed  by  its  charter.  The  impossibility  of 
the  municipality  receiving  benefit  from  the  performance  of  a  duty  is  also 
«n titled  to  great  consideration.  Perhaps  the  leading  case  upon  this  subject 
is  Hill  V.  City  of  Boston,  1-22  Mass.  344;  23  Am.  Rep.  332.  The  plaintiff  in 
tiiat  case  sought  to  recover  for  injuries  suffered  while  attending  a  public 
school  from  the  unsafe  condition  of  a  stairway  in  the  school-house.  There 
was  no  special  provision  in  the  charter  of  the  city  prescribing  its  duties  in 
the  construction,  maintenance,  and  repair  of  school-bouses,  and  whatever 
was  due  from  it  resulted  from  provisions  in  the  general  statutes  of  the  state, 
equally  applicable  to  all  municipalities.  The  decision  of  the  court  was  writ- 
ten by  Chief  Justice  Gray,  and  in  it  municipal  liability  was  more  thoroughly 
considered  than  in  any  other  opinion  coming  within  our  observation,  and  the 
conclusion  which  the  learned  judge  reached,  and  the  arguments  used,  and  the 
authorities  cited  by  him  stroiit;ly  tend  to  the  denial  of  municipal  liability  in 
many  instances  in  which  such  liability  is  concedeil  by  the  weight  of  author- 
ity upon  the  subject.  Especially  is  this  true  in  regard  to  liability  for  negli- 
gence in  the  maintenance  and  repair  of  public  bridges  and  highways.  The 
juilge  commenced  by  saymg  that  "  we  had  supposed  it  to  be  well  settled 
in  this  commonwealth  that  no  private  action,  unless  authorized  by  express 
statute,  can  be  maintained  against  a  city  for  the  ne^dect  of  a  public  duty 
imposed  upon  it  by  law  for  the  benefit  of  the  public,  and  from  the  per- 
formance of  wiiich  the  corporation  receives  no  profit  or  advantage."  That 
the  supposition  with  which  the  learned  judge  began  his  investigations  was 
by  them  strengthened  into  immovable  conviction  is  apparent  from  the  fol- 
lowing extract  from  the  closing  passages  of  his  opinion:  "  We  find  it  difficult 
to  reconcile  the  view  that  the  mere  acceptance  of  a  municipal  charter  is  to 
be  considered  as  conferring  such  a  benefit  upon  the  corporation  as  will  ren- 
der it  liable  to  private  action  for  neglect  of  the  duties  thereby  imposed  upon 


382  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine, 

it  with  the  doctrine  that  the  purpose  of  the  creation  of  municipal  corpora- 
tion  by  the  state  is  to  exercise  a  part  of  its  powers  of  government, —  a  doc- 
trine universally  recognized,  and  which  has  nowhere  been  more  strongly 
asserted  than  by  the  supreme  court  of  the  United  States  in  the  opinions 
delivered  by  Mr.  Justice  Hunt  in  United  States  v.  Railroad  Co.,  17  Wall. 
322,  329,  and  by  Mr.  Justice  Clifford  in  Laramie  v.  Albany,  92  U.  S.  307, 
308.  But  however  it  may  be  where  the  duty  in  question  is  imposed  by  the 
charter  itself,  the  examination  of  the  authorities  confirms  us  in  the  conclu- 
sion that  a  duty  which  is  imposed  upon  an  incorporated  city,  not  by  the 
terms  of  its  charter,  nor  for  the  profit  of  the  corporation,  pecuniarily  or  other- 
wise, but  upon  the  city  as  the  representative  and  agent  of  the  public  and 
for  the  public  benefit,  and  by  a  general  law  applicable  to  all  cities  and  towns 
in  the  commonwealth,  and  a  breach  of  which  in  the  case  of  a  town  would 
give  no  right  of  private  action,  is  a  duty  owing  to  the  public  alone,  and  a 
Ijreach  thereof  by  a  city,  as  by  a  town,  is  to  be  redressed  by  prosecution  in 
behalf  of  the  public,  and  will  not  support  an  action  by  an  individual,  even  if 
he  sustains  special  damage  thereby." 

In  New  Hampshire,  an  action  was  brought  by  a  person  injured  by  reason 
of  his  horse  taking  fright  at  a  stream  ot  water  thrown  from  a  hydrant  which 
was  being  tested  by  the  fire  department  of  a  city  for  the  purpose  of  ascer- 
taining its  capacity  and  utility  in  supplying  water  to  extinguish  fires.  The 
duties  of  the  officers  whose  negligence  was  complained  of  were  prescribed  by 
general  laws,  and  not  by  special  municipal  charter,  and  the  principles  ap- 
plicable to  the  case  were  manifestly  identical  to  those  applied  to  the  case 
last  cited,  and  so  the  court  ruled,  saying:  "No  private  action,  in  the  absence 
of  a  statute  giving  it,  can  be  maintained  against  a  city  for  the  neglect  of  a 
public  duty  imposed  upon  it  by  law  for  the  benefit  of  the  public,  and  from 
the  performance  of  which  the  corporation  receives  no  profit  or  advantage. 
To  charge  a  corporation  with  damages  for  injuries  arising  from  misfeasance 
and  neglect  of  duty,  no  statute  fixing  the  liability,  there  must  be  acts  posi- 
tively injurious  committed  by  authorized  agents  or  oflicers  in  the  course  of 
the  performance  of  corporate  powers,  or  in  the  execution  of  corporate  duties, 
in  distinction  from  those  done  in  a  public  capacity  as  a  governing  agency  ": 
Edijerly  v.  Concord,  62  N.  H.  8;  13  Am.  St.  Rep.  53.3,  535;  Clark  v.  Man- 
chester, 62  N.  H.  577.  Upon  the  same  principle  the  liability  of  municipal- 
ities for  negligence  in  not  providing  suitable  apparatus  and  a  sufficient 
supply  of  water  to  extinguish  fires  is  denied:  IVriyht  v.  City  Council  oj 
Aujusta,  78  Ga.  241;  6  Am.  St.  Rep.  256. 

Public  Duties  Voluntarily  Assumed. — In  the  cases  to  which  we  have  re- 
ferred, the  duty  was  imposed  by  general  law,  and  the  municipality  had  no 
legal  right  to  refuse  to  perform  it.  But  if  the  duty  is  of  a  public  nature, 
and  is  one  from  the  performance  of  which  the  municipality  can  derive  no 
gain,  it  is  not  material  that,  instead  of  being  compelled  by  statute,  it  is  volun- 
tarily assumed  by  statutory  permission.  "  The  motive  and  the  object  are 
the  same,  though  in  some  instances  the  legislature  determines  finally  the 
necessity  or  expediency,  and  in  others  it  leaves  the  necessity  or  expediency 
to  be  determined  by  the  towns  themselves.  But  when  determined,  and  when 
the  service  has  been  entered  upon,  there  is  no  good  reason  why  a  liability  to  a 
private  action  should  be  imposed  when  a  town  voluntarily  enters  upon  such 
a  beneficial  work,  and  withheld  when  it  performs  the  service  under  the  re- 
quirement of  an  imperative  law.  To  make  such  a  distinction  would  not  have 
the  effect  to  encourage  towns  in  making  liberal  provision  for  the  public  good. 
It  is  well  known  that  many  towns  in  Massachusetts,  not  bound  to  do  so. 


May,  1892.]     Goddard  v.  Inhabitants  op  Harpswell.      383 

volnntarily  maintain  high  schoola.  It  is  not  to  be  supposed  that  the  legis- 
lature have  intended  to  make  such  towns  liable  to  private  actions,  when 
towns  required  to  maintain  high  schools  would  be  exempt.  On  the  other 
hand,  it  has  been  recognized  in  numerous  cases,  in  this  state  and  elsewhere, 
that  the  question  of  the  liability  of  towns  does  not  rest  upon  this  distinction: 
Bigelow  v.  Bandolph,  14  Gray,  541;  Hafford  v.  New  Bedford,  16  Gray,  297; 
Fisher  v.  Boston,  104  Mass.  87;  6  Am.  Rep.  196;  Clarh  v.  Waltham,  128  Mass. 
567;  Eastman  v.  Meredith,  36  N.  H.  284;  72  Am.  Dec.  302;  Wixon  v.  Neivjiort, 
13  R.  I.  454;  43  Am.  Rep.  35;  Eichmondv.  Long,  17  Gratt.  375;  94  Am.  Dec. 
461":  Tindley  v.  Salem,  137  Mass.  171;  50  Am.  Rep.  289,  294.  Hence  if  an- 
thority  is  given  by  statute  to  maintain  workhouses  or  almshouses  to  relieve 
poor  and  indigent  persons,  the  fact  that  the  municipality,  acting  under  the 
permission  of  the  statute,  maintains  such  workhouses  does  not  make  their 
maintenance  any  the  less  a  public  duty,  and  the  city  is  exempt  from  liability 
to  the  same  extent  as  if  their  maintenance  had  been  compulsory  instead  of 
permissive;  nor  can  the  city  be  held  answerable  on  the  ground  that  some 
revenue  is  derived  from  the  labor  of  the  inmates,  if  the  institution  is  not 
conducted  with  a  view  to  pecuniary  profit:  Curranv.  Boston,  151  Mass.  505; 
21  Am.  St.  Rep.  465.  Many  other  cases  may  be  cited  in  which  the  general 
principle  is  declared,  that  a  municipality  is  not  answerable  for  the  acts  or 
neglects  of  its  ofBcers  or  agents  intrusted  with  the  discharge  of  a  public  duty: 
Stewart  V.  Nexo  Orleans,  9  La.  Ann.  461;  61  Am.  Dec.  21S;  County  Comnira 
V.  Durkett,  20  Md.  468;  83  Am.  Dec.  557;  GMei  v.  Beaufort,  20  S.  C.  213; 
Moffitt  V.  Asheville,  103  N.  C.  237;  14  Am.  St.  Rep.  810;  Eastman  v.  Mere- 
dith, 36  N.  H.  284;  72  Am.  Dee.  302;  Brown  v.  Guyandotte,  34  W.  Va.  299; 
Oliver  v.  Worcester,  102  Mass.  489;  3  Am.  Rep.  485;  Riehmond  v.  Long,  17 
Gratt.  375;  94  Am.  Dec.  461;  Bailey  v.  New  York,  3  Hill,  531;  38  Am.  Dec. 
669;  Maxmilian  v.  New  York,  62  N.  Y.  60;  20  Am.  Rep.  468;  City  oj  Lafay. 
ette  V.  Tiniherlake,  88  Ind,  330. 

Public  Duties  Imjiosed  by  Municipal  Charters.  —  The  fact  that  the  duty 
was  imposed  by  the  charter  instead  of  by  a  general  law  has  not  always  been 
regarded  as  controlling.  Thus  where  it  was  part  of  the  policy  of  the  state 
to  secure  the  safety  of  steam-boilers  within  its  limits,  by  providing  for  their 
inspection,  and  with  respect  to  one  municipality  this  duty  was,  by  its  char- 
ter, devolved  upon  it,  and  it  was  therefore  contended  that  the  city  was 
answerable  for  damages  alleged  to  have  been  occasioned  by  tlie  negligence 
of  an  inspector  appointed  by  it,  the  supreme  court  of  the  state,  denying 
this  liability,  said:  "The  state  has  seen  fit  to  attempt  by  legislation  to 
secure  the  safety  of  steam-boilers  within  its  limits,  and  for  this  purpose  has 
provided  for  the  appointment  of  inspectors  in  the  several  congressional  dis- 
tricts into  which  the  state  is  divided.  If  the  legislature  had  provided  for 
the  appointment  of  inspectors  by  the  several  cities  within  their  respective 
limits  by  the  same  statutes  under  which  tlie  governor  acts  in  making  similar 
appointments,  it  would  be  difficult  to  maintain  that  the  city  wonld  be  liable 
for  the  inspector's  negligence  without  also  maintaining  that  the  governor 
would  likewise  be  liable  for  the  negligence  of  his  appointees.  Both  the  city 
and  the  governor  would  be  acting  in  the  discharge  of  a  public  duty,  and  the 
duties  to  be  performed  by  the  person  appointed  are  also  public.  The  duty 
of  inspection  of  boilers  is  recognized  by  the  statute  as  governmental.  Tlie 
object  of  the  inspection  is  to  protect  all  citizens  from  danger,  who  may  come 
in  contact  with  the  boiler,  or  who  may  be  exposed  in  any  way  to  danger 
from  its  unsafe  condition.  The  city  of  New  Haven,  as  such,  lias  no  pecuni- 
ary or  individual  or  private  interest  in  the  matter,  and  although  the  power 


S84  GoDDAKD  V.  l:^HABiTANT3  OF  Harpswell.     [Maine, 

of  the  city  over  the  subject  is  conferred  by  the  charter,  and  not  by  the  gen- 
eral law,  yet  the  city  inust,  we  think,  be  regarded  as  the  agent  of  the  gov- 
ernineut,  and  acting  for  the  state,  and  not  for  itself,  in  making  the  appointment 
of  inspectors,  and  therefore  not  liable  for  the  inspector's  negligence  ":  Mead 
V.  New  Haven,  40  Conn.  72;  16  Am.  Rep.  14. 

Public  Streets,  Cases  Holding  Duty  in  Bespect  to,  is  Public,  and  not  Municipal, 
—  In  putting  or  keeping  in  proper  condition  and  repair  the  streets  of  a  muni- 
cipality, its  officers  discharge  or  fail  to  discliarge  a  duty  public  in  its  char- 
acter, and  from  which  it,  in  our  judgment,  receives  no  special  benefit  or  profit. 
Doubtless,  its  residents  use  its  streets  more  frequently  than  residents  of 
other  parts  of  the  state,  and  in  that  sense  reap  a  greater  benefit  from  them. 
But  tliis  is  more  emphatically  true  of  the  public  schools,  and  as  to  them  we 
believe  it  is  conceded  that  the  municipality  and  its  officers  exercise  govern- 
mental functions,  for  a  mistaken  or  negligent  exercise  of  which  no  liability 
can  accrue  against  the  municipality.  In  several  of  the  states,  therefore, 
where  the  law,  whether  contained  in  the  charter  or  elsewhere,  merely  con- 
fers upon  the  municipality  or  certain  of  its  officers  authority  to  lay  out,  es- 
tiblish,  or  repair  public  streets,  without  expressly  making  the  nmnicipality 
answerable  for  negligence,  no  recovery  can  be  sustained  against  it  for  inju- 
ries suffered  by  the  failure  to  keep  the  streets  in  proper  repair,  or  for  any  ob- 
struction or  defect  in  them.  In  California,  an  action  was  brought  to  recover 
coinpensation  for  injuries  sustained  in  falling  through  a  bridge  which  was 
part  of  the  public  street.  The  charter  of  the  city  provided  that  its  common 
council  should  have  power  to  cause  the  streets  to  be  cleaned  and  repaired, 
and  the  plaintiflf  insisted  "  that,  the  power  being  conferred,  a  correlative  duty 
is  imposed,  and  a  consequent  liability  for  non-performance  of  such  duty  arises 
in  favor  of  individuals  who  may  have  sufiFered  injury  by  reason  of  its  non- 
performance." But  the  court  answered  that  the  duty  was  by  the  terms  of  the 
statute  imposed  upon  the  officers,  rather  than  upon  the  municipality,  and  that 
tlie  result  of  the  reasoning  in  favor  of  the  plaintiff  was  to  affirm  the  liability  of 
the  officers,  rather  than  of  the  city,  and  further,  that  incorporated  cities  were, 
under  the  laws  of  the  state,  "mere  governmental  instruments  formed  under 
tlie  state  laws  for  the  purposes  of  internal  administration,  ....  not  distin- 
guishable in  principle  from  counties  created  by  law  for  the  same  purpose, "  and 
as  the  latter  were  not  liable,  neither  were  the  former:  Winbiyler  v.  Los  An- 
geles, 45  Cal.  36;  Tranter  v.  Sacramento,  61  Cal.  271;  Chope  v.  City  o/  Eureka, 
78  Cal.  588;  12  Am.  St.  Rep.  113.  The  decisions  of  Arkansas,  Connecticut, 
Massachusetts,  Michigan,  New  Jersey,  and  Vermont  are  in  harmony  with 
those  of  California  upon  this  subject,  and,  in  the  absence  of  any  statute  im- 
posing liability  upim  the  city,  hold  that  a  person  injured  by  defects  in  or  non- 
repair of  public  streets  is  without  redress  by  action  against  the  municipality: 
Arkadelphia  v.  Windham,  49  Ark.  139;  4  Am.  St.  Rep.  32;  Young  v.  City 
Council  etc.,  20  S.  C.  116;  47  Am.  Rep.  827;  Navasotoa  v.  Pearce,  46  Tex. 
525;  26  Am.  Rep.  279;  Detroit  v.  Blackehy,  21  Mich.  84;  4  Am.  Rep.  250; 
McCtUrheon  v.  Homer,  43  Mich.  483;  38  Am.  Rep.  212;  Barry  v.  City  of  Low- 
ell, 8  Allen,  127;  85  Am.  Dec.  690;  Young  v.  Commissioners,  2  Nott  &  McC. 
537;  Hillv.  Cdy  of  Boston,  122  Mass.  344;  23  Am.  Rep.  332;  French  v.  City 
of  Boston,  129  Mass.  592;  37  Am.  Rep.  393;  Hewison  v.  City  of  New  Haven, 
37  Conn.  475;  9  Am.  Rep.  342;  Pray  v.  Mayor  of  Jersey  City,  32  N.  J.  L. 
394;  Bates  v.  Rutland,  62  Vt.  178;  22  Am.  St.  Rep.  95;  thpugh  in  some  of 
these  states  there  now  exists  municipal  liability,  expressly  created  by  statute: 
City  of  O rand  Rapids  v.  Wyman,  46  Mich.  516;  Dotton  v.  Village  of  Albion, 
60  Mich.  129;  Cromarty  v.  Boston,  127  Mass.  329;  34  Am.  Rep.  381. 


May,  1892.]     Goddard  v.  Inhabitants  of  Harpswell,      385 

Public  Streets,  Cases  Affirming  Municipal  Liability  for  Negligence  in  Respect 
to.  — The  ground  upou  which  municipal  liability  is  denied  is  the  obvious  one 
that  the  duty  of  keeping  the  streets  in  repair  is  a  public  duty,  from  the  per- 
formance of  which  the  municipality  derives  no  emolument  or  special  advan- 
tage; and  the  mere  fact  that  it  was  created  in  and  by  tlie  charter  does  not 
result  in  any  implied  contract  on  the  part  of  the  city  that  it  will  exercise  it 
without  error  or  negligence.  While,  in  our  judgment,  these  reasons  are  both 
pertinent  and  convincing,  there  is  no  doubt  that  such  is  not  the  judgment  of 
a  decisive  majority  of  the  courts  of  this  country,  both  state  and  national. 
They  proceed  upon  the  ground  that  the  duty  of  keeping  in  repair  and  ia 
proper  and  safe  condition  all  highways  within  a  city  is  peculiarly  a  munici- 
pal duty,  —  one  which  is  rarely,  if  ever,  confided  to  any  other  than  municipal 
authority,  — and  that  the  existence  of  this  duty  implies  tliat  redress  shall  be 
accorded  in  the  courts  to  any  one  injured  by  its  non-performance  or  misper- 
formance.  While  in  many  of  the  cases  the  power  of  the  municipality  is  con- 
ferred by  its  charter,  this  does  not  appear  to  be  essential,  and  the  liability 
of  the  municipality  has  been  affirmed  when  the  statute  imposing  the  duty 
was  to  be  found  in  the  general  laws  of  the  state,  as  well  as  where  it  was  implied 
from  the  terms  of  the  charter:  Cleveland  v.  King,  132  U.  S.  295;  Cardington 
V.  Fredericks,  46  Ohio  St.  442.  Nor  does  it  seem  to  be  essential  tiiat  the 
duty  shall  rest  upon  an  express  legislative  command.  It  is  sufficient  that 
the  power  to  control,  improve,  and  repair  the  streets  within  its  boundaries 
ia  conferred  upon  the  municipality,  and  it  is  provided  with  means  which,  if 
exercised,  will  enable  it  to  execute  the  power  granted:  Hutson  v.  Mayor  etc., 
9  N.  Y.  163;  59  Am.  Dec.  526;  Albriltin  v.  Huntsville,  60  Ala.  486;  31  Am, 
Rep.  46:  Noble  v.  Richmond,  31  Gratt.  271;  31  Am.  Rep.  726;  Erie  v. 
Schwingle,  22  Pa.  St.  384;  60  Am.  Dec.  87;  O'Neill  v.  New  Orleans,  30  La. 
Ann.  220;  31  Am.  Rep.  221;  Hitchinsv.  Mayor  of  Frostbitrg,  68  Md.  100;  6  Am. 
St.  Rep.  422.  The  duty  of  the  municipality  with  respect  to  its  streets  is  treated 
as  ministerial,  and  it  is  therefore  held  liable  for  any  injuries  resulting  from 
negligence  in  the  performance  or  non-performance  of  such  duty,  whether  it  re- 
sults in  a  defect  in  a  street  or  sidewalk  from  which  injury  follows  to  a  person 
using  it  with  due  care,  provided  the  defect  is  one  of  which  the  municipality 
and  its  officers  had  notice,  or  of  which  they  could  not  be  ignorant  without 
being  negligent  in  the  discharge  of  their  duties:  Bradford  v.  Mayor  of  An' 
niston,  92  Ala.  349;  25  Am.  St.  Rep.  60;  Baltimore  City  v.  Marriott,  9  Md. 
160;  66  Am.  Dec.  326;  Taylor  v.  Cumber laiid,  64  Md.  68;  Cline  v.  Crescent 
City  R'y  Co.  and  City  of  New  Orleans,  43  La.  Ann.  327;  26  Am.  St.  Rep.  187; 
note  to  Browning  v.  City  of  Springfield,  63  Am.  Dec.  350-357;  Weisenberg  v. 
Appleton,  26  Wis.  56;  7  Am.  Rep.  39;  Saulsbnry  v.  Ithaca,  94  N.  Y.  27;  46 
Am.  Rep.  122;  Peoria  v.  Simpson,  110  III.  294;  51  Am.  Rep.  683;  St.  Paul 
V.  Seitz,  3  Minn.  297;  74  Am.  Dec.  753;  Cleveland  v.  King,  132  U.  S.  295, 
303;  Clark  v.  Richmond,  83  Va.  355;  5  Am.  St.  Rep.  281;  Anderson  v.  East, 
117  Ind.  126;  10  Am.  St.  Rep.  35;  Ma^is  v.  Springfeld,  101  Mo.  613;  20 
Am,  St.  Rep.  634;  Farquar  v.  Roseburg,  18  Or.  271;  17  Am.  St.  Rep.  732; 
Manderschid  v.  City  of  Dubuque,  29  Iowa,  73;  4  Am.  Rep.  196;  Board  of 
Comm'ra  v.  Topeka,  39  Kan.  197;  Young  v.  Village  of  Waterville,  39  Minn. 
196;  Village  of  Ponca  v.  Crawford,  23  Neb.  662;  8  Am.  St.  Rep.  144;  City  of 
Denver  v.  Dean,  10  Col.  375;  3  Am.  St.  Rep.  594;  Olson  v.  City  of  Chippewa 
Falls,  71  Wis.  558;  Whitfield  v.  City  of  Meridian,  66  Miss.  570;  14  Am.  St. 
Rep.  596;  City  of  0 lathe  v.  Mizee,  48  Kan.  435;  ante,  p.  308.  In  some  of  the 
states,  the  liability  of  municipalities  for  injuries  suffered  in  the  public  streets 
has  been  affirmed  in  exceptional  cases,  to  which  the  application  of  well-settled 
Am.  St.  KKr.,  Vol.  XXX.  — 25 


886         GoDDABD  V.  Inhabitants  of  Harpswell.      [Maine, 

legal  principles  ought  to  have  led  to  a  different  result.  Thus  where  a  city 
adopted  an  ordinance  prohibiting,  under  the  penalty  of  a  fine,  "any  sport, 
play,  or  exercise  that  might  produce  bodily  injury,  or  endanger  property  on 
any  street,  square,  or  alley  within  the  city  limits,"  it  was  held  that  the  city 
might  be  answerable  for  injuries  suffered  by  plaintiff  while  crossing  a  side- 
walk, "inflicted  by  a  sled  on  which  a  number  of  boys  were  coasting  on  the 
snow,  which  at  the  time  covered  the  streets  and  the  sidewalks,"  unless  it 
appeared  that  vigorous  efforts  were  made  to  enforce  the  ordinance:  Taylor 
V.  Mayor  of  Cumberland,  64  Md.  68;  54  Am.  Rep.  759.  But  it  is  mani- 
fest that  the  enforcement  of  an  ordinance  of  this  character  must  depend  on 
the  skill  and  vigilance  of  the  police;  and  as  the  city  is  never  answerable  for 
their  negligence  of  inaction,  it  ought  not  to  be  held  liable  for  their  not  en- 
forcing its  ordinance  against  coasting:  City  of  Lafayette  v.  Timbzrlalce,  88 
Ind.  330;  Faulkner  v.  City  of  Aurora,  85  Ind.  130;  44  Am.  Rep.  1;  Schultz  v. 
City  of  Milwaukee,  49  Wis.  254;  35  Am.  Rep.  779. 

If  a  city  undertakes  to  repair  or  improve  a  street,  it  is  also  liable  for  the 
neglect  of  its  officers  or  agents  in  leaving  the  street  in  dangerous  condition 
without  proper  guards  or  signals  to  prevent  accidents  or  warn  travelers  of 
danger:  St.  Paul  v.  Seitz,  3  Minn.  297;  74  Am.   Dec.  753;  Kimhall  v.  Bath, 

38  Me.  219;  61  Am.  Dec.  243;  Barney  Dumping-boat  Co.  v.  New  York,  40 
Fed.  Rep.  50.  Negligence  may  consist  of  permitting  a  dangerous  object  or 
obstruction  to  remain  in  a  street,  as  well  as  permitting  it  to  become  or  con- 
tinue out  of  repair.  Hence  a  city  is  answerable  for  injuries  suffered  by  a 
child  of  tender  years  from  dangerous  machinery,  which  was  permitted  to  be 
and  remained  unguarded  for  many  years  in  a  public  highway:  Osage  City  v. 
Larkiii,  40  Kan.  206;  10  Am.  St.  Rep.  186.  Furthermore,  the  safety  of  per- 
sons lawfully  and  prudently  upon  a  public  street  may  be  endangered  without 
the  street  itself  being  out  of  repair,  as  where  there  are  dangerous  excavations 
by  the  side  of  it,  or  walls  or  other  objects  in  it  from  the  falling  of  which 
travelers  may  probablj'  be  injured.  In  such  a  case,  if  the  wall  or  other  stand- 
ing object  is  in  a  dangerous  condition,  and  therefore  liable  to  fall,  or  the  ex- 
cavation is  one  into  which  a  prudent  traveler  may  probably  fall,  and  the 
city  has  notice  of  the  danger,  it  may  become  answerable  to  one  injured  from 
its  failure  to  erect  barriers  by  the  side  of  the  excavation  or  to  have  the  in- 
Becure  wall  demolished  or  strengthened:  Bassett  v.  City  of  St.  Joseph,  53  Mo. 
290;  Kiley  v.  Kansas,  87  Mo.  103;  56  Am.  Rep.  443;  Parker  v.  City  of  Macon, 

39  Ga.  129;  99  Am.  Dec.  486;  City  of  Olathe  v.  Mizee,  48  Kan!  435;  ante, 
p.  308. 

The  cases  to  which  we  have  referred  as  maintaining  the  liability  of  cities  for 
damages  resulting  from  the  non-repair  of  streets  related  to  injuries  received 
by  persons,  or  from  their  or  their  animals  being  hurt  while  passing  over  such 
streets,  from  some  defect  therein.  In  the  states  where  municipal  liability  is 
conceded  for  negligence  in  maintaining  streets,  such  liability  may  also  arise 
where  real  property  is  injured  or  damaged.  Thus  embankments  may  be  so 
constructed  as  to  prevent  the  natural  flow  of  water,  and  the  culverts  in  such 
embankments  may  be  altogether  insufficient  to  permit  the  passage  through 
them  of  such  water  as  must  reasonably  be  expected,  or  drains  or  gutters 
may  be  insufficient  or  so  negligently  constructed  that  they  will  cause  the 
overflow  of  water  upon  the  premises  of  property-holders.  The  liability  of 
municipalities  for  defects  in  and  want  of  repair  of  sewers  was  considered  in 
the  note  to  Chalkley  v.  City  of  Richmond,  29  Am.  St.  Rep.  737-741,  and  there- 
fore will  not  here  be  treated  in  detail.  It  is  sufficient  here  to  state  that  for 
negligence  in  their  construction,  maintenance,  or  repair,  every  city  is  answer- 


May,  1892.]     Goddard  v.  Inhabitants  of  Harpswell.      387 

able  to  the  same  extent  as  for  neglii,'ence  in  respect  to  other  parts  of  the 
street,  whether  sucli  negligence  results  in  personal  injury,  as  wliere  a  sewer 
is  left  open  without  guard  or  signal,  or  in  injuries  to  property  by  flooJing  or 
by  depositing  offensive  material  upon  or  in  such  close  proximity  to  it  as  to 
depreciate  its  value  by  rendering  it  unhealthful  or  highly  disagreeable  to 
the  senses:  City  Council  v.  (?«7»7,er,  33  Ala.  IIG;  70  Am.  Dec.  562;  Fort  Wciijne 
V.  Coombs,  107  Ind.  75;  57  Am.  Rep.  82;  Chalklaj  v.  liichmond,  88  Va.  402; 
29  Am.  St.  Rep.  730,  and  note;  Cooper  v.  City  of  Dallas,  83  Tex.  230;  29  Ain. 
St.  Rep.  645;  Mayor  of  Frosthurg  v.  Dufty,  70  Aid.  47;  Spawjler  v.  San  Fran- 
cisco, 84  Cal.  12;  18  Am.  St.  Rep.  158;  Frontburg  v.  Bilchins,  70  Md.  5(5; 
Hardy  v.  Brooklyn,  90  N.  Y.  435;  43  Am.  Rep.  182.  The  same  rule  applies 
to  embankments,  culverts,  dams,  drains,  and  reservoirs,  when,  through 
negligence  or  carelessness  in  their  maintenance,  lands  are  flooded  or  other- 
wise damaged:  lioss  v.  Madison,  1  Ind.  281;  48  Am.  Dec.  361;  Wallace  v. 
City  of  Mwiratine,  4  G.  Greene,  373;  61  Am.  Dec.  131;  Rochester  White  Lead 
Co.  V.  Rochester,  3  N.  Y.  463;  53  Am.  Dec.  316;  Perry  v.  Worcester,  6  Gray, 
544;  66  Am.  Dec.  431;  Cooper  v.  City  of  Dallas,  83  Tex.  239;  29  Am.  St. 
Rep.  645;  Aldworth  v.  Lynn,  153  Mass.  53;  25  Am.  St.  Rep.  608. 

Public  Streets,  Defects  in  Plan  of  Improcejuent.  —  Negligence  or  carelessness 
in  respect  to  streets  and  sewers  of  which  we  have  spoken  as  leading  to  muni- 
cipal liability  relates  rather  to  the  mode  in  which  a  plan  or  system  is  carried 
out  than  to  the  system  itself.  In  determining  whether  a  street  shall  be  laid 
out  or  improved,  or  the  manner  of  its  imj^rovement,  the  municipality  exer- 
cises quasi  legislative  or  jmlicial  functions,  and  from  error  or  mistake  therein, 
as  a  general  rule,  no  liability  results.  Hence  the  statement  is  frequently 
made  in  the  opinions  of  the  courts,  that  wliile  liability  may  exist  for  neg- 
ligence in  the  execution  of  a  plan,  it  cannot  arise  from  a  defect  in  the  plan 
itself.  This  rule,  while  of  general,  is  not  of  universal  ai)plication.  For  a 
mere  error  of  judgment  on  the  part  of  tlie  officers  of  a  municipality  not  so 
gross  as  to  support  the  iuicrence  of  imbocility  or  willful  inattention,  a  city  is 
not  answerable,  though  as  a  result  of  such  error  public  works  are  constructed 
from  which  injury  results  to  persons  or  property:  Note  to  Chalkley  v.  City  of 
Richmond,  29  Am.  St.  Rep.  737,  738;  Urquhart  v.  Ogdensburg,  91  N.  Y.  67;  43 
Am.  Rep.  655.  The  tendency  of  the  more  recent  decisions  is  to  affirm  that 
"  any  particular  plan  that  may  be  adopted  must  be  a  reasonable  one":  Hitchins 
V.  Mayor,  68  Md.  100;  6  Am.  St.  Rep.  422.  This  subject  was  carefully  exam- 
ined in  Gould  v.  Topeka,  32  Kan.  485,  49  Am.  Rep.  496,  and  the  following  con- 
clusions reached:  "The  control  of  the  streets  of  cities  was  not  put  into  their 
hands  for  the  purpose  that  they  might  plan  or  order  that  the  streets  should 
be  made  dangerous  or  unsafe  for  the  public  to  travel  thereon,  nor  was  such 
control  put  into  their  hands  for  the  purpose  that  they  might  plan  or  order 
that  the  streets  should  remain  in  an  unsafe  or  dangerous  condition  if  previ- 
ously dangerous,  but  such  control  was  given  to  them  for  the  sole  purpose 
that  they  should  make  and  keep  the  streets  safe  and  convenient  for  the  trav- 
eling public;  and  we  think  it  was  put  into  their  hands  as  a  mandatory  duty, 
which  they  have  no  right  or  discretion  to  evade  or  avoid.  If  a  city  should 
plan  or  arrange  that  a  street  should  be  made  unsafe  and  dangerous,  we 
should  be  inclined  to  think  that  it  would  so  transcend  its  powers  as  given  to 
it  by  the  legislature,  and  so  violate  its  duties  as  imposed  upon  it  by  the  legisla- 
ture, that  it  would  be  liable  for  any  injury  which  might  occur  to  any  individual 
by  reason  of  such  unwise  action.  Such  action  would  be  substantially  the  same 
as  planning  and  creating  a  public  nuisance.  Can  a  city,  by  planning  that  a 
cistera  should  be  lei't  uncovered  in  the  middle  of  a  public  street,  avoid  all 


388  GoDDARD  17.  Inhabitants  op  Harpswell.     [Maine^ 

liability  for  injuries  that  may  occur  by  reason  of  some  person's  falling  into  it 
in  the  night-time,  without  fault  on  his  part,  when,  on  the  other  hand,  it  would 
be  liable  if  the  cistern  were  left  uncovered  by  the  person  wlio  constructed  it, 
or  was  afterward  uncovered  by  some  other  person,  and  notice  of  its  condi- 
tion  had  been  given  to  the  city  officers?  Is  such  a  distinction  founded  in 
reason  ?  2  Thompson  on  Negligence,  pp.  734,  735,  836,  sees.  2,  3,  and  notes; 
pp.  766,  767,  768,  and  notes.  After  a  careful  consideration  of  this  entire 
question,  we  have  come  to  the  conclusion  that  where  a  street  as  planned  or 
ordered  by  the  governing  board  of  a  city  is  so  manifestly  dangerous  that  a 
court,  upon  the  facts,  can  say  as  a  matter  of  law  that  it  was  dangerous 
and  unsafe,  the  rule  contended  for  by  the  defendant  should  not  have  any 
application,  and  the  city  should  be  held  liable;  but  where,  upon  the  facts,  it 
would  be  so  doubtful  whether  the  street  as  planned  or  ordered  by  the  gov- 
erning board  of  the  city  was  dangerous  or  unsafe  or  not, — that  dififerent 
minds  might  entertain  different  opinions  with  respect  thereto,  —  the  benefit 
of  the  doubt  might  properly  be  given  to  the  city,  or  rather  to  its  governing 
board  that  planned  or  ordered  that  the  street  should  be  placed  in  such  a 
condition,  and  the  rule  should  be  held  to  apply,  and  the  city  should  not  be 
held  to  be  liable." 

The  plan  adopted  need  not  be  such  as  to  prove  adequate  in  extraordinary 
emergencies,  which  a  prudent  man  might  fail  to  anticipate  without  being 
guilty  of  want  of  reasonable  care  and  forethought.  Thus  in  an  action  to  re- 
cover for  injuries  suffered  from  an  embankment  and  culvert,  and  the  flooding 
of  the  plaintiff's  premises  by  water  from  the  inadequacy  of  the  culvert,  the 
defendant  asked  that  the  jury  be  instructed  as  fallows:  "If  the  jury  shall 
find  that  the  damage  complained  of  was  occasioned  by  a  flood  of  water  so 
much  more  extraordinary  than  usual  that  ordinarily  careful  and  thought- 
ful men  and  ordinarily  skillful  engineers  would  not  contemplate  that  such 
a  flood  would  ever  come,  and  such  embankment  and  culvert  did  prove 
sufficient  for  all  purposes  for  about  three  years,  the  jury  should  find  the 
damage  to  have  happened  by  what,  in  law,  is  called  the  'act  of  God,' and 
should  find  for  the  defendant."  This  instruction  was  refused,  and  the  in- 
ference  to  be  drawn  from  the  instructions  given,  taken  as  a  whole,  was  to 
the  effect  that  "if  the  damage  to  the  plaintiff  happened  in  consequence  of 
the  improvement,  the  city  is  liable."  The  judgment  of  the  trial  court  was 
reversed  on  the  ground  that  the  instruction  asked  for  "was  within  the  law, 
and  should  have  been  given  "  :  City  of  Madison  v.  Rofss,  3  Ind.  236;  54  Am.  Dec. 
481;  Mayor  of  New  Yorky.  Bailey,  2  Denio,  433;  City  of  Evansville\.  Decker,  84 
Ind.  328;  43  Am.  Rep.  86.  Though  a  flood  or  fall  of  rain  is  so  extraordinary 
that  the  municipality  might  have  been  exonerated  from  liability  had  the  plan 
of  its  sewers  proved  inadequate  for  the  discharge  of  all  the  water  falling  into 
them,  yet  if  such  plan  was  not  in  fact  inadequate  even  for  the  extraordinary 
emergency  which  arose,  the  municipality  is  answerable  to  one  whose  property 
is  damaged  by  the  failure  to  keep  the  sewer  as  originally  planned  and  con- 
structed in  proper  repair;  for  whether  the  municipality  was  in  law  bound  to 
plan  and  construct  the  sewer,  and  it  did  or  not,  after,  if  it  was  constructed, 
every  property  holder  affected  by  it  had  the  right  to  assume  that  it  would 
be  kept  in  repair,  and  that  its  capacity  would  not  be  materially  diminished 
by  the  negligence  of  the  municipal  authorities:  Spangler  v.  San  Francisco,  84 
Cal.  12;  18  Am.  St.  Rep.  158. 

Public  Streets  —  Negligence,  and  not  Injury,  is  the  Test  of  Liability.  —  The  mere 
fact  that  injury  was  occasioned  by  a  street  being  out  of  repair,  or  sewer 
being  inadequate,  or  not  in  proper  condition,  does  not  result  in  municipal 


May,  1892.]     Goddard  v.  Inhabitants  of  Harpswell.      389 

liability,  unless  it  further  appears  from  the  attendant  circumstances  that  the 
condition  leading  to  the  injury  was  a  consequence  of  negligence.  Thus 
where  it  was  shown  that  a  sewer  had  become  obstructed  during  or  imme* 
diately  succeeding  a  heavy  fall  of  rain,  so  that  it  could  not  carry  off  the 
waters  running  into  it,  and  that,  as  a  consequence,  plaintiff's  premises  were 
flooded  and  damaged,  it  was  hold  that  he  was  not  entitled  to  recover  with- 
out some  evidence  of  negligence  or  omission  of  duty  on  the  part  of  the  muni- 
cipality. Tlie  ruling  upon  the  subject  and  the  reasons  for  it  were  thua 
expressed  by  tiie  court:  "It  is  founil  upon  sulBcient  evidence  that  the  over- 
flow was  caused  by  a  stoppage  of  the  sewer  with  sand,  dirt,  and  refuse  mat- 
ter washed  in  from  the  street,  and  that  at  or  just  before  the  flooding  of  the 
plainti9"3  premises  there  was  an  unusually  heavy  shower  of  rain.  Tliere  is 
no  proof  of  any  obstruction  before  that  time.  There  being  no  fault  in 
the  construction  of  the  sewer,  causing  the  overflow,  it  was  incumbent  upon 
the  plaintiff  to  show  a  neglect  by  the  defendants  to  remove  the  obstruction 
after  notice  of  its  existence,  or  some  omission  of  duty  on  the  part  of  the  city 
officers  in  looking  after  it  and  seeing  that  no  obstruction  occurred.  There 
was  no  evidence,  and  there  is  no  finding,  that  the  sewer  was  liable  to  become 
obstructed  under  ordinary  circumstances,  so  as  to  require  the  watch  and 
care  of  the  ofiicials  to  prevent  its  becoming  filled  and  choked  with  the  wash 
of  the  street,  or  that  it  had  been  obstructed  for  any  time  and  under  circum- 
stances from  which  it  might  be  assumed  that  the  officers  of  the  city  did  know 
or  ought  to  liave  known  the  fact.  The  city  does  not  insure  the  citizen 
against  damage  from  works  of  its  construction,  but  is  only  liable,  as  other 
proprietors,  for  negligence  or  willful  misconduct.  The  principles  upon  which 
municipal  corporations  are  held  liable  for  damages  occasioned  by  defects  in 
streets  and  sewers  and  other  public  works  are  well  settled  by  numerous 
cases,  and  the  liability  is  made  to  rest,  in  any  case,  upon  some  neglect  or 
omission  of  duty:  Barton  v.  Syracuse,  37  Barb,  202;  36  N.  Y.  54;  Oriffin  v. 
Mayor  etc.  of  New  York,  9  N.  Y.  456;  61  Am.  Dec.  700;  McCarthy  v.  Syracuse, 
46  N.  Y.  194;  Nims  v.  Troy,  59  N.  Y.  500":  Smith  v.  Mayor;  m  N.Y.  295; 
23  Am.  Rep.  53. 

In  the  Grading  of  a  Street,  a  city  is  liable  for  negligence  or  unskillfulness 
from  which  injury  results,  to  the  same  extent  as  if  such  injury  had  arisen,  after 
the  grading  was  completed,  from  a  failure  to  keep  the  street  in  a  safe  condition: 
Meares  v.  Comnmsionera,  9  Ired,  73;  49  Am.  Dec.  412;  Comnmsionera  v.  Wood,  10 
Pa.  St.  93;  49  Am.  Dec.  582.  Where  such  negligence  or  unskillfulness  does 
not  exist,  a  municipality,  having  power  to  establish  or  change  grades,  and  to 
improve  streets  in  accortlance  with  grades  as  established  or  changed  by  its 
common  council  or  other  competent  authority,  is  not  answerable  for  con- 
sequential damages  resulting  to  property  by  means  of  such  grading:  Green 
V.  Borough  of  Reading,  9  Watts,  382;  36  Am.  Dec.  127;  Smith  v.  Corporation 
of  Washington,  20  How.  135;  Imler  v.  Springfield,  55  Mo.  119;  17  Am.  Rep, 
645;  Shaw  v  Crocker,  42  Cal.  438;  Wilson  v.  Mayor  of  New  York,  1  Denio, 
595;  43  Am.  Dec.  719;  Mayor  of  Philadelphia  v.  Randolph,  4  Watts  &  S. 
514;  39  Am.  Dec.  102;  except  in  states  whose  constitutions  prohibit  the  dam- 
aging of  private  property  for  public  use  without  first  making  just  compensa- 
tion to  its  owner.  The  liability  of  cities  for  injuries  resulting  from  the 
grading;  of  streets,  and  from  changes  in  the  grades  thereof,  is  considered  in  the 
note  to  O'Brien  v.  Philadelphia,  150  Pa.  St.  589;  post,  p.  835;  except  that  such 
note  does  not  treat  of  claims  for  damages  occasioned  by  the  grading  of  streets 
in  such  a  manner  as  to  interfere  with  the  flow  of  water. 

Watercourses,  Grading  Streets  so  as  to  Interfere  with.  —  It  is  often  difficult  to 


oM  GoDDARD  V.  Inhabitants  of  Hakpswell.     [Maine, 

determine  whether  a  depression  in  which  water  flows  is  or  is  not  a  water- 
course within  the  legal  signification  of  that  term,  and  it  is  not  within  the 
purpose  of  this  note  to  furnish  definitions  or  authorities  to  aid  in  the  decision 
of  that  question.  Whenever  there  exists  in  a  city  a  natural  watercourse, 
the  authority  given  to  the  municipality  to  grade  streets  does  not  carry  with 
it  the  right,  by  such  grading,  to  deprive  persons  of  their  rights  in  such  stream, 
by  preventing  its  flow  to  or  through  their  property,  nor  does  it  entitle  the 
municipality  to  so  grade  its  streets  as  to  hold  back  the  waters  of  the  stream, 
or  to  collect  them  into  new  channels  and  throw  them  upon  the  lands  of  pri- 
vate proprietors  who  were  not  injured  by  it  in  its  natural  state.  If  a  street 
extends  across  a  watercourse,  the  municipality  is  not  at  liberty  by  grading 
the  street  to  prevent  or  obstruct  the  flow  of  the  water,  and  it  must  therefore 
provide,  by  culverts  or  other  appropriate  means,  for  the  escape  of  the  water, 
so  that  the  rights  of  riparian  proprietors  shall  not  be  substantially  impaired 
and  the  adjacent  lands  shall  not  be  flooded  to  a  greater  extent  than  would 
occur  if  such  watercourse  were  left  in  its  natural  condition.  If  by  reason  of 
the  failure  of  the  municipality  to  provide  proper  culverts,  injuries  result,  it 
nmst  resjiond  in  damages  therefor:  Helena  v.  Thompson,  29  Ark.  569;  Noonan 
V.  City  of  Albany,  79  N.  Y.  470;  35  Am.  Rep.  540;  Bnrden  v.  Portage,  79 
Wis.  126;  Roue  v.  St.  Charles,  49  Mo.  509;  Barns  v,  Hannibal,  71  Mo.  449; 
Haynes  v.  Burlington,  38  Vt.  350;  Rochester  White  Lead  Co.  v.  Rochester,  3 
N.  Y.  463;  53  Am.  Dec.  316;  Wheeler  v.  Worrester,  10  Allen,  591;  Kellogg  v. 
Thompson,  66  N.  Y.  88;  Mootry  v.  Danbury,  45  Conn.  550;  29  Am.  Rep.  703; 
Parker  V.  Lowell,  11  Gray,  353;  Morse  y.  Worcester,  139  Mass.  389;  Stanch- 
field  V.  Newton,  142  Mass.  110;  Rice  v.  Evansville,  108  Ind.  7;  58  Am.  Rep. 
22;  Powers  y.  Council  Bltifs,  50  Iowa.,  197;  Richard-^onv.  Eureka,  96  Cal.  443. 
If,  however,  a  city  has  undertaken  to  provide  siuiicient  culverts,  and  to  aid 
it  in  accomplishing  that  purpose  has  consulted  an  engineer  of  skill  and  of 
good  repute,  whose  advice  it  has  followed  in  good  faith,  it  is  doubtful 
whether  it  is  liable  for  injuries  resulting  from  his  error  of  judgment:  Van 
Pelt  V.  Davenport,  42  Iowa,  308;  20  Am.  Rep.  622. 

Surface  Waters,  Interference  ivith,  by  Grading  Streets.  —  Two  opposing  rules 
regarding  the  right  to  dispose  of  surface  waters  are  still  contending  for  su- 
premacy in  this  country.  According  to  one  of  them,  the  land-owner  whose 
property  is  injured  has  a  right  to  defend  and  protect  his  property  by  such 
means  as  to  him  shall  seem  tit,  and  may,  therefore,  b}'  embankments,  restrain 
such  waters  from  flowing  upon  his  land,  or  may,  by  drains,  hasten  their  de- 
parture from  his  lauds,  though  in  either  event  injury  may  result  to  the  land 
of  another,  unless  he,  in  turn,  takes  some  measure  either  to  prevent  the 
waters  coming  upon  his  land  or  to  cast  them  off'  upon  the  lands  of  a  third 
person.  The  other  rule  is  sanctioned  by  the  civil  law,  and  is  thus  stated  by 
Pothier:  "  Each  of  the  neighbors  may  do  upon  his  heritage  what  seemeth 
good  to  him,  in  such  manner,  nevertheless,  that  he  do  not  injure  the  neighbor- 
ing heritage."  The  application  of  this  rule  requires  the  owner  of  the  lower 
heritage  to  receive  su3h  waters  as  naturally  flow  upon  his  land,  whether  Ly 
a  natural  watercourse  or  not,  and  not  to  resist  their  flow  by  embankments 
or  other  defenses  tending  to  overflow  and  injure  the  lands  of  his  neighbor 
ubove  him,  who,  in  turn,  is  prohibited  from  collecting  the  waters  into  new 
channels  and  casting  them  in  unusual  amounts  or  places  upon  the  land  of 
the  neighbor  below  him:  See  note  to  Martin  v.  Jett,  32  Am.  Dec.  123-127; 
note  to  Shane  v.  Kansas  City  etc  R.  R.  Co.,  36  Am.  Rep.  490-492. 

A  somewhat  similar  divergence  exists  respecting  the  right  of  municipali- 
ties to  deal  with  surface  waters  in  grading  and  otherwise  improving  streets. 


May,  1892.]     Goddard  v.  Inhabitants  of  Harpswell.      891 

The  weight  of  authority  probably  inclines  to  the  view  that  as  long  as  the 
grading  is  done  under  the  sanction  of  the  law,  and  pursuant  to  a  power 
authorizing  the  municipality  to  adopt  grades  and  to  improve  streets  in  ac- 
cordance therewith,  no  liability  can  arise  against  it  from  the  fact  that  the 
grading  results  in  an  injury  to  some  private  proprietor,  either  by  damming 
up  and  detaining  surface  waters  on  his  land  or  by  throwing  thereon  surface 
waters  from  which  it  was  before  exempt;  but  this  immunity  of  the  city  from 
claims  for  dama^'es  does  not  extend  to  its  wrongful  and  intentional  acts  in 
concentrating  surface  waters  and  discharging  them  upon  the  lands  of  private 
proprietors  to  their  injury:  Pye  v.  Cit//  of  Mankato,  3(5  Minn.  373;  1  Am.  St, 
Rep.  671;  O'Brien  v.  City  of  St.  Paul,  25  Minn.  331;  33  Am.  Rep.  470. 

Where  there  is  no  natural  watercourse,  but  the  surface  waters,  owing  to 
the  slope  of  the  land,  draw  off  in  a  particular  direction,  and  by  the  grading  of 
the  street  an  embankment  is  made,  which  prevents  this  flow  of  waters, 
whereby  they  are  hebl  back  upon  and  caused  to  overflow  adjacent  premises, 
the  persons  damaged  are,  in  the  majority  of  the  states,  witliout  redress, 
though  by  the  construction  of  culverts  or  drains  injury  mi^ht  have  been  pre- 
vented: Wilson  v.  Mayor  of  New  York,  1  Uenio,  595;  43  Am.  Dec.  719.  In 
a  case  in  New  York  the  general  principle  was  declared  that  the  city  had  the 
same  right  to  grade  a  street,  and  in  so  doing  to  erect  an  embankment  that 
the  owner  of  a  lot  would  have  to  fill  it  in  and  raise  it  to  such  height  as 
might  make  it  more  desirable,  and  tlierefore  that  the  city  cannot  be  held 
answerable,  where  a  private  proprietor  would  not  be  lial)Ie  had  he  done  a  sim- 
ilar ai/'t.  It  is  true  that  in  this  case  there  was  no  ground  whatever  for  hold- 
ing the  municipality  liable,  and  there  was  notliing  to  show  that  any  injury 
bad  resulted  to  any  one  from  any  cause,  and  the  opinion  of  the  court,  so  far 
as  it  dealt  with  general  principles,  was  therefore  a  dictum.  Nevertheless, 
as  it  has  1  een  mucli  relied  upon  in  other  cases,  we  quote  it,  so  far  as  material: 
"The  defendant  had,  at  least,  as  much  right  to  fill  up  and  raise  this  avenue 
as  a  private  owner  of  a  city  lot  has  to  till  up  and  improve  his  lot;  and  there 
can  be  no  question  that  such  an  owner  may  fill  up  his  lot  and  build  upon  it, 
and  the  surface  water  of  adjoining  lots  may  thus  be  prevented  from  flowing 
upon  it,  or  the  surface  water  may  be  thrown  from  it  upon  adjoining  lots,  and 
flow  upon  them  in  a  different  way  and  in  larger  quantities  than  before,  and 
yet  no  liability  would  arise.  If  it  were  otherwise,  it  would  be  quite  difficult 
to  improve  city  lots  and  build  up  a  city.  Each  owner  may  improve  his  lot 
and  protect  it  from  surface  water.  He  may  not  collect  such  water  into  a 
channel,  and  throw  it  upon  his  neighbor's  lot.  But  he  is  not  bound,  for  his 
neighbor's  protection,  to  collect  the  surface  water  which  falls  upon  his  lot, 
and  lead  it  into  a  sewer:  Vanderwiele  v.  Taylor,  65  N.  Y.  341;  Gannon  v. 
Hargadnn,  10  Allen,  lOG;  87  Am.  Dec.  025":  Lynch  v.  Mayor  of  New  York, 
76  N.  Y.  60;  32  Am,  Rep.  271.  Tliese  views  are  in  harmony  with  those  pro- 
nounced in  many  other  courts  in  which  the  question  was  necessarily  involved: 
Imler  v.  Springfield,  55  Mo.  119;  17  Am.  Rep.  645;  Clai-k  v.  Wilmington, 
6  Harr.  (Del.)  243;  Flagg  v.  Worcester,  13  Gray,  601;  Corcoran  v.  City  of 
Benecia,  96  Cal.  1;  31  Am.  St,  Rep.;  Waters  v.  Bay  View,  61  Wis.  644; 
Henderson  v.  City,  32  Minn.  319;  and  are  perhaps  a  logical  consequence 
of  many  other  cases,  which,  while  not  involving  the  question  of  damages 
resulting  from  surface  waters,  affirm  the  general  principle  that  in  no  event 
can  a  municipality  be  held  liable  for  consequential  damages  resulting  from 
the  exercise,  without  negligence  on  its  part,  of  an  authority  confided  to  it 
by  law:  Wakefield  v.  Newell,  12  R.  I.  75;  34  Am.  Rep.  598;  Smith  v.  Tripp, 
13  R.  I.  152;  Gilfeat/ier  v.  Council  Blufa,  69  Iowa,  310;  Simmons  v.  City  of 


392  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine, 

Camden,  26  Ark.  276;  Dorman  v.  Jacksonville,  13  Fla.  538;  7  Am.  Rep.  253; 
Keasy  v.  Louisville,  4  Dana,  154;  29  Am.  Dec.  395;  City  of  Delphi  v.  Erans, 
36  Ind.  90;  12  Am.  Rep.  12;  Smith  v.  Cor-poration  of  Washimjton,  20  How. 
135;  Lee  v,  Minneapolis,  22  Minn,  13;  Humes  v.  Mayor  of  Knoxville,  1 
Humph.  403;  34  Am.  Dec,  657;  White  v.  Yazoo  City,  27  Miss.  357;  O'Connor 
V.  Pittsburgh,  18  Pa.  St.  187;  Carr  v.  Northern  Liberties,  35  Pa.  St.  324; 
78  Am.  Dec.  342. 

la  some  instances  the  waters  whose  flow  was  arrested  by  the  grading  of  a 
street  had  before  that  time  been  drawn  ofif  by  depressions  or  ravines,  and 
the  contention  was,  that  the  city  had  become  liable  as  for  interference  with 
a  natural  watercourse;  but  this  liability  was  denied,  unless  the  depression  "  in 
question  had  the  proper  qualities  of,  and  constituted  what  is  known  in  law 
as,  a  watercourse,  as  distinguished  from  a  ravine,  hollow,  or  other  depression 
in  land  through  which,  in  times  of  rains,  heavy  showers,  and  melting  snows, 
the  surface  water  is  accustomed  to  escape.  The  term  '  watercourse '  is  well 
defined.  There  must  be  a  stream  usually  flowing  in  a  particular  direction, 
though  it  need  not  flow  continually.  It  may  sometimes  be  dry.  It  must 
flow  in  a  definite  channel,  having  a  bed,  sides,  oB  banks,  and  usually  discharge 
itself  into  some  other  stream  or  body  of  water.  It  must  be  something  more 
than  a  mere  surface  drainage  over  the  entire  face  of  a  tract  of  land,  occa- 
sioned by  unusual  freshets  or  other  extraordinary  causes.  It  does  not  in- 
clude the  water  flowing  in  the  hollows  or  ravines  in  land,  which  is  the  mere 
surface  water  from  rain  or  melting  snow,  and  is  discharged  through  them 
from  a  higher  to  a  lower  level,  but  which  at  other  times  are  destitute  of 
water.  Such  hollows  or  ravines  are  not,  in  legal  contemplation,  water- 
courses: Shields  v.  Arndt,  4  N.  J.  Eq.  234;  Luther  v.  Winnisimmet  Co.,  9  Cush. 
171;  Washburn  on  Easements,  209,  210":  Hoyt  v.  City  of  Hudson,  27  Wis, 
656;  9  Am.  Rep,  473, 

On  the  other  hand,  there  are  cases  which  proceed  upon  the  theory  that 
while  a  city  has  the  right  to  grade  its  streets,  and  is  not  answerable  for  in- 
juries resulting  from  a  prudent  exercise  of  that  right,  yet  that  it  is  negli- 
gence on  its  part  for  it  to  close  up  drains  or  gutters  which  have  been  used  to 
protect  lands  from  the  accumulation  of  surface  waters,  and  that  where,  by 
grading  a  street;  it  fills  up  such  drains  without  providing  others,  it  is  guilty 
of  negligence,  and  therefore  liable  for  resulting  damages:  Smithy.  City  Coun- 
cil of  Alexandria,  33  Gratt.  208;  36  Am.  Rep.  788.  We  find  a  number  of  other 
cases  which  we  are  unable  to  reconcile  with  the  general  principle  that  munici- 
palities are  not  answerable  for  surface  waters  being  held  back  or  restrained 
upon  lands  from  which,  before  the  grading  of  the  street,  they  escaped  by  nat- 
ural or  other  depressions.  In  most  of  these,  some  attempt  had  been  made  by 
means  of  culverts  or  other  appliances  to  carry  ofi'tlie  waters  otherwise  retained 
by  the  grade,  and  damages  were  recovered  for  the  insufficiency  of  such  appli- 
ances, or  negligence  in  not  keeping  them  in  proper  repair;  and  perhaps  it 
may  be  truly  said  that  the  liability  of  the  city  was  not  founded  upon  its 
obstruction  by  grading  the  street,  and  thereby  arresting  the  flow  of  surface 
waters,  but  upon  its  negligence  in  not  keeping  in  proper  repair  culverts  and 
sewers  planned  and  constructed  by  it:  Ross  v.  Clinton,  46  Iowa,  606;  26  Am. 
Rep.  169;  Aurora  v.  Gillett,  56  111.  132;  Aurora  v.  Reid,  57  111.  30;  11  Am. 
Rep.  1;  Bloomington  v,  Brokaw,  77  111.  194:  Elgin  v.  Kimball,  90  111.  356; 
Maguire  v.  Cartersville,  76  Ga,  84;  Reid  v.  City  of  Atlanta,  73  Ga.  523.  The 
general  language  employed  by  the  court  in  City  of  Dixon  v.  Baker,  65  III.  518, 
16  Am.  Rep.  591,  does  not,  it  is  true,  place  the  decision  on  the  ground  of 
the  insufficiency  of  the  sewers,  though  it  is  clear  from  the  opinion  that  such 


May,  1892.]     Guddaud  v.  Inhabitants  of  Harpswell.      893 

was  the  real  cause  of  the  injury.  The  court  here  said:  "  This  waa  an  action 
of  trespass  on  the  case,  brought  against  the  city,  to  recover  damages  for 
flowing  surface  water  upon  the  lot  of  plaintiff,  by  the  raising  of  the  grade  of 
the  street  and  sidewalk.  The  proof  shows  that  by  the  elevation  of  the 
grade  of  the  street,  on  the  part  of  the  city,  surface  water  flowed  into  the 
basement  of  the  house  of  the  plaintiff,  and  thereby  the  building  was  injured 
and  the  walls  cracked.  The  broad  ground  is  taken,  that  municipal  corpora- 
tions are  not  liable  for  damages  caused  by  such  flowage  of  the  surface  water, 
that  the  damages  are  incidental,  and  they  are  not  liable  for  incidental  dam* 
ages.  Before  the  change  of  the  grade,  the  building  of  the  plaintiflF  was  two 
feet  above  the  grade,  and  the  gutters  carried  off  all  the  surface  water.  After 
the  change,  the  water  ran  over  tlie  sidewalk  and  into  the  cellar  of  tlie  plain- 
tiflF. From  the  evidence,  tljis  might  have  been  prevented  by  proper  sewerage. 
If  municipal  corporations  can  raise  the  grade  of  streets  at  discretion,  and  not 
provide  suitable  gutters  to  carry  off  tlie  surface  water,  and  thus  overflow  the 
lands  abutting  upon  the  streets  with  impunity,  then  the  owners  of  lots  in 
our  towns  and  cities  are  entirely  at  the  mercy  of  the  authorities  of  the  mu- 
nicipality. They  may  make  the  premises  unliealtliful,  or  may  compel  the 
owners  of  the  lots  to  incur  great  expense  in  raising  the  building  to  tlie  grade 
established,  or  may  wiiolly  destroy  the  property  for  use.  One  owner  of  land 
has  no  right,  by  artificial  structures,  to  turn  the  surface  water  from  his  land 
upon  the  land  of  another,  when,  without  such  structures,  the  flowage  never 
woukl  have  taken  place.  The  same  principle  which  controls  individuals 
must  control  as  between  towns  and  cities  and  individual  proprietors.  Mu- 
nicipalities hold  the  streets  of  towns  in  trust  for  the  public,  and  may  regu- 
hite  and  establish  their  grade,  but  this  must  be  done  so  as  to  do  no  serious 
injury  to  owners  of  abutting  lots.  In  Nevins  v.  CUy  of  Peoria,  41  III.  502, 
Si)  Am.  Dec.  392,  this  question  was  fully  considered  and  the  authorities  re- 
viewed. It  was  there  held  that  while  a  city  has  the  absolute  control  over 
the  grade  of  its  streets,  and  may  elevate  or  lower  it  at  pleasure,  yet  it  has 
no  more  power  over  the  streets  than  a  private  individual  has  over  his  own 
land,  and  that  its  liability  for  injury  to  the  property  of  another  is  the  same 
as  that  of  the  private  individual.  It  was  further  held  that  if,  in  the  elevation 
of  its  streets,  it  turned  water  upon  the  ground  and  into  the  cellar  of  one  of 
its  citizens,  it  must  respond  in  damages  for  the  injury  thus  occasioned. 
That  case  is  decisive  of  the  plaintiff's  right  in  this  case,  and  there  was  no 
error  in  giving  the  plaintiff's  flrst  instruction.  Error  is  assigned  upon  the 
refusal  of  the  court  to  instruct  the  jury,  in  behalf  of  the  city,  that  it  was 
not  liable  for  injuries  resulting  from  error  in  judgment  of  the  common  coun- 
cil as  to  the  size  of  the  sewers  necessary  for  the  passage  of  the  surface  water. 
The  evidence  is  overv/helming  that  the  sewers  were  insufficient,  and  the 
common  council  might  ami  ought  to  have  known  the  fact.  The  city  did  not 
exercise  reasonable  care  in  their  construction,  and  the  instruction  was 
properly  refused":  City  of  Dixon  v.  Baker,  65  111.  518;  16  Am.  Rep.  591. 

Tli€  Throwing  of  Surface  Waters  upon  Lands,  where  they  did  not  flow  be- 
fore, or  though  upon  lands  where  they  before  ran,  at  a  different  place,  or 
with  increased  velocity,  or  in  much  greater  quantities,  presents  a  case  sub- 
stantially different  from  the  merely  restraining  of  water  by  street  embank- 
ments. When,  as  a  result  of  the  grading  of  a  street,  suiface  waters  which 
before  ran  off  upon  the  natural  surface  of  the  soil  are  collected  together  in 
one  channel  and  thrown  upon  the  lands  of  a  private  proprietor,  who  is  dam- 
ai,'ed  thereby,  he  may  recover  compensation  therefor  from  the  City:  Young  v. 
IlijIiwiyConmirs,  134  III.  509;    W/ujiplev.  Fairharen,  63  Vt   221;  Pyev.  City 


394  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine, 

of  Manhato,  36  Minn.  373;  1  Am.  St.  Rep.  671;  Nerins  v.  City  of  Peoria,  41 
111.  502;  89  Am.  Dec.  392;  Follmann  v.  Mankato,  45  Minn.  457;  Ashley  v.  Port 
Huron,  35  Mich.  296;  24  Am.  Rep.  552;  Ahller  v.  Morrktoivn,  47  N.  J.  Eq. 
62;  48  N.  J.  Eq.  645;  Seifert  v.  City  of  Brooklyn,  101  N.  Y.  136;  54  Am.  Rep. 
664;  Gilli'ion  v.  City  of  Charleston,  16  W.  Va.  282;  37  Am.  Rep.  763;  Bitchina 
V.  Mayor  of  Frostbuig,  68  Md.  100;  6  Am.  St.  Rep,  422;  West  Orange  v.  Field* 
37  N.  J.  Eq.  600;  45  Am.  Rep.  670;  Field  v.  West  Orange,  46  N.  J.  Eq.  183; 
Davis  V.  City  ofCraufordsville,  119  Ind.  1;  12  Am.  St.  Rep.  361 ;  Turner  v.  Dart' 
mouth,  13  Allen,  291;  Young  v.  Leedom,  67  Pa,  St.  351;  Blake'y  v,  Devine,  36 
Minn,  53,  Hence  where  a  city  causes  the  grade  of  a  street  to  be  changed 
by  cutting  it  down,  whereby  surface  water  whicli  had  collected  in  a  pond  or 
natural  reservoir  was  released  and  carried  upon  the  premises  of  the  plain tifif, 
flooding  his  cellar  and  well,  and  otherwise  damaging  him,  he  was  entitled  to 
recover:  Inman  v,  Trifp,  11  R.  I.  520;  23  Am.  Rep.  520;  Pcttigrew  v.  Village 
of  Evansville,  25  Wis,  223;  3  Am.  Rep.  50.  The  fact  that  waters  were  con- 
centrated by  means  of  a  culvert  cannot  sustain  a  recovery  by  a  lot-owner 
upon  whose  lands  they  afterwards  flowed,  unless  it  appeared  that  by  an  in- 
crease in  their  quantity  or  force  he  sufl"ered  injury  in  excess  of  that  he 
would  have  sustained  had  the  waters  been  left  in  their  natural  condition: 
Noble  V.  St.  Albans,  56  Vt.  522;  Rutherford  v.  Village  of  Holley,  105  N.  Y. 
632.  In  Missouri  we  understood  the  decisions  of  the  supreme  court  as  de- 
claring that  no  liability  can  accrue  against  a  city  for  increasmg  the  flow  of 
surface  waters  by  means  of  grading  a  public  street  as  long  as  the  plan  adopted 
is  carried  out  without  negligence  or  want  of  skill,  and  therefore  that  if  it  is 
a  part  of  such  plan  that  waters  shall  be  concentrated  and  thrown  iipon  the 
lands  of  private  proprietors,  they  are  without  legal  redress:  Lambar  v.  St. 
Lords,  15  Mo.  610;  St.  Louis  v.  Gurno,  12  Mo.  414.  Speaking  of  evidence 
offered  in  support  of  a  claim  for  damages,  and  determining  that  it  did  not 
support  such  claim,  the  court  said:  "It  not  only  tended  to  show,  but  con- 
clusively established,  che  fact  that  the  work  of  grading  and  opening  the 
said  street  in  accordance  with  the  plan  was  well  and  carefully,  and  not  neg- 
ligently, done,  and  that  the  injury  to  plaintiff's  lots  was  not  occasioned  by 
any  careless  or  negligent  execution  of  the  work  in  grading  and  opening  said 
street  which  the  ordinance  authorized,  but  resulted  from  an  error  of  judg- 
ment oa  the  part  of  the  city  council  in  ordering  the  opening  of  a  street  at  a 
certain  grade  without  providing,  in  the  plan  and  specifications  for  doing  the 
work,  some  method  of  drainage  for  the  disposition  of  the  surface  water.  The 
passage  of  the  ordinance  establishing  the  grade  of  said  street,  directing  it  to 
be  opened  according  to  the  plan  and  specifications,  was  qtiasi  judicial,  and 
the  city  is  not  liable  for  consequential  damages  arising  from  a  defect  in  the 
plan  adopted,  but  can  only  be  held  liable  for  damages  resulting  from  the 
negligent  execution  of  the  work  done  in  compliance  with  such  plan":  Foster 
v.  St.  Louis,  71  Mo.  157,  Few,  if  any,  of  the  courts  of  this  country  at  the 
present  time  concur  with  these  views.  Their  inclination  would  rather  be  to 
aSirm  that  the  fact  that  the  plan  necessarily  involved  the  invasion  of  private 
rights  of  property  was  an  unanswerable  reason  for  holding  the  municipality 
liable  for  its  execution.  Even  the  supreme  court  of  Missouri,  as  we  under- 
stand its  most  recent  opinion,  has  receded  from  the  position  formerly  taken 
by  it  upon  this  question.  In  Ryrhlicki  v.  City  of  St.  Louis,  98  Mo,  497,  14 
Am.  St,  Rep.  651,  the  plaintiff,  in  his  opening  statement  in  the  trial  court, 
declared  that  he  expected  to  prove  that  he  was  the  owner  of  certain  land.s  in 
the  city  of  St.  Louis,  on  the  north  side  of  which  was  a  block  of  land  separatt'd 
from  plaintiff's  land  by  Page  Avenue;  that  in  opening  and  grading  curtain 


May,  1892.]     Goddard  v.  Inhabitants  of  Harpswell.      395 

streets,  defendant  diverted  large  quantities  of  surface  water  at  the  north 
line  of  the  block  referred  to,  and  after  conducting  it  by  culverts  and  drains 
under  the  the  road-bed  of  Page  Avenue,  discharged  it  upon  plaintiff's  prop- 
erty, by  reason  of  which  six  acres  of  such  property  was  turned  into  a  morass, 
and  ruined  for  the  purposes  of  cultivation;  that  the  improvement  upon  the 
streets  from  which  this  damage  resulted  was  done  by  virtue  of  city  ordi. 
nances  duly  enacted.  Upon  this  statement  the  plaintiff  was  nonsuited. 
Without  attempting  any  explanation  of  the  cases  we  have  just  cited,  and 
also  without  expressly  overruling  them,  the  majority  of  the  court  reversed 
the  judgment  of  nonsuit,  declaring  that  "  the  question  presented  by  this 
recor<l  is,  whether  the  defendant  may,  in  the  construction  of  its  streets,  col- 
lect surface  water,  and  then,  by  means  of  drains  aud  conduits,  discharge  it  in 
volume  upon  the  land  of  an  adjoining  proprietor.  From  the  authorities  be- 
fore cited,  it  makes  no  difference  whether  this  particular  question  is  tried 
by  the  rules  of  the  civil  law  or  by  what  is  called  the  common-law  rule.  The 
result  is  the  same;  for  either  line  of  decisions  rales  this  question  against  de- 
fendant." 

Doulitless  the  grading  of  a  street  may  to  some  extent  increase  the  flow  of 
surface  waters  upon  contiguous  premises  without  involving  municipal  liabil- 
ity, as  where  the  waters  flowing  from  a  street  as  graded  run  upon  and  over 
premises  which  they  did  not  before  reach,  or  a  street  embankment  or  cut 
caused  waters  to  escape  somewhat  more  or  less  rapidly  than  before,  or  at  a 
different  point;  but  the  proposition  that  waters  may  lawfully  be  concentrated 
and  thrown  upon  the  lands  of  private  proprietors  is  no  longer  tenable.  If  a 
street  is  cut  through  a  hill  to  conform  it  to  the  grade  as  established  by  a 
municipality,  and  by  reason  of  such  cut  and  corresponding  cuts  in  other 
streets  waters  are  discliarged  upon  lands  which  they  did  not  before  reach, 
and  in  greatly  increased  quantities,  the  city  is  not  answerable,  for  the  rea- 
son that  it  has  but  pursued  the  authority  vested  in  it  by  law,  and  has  not 
concentrated  surface  waters  by  means  of  any  culvert,  artificial  drain,  or 
other  appliance,  and  then  cast  them  upon  private  property;  but  the  rule  is 
otherwise  if  the  streets  as  cut  reach  a  swamp  or  reservoir  into  which  a  nat- 
ural watercourse  flows,  and  thus  result  in  draining  its  waters  upon  lands 
within  the  city:  Town  of  Union  v.  Durkes,  38  N.  J.  L.  21.  And,  generally, 
when  surface  waters -have  not  been  concentrated  by  bringing  them  together 
in  culvert  or  drains,  and  any  change  or  increase  in  the  flow  tliereof  resulted 
solely  from  the  grading  of  the  streets,  whether  such  grading  consists  of  an 
embankment  or  cut,  and  not  from  a  plan  or  device  having  in  view  the  con- 
centration or  cliange  in  the  place  of  discharge  of  surface  waters,  such  injury 
as  results  is  incidental  and  consequential,  for  which  there  is  no  redress  by  ac- 
tion against  the  city:  Miller  v.  Morridown,  47  N.  J.  Eq.  62;  affirmed  48 
N.  J.  Eq.  645;  Fidd  v.  West  Ornwje,  46  N.  J.  Eq.  183;  Kycldicki  v.  SL  Louis, 
98  Mo.  497;  14  Am.  St.  Rep.  651. 

The  LiahiUty  of  a  Municipality  for  a  Nuisance  created  by  its  act  or  ne- 
glect is  well  established.  In  most  of  the  cases  in  which  any  attempt  has 
been  made  to  prevent  the  enforcement  of  this  liability,  the  immunity  of  the 
city  has  been  placed  upon  the  ground  that  the  alleged  nuisance  arose  from  a 
defect  in  the  plan  of  a  street  or  of  a  sewer  therein,  and  that  as  tlie  adop- 
tion of  stich  plan  involved  the  exercise  of  judicial  or  legislative  functions, 
no  liability  could  result  from  an  error  in  exercising  them.  Whenever  the 
nuisance  complained  of  results  in  the  direct  injury  of  property,  the  liaMlity 
of  the  city  cannot  be  escip  d  on  the  ground  that  the  injury  arose  from  a  de- 
fect or  error  in  the  plan  of  the  work,  and  not  from  negligence  in  its  execu- 


396  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine^ 

tioa.  Thus  in  New  York,  a  sewer  was  planned  and  constructed  with  various 
lateral  sewers  connected  with  it,  and  the  capacity  of  the  main  sewer  was 
entirely  inadequate  to  "  carry  off  the  accumulations  of  water  and  matter 
drawn  into  it,  and  the  result  was,  that  at  times  of  heavy  rain  and  melting 
snow,  the  collected  sewerage,  being  obstructed  in  its  flow,  was  forced  through 
the  man-hole,  and  inundated  the  district,  involving  serious  injury  to  prop- 
erty." An  action  was  brought  by  a  person  whose  property  was  injured, 
and  by  way  of  defense  it  was  insisted  that  as  the  damage  complained  of 
was  occasioned  by  a  defect  in  the  plan  of  the  sewer,  the  plaintiff  was  with- 
out redress.  In  overruling  this  defense,  the  court  of  appeals  said:  "  We  eater- 
tain  no  doubt  as  to  the  liabdity  of  the  defendant  for  the  damages  occasioned 
by  the  defects  of  the  sewer,  and  think  it  rests  upon  principles  not  conflicting 
■with  those  announced  in  any  reported  case,  but  substantially  in  harmony 
with  all  of  them.  Municipal  corporations  have  quite  invariably  been  held 
liable  for  damages  occasioued  by  acts,  resulting  in  the  creation  of  public  or 
private  nuisances,  or  for  an  unlawful  entry  upon  the  premises  of  another, 
whereby  injury  to  his  property  had  been  occasioned:  Baltimore  etc.  E.  B.  Co., 
V.  F'tfth  Baptist  Church,  108  U.  S.  317.  This  principle  has  been  uniformly  ap- 
plied to  the  act  of  such  corporations  in  constructing  streets,  sewers,  drains, 
and  gutters,  whereby  the  surface  water  of  a  large  territory,  which  did  not 
naturally  flow  in  that  direction,  was  gathered  into  a  body,  and  thus  precipi- 
tated upon  the  premises  of  an  individual,  occasioning  damage  thereto:  Byrnes 
V.  City  of  Cohoes,  67  N.  Y.  204;  Bastahle  v.  Syracuse,  8  Hun,  587;  72  N.  Y.  64; 
Noonanv.  City  of  Albany,  79  N.  Y.  470,  475;  35  Am.  Rep.  540;  Beach  v.  City 
of  Elndra,  22  Hun,  158;  Field  v.  West  Orange,  36  N.  J.  Eq.  183;  on  ap- 
peal, 37  N.  J.  Eq.  600;  45  Am.  Rep.  670.  We  are  also  of  the  opinion  that  the 
exercise  of  a  judicial  or  discretionary  power,  by  a  municipal  corporation, 
which  results  in  a  direct  and  physical  injury  to  the  property  of  an  individ- 
ual, and  which  from  its  nature  is  liable  to  be  repeated  and  continuous,  but 
is  remediable  by  a  change  of  plan  or  the  adoption  of  prudential  measures, 
renders  the  corporation  liable  for  such  damages  as  occur  in  consequence  of 
its  continuance  of  the  original  cause  after  notice,  and  an  omission  to  adopt 
Buch  remedial  measures  as  experience  has  shown  to  be  necessary  and  proper: 
Wood  on  Nuisances,  sec.  752.  While  in  the  present  case  the  corporation 
was  under  no  original  obligation  to  the  plaintiff  or  other  citizens  to  build  a 
sewer  at  the  time  and  in  the  manner  it  did,  yet,  having  exercised  the  power 
to  do  so,  and  thereby  created  a  private  nuisance  on  his  premises,  it  incurred 
a  duty,  having  created  the  necessity  for  its  exercise,  and  having  the  power 
to  perform  it,  of  adopting  and  executing  such  measures  as  should  abate  the 
nuisance,  and  obviite  damage:  Phinizy  v.  City  of  Awjiista,  4:1  Ga.  260,  263; 
Byrnes  v.  City  of  Cohoes,  67  N.  Y.  204;  Bastable  v.  Syracuse,  8  Hun,  587;  72 
N.  Y.  64.  It  is  a  principle  of  the  fundamental  law  of  the  state,  that  the  prop- 
erty of  individuals  cannot  be  taken  for  public  use  except  upon  the  condition 
that  just  compensation  be  male  therefor,  and  any  statute  conferring  power 
upon  a  municipal  body,  the  exercise  of  which  results  in  the  appropriation,  de- 
struction, or  physical  injury  of  private  property  by  such  body,  is  inoperative 
and  ineffectual  to  protect  it  from  liability  for  the  resultant  damages,  unless 
some  adequate  provision  is  contained  in  the  statute  for  making  such  compensa- 
tion. The  immunity  which  extends  to  the  consequences,  following  the  exercise 
of  judicial  or  discretionary  power,  by  a  municipal  body  or  other  functionary, 
presupposes  that  such  consequences  are  lawful  in  their  character,  and  that  the 
act  performed  might  in  some  manner  be  lawfully  authorized.  Whea  such 
power  can  be  exercised  so  as  not  to  create  a  nuisance,  and  does  not  require 


May,  1892.]     Goddaud  v.  Inhabitants  op  Harpswell.      397 

the  appropriation  of  private  property  to  effectuate  it,  the  power  to  make 
such  an  appropriation  or  create  such  nuisance  will  not  be  inferred  from  the 
grant.  Where,  however,  the  acta  done  are  of  sucli  a  nature  as  to  constitute 
a  positive  invasion  of  the  individual  rights  guaranteed  by  the  constitution, 
legislative  sanction  is  inefl'ectual  as  a  protection  to  the  persons  or  corpora- 
tion performing  such  acts  from  responsibility  for  their  consequences:  /?ad- 
€(ifv.  Mayor  etc.,  4  N.  Y.  195;  53  Am.  Dec.  357  ":  Sei/ertv.  City  of  Brooklyn, 
101  N.  Y.  13G;  54  Am.  Rep.  664,  668.  So  in  Missouri,  where  a  system  of 
sewers  was  so  planned  that  it  discharged  the  contents  of  the  sewer  into  a 
small  running  stream  of  water  near  the  plaintiff's  residence,  producing  a 
sickening  steuch  upon  his  premises,  the  city  was  held  liable,  the  court  say- 
ing: "Conceding  full  effect  to  the  authority  conferred  by  the  city's  charter 
to  establish  the  system,  yet  it  falls  far  short  of  legalizing  the  municipal  acta 
here  in  question.  The  power  granted  was  general.  It  did  not  expressly  in- 
dicate and  sanction  the  particular  arrangement  or  plan  adopted.  Hence  the 
power  it  has  must  be  reganled  as  subject  to  the  just  limitation  forbidding 
its  exercise  ia  such  manner  aa  to  create  a  nuisance  injurious  to  private 
riuhts  of  property,  where  such  a  consequence  is  not  a  necessary  result  of  ex- 
ercising the  power":  Edmondson  v.  Moherly,  98  Mo.  5'23;  Hwjhes  v.  Fond  du 
LaCj  73  Wis.  ;i80;  Stoddard  v.  Saratoga  Sjn-ing%  127  N.  Y.  261.  Though  a 
municipality  in  its  control  of  school-houses  and  school  property  for  most 
purposes  exercises  govern'mental  functions,  and  for  a  negligence  in  their  ex- 
ercise cannot  be  held  answerable,  yet  if  it  so  fills  in  a  school  lot  aa  to  inflict 
injury  upon  the  property  of  a  private  proprietor,  it  is  answerable  to  him 
thereior:  Mikx  v.    Worcester,  154  Mass.  511;  26  Am.  St.  Rep.  264. 

Though  a  city  is  liable  for  creating  a  nuisance  wherel)y  injury  results  to  a 
citizen,  a  different  result  attends  its  failure  to  exercise  powers  which,  if  exer- 
cised, might  have  resulted  in  the  prevention  or  abatement  of  a  nuisance 
created  within  its  limits  and  maintained  upon  private  property,  but  to  which 
neither  it  nor  its  officers  contril)uted.  Thus  municipalities  are  usually  given 
power  to  abate  nuisances,  and  from  the  failure  to  assert  such  power  nui- 
sances may  continue,  and  their  continuance  involve,  either  directly  or  in- 
directly, serious  injury  to  private  proprietors.  The  latter,  however,  are 
without  means  of  redress  by  civil  action  against  a  city.  The  power  of  abat- 
ing a  nuisance,  or  of  determining  whether  it  shall  be  abated,  is  judicial,  and 
the  failure  to  exercise  it,  if  not  corrupt,  cannot  give  any  right  of  action  to  a 
person  Bufifering  injury  therefrom:  Jaiiies  v.  Harrodahurg,  85  Ky.  191;  7  Am. 
St.  Rep.  589;  Dai-iiw.  City  Couiicil  of  Montgomery,  51  Ala.  139;  23  Am.  Rep. 
645;  Hill  v.  Charlotte,  72  N.  C.  55;  21  Am.  Rep.  451;  Forsyth  v.  Atlanta,  45 
Oa.  152;  12  Am.  Rep.  576;  Rivera  r.  Augusta,  65  Ga.  376;  38  Am.  Rep.  787. 
We  are  not  able  to  reconcile  with  the  principles  here  stated  the  decision  ia 
Titylor  V.  Mayor  of  CumherUind,  64  Md.  68,  54  Am.  Rep.  759,  affirming  that 
the  using  of  public  street.!  for  "coasting  on  the  snow"  is  a  nuisance,  and 
that  for  want  of  dilige.ice  and  vigor  in  suppressing  it  a  city  may  be  answer- 
able. Possibly  the  judgment  in  tliis  case,  and  that  in  Mayor  of  Baltimore  v. 
Marriott,  9  Md.  160,  upon  which  it  was  founded,  may  be  sustained  upon  the 
principle  that  the  city  had  assumed  the  duty  of  keeping  the  public  streets 
within  its  limits  free  from  danger,  throULjh  its  negligence,  to  persons  lawfully 
Using  them,  and  tliat  it  had  not  performed  this  duty  in  those  cases.  In 
Burj'ord  v.  Orand  /iapids,  53  Mich.  98,  51  Am.  Rep.  105,  a  city  was  sought 
to  1)6  held  liable  for  injuries  resulting  to  plaintiff  from  his  horse  being  run 
into  and  injured  by  a  vehicle  "used  in  coasting,  and  called  a  bob,"  the  use  of 
such  vehicle  at  the  place  where  the  injury  occurred  having  beeu  sanctioned 


398  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine, 

by  a  municipal  ordinance  permitting  coasting  on  certain  designated  streets. 
Judge  Cooley,  in  an  able  opinion,  referring  to  the  authorities  upon  the  sub* 
ject,  reached  the  conclusion  that  as  coasting  was  not  necessarily  a  nuisance, 
the  municipality  might  exercise  a  discretion  in  respect  to  permitting  it,  and 
could  not  be  held  liable,  even  though  the  discretion  had  been  erroneously 
exercised. 

Schools  and  School  Property.  —  Cities,  in  holding  and  maintaining  property 
used  for  public  schooLs  as  well  as  in  performing  all  other  duties  imposed  upon 
them  in  respect  to  such  schools,  are  regarded  as  acting  "with  a  sole  view  to 
the  general  benefit,  and  under  the  requirement  or  authority  of  general  laws. 
In  such  cases,  in  the  absence  of  any  statute  which  directly  or  by  implication 
gives  a  private  remedy,  no  action  lies  in  favor  of  a  person  who  has  received  an 
injury  in  consequence  of  a  negligent  or  defective  performance  of  the  public 
service":  Howard  v.  fVorceste?;  153  Mass.  426;  25  Am.  St.  Rep.  651.  Hence 
no  recovery  can  be  had  against  a  city  for  injuries  received  by  a  child  who 
attended  a  public  school,  by  reason  of  the  unsafe  condition  of  a  staircase  or 
other  part  of  a  school-house:  Bill  v.  Boston,  122  Mass.  344;  23  Am.  Rep.  332; 
Wexon  V.  Newport,  13  R.  I.  454;  43  Am.  Rep.  35;  or  from  a  dangerous  excava- 
tion in  a  school  lot:  Finch  v.  Toledo  Board  of  Education,  30  Ohio  St.  37;  27  Am. 
Rep.  414;  Flori  v.  St.  Louis,  69  Mo.  341;  33  Am.  Rep,  504;  Bigelow  v.  Inhabitants 
of  Randolph,  14  Gray,  541;  or  for  negligence  in  blasting  rocks  in  excavating 
for  the  foundation  of  a  school-house,  by  which  a  traveler  was  injured  while 
lawfully  using  the  public  highway:  Howard  v.  City  of  }Vorcester,  153  Mass. 
426;  25  Am.  St.  Rep.  461.  If  the  commissioners  or  other  persons  having 
the  control  of  tlie  public  schools  or  of  school  property,  though  appointed  by 
the  mayor  of  the  city,  were  "vested  with  full  power  and  authority  to  man- 
age and  control  the  educational  interests  of  the  entire  municipality,  and  to 
appoint  all  subordinate  officers  and  employees,  who  were  subject  to  their  gov- 
ernment and  control  exclusively,  and  were  their  servants  and  subordinates," 
and  in  the  discharge  of  their  duties  are  not  amenable  to  the  municipality  in 
any  respect,  its  liability  may  also  be  denied  on  that  ground.  Hence  where 
the  educational  department  is  under  the  control  of  commissioners,  and  a 
part  of  a  building  leased  by  them,  and  occupied  for  a  normal  school,  is  allowed 
to  get  out  of  repair,  by  reason  of  wliich  foul,  dirty  water  is  permitted  to  run 
down  into  the  lower  part  of  the  building  and  to  injure  property  there  situ- 
ated, there  cannot  be  any  recovery  against  the  city:  Ham  v.  New  York,  70 
N.  Y.  459. 

Fire  Department.  — Nearly  all  cities  take  some  measures  intended  for  the 
better  protection  of  property  from  destruction  by  fire.  These  measures  gen- 
erally consist  partly  of  means  adapted  to  keeping  on  hand  and  furnishing  an 
adequate  supply  of  water,  and  partly  in  having  a  fire  department  with  appli- 
ances to  be  used  by  it  in  extinguishing  fires.  The  claim  is  often  made  that 
the  plaintiff  has  suffered  loss  from  the  destruction  of  his  property  by  fire 
which  would  not  have  occurred  had  the  supply  of  water  been  adequate,  or 
had  the  fire  department,  or  some  officer  thereof,  not  been  guilty  of  some  negli- 
gence, and  therefore  that  the  city  should  be  held  answerable  for  the  loss 
resulting  from  the  negligence  of  itself  or  its  officers  or  servants;  and  so  far  as 
we  are  aware,  this  claim  has  always  been  successfully  met  by  the  claim  on 
the  part  of  the  city  that  in  what  it  did  it  exercised  discretionary  govern- 
mental functions  for  the  benefit  of  the  public,  and  not  for  its  private  advan- 
tage, and  therefore  that  it  could  not  incur  any  liability.  Hence  its  liability 
cannot  be  established  by  proof  that  loss  resulted  to  plaintiff  from  its  neglect 
in  not  providing  a  sufficient  supply  of  water,  or  from  shutting  off  the  water 


May,  1892.]     Goddard  v.  Inhabitants  of  Harpswell.      399 

and  not  turning  it  on  when  required,  or  in  failing  to  furnish  proper  cisterns, 
engines,  or  other  appliances,  or  from  any  failure  to  assert  or  employ  any 
power  or  authority  vested  in  it  hy  law:  Mendel  v.  Wheelinrj,  28  VV.  Va.  233; 
57  Am.  Rep.  664;  Wriifnt  v.  Augusta,  78  Ga.  241;  6  Am.  St.  Rep.  256; 
Wheeler  v.  Cinnnnafi,  19  Ohio  St.  19;  2  Am.  Rep.  3t)8;  Black  v.  Ci(;/  of  Coliim- 
hia,  19  S.  0.  412;  45  Am.  Rep.  785;  Rohinsmv.  Emnsville,  87  lud.  334;  44  Am. 
Rep.  770;  Nickerson  v.  Bridje-port  H.  Co.,  46  Conn.  24;  33  Am.  Rep.  1;  Brink- 
meyer  V.  Evansville,  29  I  ml.  187;  Tuinterv.  Worcester,  123  Mass.  311;  25  Am. 
Rep.  90;  Heller  y.  Sedalia,  53  Mo.  159;  14  Am.  Rep.  444;  Grant  w.  Erie,  69  Pa. 
St.  420;  8  Am.  Rep.  272;  Foster  v.  Lookout  Water  Co.,  3  Lea,  42;  nor  by  show- 
ing any  neu'ligent  act  on  the  part  of  an  officer  of  the  fire  department  resulting 
in  loss,  eitlier  by  contributing  to  the  destruction  of  property  by  fire  or  the 
damage  of  the  plaintiff  in  other  respects:  Hayes  v.  Oshkosh,  33  Wis.  314;  14  Am. 
Rep.  760;  Wilcox  v.  Chicago,  107  111.  334;  47  Am.  Rep.  434;  Wild  v.  Paterson,  47 
N.  J.  L.  40(J;  Burrill  v.  Augusta,  78  Me.  118;  57  Am.  Rep.  788;  Grube  v.  St. 
Paul,  34  Minn.  402.  Therefore  he  cannot  recover  on  the  ground  that,  through 
neglicrence  of  a  person  acting  in  the  department,  a  collision  occurred  between 
a  vehicle  controlled  by  such  person  and  a  vehicle  in  which  plaintiff  was 
riding,  or  because  plaintiff  was  negligently  run  over,  and  thereby  suffered 
personal  injuries:  Alexander  v.  Vicksburg,  68  Miss.  564;  Hafford  v.  Neio  Bed- 
ford, 16  Gray,  297;  Jewett  v.  New  Ha  en,  38  Conn.  368;  9  Am.  Rep.  382; 
Wilcox  V.  Chicago,  107  111.  334;  47  Am.  Rep.  434;  or  was  hurt  by  the  burst- 
ing of  a  hose:  Fisher  v.  Boston,  104  Mass.  87;  6  Am.  Rep.  196;  or  by  slipping 
and  falling  upon  ice,  resulting  from  water  being  permitted  to  escape  from  a 
hydrant:  Wrls/i  v.  Rutland,  56  Vt.  228;  48  Am.  Rep.  762;  or  by  negligently 
maintaining  a  door  in  an  engine-house,  so  that  it  opened  upon  and  struck 
passing  pedestrians:  Kies  v.  Erie,  135  Pa.  St.  144;  20  Am.  St.  Rep.  867.  So 
municipal  liability  cannot  be  establislied  by  proof  that  the  fire  department, 
or  some  member  thereof,  needlessly  or  negligently  caused  the  destruction 
of  plaintiff's  property,  whether  such  destruction  arose  from  the  negligent 
management  of  some  appliance  or  from  a  mistaken  judgment  in  ordering  the 
destruction  of  property  to  arrest  an  existing  conflagration:  Dunhar  v.  San 
Francisco,  1  Cal.  355;  Field  v.  Des  Moines,  39  Iowa,  575;  18  Am.  Rep.  46; 
Taylor  v.  Plyinout/i,  8  Met.  462;  Hayes  v.  Oshkosh,  33  Wis.  314;  14  Am.  Rep 
760;  White  v.  Charleston,  2  Hdl  (S.  C.)571;  McDonald  v.  Red  Wing,  13  Minn. 
38. 

Water-works.  — It  may  be  that  water- works  were  owned  by  the  city,  and 
that  it  fui-nislied  water  to  its  inhabitants  for  a  compensation,  and  assumed  in 
connection  with  such  works  the  duty  of  having  on  hand  an  adequate  supply 
of  water  and  suitable  hydrants  and  other  appliances  for  use  in  extinguishing 
fires,  and  then  the  question  arises  whether  the  municipality,  because  of  its 
deriving  profit  from  its  water-snpplj'  system,  is  answerable  for  the  negli- 
gence or  other  wrong  of  its  officers  and  servants  acting  within  the  scope  of 
their  duties.  In  performing  the  duty  of  supplying  water  for  use  in  extin- 
guishing fires,  we  think  the  authorities  agree  in  denying  municipal  liability 
for  negligence,  whether  it  results  in  an  inadequate  supply  of  water  or  in 
causing  the  supply  to  be  unavailing,  owing  to  the  absence  or  non-repair  of 
some  necessary  aj)pliance.  This  duty  is  governmental  in  its  character, 
not  undertaken  for  the  benefit  of  the  municipality,  and  cannot  be  performed 
without  exercising  quasi  juilicial  or  legislative  functions  out  of  the  wrongful 
or  negligent  exercise  of  which  it  is  universally  conceded  no  liability,  to  a 
civil  action  can  arise:  Mendel  v.  Wheeling,  28  Va.  233;  57  Am.  Rep.  664; 
Black  V.  Columbia,  19  S.  C.  412;  45  Am.  Rep.  785;  Robinson  v.  City  of  Evans- 


400  GoDDARD  V.  Inhabitants  op  Harpswell.     [Maine, 

ville,  87  Ind.  33i;  44  Am.  Rep.  770.  If,  however,  througli  the  neglect  of  aa 
officer  having  control  of  the  water-supply  system,  other  injuries  result,  of  a 
private  nature,  the  authorities  do  not  agree  as  to  whether  a  city  is  answer- 
able therefor  or  not.  Thus  in  New  Hampshire,  where  a  horse  was  fright- 
ened by  a  stream  of  water  thrown  from  a  hydrant  which  was  being  tested  by 
firemen,  and  an  action  was  afterwards  commenced  to  recover  compensation 
for  injuries  received,  and  the  claim  was  made  that  the  persons  in  charge  of 
the  hydrant  had  been  guilty  of  negligence  which  was  the  proximate  cause  of 
the  injury  to  plain  titf.  tiie  right  to  recover  was  denied,  partly  iipoa  the  ground 
that  the  officers  in  charge  of  the  hydrant  "  wure  puMic  officers,  amenable  to 
law  for  their  conduct,  and  not  under  control  and  direction  of  the  city," 
and  partly  upon  the  ground  that  they  were  in  the  discharge  of  a  public 
duty  from  which  the  city  received  no  advantage.  Upon  this  latter  topic 
the  court  said:  "  It  is  claimed  by  the  plaintiff  that  the  act  empowering  the 
city  to  introduce  water  conferred  special  privileges  on  the  defendants  and 
their  inhabitants,  and  is  one  from  which  the  city,  in  its  corporate  character 
receives  special  benefits  in  the  way  of  rents  and  tolls  for  the  use  of  the  water, 
and  thereby  the  duty  is  imposed  of  protecting  individuals  from  injury  aris- 
ing froma  negligent  use  of  the  privileges  so  conferred.  Conceding  this  to 
be  so,  it  does  not  ap[)ear  that  the  doctrine  has  any  application  to  this  case. 
The  act  from  which  the  injury  arose  was  the  use  of  a  hydrant  with  hose  at- 
tached, constructed  for  use  in  extinguishing  fires,  and  under  the  control  of 
tJie  fire  department,  an  independent  branch  of  the  city  government.  No 
toll,  or  rent,  or  special  advantage  accrues  to  the  defendants  in  their  corpo- 
rate capacity  for  the  use  of  the  hydrants  for  such  purposes,  but  a  tax  is  laid 
for  supporting  the  use.  For  the  use  of  the  water  by  individuals,  for  domestic 
and  other  purposes,  an  annual  rent  is  paid  or  may  be  exacted.  The  use  of  the 
water  from  the  hydrants  is  a  public  use,  enjoyed  in  common  by  the  people, 
and  from  which  the  city  ia  its  corporate  capacity  receives  no  special  advan- 
tage; and  in  the  absence  of  a  statute  giving  the  action,  the  defendants 
cannot  be  made  liable  for  any  neglect  of  duty  in  respect  to  such  public  use  ": 
Eihjerly  v.  Concord,  62  N.  H.  8;  13  Am.  St.  Rep.  533.  Perhaps,  however,  the 
weight  of  authority  with  respect  to  the  liability  of  a  city  for  negligence  of 
its  water  commissioners,  or  other  officers  or  agents  intrusted  with  the  duty 
of  planning  and  keeping  in  repair  a  system  of  water,  is  affirmed  and  enforced 
under  substantially  the  same  circumstancea  as  is  the  liability  for  negligence 
in  performing  the  duty  of  keeping  safe  in  condition  the  public  streets,  and 
therefore  whosoever  is  injured  in  person  or  property  by  negligence  in  main- 
taining or  operating  such  works,  or  in  the  use  of  water  therefrom,  or  for 
negligence  or  want  of  skill  in  their  construction  or  operation,  may  recover  of 
the  city  for  such  injuries,  unless  they  merely  arise  from  negligence  in  rela- 
tion to  the  public  duty  of  furnishing  water  to  extinguish  fires.  Hence  an 
action  may  be  maintained  when  injury  has  resulted  from  negligence  of  the 
water  commissioners,  whereby  a  public  highway  was  made  unsafe:  Aldrichv. 
Tripp,  II  R.  I.  141;  23  Am.  Rep.  434;  Hand  v.  Brookline,  126  Mass.  324;  or 
land  was  flooded  by  a  dam  breaking,  through  want  of  skill  in  its  construc- 
tion: Bailey  v.  Mayor  of  New  York,  3  Hill,  531;  38  Am.  Dec.  669;  or  work- 
men  were  injured  by  negligently  omitting  precautions  for  their  safety: 
Connolly  v.  Walthnm,  Mass.,  May  10,  1892;  31  N.  E.  Rep.  302.  In  a  case  in 
which  a  city  was  sued  to  recover  for  damages  arising  from  the  death  of  plain- 
tiff's intestate  from  drinking  impure  and  unhealthful  water  from  a  public 
well  belonging  to  the  defendant,  and  in  which  its  liability  was  denied  on  the 
ground  that  it  had  not  been  guilty  of  negligence,  the  court  assumed  that  had 


May,  1892.]     Goddard  v.  Inhabitants  op  Harpswell.     401 

negligence  existed,  liability  to  respond  in  damagea  might  have  resulteil,  say- 
ing "The  city  was  not  an  insurer  of  the  quality  of  the  water,  and  bound  un- 
der all  circumstances  to  keep  it  pure  and  wholesome.  This  is  not  claimed. 
It  owned  this  well  as  it  owned  its  other  property  kept  for  public  use,  such  as 
streets,  parks,  and  public  buildings;  and  it  owed  the  duty  of  reasonable  dili- 
gence to  care  for  it  as  it  was  bound  to  care  for  such  other  property":  Dana' 
her  y.  City  nf  Brooklyn,  119  N.  Y".  250. 

Police  Department.  —  Municipal  corporations  are  usually  required  by  their 
charters  or  by  general  law,  and  sometimes  by  both,  to  have  a  police  depart- 
ment, and  by  its  aid  to  promote  public  health  and  morals,  to  better  provide 
for  personal  security  and  ttie  preservation  of  rights  of  property,  and  to  sup- 
press crime  by  watchfulness  and  skill,  both  by  preventing  its  commission 
and  by  apprehending  and  punishing  those  who  commit  it.  All  these  duties 
are  clearly  of  a  public  character,  and  so  far  as  we  are  aware,  no  city  has  ever 
been  held  answerable  for  any  wrong  or  negligence  on  the  part  of  the  oflBcers 
to  whom  their  performance  is  deputed.  The  city  is  not  liable  for  injuries 
suffered  from  the  inadequacy  of  its  police  force,  whether  resulting  from  it» 
not  callini:;  into  its  service  a  sufficient  number  of  men,  or  from  the  negligence 
or  inattention  of  those  whom  it  engages  in  such  services:  Hannon  v.  Agnew, 
96  N.  Y.  439;  Deioey  v.  Detroit,  15  Mich.  307;  Odell  v.  Schroeder,  58  111.  353; 
Prather  v.  Leximjton,  13  B.  Hon.  559;  56  Am.  Dec.  585;  Worlcy  v.  Columbia, 
88  Mo.  lOG;  Lafaijttte  v.  Tiniberlake,  88  Ind,  330.  Nor  is  a  municipality 
answerable  for  any  wantonness,  recklessness,  or  other  wrong  committed  by 
a  policeman  while  in  the  discharge  of  his  duty.  He  is  regarded  as  an  agent 
or  servant  of  the  law,  or  of  the  state,  rather  than  of  the  city,  and  hence  it  is 
not  responsible  for  his  acts.  "Police-officers  can  in  no  sense  be  regarded 
as  agents  or  servants  of  the  city.  Their  duties  are  of  a  public  nature. 
Their  appointment  is  devolved  on  cities  and  towns  by  the  legislature  as  a 
convenient  mode  of  exercising  a  function  of  government;  but  this  does  not 
render  them  liable  for  their  unlawful  or  negligent  acts.  The  detection  and 
arrest  of  offenders,  the  preservation  of  the  public  peace,  the  enforcement  of 
the  laws,  and  other  similar  powers  and  duties  with  which  police-officers  and 
constables  are  intrusted,  are  derived  from  the  law,  and  not  from  the  city  or 
town  under  wliich  they  hold  their  appointment.  For  the  mode  in  which 
they  exercise  their  powers  and  duties,  the  city  or  town  cannot  be  held  lia- 
ble ":  Buttrick  v.  Lowell,  1  Allen,  172;  79  Am.  Dec.  721;  Burch  v.  Hani- 
wicke,  30  Gratt.  24;  32  Am.  Rep.  640;  CalwM  v.  City  of  Boone,  51  Iowa,  687; 
33  Am.  Rep.  154;  Bowel  itch  v.  Boston,  101  U.  S.  16;  Atmalir  v.  Bn/timore,  31 
Md.  462;  Elliott  v.  Philadelphia,  75  Pa.  St.  347;  15  Am.  Rep.  591;  Norris- 
iownv.  Fifzpatrick,  94  Pa.  8t.  121;  39  Am.  Rep.  771;  Caniphellv.  MoiU(jome)-y, 
53  Ala.  527;  25  Am.  Rep.  656;  Peters  v.  Lindshorg,  40  Kan.  654.  Therefore, 
a  city  is  not  liable  for  tlie  use  of  excessive  force  by  its  policemen,  or  for  tiieir 
assault  or  battery  upon,  or  shooting,  or  other  abuse  of,  a  prisoner  or  other 
person:  Buttrick  v.  Lowell,  1  Allen,  172;  79  Am.  Dec.  721;  Calwell  v.  City  of 
Boone,  61  Iowa,  687;  33  Ani.  Rep.  154;  Moffitt  v.  Asheville,  103  N.  C.  237;  14 
Am.  St.  Rep.  810;  Whitfield  v.  Pari%  84  Tex.  431;  31  Am.  St.  Rep.;  nor  for 
their  unlawful  seizure  of  property,  whereby,  or  throufjh  their  negligence,  it 
is  lost  or  misappropriated:  Elliott  v.  City  of  Philadeljilda,  75  Pa.  St.  547;  15 
Am.  Rep.  591;  Fox  v.  Northern  Liberties,  3  Watts  &  S.  103;  Dargnn  v.  Mayor 
of  Mobile,  31  Ala.  469;  70  Am.  Dec.  505;  Stetoart  v.  City  of  Kau  Orleans,  9 
La.  Ann.  461:  61  Am.  Dec.  218.  Nor  is  it  material  that  the  policeman  for 
whose  wrongful  act  compensation  is  sought  was  acting  under  a  municipal  or- 
dinance, and  in  an  attempt  to  enforce  its  provisions,  or  to  apprehend  one 
AM,  St.  Rep.,  Vol.  XXX.  — 26 


402  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine, 

accused  of  violating  them.  "  The  authority  to  enact  by-laws  is  delegated  to 
the  city  by  tlie  sovereiga  power,  and  the  exercise  of  the  authority  gives  to 
such  enactments  the  same  force  and  efTect  as  if  they  had  been  passed  directly 
by  the  legislature.  They  are  public  laws  of  a  local  and  limited  operation, 
designed  to  secure  good  order  and  to  provide  for  the  welfare  and  comfort  of 
the  inhabitants.  In  their  enforcement,  therefore,  police-officers  act  in  their 
public  capacity,  and  not  as  agents  or  servants  of  the  city  ":  Buttrirh  v.  Low- 
ell, 1  Allen,  172;  79  Am.  Dec.  721;  Calwdl  v.  City  of  Boone,  51  Iowa,  687; 
33  Am.  Rep.  154;  Moffitt  v.  Asheville,  103  N.  C.  237;  14  Am.  St.  Rep.  810. 

A  City  Jail  or  Other  PHson  is  usually  in  charge  of  policemen,  and  in  pro- 
viding and  keeping  it  in  repair  a  municipality  manifestly  exercises  duties 
of  the  same  public  character  as  when  it  provides  a  police  department.  If 
any  policeman  or  officer  should  be  guilty  of  mistreatment  of  a  prisoner,  the 
city  must  be  exonerated  from  liability,  under  the  authorities  already  cited 
granting  it  immunity  from  liability  for  acts  of  policemen.  So  in  providing 
a  pr  son  and  keeping  it  in  repair,  and  furnishing  supplies  for  its  inmates,  it 
exercises  discretionary  governmental  functions,  and  is  therefore  not  an- 
swerable to  one  who  is  injured  in  health  or  otherwise  by  the  condition  of  the 
prison  or  the  failure  to  furnish  proper  supplies  to  the  persons  confined 
therein:  Le  Clef  v.  Concordia,  41  Kan.  323;  13  Am.  St.  Rep.  285;  MnffM  v. 
Asheville,  103  N.  C.  237;  14  Am.  St.  Kep.  810;  Governor  y.  Clark  Co.,  19  Ga.  97. 

In  the  Maintdining  of  Almahoiiseft,  Hospitals,  and  Workhouses,  and  in  provid- 
ing for  the  welfare  and  support  of  indigent  persons,  and  for  the  advancement 
of  public  health,  municipalities  also  exercise  discretionary  governmental  func- 
tions, and  are  therefore  not  answerable  in  a  civil  action  for  their  negligence, 
nor  for  that  of  their  officer  or  agents.  Hence  there  can  be  no  recovery  against 
a  city  on  the  ground  that  its  health-officers  negligently  exposed  plaintiflf  to 
a  contagious  disease:  Ogg  v.  City  of  Lansing,  35  Iowa,  495;  14  Am.  Rep.  499; 
Brown  v.  Vinalhaven,  65  Me.  402;  20  Am.  Rep.  709;  or  after  cleaning  a 
vault  on  private  premises,  left  it  open,  in  consequence  of  wliich  plaintiflf, 
without  fault  on  his  part,  fell  into  it  and  was  injured:  Bryant  v.  St.  Paul, 
33  Minn.  289;  53  Am.  Rep.  31;  or  without  authority  took  possession  of  a 
dwelling-house,  to  the  exclusion  of  its  owner,  and  used  it  as  a  hospital:  Spring 
V.  Hyde  Park,  137  Mass.  554;  50  Am.  Rep.  334;  Lynde  v.  Rockland,  66  Me. 
309,  314.  A  municipality,  not  guilty  of  negligence  in  selecting  a  physician  or 
surgeon  for  the  poor,  or  for  the  inmates  of  a  hospital  or  other  public  institu- 
tion, is  not  answerable  to  one  injured  by  his  negligent  or  unskillful  treatment: 
Summers  v.  Board  of  Comm'rs,  103  Ind.  262;  53  Am.  Rep.  512;  Sherboume 
V.  Yuba  Co.,  21  Cal.  113;  81  Am.  Dec.  151.  And,  generally,  for  any  wrong- 
ful  act  or  neglect  of  an  officer  or  employee  in  any  city  hospital,  almshouse, 
or  other  charitable  institution,  there  can  be  no  recovery  except  against  him 
personally:  Mulcairns  v.  Janesville,  67  Wis.  24;  Richmond  v.  Long,  17  Gratt. 
375;  94  Am.  Dec.  461;  Murtaugh  v.  St.  Louis,  44  Mo.  479,  4S1;  Heriot'a 
Hospital  v.  Ross,  12  Clark  &  F.  507;  McDonald  v.  Massachusetts  General  Hos- 
pital, 120  Mass.  432;  21  Am.  Rep.  529;  Benton  v  City  Hospital,  140  Mass.  13; 
54  Am.  Rep.  436;  Perry  v.  House  of  Refuge,  63  Md.  20;  52  Am.  Rep.  495; 
Maxmilian  v.  New  York,  62  N.  Y.  160;  20  Am.  Rep.  468;  Haight  v.  New 
York,  24  Fed.  Rep.  93;  Curran  v.  Boston,  151  Mass.  505;  21  Am.  St.  Rep. 
465. 

If  a  City  has  Property,  or  Engages  in  an  Undertaking  the  Object  of  Which  is 
Profl  to  itself,  its  liability  with  respect  to  such  property  or  business  is  the  same 
as  if  it  were  a  private  corporation:  Bailey  v.  Mayor,  3  Hill,  531;  38  Am.  Dec. 
669;  Clark  v.  Manchester,  62  N.  H.  577.     Hence  if  it  rents  a  building  or  some 


May,  1892.]     Goddard  v.  Inhabitants  of  Harpswell.      403 

portioQ  thereof,  it  becomes  answerable  for  negligence  in  respect  to  the  build- 
ing and  its  appurtenances,  and  the  streets  and  approaclies  tliereto,  to  the  same 
extent  as  tlie  owner  of  other  property  used  for  private  purposes:  Worden  v. 
Neu)  Bedford,  131  Mass.  23;  41  Am.  Rep.  185;  Mayor  of  Savannah  v.  CuU 
lens,  38  Ga.  334;  95  Am.  Dec.  398.  If  it  owns  water-works,  and  undertakes 
to  supply  an  inliabitant  with  water  for  some  specified  purpose,  and  uncovers 
a  pipe  by  which  he  receives  such  water,  so  that  it  is  frozen  and  his  supply 
cut  off,  the  city  is  answerable  in  damages:  Stock  v.  Boston,  149  Mass.  410; 
14  Am.  St.  Rep.  430;  though,  in  one  state  at  least,  such  damage  is  limited 
to  the  amount  paid  for  the  use  of  the  water:  SinU/i  v.  Philadelphia,  81  Pa.  St. 
38;  22  Am.  Rep.  731. 

iVharves,  Piers,  etc.,  Nejlijence  in  Management  of .  — A  city  owning  or  in 
possession  of  a  wharf  or  pier,  for  the  use  of  which  it  is  authorized  to  collect, 
and  does  collect,  tolls,  is  charged  with  the  duty  of  keeping  it  in  proper  and 
safe  condition  and  repair  in  its  capacity  of  owner  and  manager  of  private 
property,  and  is  answerable  to  any  one  injure  1  by  its  failure  to  perform  such 
duty,  in  all  cases  in  which  its  nou-perfonuuice  is  attributable  to  negli- 
gence: Pittsbunjh  V.  Grier,  22  Pa.  St.  54;  (iO  Am.  Dec.  65;  Shinkle  v.  Coving- 
ton,  1  Bush,  017;  Fennimore  v.  New  Orleans,  20  La.  Ann.  124;  Allpglieny  y. 
Campbell,  107  Pa.  St.  530;  52  Am.  Rep.  478;  City  of  Petershurg  v.  Apple- 
garth,  28  Gratt.  :)21 ;  26  Am.  Rep.  357;  Memphis  v.  Kimbrough,  12  Heisk.  133. 

In  South  Carolina,  a  munici[)ality  was  authorized  to  issue,  and  did  issue, 
certain  certificates  of  stock,  each  of  which  contained  a  provision  "  that  the 
demand  evidenced  thereby  was  recorded  in  and  transferable  only  at  the  office 
of  the  city  treasurer  by  appearance  in  person  or  by  attorney  according  to  the 
rules  and  forms  instituted  for  that  purpose,"  and  it  was  held  that  the  munici- 
pality had,  in  efifect,  entered  into  a  contract  with  persons  interested  in  the 
stock  that  the  same  should  not  be  illegally  transferred,  and  was  therefore 
answerable  to  any  one  injured  through  its  violation  of  such  contract  by  its 
permitting  an  unauthorized  transfer  of  the  stock  to  be  made:  Chapman  v. 
Charleston,  28  S.  C.  373;  13  Am.  St.  Rep.  681, 

Te.:>t  of  Liahility  is.  Was  the  Duty  Municipal  i — The  negligence  or  omis- 
sions which  we  have  referred  to,  and  for  which  municipalities  have  been 
held  answerable,  occurred  in  performing  or  failing  to  perform  some  duty 
which  the  city  had  taken  upon  itself,  or  which  had  been  imposed  upon  it, 
and  with  the  performance  of  which  it  became  charged  as  a  corporate  duty, 
rather  tiian  as  an  instrumentality  of  the  .sovereign  power  acting  for  the  bene- ' 
fit  of  the  public.  We  confess  that  it  is  not  always  possible  to  determine 
from  the  decisions  when  a  municipality  is  acting  in  one  capacity,  rather 
than  in  the  other,  but  the  only  principle  upon  wiiich  it  can  in  any  instance 
be  held  answerable  is,  we  submit,  that  it  has,  by  its  voluntary  act,  in  ac- 
cepting its  charter,  or  by  some  general  law,  become  answerable  for  the  per- 
formance of  some  duty,  and  that  from  its  proper  performance  it  cannot 
escape  on  the  ground  that,  by  its  own  act,  or  by  the  law,  such  performance 
has  been  delegited  to  some  officer  or  agent.  If  a  duty  is  not  a  duty  of  the 
municipality,  but  merely  of  some  of  its  othcers,  then  no  liability  can  attach 
at'ainst  it.  Thus  if  a  city  surveyor  is  called  upon  to  make  a  survey  for  a 
private  proprietor,  and  to  establish  the  boundary  line  of  his  lot,  the  officer, 
though  the  charter  of  the  city  may  give  him  authority  to  act,  does  not  act  for 
it,  nor  in  the  discharge  of  a  corporate  duty,  and  it  cannot  be  held  liable  for 
damages  resulting  from  his  error  or  want  of  skill:  Alcorn  v.  Philadelphia,  44 
Pa.  St.  348.  If,  on  the  other  hand,  the  officer  from  whose  negligence  injury 
has  resulted  was  acting  in  the  discharge  of  a  corporate  duty,  as  distinguished 


404  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine^ 

from  a  discretionary  governmental  duty,  the  city  is  liy.ble.  This  is  an  es- 
sential test.  The  fact  tliat  tlie  officer  was  not  appointed  by  the  munici- 
pality, or  cannot  be  discharged  or  controlled  by  it,  is  often  spoken  of  as 
material;  but  if  material,  it  is  so  only  because  it  may  aid  in  determining 
wliether  or  not  the  duty  was  a  corporate  one;  but  if  it  be  conceded  to  be  of 
the  latter  character,  the  liability  of  the  city  is  generally  enforced,  though  it 
has  not  appointed  and  cannot  control  him.  Thus  in  an  action  against  the 
city  of  New  York  to  recover  for  damages  sufiFered  from  the  unsafe  condition 
of  a  public  street,  it  resisted  recovery,  on  the  ground  that  the  injury  com- 
plained of  arose  from  the  negligence  of  the  commissioners  of  public  parks. 
To  this  defense  the  court  responded,  that,  conceding  the  duty  to  have  been 
devolved  upon  these  commissioners,  it  was  still  a  municipal  duty;  that  "the 
city  must  act  throu^'h  its  officers  and  agents,  and  it  is  for  the  legislature  to 
determine  what  powers  and  duties  shall  be  devolved  upon  them.  It  matters 
not  how  independently  they  may  act,  nor  how  they  are  chosen.  If  they  are 
provided  by  law  and  authorized  to  discharge  a  corporate  duty  which  rests 
upon  the  municipality,  then  in  the  discharge  of  that  duty  they  represent  the 
municipality,  and  it  may  be  chargeable  with  their  misfeasance  or  non-feasance. 
The  exclusive  control  of  the  streets  may  by  law  be  confided  to  the  mayor  or  the 
street  commissioner,  free  from  the  control  of  the  common  council,  and  yet  the 
care  of  the  streets  would  remain  a  municipal  duty,  discharged  by  the  officers 
designated  for  and  in  behalf  of  the  city  ":  Ehnjott  v.  New  York,  96  N.  Y.  264, 
273;  48  Am.  Rep.  622.  In  another  case  in  the  same  state,  the  defense  was, 
that  the  dangerous  condition  of  the  street  from  which  plaintiff  suffered  injury 
was  due  to  the  act  of  the  board  of  water  commissioners  of  the  city,  created  by 
a  special  statute  defining  their  duties.  In  overruling  this  defense,  the  court 
of  appeals  said:  "The  board  exists  solely  for  the  benefit  of  the  city.  It  can 
own  no  property,  and  do  no  act  that  has  not  reference  to  the  well-being  of 
the  city.  It  is  given  the  power  to  purchase  and  acquire  land,  but  the  title, 
when  acquired,  vests  in  the  city.  For  its  contracts  the  city  is  liable,  and 
judgments  recovered  against  it  are  judgments  against  the  city.  When  the 
water  rents  collected  by  it  are  more  than  sufficient  to  meet  its  expenses,  the 
surplus  must  go  to  the  benefit  of  the  city.  It  is  denominated  the  'board  of 
water  commissioners  of  the  city  of  Yonkers.'  It  is  not  an  independent  body 
acting  for  itself,  but  i.s  a  department  of  the  city,  and  one  of  the  instruments 
of  the  municipal  government.  Being  such,  when  engaged  in  digging  the 
trench  for  the  purpose  of  laying  water-pipe  in  Yonkers  Avenue,  it  was  en- 
gaged in  the  discharge  of  a  municipal  duty,  and  it  was  obligatory  upon  it, 
in  so  doing,  to  so  protect  and  guard  the  work  that  it  should  not  endanger 
persons  using  the  street,  and  if  tliat  was  impossible,  with  a  due  and  diligent 
prosecution  of  the  work,  the  street  should,  by  suitable  barrier,  have  been 
closed  against  the  public.  For  its  failure  so  to  do,  and  for  injuries  resulting 
from  such  failure,  the  defendant  is  liable  ":  Pettengillv.  Yonkers,  116  N.  Y. 
558;  15  Am.  St.  Rep.  442.  The  leading  case  upon  this  subject  is  Barnes  v. 
District  of  Columbia,  91  U.  S.  540.  The  question  tliere  involved  was,  whether 
the  plaintiff  could  recover  for  injuries  resulting  "in  consequence  of  the  de- 
fective condition  of  one  of  the  streets  of  the  city  of  Washington."  The 
statute  creating  the  defendant  a  municipal  corporation,  after  giving  it  power 
to  sue  and  be  sued,  and  to  exercise  all  other  powers  of  a  municipal  corpora- 
tion not  inconsistent  with  the  laws  and  constitution  of  the  United  States, 
and  the  provisions  of  the  statute  authorized  the  President,  with  the  consent 
of  the  Senate,  to  appoint  a  board  of  public  works,  who  should  have  entire 
control  of  and  make  all  needful  regulations  which  should  be  necessary  for 


May,  1892.]     Goddaud  v.  Inhabitants  of  Harpswell.      405 

keeping  in  repair  the  streets,  avenues,  alleys,  and  sewers  of  the  city.  After 
affirming  that  the  duty  of  keeping  the  streets  in  repair  was  essentially  a 
municipal  duty,  and  that  its  negligent  performance  usually  resulted  iu  mu- 
nicipal liability,  the  supreme  court  of  the  United  States  proceeded  to  con- 
sider whether  or  not  the  fact  that  the  duty  was  by  a  statute  intrusted  to 
a  board  of  public  works  exonerated  the  municipality  from  negligence  in  its 
performance.  "  A  municipal  corporation,"  said  that  court,  "  may  act  through 
its  mayor,  through  its  common  council,  or  its  legislative  department,  by 
whatever  name  called,  its  superintendent  of  streets,  commissioner  of  high- 
ways, or  board  of  public  works,  provided  the  act  is  within  the  province 
committed  to  its  charge.  Nor  can  it,  in  principle,  be  of  the  sliglitest  conse- 
quence by  what  means  these  several  officers  are  placed  iu  their  position,  — 
whether  they  are  elected  by  the  people  of  the  municipality,  or  appointed  by 
the  President  or  a  governor.  The  people  are  the  recognized  source  of  all 
autliority,  state  and  niunicipal,  and  to  this  authority  it  must  come  at  last, 
whether  immediately  or  by  a  circuitous  process." 

Torts,  Oenerally.  —  We  have  heretofore  considered  the  liability  of  munici- 
pal corporations  for  negligence  in  the  performance  or  non-performance  of 
some  corporate  duty.  \Ve  now  wish  to  treat  of  their  lial)ility  for  torta  of  a 
more  active  and  intentional  character.  Sometimes  doubt  has  been  expressed 
concerning  the  liability  of  municipal  corporations  for  torts,  but  if  any  doubt 
upon  this  subject  ever  existed,  its  existence  has  long  since  ceased:  Anthony 
V.  Inhabitants  of  Adams,  1  Met.  284;  Sewall  v.  aS"*.  Paul,  20  Minn.  511; 
Allen  V.  Decatur,  23  111.  332;  76  Am.  Dec.  692;  Wilde  v.  New  Orleans,  12 
La.  Ann.  15;  Hunt  v.  Boonville,  65  Mo.  620;  27  Am,  Rep.  299;  Sheldon  v. 
Kalamazoo,  24  Mich.  383;  Ashley  v.  Port  Huron,  35  Mich.  296;  24  Am.  Rep. 
552;  'Thayer  v.  City  of  Boston,  19  Pick.  511;  31  Am.  Dec.  157.  Whenever 
liability  exists,  it  must  necessarily  be  for  the  act  of  an  officer  or  agent,  for 
except  through  officers  or  agents,  a  municipality  cannot  act  at  all.  In  an 
action  against  a  city  for  a  tort  it  may  defend  with  success,  —  1.  By  showing 
that  the  act  complained  of  was  as  to  it  ultra  vires,  and  therefore,  in  contem- 
plation of  law,  could  not  liave  been  its  act;  and  2.  By  proving  that  the  officer 
or  other  person  by  whom  it  was  done  was  not,  in  doing  it,  the  agent  of  tha 
city. 

Torts,  Ultra  Vires.  —  The  defense  of  ultra  vires  exists  when  the  act  com- 
plained of  as  wrongful  was  wlioUy  beyond  the  powers  of  the  corporation,  or 
iu  other  words,  when  it  was  not  possible  for  the  corporation,  under  any  cir- 
cumstance, to  have  authorized  the  doing  of  the  act.  Thus  if  a  city,  having 
no  power  to  enact,  under  any  circumstance,  a  valid  ordinance  giving  a  firm 
a  monopoly  of  the  slaughtering  of  animals,  attempts  to  enact  such  ordinance, 
and  its  officers  undertake  to  enforce  it,  no  municipal  liability  can  result: 
Oily  of  Chicacfo  v.  Turner,  80  111.  420.  A  law  wiiich  is  void  because  it  con- 
flicts with  the  constitution  of  the  state,  and  a  municipal  ordinance  which  is 
void  because  the  laws  of  the  state  do  not  permit  the  municipal  autliorities 
to  enact  and  enforce  it,  stand  upon  the  same  ground,  and  any  act  done  in 
the  attempted  enforcement  of  either  is  ultra  vires,  and  the  only  liability  re- 
sulting is  against  the  persons  who  did  or  attempted  to  do  it:  Mayor  of  Albany 
v.  Cunliff,  2  N.  Y.  165;  Worlpy  v.  Inhahitants  of  Columbia,  88  Mo.  106;  Brown 
V.  City  of  Cape  Girardeau,  90  Mo.  377;  59  Am.  Rep.  28;  Cuylerv.  Rochester,  12 
Wend.  165;  Lemon  v.  Newton,  134  Mass.  476;  Ti-ammellv.  Rtis-^ellville,  34  Ark. 
105;  36  Am.  Rep.  1.  Hence  where  the  common  council  of  a  city,  by  its  vote, 
directed  that  a  dam  be  erected  on  the  land  of  a  private  citizen  for  the  purpose 
of  flooding  it,  and  thereby  abating  an  alleged  nuisance,  and  such  dam  was 


406  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine, 

accordingly  built,  it  was  held  that  the  municipality  was  not  liable  for  the 
consequent  damages  to  the  owner  of  the  land,  because  "the  acts  done  hav- 
ing been  beyond  the  authority  and  power  of  the  city  to  do,  the  city  cannot 
be  held  answerable  in  damages  for  that  which  was  done  under  the  supposed 
authority  of  illegal  and  void  votes  ":  Cavaitaijh  v.  Boston,  139  Mass.  4i26;  52 
Am.  Rep.  716;  Seek  v.  Deering,  79  Me.  3i3;  1  Am.  St.  Rep.  314.  If  the 
officers  or  employees  of  a  municipality,  whether  pursuant  to  a  vote  of  its 
common  council  or  not,  engage  in  an  act  which  the  latter  had  no  power  to 
authorize,  they  are  not,  while  so  engaged,  the  representatives  of  the  munici- 
pality, and  it  is  therefore  not  liable  for  their  negligence  or  misconduct. 
Tlierefore,  if  the  fire  department  is  directed  to  participate  in  a  celebration 
when  there  is  no  authority  to  so  direct  it,  or  a  vote  to  raise  a  committee  to 
celebrate  a  holiday  is  so  taken  as  to  be  void,  no  municipal  liability  can  result 
from  the  misconduct  or  negligence  of  persons  acting  under  the  void  order  of 
the  city  council:  Smith  v.  City  of  Rochester,  76  N.  Y.  506;  Morrison  v.  City 
of  Laiorence,  98  Mass.  219.  Where  an  act,  because  it  is  ultra  vires,  cannot 
be  authorized  in  advance  of  the  doing  of  it,  it  is  impossible  to  ratify  it,  and 
therefore  the  liability  of  a  city  cannot  be  sustained  for  injuries  growing  out 
of  such  act  by  showing  that  it  was  ratified  subsequently  to  its  commission: 
Ho7-n  V.  Baltimore,  30  Md.  218.  There  are  a  few  cases  apparently  in  conflict 
with  the  principles  we  have  stated.  Thus  municipalities  undertaking,  by  the 
resolutions  of  their  common  councils,  to  authorize  the  placing  and  keeping  of 
obstructions  or  dangerous  objects  in  a  public  street  have  been  held  liable  for 
resulting  damages:  Cohenv.  Mayor  of  New  York,  11 3  N.  Y.  532;  10  Am.  St.  Rep. 
506;  Stanley  v.  Davenport,  54  Iowa,  463;  37  Am.  Rep.  216.  But  these  decisions 
are  defensible  on  the  ground  that  it  was  the  duty  of  the  municipality  to  keep 
the  streets  in  a  safe  condition,  and  it  was  equally  answerable  for  their  con- 
dition after  notice  thereof,  whether  it  attempted  to  license  their  obstruction 
or  not.  A  case  decided  in  Georgia  we  are  unable  to  reconcile  with  the  other 
authorities  upon  this  subject.  It  was  an  action  against  a  city,  the  complaint 
in  which  alleged  that  the  mayor  and  common  council  had  passed  a  resolution 
declaring  that  plaintifiFs  were  itinerant  and  non-resident  speculators  and 
traders  within  the  meaning  of  a  certain  tax  ordinance  of  the  city,  and  had 
directed  the  clerk  of  the  city  council  to  issue  execution  to  collect  taxes 
claimed  to  be  due  from  plaintiffs  as  such  non-residents,  and  that  the  purpose 
of  such  resolution  was  to  protect  merchants  of  the  city  from  competition  in 
business,  and  that  execution  was  accordingly  issued  and  levied  upon  plain- 
tiffs' property.  There  was  no  claim  that  in  passing  the  resolution  the  com- 
mon council  were  acting  within  the  limits  of  any  authority  delegated  to 
them,  and  yet  it  was  held  that  the  complaint  stated  a  cause  of  action.  The 
court,  however,  in  its  opinion,  did  not  consider  any  question  except  that  of 
the  right  of  the  plaintiffs  "to  transact  business  in  Atlanta  without  any  hos- 
tile proceedings  against  them  founded  upon  the  mere  fact  of  noa-residence  ": 
Gould  V.  Atlanta,  60  Ga.  164. 

(Jnlaioful  Acts  Which  are  not  Ultra  Vires.  — If  the  wrongful  act  in  ques. 
tion  is  one  which  the  municipality  had  the  right  to  do  under  some  circum- 
stances or  in  some  manner,  then  it  is  not  ultra  vires,  though  done  in  different 
circumstances  or  in  a  different  manner;  and  if  authorized  by  the  city,  a  recov- 
ery may  be  had  at  the  instance  of  one  injured  thereby,  as  where  a  road  is 
authorized  to  be  constructed  in  a  particular  manner  and  out  of  designated 
materials,  but  it  is  constructed  in  a  different  mode  and  with  other  materials: 
Pekin  V.  Nemell,  26  111.  320;  79  Am.  Dec.  378.  If  a  city  has  invaded  the 
rights  of  private  proprietors  by  a  trespass  upon  their  property  or  by  any 


May,  1892.]     Goddard  v.  Inhabitants  of  Harpswell.      407 

other  actionable  tort,  it  is  not  always,  nor  usually,  a  sufficient  answer  to  say 
that  if  the  act  was  wrongful  and  unlawful,  then  the  city  was  not  authorized 
to  do  it,  and  it  is  not  the  act  of  the  city.  If  such  were  the  case,  municipal 
liability  for  tort  could  not  exist.  If  a  municipality,  acting  by  its  common 
council  or  other  governing  boJy,  determines  to  do  an  act,  and  commits  the 
duty  of  doing  it  to  some  officer  or  agent,  and  the  act  was  one  which  it  had 
power  to  authorize,  he  and  the  niunicipality  occupy  substantially  the  rela- 
tion of  principal  and  agent,  and  hence  it  is  answerable  at  least  for  such  torts 
aa  he  commits  while  acting  in  good  faith,  in  the  exercise  of  tlie  power  confided 
to  him:  HoiUard  v.  St.  Louis,  3(5  Mo.  546.  "  When  officers  of  a  town,  acting 
as  its  agents,  do  a  tortious  act  with  an  honest  view  to  obtain  lor  the  public 
Borne  lawful  benefit  or  advantage,  reason  and  justice  lequire  that  the  town 
in  its  corporate  capacity  should  be  liable  to  make  good  the  damiige  sustained 
by  an  individual  in  consequence  of  the  acts  thus  done.  The  contrary  doc- 
trine would  be  injurious  to  the  person  damaged  and  to  the  agents  employed 
by  the  town.  It  would  also  be  injurious  to  the  town,  by  paralyzing  the 
energies  of  such  agents  or  officers,  as  they  would  be  likely  to  refuse  to  act 
when  prompt  action  is  important":  Hmvkn  v.  Charlemont,  107  Mass.  417. 
Therefore  a  municipality  is  liable  if  it  authorizes  its  selectmen  to  repair  a 
highway,  and  in  so  doing  they  enter  upon  private  property  witiiout  the  con- 
sent of  the  owner,  and  take  away  stone  to  be  used  in  repairing  a  bridge: 
Hawks  V.  Charlemont,  107  Mass.  417;  or  if  a  warden  or  other  officer,  acting 
under  a  vote  of  the  burgesses  or  town  council  requiring  him  to  remove  an 
encroachment  from  a  public  highway,  causes  a  fence,  which  he  in  good  faith 
believed  to  be  on  such  highway,  to  be  removed  therefrom,  when  it  was  not 
thereupon,  nor  was  it  an  encroachment:  Weed  v.  Greenwich,  45  Conn.  170; 
Woodcock  V.  City  of  Calais,  66  Me.  234;  Lee  v.  Sandy  Hill,  40  N.  Y.  442; 
Sheldon  v.  Kalamazoo,  24  Mich.  383.  And  whenever  a  city  directs  a  street 
to  be  opened,  or  other  public  work  to  be  done,  and  sends  a  force  to  do 
it,  and  in  so  doing  enters  upon  private  property,  without  first  acquiring  the 
right  to  do  so  by  proceedings  in  the  exercise  of  the  right  of  eminent  domain, 
or  by  some  other  appropriate  proceeding,  it  is  guilty  of  a  trespass  for  which 
it  must  respond  in  damages:  J/ildrethv.  Lowell,  11  Gray,  349;  Hickerson  v. 
Mexico,  58  Mo.  61;  Soulard  v.  City  of  St.  Lotus,  36  Mo.  546;  Allen  v.  City  of 
Decatur,  23  111.  332;  76  Am.  Dec.  692;  Sewellv.  St.  Paul,  20  Minn.  511. 
The  result  of  the  authorities  upon  this  subject  was  thus  forcibly  stated  by 
Judge  Cooley:  "It  is  very  manifest  from  this  reference  to  authorities  that 
they  recognize  in  municipal  corporations  no  exemption  from  responsibility, 
•where  the  injury  an  individual  has  received  in  a  direct  injury  accomplished 
by  a  cor|)orate  act  which  is  in  the  nature  of  a  trespass  upon  him.  The  right 
of  an  individual  to  the  occupation  and  enjoyment  of  his  premises  is  exclu- 
sive, and  the  public  authorities  have  no  more  liberty  to  trespass  upon  it  than 
has  a  private  individual.  If  the  corporation  send  people  with  picks  and 
spades  to  cut  a  street  through  it  without  first  acquiring  the  right  of  way,  it 
is  liable  for  a  tort;  but  it  is  no  more  liable  under  such  circumstances  than  it 
is  when  it  pours  upon  its  land  a  flood  of  water  by  a  public  sewer  so  con- 
structed that  the  flooding  must  be  a  necessary  result.  The  one  is  no  more 
unjustifi able,  and  no  more  an  actionable  wrong,  than  the  other.  Each  is  a 
trespass,  and  in  each  instance  the  city  exceeds  its  lawful  jurisdiction":  Ash- 
ley V.  Port  Huron,  35  Mich.  296;  24  Am.  Rep.  552;  Phodes  v.  City  of  Cleve- 
land, 10  Ohio,  159;  36  Am.  Dec.  82;  Ooodloer.  City  of  CincinKati,  4  Ohio,  500; 
22  Am.  Dec.  764.  Hence  where  a  city,  authorized  to  change  the  grade  of  a 
street  upon  certain  coutingeacies  only,  and  upon  making  compensation  to 


408  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine, 

any  lot-owner  damaged  thereby,  proceeds  to  chancre  the  grade,  and  to  grade 
the  street  accordingly,  in  the  absence  of  such  a  contingency,  and  without  com- 
plying with  the  requirements  of  the  law  or  compensating  the  owner,  he  may 
recover  damages  from  the  city  by  an  appropriate  action:  Trustees  of  Diocese 
of  Iowa  V.  City  of  Anamosa,  76  Iowa,  538.  A  city,  acting  by  its  agents,  pur- 
chased certain  broken  rock,  and  entered  upon  the  land  where  it  was  lying 
and  removed  it.  The  vendor  of  the  city,  however,  had  no  title  to  the  prop- 
erty, and  hence  an  action  was  brought  against  the  city  by  the  true  owner  of 
the  rock.  It  was  argued  for  the  defendant  "  that  as  the  city  had  no  au- 
thority under  its  charter  to  commit  a  trespass,  or  to  order  the  commission  of 
a  trespass,  an  order  to  its  servants  to  do  an  act  which,  when  performed,  con- 
stituted a  trespass,  would  not  make  the  city  liable,  as  both  the  order  and 
the  act  would  be  ultra  vires."  To  this  the  court  replied:  "This  argument 
fails  to  distinguish  between  the  doing  of  an  act  in  its  nature  unlawful  or 
prohibited,  and  the  doing  of  an  act  in  its  nature  lawful  and  authori7,ed  at  an 
unauthorized  place  or  in  an  unlawful  manner.  On  the  defendant's  theory, 
municipal  corporations  could  never  be  held  liable  for  negligent  or  tortious 
acta  of  their  agents  and  servants.  As  they  have  no  authority  to  do  wrong, 
and  cannot  authorize  their  officers  or  servants  to  do  wrong,  therefore 
it  is  argued  they  can  never  be  held  liable  for  injuries  inflicted  by  them. 
This  is  an  unwholesome  doctrine,  and  is  not  supported  either  by  reason  or 
authority ":  Hunt  v.  Boonville,  65  Mo.  620;  27  Am.  Rep.  299.  Another  . 
case  in  the  same  state  is  somewhat  more  extreme  in  character.  A  city  being 
authorized  to  purchase  a  pest-house,  its  phy.sician  and  police  took  possession 
of  plaintifif's  premises  without  authority,  and  used  them  for  the  purposes  of 
the  pest-house  for  the  period  of  two  months,  after  which  an  action  was 
brought  for  the  trespass  involved  in  this  seizure  and  use  of  the  property. 
The  defendant  contended  that  as  it  was  not  authorized  to  acquire  property 
for  use  as  a  pest-house  except  by  purchase,  its  occupancy  of  plaintiff's  prem- 
ises was  ultra  vires.  The  court  replied  that  as  the  property  was  taken  for  a 
purpose  sanctioned  by  the  charter,  and  as  everything  was  done  in  accord- 
ance with  the  charter,  except  the  acquisition  of  the  title,  the  act  was  not 
ultra  vires  in  such  a  sense  as  excluded  municipal  liability:  Dooley  v.  City  of 
Kansas,  82  Mo.  444;  52  Am.  Rep.  380;  Sheldon  v.  Kalamazoo,  24  Mich.  383. 
Wrongful  Acts  not  Authorized  by  the  Municipality. — In  all  the  cases  cited 
in  the  preceding  paragraph,  the  wrongful  acts  were  committed  under  such 
circumstances  as  showed  them  to  have  been  autliorized  or  ratified  by  the  city 
council,  and  they  were  therefore,  to  all  intents  and  purposes,  the  acts  of  the 
city,  done  in  good  faith  under  a  claim  of  right.  We  are  now  to  consider  that 
class  of  cases  in  which  it  appears  that  the  wrongful  act  was  committed  by  an 
officer  of  the  city  acting  in  good  faith,  but  nevertheless  not  authorized  by 
law  to  do  what  he  did,  nor  authorized  by  the  city  itself,  unless  the  fact  that 
he  was  its  officer,  acting  in  good  faith,  may  be  treated  as  equivalent  to  such 
authorization.  If  the  common  council  deputes  the  performance  of  certain 
work  to  specified  persons,  whether  they  happen  to  be  officers  of  the  corpora- 
tion or  not,  and  those  persons  in  doing  such  work,  but  acting  in  good  faith, 
commit  a  trespass  upon  the  lands  of  a  private  proprietor,  they  may  still  be 
regarded  as  the  agents  of  the  city,  and  it  is  responsible  for  the  trespass, 
though  it  did  not  authorize  the  particular  unlawful  act  in  controversy:  Plat- 
ter V.  Seymour,  86  Ind.  323;  Gonniffv.  San  Francisco,  67  Cal.  45;  Waldron  v. 
Haverhill,  143  Mass.  582.  When  an  officer  of  a  municipality  has  no  other 
authority  than  that  intrusted  to  him  by  law,  and  he  acts  beyond  that  author- 
ity, and  commita  a  tort,  whereby  a  citizen  is  injured  either  in  person  or 


May,  1892.]     Goddard  v.  Inhabitants  of  Harpswell.      409 

property,  the  tort  is  the  act  of  the  officer  only,  and  ordinarily  no  recovery  of 
damages  can  be  had,  except  against  him:  Bonrd  of  Trustees  v.  Schroeder,  58 
111.  353;  Cooney  v.  Town  of  Hartland,  95  111.  516;  Horn  v.  Mayor  of  BaliU 
more,  30  Md.  218;  Shei-man  v.  City  of  Grenada,  51  Miss.  180;  Danovan  v. 
Jones,  36  N.  H.  248;  New  York  etc.  Co.  v.  City  of  Brooklyn,  71  N.  Y.  580; 
Donnelly  v.  Tripp,  12  R.  I.  97;  Pierce  v.  Tripp,  13  R.  I.  181;  Rowland  v. 
City  of  Gallatin,  75  Mo.  134;  42  Am.  Rep.  395;  Walling  v.  S/ireveport,  5  La. 
Ann.  660;  52  Am.  Dec.  608.  The  rule  upon  this  subject  was  thus  formu- 
lated by  Chief  Justice  Shaw  in  a  leading  case:  "As  a  general  rule,  the  cor- 
poration is  not  responsible  for  the  unauthorized  and  unlawful  acts  of  its 
oflScers,  though  done  colore  officii;  it  must  further  appear  that  they  were  ex- 
pressly authorized  to  do  the  acts  by  the  city  government,  or  that  they  were 
done  bona  fide  in  pursuance  of  a  general  authority  to  act  for  the  city  on  the 
subject  to  which  they  relate,  or  that,  in  either  case,  the  act  was  adopted  and 
ratitied  by  the  corporation":  Thayer  v.  Boston,  19  Pick.  511;  31  Am.  Dec. 
157;  Mitchell  v.  Rockland,  41  Me.  363;  63  Am.  Dec.  252;  Ca^pary  v.  Port- 
land, 19  Or.  496;  20  Am.  St.  Rep.  842.  Therefore,  if  the  mayor  of  a  city, 
having  no  power  to  contract  for  the  removal  of  dead  animals,  enters  into  a 
contract  for  the  removal  of  such  animals,  the  municipality  cannot  be  lield 
liable  for  damages  arising  from  the  depositing  by  the  contractor  of  carcasses 
upon  private  property:  llilsdorf  \.  City  of  St.  Louis,  45  Mo.  94;  100  Am.  Dec. 
352. 

In  attempting  to  specify  the  cases  in  which  municipalities  are  not  answer- 
able for  the  torts  of  their  officers,  Judge  Shaw,  in  the  extract  quoted  in  the 
last  paragraph,  mentioned  as  among  the  contingencies  in  which  cities  are  lia- 
ble, those  in  which  torts  are  committed  by  their  officers  or  agents,  acting 
bona  fide,  "in  pursuance  of  a  general  authority  to  act  for  the  city  on  the  sub- 
ject  to  which  they  relate."  This  limitation,  while  perhaps  not  inaccurately 
expressed,  is,  we  think,  mislea<ling,  because  it  is  likely  to  create  the  impres- 
sion that  every  officer,  as  to  matters  falling  within  his  department,  acts  in 
pursuance  of  a  general  authority  to  act  for  the  city;  or  in  other  words,  that 
if  a  street  superintendent  does  anything  in  relation  to  public  streets,  or  a 
tax  collector  in  relation  to  the  collection  of  taxes,  the  city  must  be  answer- 
able therefor,  because  of  tiie  general  authority  over  the  streets  in  the  one' 
case  and  the  collection  of  taxes  in  the  other.  Such  is  not  the  law,  nor  is  it 
within  the  meaning  of  the  learned  jurist  we  have  quoted.  For  unless  by 
law  or  the  action  of  the  eity  discretion  is  vested  in  the  officer  or  agent  to 
determine  how  he  shall  act,  his  act,  though  apparently  falling  within  his 
department,  is  but  his  personal  act,  for  whiuh  he  alone  is  answerable  if  it  is 
contrary  to  law.  We  have  already  sh<iwn  that  officers  of  the  street  depart- 
ment have  no  authority  to  go  upon  private  property  and  take  material  there- 
from, though  for  the  purpose  of  using  it  upon  the  public  streets,  and  that 
therefore  such  officers  alone  are  liable:  Rowland  v.  Gallatin,  75  Mo.  134;  42 
Am.  Rep.  395.  But  if  the  city,  by  a  resolution  of  its  common  council,  had 
authorized  them  to  do  what  tliey  did,  the  result  would  be  otherwise:  Buffalo  etc.- 
T.  Co.  V.  Buffalo,  53  N.  Y.  639.  The  clerk  of  a  common  council  may  by  law 
be  vested  with  authority  to  issue  warrants  to  persons  for  such  sums  as  may 
be  allowed  by  such  council  or  by  law,  but  this  authority  can  in  no  way  in- 
culpate the  city  in  or  make  it  liable  for  his  wrongful  act  in  issuing  warrants 
for  other  sums,  or  in  altering  them  after  they  are  issued:  Cliandlerv.  Bay  St. 
Louis,  57  Miss.  327.  If  an  officer  or  employee  is  chargej.1  by  law  or  the  mu- 
nicipality with  tlie  duty  of  serving  writs  or  warrants  under  which,  in  proper 
cases,  he  is  entitled  to  seize  property  or  arrest  persons,  his  seizure  or  arrest, 


410  GoDDARD  V.  Inhabitants  of  Harpswell.     [Maine, 

without  authority  and  .without  the  previous  direction  or  subsequent  ratifica- 
tion of  the  city,  does  not  create  any  liability  against  it:  Fox  v.  Northern  Lib- 
erties, 3  Watts  &  S.   103;  Everson  v.   Syracuse,   100  N,  Y.  577;  Corsicana  v. 
White,  57  Tex.  382;  Thomas  v.  Grafton,  34  W.  Va.  282;  26  Am.  St.  Rep.  924. 
So  for  the  acts  of  an  assessor  or  collector  of  taxes,  as  where  the  latter  levies 
upon  property  not  subject  to  levy  under  his  warrant,  the  municipality  is  not 
answerable,  unless  it  directed  him  to  do  what  he  did:  Lorillard  v.  Monroe,  11 
N.  Y.  392;  62  Am.  Dec.  120;  Wallace  v.  Alennsha,  48  Wis.  79;  33  Am.  Rep.  804. 
If,  however,  the  common  council  of  the  city  undertakes  to  make  an  assessment 
for  damages  and  benefits  in  a  case  where  they  are  authorized  to  do  so,  but  the 
assessment  is  void  for  some  reason,  and  the  collector  in  what  he  does  is,  in 
effect,  acting  by  the  authority  of  the  city,  then  it  is  answerable  for  his  acts: 
Horton  V.  NeivelJ,  R.  I.  Jan.  2,  1892;  17  R.  I.;  Durkee  v,  Kenosha,  59  Wis. 
123;  48  Am.  Rep.  480;  HoweU  v.  Buffalo,  15  N".  Y.  512;  Bank  of  Commonwealth 
V.  New  York,  43  N.  Y.  184.     If,  on  the  other  hand,  certain  officers  are  by  law 
authorized  or  required  to  abate  nuisances,  and  they  proceed  in  good  faith  to 
abate  an  alleged  nuisance,  any  person  injured  by  their  acts  may  recover  of  the 
municipality,  if  he  can  show  that  no  nuisance  in  fact  existed,  because  the  offi- 
cers in  what  they  did  were  acting  under  a  general  authority  to  act  for  the  city: 
Americus  v.  Mitchell,  79  Ga.  807.     So  where  the  officers  of  the  executive  de- 
partment  of  a  city  prevented  the  laying  of  a  railway  track  under  a  claim 
that  the  time  allowed  by  the  ordinance  within  which  to  lay  it  had  expired, 
and  it  was  claimed  that  the  city  was  not  answerable  for  their  acts  because 
they  were  not  authorized,  the  court  said:  "  We  recognize  the  doctrine  to  be- 
that  the  unauthorized  acts  of  municipal  officers  are  regarded  as  acts  of  the 
municipal  corporation,  provided  the  acts  are  performed  by  that  branch  of 
the  municipal  government  which  is  invested  with  jurisdiction  to  act  for  the 
corporation  upon  the  subject  to  which  the  particular  acts  relate.     In  the 
present  case,  the  mayor,  the  superintendent  of  police,  and  the  superintendent 
of  streets  were  engaged  in  doing  the  acts  which  prevented  the  railroad  com- 
pany from  constructing  its  road.     The  mayor  is  the  general  executive  officer 
of  the  city.     He  and  others  under  his  control  are  the  executive  department 
of  the  city,  and  we  cannot  doubt  that  the  city  was  by  law  liable  for  those 
wrongful  acts  done  by  the  officers  of  the  executive  department  within  the 
sphere  of  their  authority,  though  not  authorized  by  the  common  council  to 
do  them,  as  by  its  (the  city's)  own  acts":  Chicago  v.  Chicago  etc.  R.  R.  Co., 
105  111.  73.     This  language  was  probably  a  correct  statement  of  the  law  ap- 
plicable to  the  particular  case  to  which  the  court  applied  it,  but  the  inference 
which  might  be  drawn  from  it  —  that  the  municipality  is,  as  a  general  rule, 
liable  for  the  wrongful  acts  or  omissions  of  its  officers  — is  not  at  all  true.     We 
have  already  called  attention  to  the  fact  that  a  municipality  is  not  answerable 
for  the  performance  of  duties  confided  to  it  or  its  officers  of  a  governmental, 
discretionary  character,  for  the  performance  of  which  neither  the  state  nor 
its  officers  would  have  been  answerable  had  the  duty  remained  with  them, 
and  its  performance  not  been  delegated  to  the  municipality  or  its  officers! 
Besides  these  duties  are  many  others  devolved  upon  the  officers  of  a  munici- 
pality  for  the  performance  of  which  it  is  not  answerable.     Thus  while  the 
law  may  require  a  city  treasurer  to  keep  certain  moneys,  or  a  city  clerk  or 
auditor  to  keep  certain  accounts  and  records,  or  a  city  surveyor  to  mak« 
surveys,  the  city  is  not  answerable  for  the  default  of  either  in  performing 
his  duties.     The  reason  is,  that  he  is  not  an  agent  of  the  city,  nor  carrying 
out  its  orders,  nor  doing  anything  which  the  law  requires  it  to  do.     If  a  duty 
ia  one  which  the  law  requires  the  city  to  perform,  and  it  is  not  a  public 


May,  1892.]     Goddakd  i'.  Inhabitants  of  HARPSwiiLL.      411 

governmental  duty,  then  the  city  is  answerable  for  the  manner  of  its  per- 
formance, and  for  such  injuries  as  result  from  its  omission  or  its  negligent 
performance.  If,  on  the  other  hand,  the  law  requires  some  officer  to  per- 
from  a  duty,  then  its  omission  or  negligent  performance  is  a  matter  for 
which  he  alone  is  answerable:  Maxmilian  v.  Mayor,  62  N.  Y.  160;  20  Am. 
Rep.  468.  "The  officers  of  a  city  are  quasi  civil  officers  of  the  government, 
although  appointed  by  the  corporation.  They  are  personally  liable  for  their 
malfeasance  or  non-feasance  in  office,  but  for  neither  is  the  corporation  re- 
sponsilile.  Omissions  of  a  duty  imposed  upon  them  by  law,  productive  of 
prejudice  to  an  individual,  is  not  a  corporate  injury.  The  duty  of  the  officers 
of  the  city  is  prescribed  by  the  statute,  from  which,  also,  they  derive  their 
power.  The  corporation  appoints  them  to  office,  but  does  not  in  that  act 
sanction  their  official  delinquencies  nor  render  itself  liable  for  their  official 
misconduct ":  Prather  v.  City  of  Lexington,  13  B.  Mon.  559;  56  Am.  Dec. 
585.  Even  with  respect  to  matters  for  which  the  corporation  is  liable  for 
the  negligence  of  its  officers,  such  liability  cannot  be  enhanced  by  showing 
that  they  were  actuated  by  malice:  City  Council  v.  Gilmer,  33  Ala.  116;  70 
Am.  Dec.  562.  Whenever  the  duty  of  keeping  in  repair  the  highways  is  not 
regarded  as  a  municipal  duty  which  the  city  or  town  must,  at  its  peril,  per- 
form, it  is  not  liable  for  the  neglect  of  its  highway  surveyors  or  overseers  of 
highways:  Pratt  v.  Weymouth,  147  Mass.  245;  9  Am.  St.  Rep.  691;  Goddard 
v,  Ilarpswell,  84  Me.  499;  ante,  p.  373  (the  principal  case);  People  v.  Board 
etc.  o/Esoptis,  74  N.  Y.  310. 

Contractors,  Liahility  for.  —  When  a  municipality  contracts  for  the  doing 
of  a  work,  and  injury  results  to  private  persons  from  the  wrongful  or  negli- 
gent act  or  acts  of  the  contractor  or  his  employees,  and  the  city  is  sought  to 
be  made  liable  for  such  injury,  the  inquiry  should  be,  —  1.  Was  the  work  one 
which  it  was  the  duty  of  the  city  to  do,  and  for  negligent  acts  in  the  doing 
of  which  it  must  necessarily  be  answeralde  ?  and  2.  If  the  work  was  not  of 
this  class,  were  the  circumstances  under  which  it  was  done  and  the  control 
of  the  city  over  it  by  the  terms  of  the  contract  or  by  law  such  that  whatever 
was  done  must  be  regarded  as  its  act  accomplished  by  its  contractor  acting 
as  its  agent?  As  we  have  already  shown,  certain  duties  are  by  many  of  the 
courts  regarded  as  private  municipal  duties,  the  negligent  performance  or 
omission  of  which  is  at  the  peril  of  the  municipality.  The  principal  of  these 
is  keeping  in  safe  condition  and  repair  the  public  streets.  It  seems  obvious 
to  us  that  a  municipality  cannot  escape  liabdity  with  respect  to  these  duties 
by  contracting  for  their  performance  by  some  one  who  is  not  an  officer  of 
the  city.  It  cannot  contract  away  its  liability,  and  thus  delegate  its  respon- 
sibility to  another,  so  that  a  person  injured  by  his  putting  or  leaving  a  street 
in  a  dangerous  condition  must  look  to  him  alone  for  recompense.  Tiius 
where  a  city  owing  to  the  public  the  duty  of  keeping  its  streets  in  a  safe 
condition  for  travel  contracted  for  the  construction  of  a  sewer  in  one  of  such 
streets,  and  the  contractor,  in  making  an  excavation  for  the  sewer,  permitted 
it  to  remain  open  and  unguarded  at  night  without  any  light  or  other  signal 
of  danger,  and  a  person  using  due  care  fell  into  the  excavation  and  was  in- 
jured, and  a  city  denies  its  lialtility  on  the  ground  that  the  work  was  exe- 
cuted under  a  contract  which  contained  no  stipulation  that  the  contractor 
should  take  any  precautions  to  prevent  injury  to  travelers,  but  the  court  de- 
cided that  "although  the  work  may  be  let  out  by  contract,  the  corporation 
still  remains  charged  with  the  care  and  control  of  the  streets  in  which  the 
improvement  is  carried  on,"  and  therefore  that  the  city  was  liable.  Somo 
stress  was,  however,  in  the  opinion  of  the  court,  placed  upon  the  fact  that 


412  GoDDARD  V.  Inhabitants  of  Hakpswell.     [Maine, 

the  work  was  such  that  ita  performance  necessarily  left  the  street  ansafe  for 
travelers  at  night:  Storrs  v.  City  of  Utlca,  17  N.  Y.  104;  72  Am.  Dec.  4.37. 
See  also  Water  Company  v.  Ware,  16  Wall.  566;  Bobbins  v.  Chicago,  4  WalL 
657.  Nor  is  it  material  iu  such  case  tliat  the  municipality  provided  in  its 
contract  that  the  contractor  should  take  such  precautions  as  would  have 
prevented  injury  to  persons  using  the  street  had  he  complied  with  his  agree- 
ment: McAllister  v.  City  of  Albany,  18  Or.  426.  The  decided  weight  of  au- 
thority at  the  present  time  is  to  the  effect  that  where  it  is  the  duty  of  the 
municipality  to  keep  its  streets  in  safe  condition  for  travel,  it  must  respond 
in  damages  to  any  person  injured  by  the  streets  being  left  in  an  unsafe  or 
dangerous  condition,  though  they  were  so  left  through  the  act  or  neglect  of 
an  independent  contractor,  or  of  his  servants  or  agents  over  whom  it  had  no 
direct  control:  Mayor  etc.  of  Baltimore  v.  O'Donnell,  53  Md.  110;  36  Am.  Rep. 
395;  Mayor  of  Birminyham  v.  McCary,  84  Ala.  469;  Nashville  v.  Brown,  9 
Heisk,  1;  24  Am.  Rep.  289;  Logansport  v.  Dick,  70  Ind.  65;  36  Am.  Rep.  166; 
St.  Paul  V.  Sellz,  3  Minn.  297;  74  Am.  Dec.  753;  Circleville  v.  Neuding,  41  Ohio 
St.  405;  Wilson  v.  Wheeling,  19  \V.  Va.  323;  42  Am.  Rep.  780;  Dillon  on  Mu- 
nicipal  Corporations,  4th  ed.,  sec.  1027.  In  a  few  of  the  states  the  rule  as  we 
have  stated  it  is  not  recognized,  and  the  contractor  alone  is  answerable  for 
his  negligence  in  leaving  the  streets  in  a  dangerous  condition,  where  the  city 
reserves  no  control  over  him  and  his  work,  other  than  the  right  to  have  done 
it  according  to  the  plans  and  specifications:  Barry  y.  St.  Louis,  17  Mo.  121; 
Painter  v.  Pit(.-<hurgh,  46  Pa.  St.  213;  City  of  Erie  v.  Caulkins,  85  Pa.  St.  247; 
27  Am.  Rep.  642.  If  an  injury  occurred,  not  from  the  condition  in  which 
the  street  is  left  by  the  contractor,  but  by  his  doing,  while  engaged  in  the 
performance  of  his  contract,  some  act  in  a  negligent  manner,  then  the  au- 
thorities are  more  equally  divided  concerning  the  liability  of  the  city.  Thus 
if  he  blasts  rocks  without  giving  warning  of  danger,  and  a  person  using  a 
street  in  the  vicinity  is  struck  by  a  fragment  of  such  rock,  some  of  the  courts 
affirm  (Logansport  v.  Dick,  70  Ind.  65;  36  Am.  Rep.  166)  and  others  deny 
(Blumb  V.  Kansas,  84  Mo.  112;  54  Am.  Rep.  87;  Herrington  v.  Lansing- 
burgh,  110  N.  Y.  145;  6  Am.  St.  Rep,  348)  the  liability  of  the  city,  while 
others  make  the  liability  depend  on  whether  or  not  the  work  for  which  it 
contracted  was  such  that  in  the  doing  of  it  blasting  was  necessary,  holding 
that  liability  exists  if  the  blasting  was  a  necessary  consequence  of  the  doing 
of  the  work  according  to  the  contract:  Joliet  v.  Harwood,  86  III.  110;  29 
Am.  Rep.  17.  Where  the  injury  for  which  recovery  is  sought  resulted  from 
the  act  or  neglect  of  a  contractor,  and  does  not  consist  in  the  leaving  of  the 
street  or  other  public  place  in  an  unsafe  or  dangerous  condition,  nor  in  the 
doing  of  work  which,  if  done  according  to  the  contract,  is  necessarily  and 
intrinsically  dangerous,  than  the  liability  of  the  city  exists  only  when  it 
occupies  with  the  contractor  the  relation  of  principal  and  agent.  Thus  if  it 
retains  full  control  over  the  mode  and  manner  of  performing  the  work,  or  if 
the  wrong  or  injury  was  a  necessary  consequence  of  the  work,  or  occurred  in 
doing  something  which  the  contract  gave  the  contractor  a  right  to  do,  then 
the  municipality  must  be  regarded  as  itself  guilty,  and  held  answerable  ac- 
coidingly:  Harper  v.  City  of  Milwaukee,  30  Wis,  375;  Cincinnati  v.  Stone,  5 
Ohio  St.  38;  Nevins  v.  Peoria,  41  111.  502;  89  Am.  Dec.  392.  Hence  if  a  con- 
tract provides  that  &s  part  of  the  consideration  for  doing  the  work,  the  con- 
tractor may  receive  and  use  all  stone  in  a  street,  and  he  accordingly  takes 
and  uses  such  stone,  when  it  belonged  to  the  owner  of  the  fee  of  the  street, 
the  latter  may  recover  of  the  city  therefor:  Bich  v.  Minneapolis,  37  Minn. 
423;  5  Am.  St.  Rep.  861.     If  the  work  which  the  municipality  employs  the 


Aug.  1892.]  Grotton  v.  Glidden.  413 

contractor  to  do  is  "intrinsically  dangerous,  however  skillfully  performed, 
then  a  municipality,  like  any  other  employer,  is  responsible  for  damages  in- 
flicted in  the  doing  of  the  work:  Blake  v.  Ferris,  5  N.  Y.  48;  55  Am.  Dec. 
304;  Erie  v.  Calkiiis,  85  Pa.  St.  187;  27  Am.  Rep,  642;  Dillon  on  Municipal 
Corporations,  sees.  1029,  1030.  "But  employers  not  personally  giving  direc- 
tions respecting  the  manner  of  the  work,  but  contracting  with  a  third  person 
to  do  it,  are  not  liable  for  a  wrongful  or  negligent  act  in  the  performance  of 
the  contract,  if  what  was  agreed  to  be  done  was  lawful,  and  does  not  consti- 
tute a  nuisance,  or  is  not  intrinsically  dangerous  ":  Dillon  on  Municipal  Cor- 
porations, sec.  1029;  HerringUn  v.  Village  qf  Lanaingburghf  110  N.  Y.  145; 
«  Am.  St.  Rep.  348. 


Grotton  v.  Gliddbij. 

[84  Maine,  689.] 
FiOHTiNO,  LiABTLiTT  FOB  INJURIES  INFLICTED  IN. — If  two  persons  Volun- 
tarily engage  in  a  fight,  either  may  maintain  an  action  against  the  other 
to  recover  damages  for  injuries  received.     The  fact  that  the  fight  was 
voluntary  ia  admissible  only  in  mitigation  of  damages. 

H.  Bliss,  Jr.y  and  W.  A.  Fogler^  for  the  plainti£^ 
L.  M.  Staples,  for  the  defendant. 

Walton,  J.  This  is  an  action  to  recover  damages  for  an 
assault  and  battery.  The  plaintiflF  has  obtained  a  verdict  for 
fifty  dollars,  and  the  case  is  before  the  law  court  on  motion 
and  exceptions  by  the  defendant. 

The  evidence  satisfies  us  that  the  plaintiflF's  injuries  were 
received  while  he  and  the  defendant  were  engaged  in  a  volun- 
tary fight.  The  defendant  contends  that  he  acted  only  in 
self-defense.  But  the  evidence  satisfies  us  that  the  fight  was 
voluntary  on  the  part  of  both  parties.  This  brings  us  to  the 
question  whether,  if  two  persons  engage  voluntarily  in  a  fight, 
either  can  maintain  an  action  against  the  other  to  recover 
damages  for  the  injuries  he  may  receive.  We  think  he  can. 
It  seems  to  be  settled  law  that  each  may  maintain  an  action 
against  the  other.  It  is  familiar  law  that  each  may  be  pun- 
ished criminally.  And  it  seems  to  be  equally  well  settled 
that,  by  the  rules  of  the  common  law,  each  may  have  an  ac- 
tion against  the  other  and  recover  full  damages  for  all  the 
injuries  he  received.  The  fact  that  the  fight  was  voluntary 
is  admissible  in  evidence,  as  are  many  other  facts,  to  keep 
down  the  amount  of  the  punitive  damages,  but  not  to  reduce 
the  actual  damages. 

la  Boulter  v.  Clark^  cited  in  Bull.  N.  P.  16,  the  court  held 


i 


AMERICAN  STATE  EEPOIITS. 

\'m(,,   XXXT,    Paces  r;(.;o-(i',)l , 
IN   RE  HESS  WILE. 

Undue  influence. 

Packs  ■J'42-To'(. 
ALTOONA  SEC.   NAT.    HK.  7:  DUNN. 

I  151     I'ENNSVI.VVMA,    •»-<.>S.  1 

Accommodation  Notes. 


March,  1892.]  In  re  Hess's  Will.  665 

a  fraudulent  disposition  of  property,  must  show  that  he  was  a  creditor  at  the 
time  that  the  act  was  done,  and  that  it  was  in  fraud  of  his  rights:  Stone  v. 
Myers,  9  Minn.  303;  86  Am.  Dec.  104,  and  note;  Reid  v.  Gray,  37  Pa.  St. 
508;  78  Am.  Dec.  444.  A  conveyance  is  not  void  as  against  subsequent 
creditors  unless  fraudulent  in  fact,  —  that  is,  made  with  a  view  to  future 
debts:  Horny.  Volcano  Water  Co.,  13  Cal.  62;  73  Am.  Dec.  569,  and  note; 
Inhabitants  of  Pelham  v.  Aldrich,  8  Gray,  515;  69  Am.  Dec.  266,  and  note; 
Bullitt  V.  Taylor,  34  Miss.  708;  69  Am.  Dec.  412,  and  note;  Nicholas  v. 
Ward,  1  Head,  323;  73  Am.  Dec.  177;  Coohv.  Johnson,  12  N.  J.  Eq.  51;  72 
Am.  Dec.  381,  and  note;  Bewick  v.  Muir,  83  Cal.  368.  See  also  Rollins  v. 
Shaver  Wagon  etc.  Co.,  80  Iowa,  380;  20  Am.  St.  Rep.  427. 


In  rb  Hess's  Will. 

[48  Minnesota,  504.] 

Wills  —  Undue  Influence.  —  Circumstances  Relied  upon  to  Prove  Un- 
due Influence  must  be  such  as,  taken  together,  point  unmistakably 
to  the  fact  that  the  mind  of  the  testator  was  subjected  to  that  of  some 
other  person,  so  that  his  will  is  that  of  the  latter,  and  not  of  the  former. 

Wills.  —  Burden  of  Proving  Fraud  or  Undue  Influence  rests  upon  the 
contestants  of  the  will. 

Wills  — Undue  Influence. — While  evidence  of  declarations  of  a  testa- 
tor, made  subsequent  to  the  execution  of  his  will,  may  be  received  for 
the  purpose  of  showing  the  extent  and  effect  of  the  undue  influence 
claimed  to  have  been  exercised  over  him,  yet  if  the  evidence,  indepen- 
dent and  exclusive  of  his  declarations,  does  not  satisfy  the  jury  that  un- 
due influence  was  used  in  procuring  the  will,  they  must  answer  the 
question  of  undue  influence  in  the  negative.  The  evidence  of  undue  in- 
fluence must  be  other  than  that  which  proceeds  from  the  testator's  own 
mouth  after  the  will  was  made. 

Wills.  —  Undue  Influence  is  not  Established  by  the  fact  that  there 
were  motive  and  opportunity.  It  must  further  appear  that  the  influ- 
ence was  exercised,  and  that  its  efl^ect  was  to  destroy  the  free  agency  of 
the  testator,  and  to  control  the  disposition  of  his  property  under  the 
will. 

Wills  —  Undue  Influence. — The  Influences  Resulting  in  Favor  of 
Persons  Who  are  Nearest  the  testator  in  respect  and  afi'ection,  or  by 
reason  of  intimate  social  or  domestic  relations,  cannot  be  regarded  as 
undue. 

Wills.  — Undue  Influence  cannot  be  Presumed  from  the  mere  fact  that 
the  provisions  of  the  will  are  much  more  favorable  to  some  of  the  bene- 
ficiaries than  to  others. 

Lloyd  Barber,  for  the  proponents. 

Keyes  and  Brown,  for  the  contestants. 

Vanderburgh,  J.  Timothy  Hess,  late  of  Winona  County, 
died  testate,  in  December,  1889,  leaving  him  survivinp^  five 
children,  James  Hess,  Mrs.  Ella  Dearborn,  Mrs.  Mary  Foster, 


6ti6  In  rk  Hess's  Will.  [Miim. 

Mrs.  Emma  Ryan,  and  Cornelius  Hess.  He  was  upwards  of 
Beventy  years  old.  His  will  was  executed  September  24, 1888. 
In  this  will,  James  Hess  and  Mrs.  Ella  Dearborn  were  named 
executors,  and  legacies  of  fifty  dollars  each,  only,  were  left  to 
Mrs.  Foster,  Mrs.  Ryan,  and  Cornelius  Hess,  a  legacy  of  five 
hundred  dollars  to  George  Ford,  a  son  of  Mrs.  Dearborn,  and 
all  the  rest  and  residue  of  the  estate  of  the  deceased  was  given 
and  devised  to  the  executors,  James  Hess  and  Mrs.  Dearborn, 
share  and  share  alike.  The  estimated  value  of  the  estate  was 
about  five  thousand  dollars.  The  validity  of  this  will  is  con- 
tested by  Mrs.  Foster  and  Mrs.  Ryan  and  Cornelius  Hess, 
who  alleged  that  the* same  was  procured  to  be  executed 
through  the  fraud  of  James  Hess  and  Mrs.  Dearborn,  and 
constraint  and  undue  influence  by  them  executed  and  exer- 
cised over  the  mind  of  the  testator  at  the  time  of  the  execu- 
tion thereof.  On  appeal  from  the  order  and  judgment  of  the 
probate  court,  the  issue  of  fraud  and  undue  influence  was 
tried  by  jury  in  the  district  court  of  Winona  County,  and  a 
verdict  thereon  rendered  in  favor  of  the  contestants. 

One  of  the  principal  assignments  of  error  is,  that  the  find- 
ing and  verdict  of  the  jury  are  not  justified  by  the  evidence. 
It  is  contended  by  the  proponents  that  there  was  no  evidence 
of  fraud  or  undue  influence  in  the  case  warranting  the  sub- 
mission of  the  question  to  the  jury.  It  is  not  necessary,  in 
considering  this  assignment  of  error,  to  review  the  evidence 
in  extenso,  or  to  make  special  reference  to  the  testimony  of  the 
several  witnesses.  It  will  be  sufficient  to  refer  to  such  parts 
of  it  as  may  be  necessary  to  show  the  basis  of  our  conclusions 
upon  this  question.  What  is  and  is  not  undue  influence  has 
been  considered  and  declared  in  our  former  decisions,  and  we 
need  do  little  more  than  refer  to  them  here:  In  re  Stover's  Will, 
28  Minn.  11;  Nelson's  Will,  39  Minn.  205-208;  Mitchell  v.  Mitch- 
ell, 43  Minn.  73.  It  is  said,  in  In  re  Stover's  Will,  28  Minn.  11, 
"  From  the  nature  of  the  case,  the  evidence  of  undue  influence 
will  be  mainly  circumstantial.  It  is  not  usually  exercised 
openly,  in  the  presence  of  others,  so  that  it  can  be  directly 
proved.  But  the  circumstances  relied  on  to  show  it  must  be 
Buch  as,  taken  together,  point  unmistakably  to  the  fact  that 
the  mind  of  the  testator  was  subjected  to  that  of  some  other 
person,  so  that  the  will  is  that  of  the  latter,  and  not  of  the 
former."  But  the  burden  of  proof  rests  upon  the  contestants 
to  establish  the  existence  of  fraud  or  undue  influence;  and 


March,  1892.]  In  re  Hess's  Will.  667 

that,  we  are  obliged  to  hold,  after  a  very  careful  and  thorough 
consideration  of  the  evidence  in  this  case,  they  failed  to  do. 

Evidence  was  received,  on  the  trial,  of  the  declarations  of  the 
testator  subsequent  to  the  execution  of  the  will,  for  the  pur- 
pose of  showing  the  extent  and  effect  of  the  undue  influence 
claimed  to  have  been  exercised  over  him  when  the  will  was 
made;  but  the  court  correctly  charged  the  jury  that  if  the 
evidence,  independent  and  exclusive  of  the  testator's  declara- 
tions, did  not  satisfy  them  that  undue  influence  was  used  in 
procuring  the  making  of  the  will,theymustanswer  the  question 
of  undue  influence  in  the  negative.  And  this  must,  of  course, 
be  so;  otherwise  the  fact  would  be  permitted  to  be  proved  by 
such  declarations,  though  not  part  of  the  res  gestx.  The  evi- 
dence of  undue  influence  must  be  other  than  that  which  pro- 
ceeds from  the  testator's  own  mouth  after  a  will  is  made.  And 
in  this  case  tlie  evidence  fails  to  show,  apart  from  such  declara- 
tions, that  there  had  been  either  such  pressing  solicitations  or 
fraudulent  practices  on  the  part  of  the  proponents  as  to  amount 
to  moral  coercion  of  the  testator,  not  only  affecting  his  judg- 
ment, but  overriding  his  free  agency  also.  Indeed,  with  the 
exception  of  the  testimony  of  the  witnesses  to  the  will  of  what 
transpired  at  the  time  it  was  drawn  and  executed,  there  is  no 
evidence  of  any  importance  on  the  main  issue.  It  is  not 
enough  that  there  be  motive  and  opportunity,  as  the  evidence 
undoubtedly  tends  to  show  there  were  in  this  case,  but  the 
influence  must  be  exercised  and  take  effect  so  as  to  destroy 
the  free  agency  of  the  testator,  and  control  the  disposition  of 
the  property  under  the  will  when  it  is  made.  Unless  the 
influence  of  these  beneficiaries  was  unfairly  and  unlawfully 
executed,  so  as  to  dominate  his  will  at  the  time,  it  is  not 
material  that  they  were  interested  in  the  will,  or  had  better 
opportunities  for  solicitation  or  persuasion  than  the  contest- 
ants. Nor  is  it  surprising  that  a  testator  should  favor  those 
who  are  nearest  to  him  in  respect  and  affection,  or  by  reason 
of  intimate  social  or  domestic  relations.  The  influences  grow- 
ing out  of  such  causes  must  be  allowed  to  have  their  natural 
and  legitimate  effect  upon  the  mind  of  the  testator,  so  that, 
if  he  chooses  to  make  unwise  and  apparently  unjust  discrim- 
ination among  those  who  are  the  natural  objects  of  his  bounty, 
he  is  at  liberty  to  do  so;  for  when  he  comes  to  make  his  will, 
he  is  entitled  to  distribute  his  property  as  he  pleases,  provided 
only  that,  in  the  exercise  of  this  right,  his  mind  is  under  no 
such  constraint  or  moral  coercion  as  to  interfere  with  his  free 


€68  In  re  Hess's  Will,  [Minn. 

agency:  Mitrhell  v.  Mitchell,  43  Minn.  73.  The  principal 
actors  in  this  contest  are  Mrs.  Dearborn  and  Mrs.  Foster,  who 
is  the  cliief  contestant.  The  record  shows,  we  think,  quite 
clearly  that  the  testator  was  previously  dissatisfied  with  the 
conduct  and  social  relations  of  Mrs.  Ryan  and  Mrs.  Foster. 
And  though  he  had  not  forgotten  that  Mrs.  Foster  had,  years 
before,  rendered  him  valuable  service  in  his  household  after 
the  decease  of  his  wife,  yet  he  was  displeased  at  her  marriage, 
and  feared  and  believed  that  any  property  which  she  might 
receive  would  be  squandered.  And  we  gather  from  the  record 
sufficient  evidence,  we  think,  to  warrant  the  belief  that  there 
were  grounds  for  such  dissatisfaction  on  the  part  of  the 
testator. 

As  respects  the  specific  charge  of  fraud  growing  out  of  the 
alleged  representations  of  Mrs.  Dearborn,  we  dismiss  it  by  say- 
ing that  it  is  not  sustained  by  the  evidence;  nor  does  the 
record  present  a  much  stronger  case  of  undue  influence.  The 
testator  had  made  his  home  with  his  son,  James,  on  the  farm 
of  the  latter,  in  Winona  County,  for  several  years  before  his 
death.  Mrs.  Dearborn  lived  in  Chicago.  A  few  days  before  the 
will  was  executed,  Mrs.  Dearborn  came  on  a  visit  to  her  father, 
and  remained  till  after  its  execution,  when  her  father  went 
with  her  to  Chicago,  but  afterwards  returned  to  Minnesota, 
and,  before  his  death,  visited  Mrs.  Foster  in  Wisconsin.  As 
respects  James,  the  evidence  shows  that  he  brought  his  father 
and  sister  to  the  magistrate  when  the  will  was  made.  His 
father  also  left  with  him  the  key  to  his  box  in  a  safety- vault, 
where  the  testator  had  deposited  it  before  he  went  to  Chicago. 
A  witness  also  testifies  that  Mrs.  Dearborn  said,  in  presence 
of  the  magistrate  and  her  father,  that  James  did  not  want  the 
contestants  to  be  allowed  any  more  than  a  nominal  sum 
each,  in  the  will, —  "just  enough  to  prevent  breaking  the  will." 
There  is  no  other  evidence  connecting  him  with  the  will. 
But  Mrs.  Dearborn  was  present  when  the  will  was  made,  and 
talked  with  other  persons  present,  including  the  testator, 
about  its  provisions.  The  testator  was  of  sound  mind,  and 
unquestionably  competent  to  make  a  will,  and  a  man  of  reso- 
lute and  determined  purpose.  Searl  (who  drew  the  will)  and 
his  wife  were  the  principal  witnesses  in  the  case.  Searl 
swears  that  Mrs.  Dearborn  said,  when  they  came  in,  that  her 
father  had  come  to  have  a  will  made,  and  she  came  to  tell 
him  how  they  wanted  it  made,  or  how  their  father  wanted  it 
made.     Then  he  says  the  testator  said  he  "  wanted  to  make 


March,  1892.]  In  be  Hess's  Will.  669 

his  will,  and  told  him  how  he  wanted  it  made."  Searl  was 
greatly  surprised  at  the  inequality  of  the  bequests  in  the  will, 
and  80  expressed  himself.  Tliis  led  to  more  or  less  conversa- 
tion, particularly  in  respect  to  further  provision  for  Mrs.  Fos- 
ter. It  seems  that  the  testator  was  not  very  communicative, 
but  said,  in  substance,  in  reference  to  Mrs.  Foster,  that  he 
would  like  to  give  her  more,  but  her  husband  would  squander 
it.  The  witness  stated  that  the  testator  was  not  satisfied,  and 
was  uneasy  and  restless;  but  it  distinctly  appears  that  after 
all  the  suggestions  were  made,  and  notwithstanding  all  that 
was  said,  he  firmly  adhered  to  his  purpose  to  make  his  will  as 
he  had  at  first  indicated.  The  witness  Searl  states,  on  his 
cross-examination:  "  INIrs.  Dearborn  did  not  dictate  the  will 
to  me.  I  drew  the  will  as  he  dictated  it.  Q.  And  drew  it 
just  as  he  told  you,  I  suppose?  A.  Yes,  sir.  Q.  Now,  then, 
you  state  that  Mr.  Hess  appeared  to  be  thoughtful,  very  silent, 
peculiar  in  his  manner,  do  you?  A.  I  did  not  see  anything 
peculiar  about  him  at  that  time.  I  may  have  expressed  it  in 
that  way.  I  don't  remember.  Q.  Do  you  now  state  that 
when  you  were  talking  over  the  will,  he  was  decided  in  mak- 
ing it  as  he  dictated  it?  ,  A.  Yes,  sir;  he  was  decided.  Q. 
That  the  will  should  be  as  he  dictated?  A.  Yes,  sir;  he  did 
not  want  it  changed,  as  he  had  arranged  it  in  his  mind."  So 
that  it  is  quite  apparent  that  the  testator  was  not  influenced 
to  change  the  nature  of  the  bequests  or  the  frame  of  the  will 
by  anything  that  occurred  at  the  office  of  the  magistrate, 
where  it  was  drawn  and  executed.  It  was  already  "  arranged 
in  his  mind."  And  there  is  nothing  to  show  either  that  in 
forming  his  purpose  or  in  adhering  to  it  he  was  unduly  in- 
fluenced, or  that  the  instrument  was  not  his  will,  as  he  under- 
stood and  declared  it  to  be.  The  witness  further  states  that 
"after  it  was  completed,  he  said  it  might  not  amount  to  any- 
thing." He  knew  that  he  could  alter  it  afterwards  if  he  de- 
sired to  do  so,  and  he  was  advised  by  some  of  the  witnesses  to 
do  so,  but  did  not.  He  visited  his  daughter  Mrs.  Foster 
during  the  summer  before  he  died,  and  it  appears  that  she 
understood  that  he  had  made  his  will,  and  knew  that  she  was 
not  favored,  and  she  endeavored  afterwards  to  induce  him  to 
change  it,  but  could  not  prevail  on  him  to  do  so. 

The  more  closely  the  case  is  examined  in  the  light  of  all 
the  testimony,  the  more  clearly  it  appears  that  there  is  no 
sufficient  proof  of  facts  from  which  undue  influence  can  be 
inferred.     The  testator  was  a  man  of  strongly  marked  charac- 


670  In  re  Hess's  Will.  [Minn. 

teristics,  of  sound  mind  and  determined  will,  abundantly  able 
to  protect  himself,  —  a  matter  not  to  be  overlooked  in  consid- 
ering a  case  of  this  kind;  and  as  long  as  the  law  permits  a 
disposition  of  property  by  will  different  from  that  which  the 
statute  makes  in  case  of  intestacy,  the  mere  fact  that  the  tes- 
tator makes  an  unequal,  partial,  or  seemingly  unjust  division 
of  his  property  is  no  ground  for  setting  it  aside.  The  provis- 
ions of  the  will  may  be  considered,  in  connection  with  other 
evidence,  in  trying  the  question  of  undue  influence,  but  is  not 
itself  evidence  of  such  influence;  and  the  court  cannot  assume 
to  judge  of  the  justice  of  the  provisions  of  the  will,  or  to  ques- 
tion the  motives  of  the  testator  in  making  it:  Cudney  v.  Cud- 
ney,  68  N.  Y.  152;  Nelson's  Will,  39  Minn.  205;  Latham  v. 
Udell,  38  Mich.  238. 
Order  reversed. 

Undue  Influence  as  Affectinir  the  Validity  of  Wills.* 
1^0  Precise  Test  Possible.  —  That  undue  influence  exercised  over  a  testa- 
tor will  invalidate  a  will  executed  by  him  as  the  result  of  ita  domination  is 
everywhere  conceded,  and  it  is  therefore  of  the  utmost  importance  that  some 
test  be  formulated,  by  the  application  of  which  to  established  facts  a  correct 
oonclnsion  may  be  reached  as  to  whether  or  not  a  will  is  incurably  tainted 
by  this  vice.  We  must,  however,  confess  at  the  outset  that  such  a  test  has 
not  been,  and  cannot  be,  prescribed,  and  that  each  case  must  be  left  to  be 
decided  in  the  light  of  its  attendant  circumstances:  Elkinton  v.  Brick,  44 
ir.  J.  Eq.  154;  Waddington  v.  Buzhy,  45  N.  J.  Eq.  173;  14  Am.  St.  Rep,  706; 
Hartman  v.  Strickler,  82  Va.  225.  It  is  not  the  means  employed,  so  much  as 
the  effect  produced,  which  must  be  considered  in  determining  whether  un- 
due influence  has  contributed  to  the  making  of  a  will;  for  no  matter  what 
means  have  been  employed  for  influencing  the  judgment  or  overcoming  the 
will  of  the  testator,  yet  if  he  was  able  to  resist  them,  and,  notwithstanding 
their  existence,  to  make  a  disposition  of  his  property  according  to  his  own 
desires,  that  disposition  must  stand,  because  the  influences  were  unavailing. 
Though,  on  the  other  hand,  the  influence  exerted  over  the  testator  was  such 
aa  if  applied  under  ordinary  circumstances,  or  exercised  over  persons  of  or- 
dinary powers  of  resistance,  would  be  regarded  as  innocent,  yet  if,  in  the 
particular  case,  it  resulted  in  a  disposition  of  property  contrary  to  the 
testator's  desire,  the  influence  was  undue:  Levei-ett's  Heirs  v.  Carlisle,  19 
Ala.  80. 

Oeneral  Definitions.  —  Though  no  precise  or  absolute  test  of  undue  influ- 
ence has  been  or  can  be  formulated,  equally  applicable  to  all  cases,  still, 
many  general  definitions  have  been  given  of  sufficient  accuracy  to  be  of 
value  in  considering  this  topic.  "Undue  influence,  legally  speaking,  must 
be  such  as,  in  some  measure,  destroys  the  free  agency  of  the  testator;  it  must 

•  REFERENCI  TO  MONOOBAPHIC  NOTKS. 

Declarations  of  a  testator  as  evidence  of  undue  influence  or  of  imposition:  3  Am. 
Dee.  395-890. 
Influence  or  Importunity  suflScient  to  Invalidate  a  will:  16  Am.  Dec.  267-26& 
Presumptions  of  undue  influence:  21  Am.  St.  Rep.  94-101. 


March,  1892.]  In  re  Hess's  Will.  671 

be  suflScient  to  prevent  the  exercise  of  that  discretion  which  the  law  requirea 
in  relation  to  every  testamentary  disposition.  It  is  not  enough  that  the 
testator  is  dissuaded  by  solicitations  or  argunient  from  disposing  of  his  prop- 
ertj'  as  he  had  previously  intended;  he  maj'  yield  to  the  persuasions  of  affec- 
tion or  attachment,  and  allow  their  suggestion  to  be  exerted  over  his  mind; 
and  in  neither  of  these  cases  would  the  law  regard  the  influence  as  undue. 
To  amount  to  this,  it  must  be  equivalent  to  moral  coercion,  — it  must  con- 
strain its  subject  to  do  what  is  against  his  will,  but  which,  from  fear,  the  desire 
of  peace,  or  some  other  feeling,  he  is  unable  to  resist;  and  when  this  is  so,  the 
act  which  is  the  result  of  that  influence  is  vitiated  ":  Gilbert  v.  Gtlhert,  22 
Ala.  529;  58  Am.  Dec.  2GS;  Dunlap  v.  Rohimon,  28  Ala.  100;  Tcujlor  v.  Kelly, 
31  Ala.  59;  6S  Am.  Dec.  150;  Jlairs  Heirs  v.  Hall's  Exrs,  .38  Ala.  131; 
O'Neall  V.  Farr,  1  Rich.  80.  "On  this  subject,  as  on  that  with  regard  to 
capacity,  no  precise  and  distinct  line  can  be  drawn.  Suffice  it  to  say,  that 
the  influence  exercised  must  be  an  unlawful  importunity,  on  account  of  the 
manner  or  motive  of  its  exertion,  and  by  reason  of  which  the  testator's  mind 
was  so  embarrassed  and  restrained  in  its  operation  that  he  was  not  master  of 
his  own  opinions  in  respeat  to  the  disposition  of  his  estate  ":  Potts  v.  House, 
6Ga.  324,  359;  50  Am.  Dec.  329.  "The  testator  should  enjoy  full  liberty 
and  freedom  in  the  making  of  his  will,  and  possess  the  power  to  withstand 
all  direction  and  control.  That  degree,  therefore,  of  importunity  or  undue 
influence  which  deprives  the  testator  of  his  free  agency,  if  it  is  such  as  he  is 
too  weak  to  resist,  and  will  render  the  instrument  not  his  free  and  unre- 
strained act,  is  sufficient  to  invalidate  it ":  Davis  v.  Calvert,  5  Gill  &  J.  269; 
25  Am.  Dec.  282;  Wawpler  v.  W<ui)j>ler,  9  Md.  540;  Grove  v.  Spiker,  72  Md. 
300;  Maynard  v.  Vinton,  59  Midi.  139;  60  Am.  Rep.  276;  Latham  v.  Schaal,  25 
Neb.  535.  "  What  constitutes  undue  influence  can  never  be  precisely  defined. 
It  must  necessarily  depend,  in  each  case,  on  the  means  of  coercion  or  influence 
possessed  by  one  party  over  the  other;  upon  the  power,  authority,  or  control 
of  the  one,  the  age,  the  sex,  the  temper,  the  mental  and  physical  condition, 
and  the  dependence  of  the  other.  Whatever  destroys  the  free  agency  of 
the  testator  constitutes  undue  influence.  Whether  that  object  be  effected  by 
physical  force  or  mental  coercion,  by  threats  which  occasion  fear,  or  by  impor- 
tunity which  the  testator  is  too  weak  to  resist,  or  which  extorts  compliance 
in  the  hope  of  peace,  is  immaterial.  In  considering  the  question  of  undue 
influence,  therefore,  it  becomes  essential  to  ascertain,  as  far  as  practicable, 
the  power  of  coercion  upon  the  one  hand,  the  liability  to  its  influence  upon 
the  other":  Moore's  Eicrs  v.  Blauvelt,  15  N.  J.  E(j.  368;  Turner  v.  Chees- 
man,  15  N.  J.  Eq.  243;  Marshall  v.  Flinn,  4  Jones,  199.  "A  learned  text- 
writer  on  wills  deduces  the  following  rules  or  principles  from  adjudged 
cases,  and  that  the  influence  to  avoid  a  will  nmst  be  such  as,  —  1.  To  destroy 
the  freedom  of  the  testator's  will,  and  thus  remler  his  act  obviously  more  the 
ofi"spring  of  the  will  of  others  than  his  own;  2.  That  it  must  be  an  influence 
specially  directed  towards  the  object  of  procuring  a  will  in  favor  of  particu- 
lar parties;  3.  If  any  degree  of  free  agency  or  capacity  remained  in  the  tes- 
tator, so  that,  when  left  to  himself,  he  •was  capable  of  making  a  valid  will, 
then  the  influence  which  so  controls  him  as  to  render  his  making  a  will  of 
no  efi'ect  must  be  such  as  was  intended  to  mislead  him  to  the  extent  of  mak- 
ing a  will  essentially  contrary  to  his  duty;  and  it  must  have  proved  suc- 
cessful, to  some  extent":  Gardiner  v.  Gardiner,  34  N.  Y.  161;  citing  Redfield 
on  Wills,  524.  "Undue  influence  is  very  nearly  allied  to  fraud,  yet  they 
are  not  identical;  whilst  undue  influence  comprehends  fraud,  fraud  does  not 
embrace  every  species  of  undue  influence.     Undue  influence  exists  where- 


672  In  re  Hess's  Will.  [Minn. 

ever,  through  weakness,  ignorance,  dependence,  or  implicit  reliance  of  one 
on  the  good  faith  of  another,  tlie  latter  obtains  an  ascendancy  which  pre- 
vents the  former  from  exercising  an  unljiased  judgment.  To  affect  a  will, 
it  must,  in  a  measure  at  least,  destroy  free  agency,  and.  operate  on  the  mind 
of  the  testator  at  the  time  of  making  the  will":  Herster  v.  Herster,  122 
Pa.  St.  239;  9  Am.  St.  Rep.  95.  "To  make  a  good  will,  a  man  must  be  a 
free  agent.  But  all  influences  are  not  unlawful.  Persuasions,  appeals  to 
the  affection  or  ties  of  kindred,  to  a  sentiment  of  gratitude  for  past  services, 
or  pity  for  future  destitution,  or  the  like,  —  these  are  all  legitimate,  and 
may  be  fairly  pressed  on  a  testator.  On  the  other  hand,  pressure,  of  what- 
ever character,  whether  acting  on  the  fears  or  the  hopes,  if  so  exerted  as  to 
overpower  the  volition  without  convincing  the  judgment,  is  a  species  of  re- 
straint under  which  no  valid  will  can  be  made.  Importunity  or  threats, 
such  as  the  testator  has  not  the  courage  to  resist;  moral  command  asserted, 
and  yielded  to  for  the  sake  of  peace  and  quiet,  or  of  escaping  from  distress 
of  mind  or  social  discomfort,  —  these,  if  carried  to  a  degree  in  which  the  free 
play  of  the  testator's  judgment,  discretion,  or  wishes  is  overborne,  will  con- 
stitute undue  influence,  though  no  force  is  either  used  or  threatened.  In  a 
word,  a  testator  may  be  led,  but  not  driven;  but  his  will  must  be  the  off- 
spring of  his  own  volition,  and  not  the  record  of  some  one  else's  ":  Hull  v. 
Hall,  L.  R.  1  Pro.  &  D.  481;  Gay  v.  Gillilan,  92  Mo.  250;  1  Am.  St.  Rep. 
712. 

The  means  employed  and  the  persons  using  them  are  immaterial,  provided 
the  result  is  undue  influence.  While  the  influence  is  usually  exerted  by 
some  person  directly  or  indirectly  benefited  by  the  will  as  it  is  finally  exe- 
cuted, yet  the  effect  upon  the  will  is  precisely  the  same,  where  the  person 
influencing  the  testator  receives  no  personal  or  other  benefit  from  what  he 
does:  In  re  Cahill,  74  Cal.  52.  So  as  to  the  means  employed.  They  may  be 
any  of  the  infinite  methods  and  forces  by  which  one  mind  may  obtain  an 
ascendancy  over  another,  so  that  what  it  did  emanates  from  the  former,  and 
not  from  the  latter:  Gay  v,  Gillilan,  92  Mo.  250;  1  Am.  St.  Rep.  712;  Car- 
roll V.  Hau&e,  48  N.  J.  Eq.  269;  27  Am.  St.  Rep.  469.  In  England,  how- 
ever, it  has  been  held  that  every  undue  influence  which  may  vitiate  a  will 
must  be  in  the  nature  of  coercion  or  of  fraud.  Thus  the  lord  chancellor,  in 
Boyse  v.  Bossborough,  6  H.  L.  Gas.  2,  3  Jur.,  N.  S.,  373,  said:  "  The  diflS- 
culty  of  deciding  such  a  question  arises  from  the  difficulty  of  defining  with 
distinctness  what  is  undue  influence.  In  a  popular  sense  we  often  speak  of 
a  person  exercising  undue  influence  over  another,  when  the  influence  cer- 
tainly is  not  of  a  nature  which  would  invalidate  a  will.  A  young  man  is 
often  led  into  dissipation  by  following  the  example  of  a  companion  of 
riper  years,  to  whom  he  looks  up,  and  wlio  leads  him  to  consider  habits 
of  dissipation  as  venial,  and  perhaps  even  creditable;  the  companion  is 
then  correctly  said  to  exercise  an  undue  influence.  But  if,  in  these  cir- 
cumstances, the  young  man,  influenced  by  his  regard  for  the  person  who 
has  thus  led  him  astray,  were  to  make  a  will,  and  leave  to  him  every- 
thing he  possessed,  such  a  will  certainly  could  not  be  impeached  on  the 
ground  of  undue  influence.  Nor  would  the  case  be  altered  merely  be- 
cause the  companion  had  urged,  or  even  importuned,  the  young  man  so 
to  dispose  of  his  property,  provided  only  that  in  making  such  a  will  the 
young  man  was  really  carrying  into  effect  his  own  intention,  formed  with- 
out either  coercion  or  fraud.  I  must  further  remark,  that  all  the  difficulties 
of  defining  the  point  at  which  influence  exerted  over  the  mind  of  a  testator 
becomes  so  pressing  as  to  be  properly  described  as  coercion  are  greatly 


March,  1892.]  In  re  Hess's  Will.  673 

enhanced  when  tlie  question  is  one  between  husband  and  wife.  The  re- 
lation constituted  by  marriage  is  of  a  nature  which  makes  it  as  difficult  to 
inquire  aa  it  would  be  impolitic  to  permit  inquiry  into  all  which  may  have 
passed  in  the  intimate  union  of  aflfections  and  interests  which  it  is  the  para- 
mount purpose  of  that  connection  to  cherish;  and  this  is  the  case  with  which 
your  lordships  have  now  to  deal.  In  order,  therefore,  to  have  something  to 
guide  us  in  our  inquiries  on  this  very  difficult  subject,  I  am  prepared  to  say 
that  influence,  in  order  to  be  undue  within  the  meaning  of  any  rule  of  law 
which  would  make  it  sufficient  to  vitiate  a  will,  must  be  an  influence  exer- 
cised eitlier  by  coercion  or  by  fraud.  In  the  interpretation,  indeed,  of  these 
words,  some  latitude  must  be  allowed.  In  order  to  come  to  the  conclusion 
that  a  will  has  been  obtained  by  coercion,  it  is  not  necessary  to  establish 
that  actual  violence  has  been  used,  or  even  threatened.  The  conduct  of  a 
person  in  vigorous  health  towards  one  feeble  in  body,  even  though  not  un- 
sound in  mind,  may  be  such  as  to  excite  terror,  and  make  him  execute  as  hia 
will  an  instrument  which,  if  he  had  been  free  from  such  influence,  he  would 
not  have  executed.  Imaginary  terrors  may  have  been  created  sufficient  to 
deprive  him  of  free  agency.  A  will  thus  made  may  possibly  be  described  as 
obtained  by  coercion.  So  as  to  fraud.  If  a  wife,  by  fal^sellood,  raises  pre- 
judices in  the  mind  of  her  husband  against  those  who  would  be  the  natural 
objects  of  his  bounty,  and  by  contrivance  keeps  him  from  intercourse  with 
his  relatives,  to  the  end  that  these  impressions  which  she  knows  he  had  thus 
formed  to  their  disadvantage  may  never  be  removed,  such  contrivance  may, 
perhaps,  be  equivalent  to  positive  fraud,  and  may  render  invalid  any  will 
executed  under  false  impressions  thus  kept  alive.  It  is,  however,  extremely 
difficult  to  state  in  the  abstract  what  acts  will  constitute  undue  influence  in 
questions  of  this  nature.  It  is  sufficient  to  say  that,  allowing  a  fair  latitude 
of  construction,  they  must  range  themselves  under  one  or  other  of  these 
heads,  — coercion  or  fraud." 

Free  Arjency  must  be  Destroyed.  — The  theory  upon  which  a  will  is  set  aside 
for  undue  influence  is,  that  though  it  is  in  form  the  will  of  the  testator,  it  is 
in  fact  the  will  of  some  other  person.  Hence,  whatever  may  have  been  the 
influence  exerted  or  attempted  to  be  exerted  by  another,  it  cannot  vitiate  a 
will,  unless  in  fact  it  overcanie  the  will  of  the  testator,  so  that,  to  some  extent 
at  least,  he  was  not,  in  executing  the  will,  a  free  agent.  "Undue  influence, 
Buch  as  will  invalidate  a  will,  must  be  something  which  destroys  the  free 
agency  of  the  testator  at  the  time  when  the  instrument  is  made,  and  which 
in  fact  substitutes  the  will  of  another  for  that  of  the  testator.  It  may  be 
exercised  through  threats,  fraud,  importunity,  or  by  the  silent,  resistless 
power  which  the  strong  often  exercise  over  the  weak  and  infirm;  but,  however 
exercised,  it  must,  in  order  to  avoid  the  will,  destroy  the  free  agency  of  the 
testator  at  the  time  it  was  made,  so  that  the  instrument,  in  effect,  expresses 
the  mind  and  intent  of  some  one  else,  and  not  his  own  ":  Schmidt  v.  Schmidt, 
47  Minn.  451.  As  undue  influence  consists  of  the  overcoming  of  the  will  of 
another,  so  as  to  produce  a  testamentary  disposition  of  his  property,  it  is 
manifest  that  it  is  rarely  possible  to  determine  whether  such  an  influence 
has  been  exerted  without  taking  into  consideration  the  character  and  cir- 
cumstances of  the  testator.  Too  many  wills  are  executed  after  the  testator 
hjis  become  enfeebled  in  nund  or  body,  or  both,  by  age  or  disease,  and  when 
he  is  more  susceptible  to  the  influence  of  others,  and  less  able  to  resist  their 
importunity  or  coercion  than  a  person  of  robust  health,  in  the  maturity  of 
his  intellectual  powers.  Still,  the  law  permits  persons  of  extreme  age,  or 
those  in  the  presence  of  impending  death,  and  while  tortured  and  enfeebled 
AM.  St.  Kep.,  Vol.  XXXL— 43 


674  In  re  Hess's  Will.  [Minn. 

by  the  progress  of  painful  and  fatal  maladies,  to  dispose  of  their  property  by 
will.     In  this  case,  as  well  as  in  all  others,  the  only  question,  when  tes- 
tamentary capacity  exists,  is,  though  the  influence  of  others  was  brought  to 
bear  upon  the  testator,  Was  he  able  to  resist  such  influence  ?  and  if  the  in- 
fluence were  removed,  would  it  still  receive  his  assent?     If  so,  it  is  his  will, 
and  must  be  respected  as  such.     But  neither  importunity,  nor  threats,  nor 
persuasion,  nor  any  other  of  the  manifold  forms  in  which  influence  may  be 
brought  to  bear,   can  vitiate  the  will,  if  the  testator  was  able  to  properly 
weigh  or  resist  them,  and  ultimately  made  a  disposition  of  his  property  which 
was  the  result  of  his  mind  and  will,  and  not  of  the  will  of  another:   ToJnn  v. 
Jenkins,  29  Ark.  151;  Leeper  v.  Taylor,  47  Ala.  221;  Tyson  v.  Tyson,  37  Md. 
567;  Brick  v.  Brick,  66  N.  Y.  144;  Barnes  v.  Barnes,  66  Me.   286;  Marx  v. 
McGlynn,  88  N.  Y.  357;  Gardner  v.  Gardner,  22  Wend.  526;  34  Am.  Dec. 
340;  Lotve  v.    Williamson,  2  N.  J.  Eq.  82;  Small  v.  Small,  4  Greenl.   223;   16 
Am.  Dec.  253;  Baldwin  v.  Parker,  99  Mass.  79;  96  Am.  Dec.  697;  Floyd  v. 
Floyd,  3  Strob.  44;  49  Am.  Dec.  626;  McCulloch  v.  Campbell,  49  Ark,  367; 
Waddinrjton  v.   Bnzhy,  45  N.  J.  Eq.   173;  14  Am.  St.   Rep.  706;  Alhnon  v. 
Pigg,  82  111.  149;  25  Am.  Rep.  303;  Taylor  v.  Kelly,  31  Ala.  59;  68  Am.  Dec. 
150;  Latham  v.  Ud»ll,  38  Mich.  238;  Layman  v.  Conrey,  60  Md.  286;  Stiiizv. 
Schaeffle,  16  Jur.  909;    Williams  v.  Goude,  1  Hagg.  Ecc.  577;  Forney  v.  Ferrell, 
4  W.  Va.  729.     Upon  this  subject  the  vice-chancellor  of  New  Jersey,  in  Hay- 
dock  V.  Haydock,  33  N.  J.    Eq.  494,  pertinently  and  forcibly  said:   "The  de- 
termination of  this  question  must  always  be  largely  controlled  by  the  state 
of  health  and  condition  of  mind  of  the  person  alleged  to  have  been  unduly  or 
unfairly  influenced.    A  mind  naturally  weak,  and  which  has  become  impaired 
by  age,  disease,  or  grief  is  much  more  subject  to  any  sort  of  control  than 
one  naturally  strong  and  unimpaired.     It  is  always,  therefore,  a  matter  of 
the  first  importance  to  the  tribunal  charged  with  the  duty  of  deciding  this 
question  to  know  fully  the  situation  and  surroundings  and  the  exact  condi- 
tion  of  mind  and  state  of  physical  health  of  the  person  alleged  to  have  been 
imposed  upon.     No  definition  of  what  the  law  denominates  undue  influence 
can  be  given  which  will  furnish  a  safe  and  reliable  test  for  every  case.     Each 
case  must  be  decided  on  its  own  special  facts.     All  that  can  be  said  in  the 
way  of  formulating  a  general  rule  on  that  subject  is,  that  whatever  destroys 
free  agency,  and  constrains  the  person  whose  act  is  brought  into  judgment  to 
do  what  is  against  his  will,  and  what  he  would  not  have  done  if  left  to  him- 
self, is  undue  influence,  whether  the  control  be  exercised  by  physical  force, 
threats,  importunity,  or  any  other  species  of  mental  or  physical  coercion. 
The  extent  or  degree  of  the  influence  is  quite  immaterial;  for  the  test  always 
is.  Was  the  influence,  whether  slight  or  powerful,  sufficient  to  destroy  free 
agency,  so  that  the  act  put  in  judgment  was  the  result  of  the  domination  of 
the  mind  of  another,  rather  than  the  expression  of  the  will  and  mind  of  the 
actor?     Turner  v.  Cheesman,  15  N.  J.  Eq.  243,  265;  Moore's  Ex'rs v.  Blauvelt, 
15  N.  J.  Eq.  367;  Lynch  v.  Clements,  24  N.  J,  Eq.  431," 

Must  he  Directed  towards  the  Execution  of  the  Will.  —  The  general  declara- 
tion is  frequently  made,  that  the  undue  influence  which  will  vitiate  a  will 
must  be  specially  directed  towards  that  object;  that  it  must  be  exercised 
with  a  view  to  procuring  a  will  to  be  made  in  harmony  with  it:  McCulloch  v. 
Campbell,  49  Ark.  367;  Allmon  v.  Pigg,  82  111.  149;  25  Am.  Rep,  303;  Roe 
V,  Taylor,  45  111.  491;  Brownjield  v,  Brownjield,  43  111,  155;  Rutherford  v. 
Moi-ris,  77  111.  397,  We  are  not  sure  that  this  is  always  true.  Doubtless,  it 
would  not  be  sufficient,  to  destroy  a  will,  to  prove  that  certain  persons  exer- 
cised  a  great  and  even  an  undue  influence  over  the  testator  in  many  respects. 


March,  1892.]  In  ke  Hess's  Will.  675 

if  it  was  clear  that  such  influence  was  not  exerted  with  respect  to  tlie  will, 
and  that  the  latter  was  entirely  free  of  it.  There  muy  perhaps  be  instances 
in  which  persons  exercise  an  influence  over  a  testator  to  the  extent  of  pre- 
venting him  from  disposing  of  his  property  as  he  otherwise  would,  without 
their  knowing  or  caring  whether  that  result  was  produced  or  not,  as  where, 
by  misrepresentation  or  other  means,  a  prejudice  is  generated  against  rela- 
tives, or  devisees,  or  legatees,  causing  them  to  be  disinherited  or  deprived  of 
the  benefits  of  a  pre-existing  will.  If,  in  such  a  case,  the  mind  and  will  of 
the  testator  were  so  influenced  that  he  revoked  his  will,  wo  doubt  whether  the 
effect  of  the  undue  influence  upon  the  new  will  executed  under  its  domina- 
tion can  be  ol)literated  by  proving  that  it  was  exercised  for  some  other  ob- 
ject than  of  producing  the  will  which  actually  resulted  from  it. 

Alust  Affect  the  Will.  — It  is  true,  beyond  question,  that  no  influence  can 
vitiate  a  will  which  it  did  not  afi'ect.  It  is  not  material  that  the  influence 
be  exercised  on  the  day  or  hour  that  the  will  was  made,  provided  it  was  at 
that  time  a  continuing  influence:  Taylor  v.  Wilhurn,  20  Mo.  .306;  64  Am. 
Dec.  186;  Davis  v.  Calvert,  5  Gill  &  J.  269;  25  Am.  Dec.  2S2;  Hartman  v. 
Strickler,  82  Va.  225.  Though  an  influence,  undue  and  unlawful,  was  exerted 
over  a  testator,  yet  if  it  at  no  time  affected  or  overcame  his  will,  or  if,  though 
dominating  his  will  at  the  time,  its  potency  bad  ceased,  so  that  when  he  came 
to  make  the  will  in  question  it  was  a  correct  expression  of  his  desires,  then 
the  influence,  because  it  has  been  harmless,  should  not  be  taken  into  consid- 
eration: Monroe  v.  Barclay,  17  Ohio  St.  313;  93  Am.  Dec.  620;  Eckert  v. 
Flowry,  43  Pa.  St.  46;  McMahon  v.  Ryan,  20  Pa.  St.  329;  Harvey  v.  Sullens, 
46  Mo.  147;  2  Am.  Rep.  491;  Morris  v.  Stokes,  21  Ga.  552;  Children's  Aid 
Society  V.  Loveridije,  70  N.  Y.  387;  McCulloch  v.  Catnpbell,  49  Ark.  367; 
Jenckes  v.  Court  of  Probate,  2  R.  I.  255;  Button  v.  Watson,  13  Ga.  63;  58 
Am.  Dec.  504. 

Whether  the  Ivjluence  must  he  Unlawful.  —  That  an  influence,  to  be 
undue,  must  be  unlawful,  is  often  asserted:  Means  v.  Means,  5  Strob.  167. 
In  other  cases  it  is  said  that  the  influence  must  be  fraudulent  and  control- 
ling: Wri'jht  V.  Howe,  7  Jones,  412;  and  must  be  intended  to  mislead  the 
testator  "to  the  extent  of  making  a  will  essentially  contrary  to  his  duty": 
Jachnans  Will,  26  Wis.  104,  112;  Gardiner  v.  Gardiner,  M  N.  Y.  155.  That 
an  undue  influence  is  often  unlawful  and  fraudulent  is  no  doubt  true,  and 
that  fraud,  where  it  results  in  undue  influence,  is  fatal  to  a  will,  is  equally 
beyond  dispute:  Se;/nine  v.  Se(/uine,  4  Abb.  App.  191;  Terry  v.  Buffing- 
ton,  11  Ga.  337;  56  Am.  Dec.  423.  But  we  apprehend  that  it  is  not  essen- 
tial that  an  influence  be  either  unlawful  or  fraudulent,  unless  it  be  true, 
as  a  matter  of  law,  that  every  influrnce  which  deprives  the  testator  of  his 
free  agency,  and  procures  him  to  execute  a  will  which  is  the  will  of  another 
person,  and  not  of  himself,  is  fraudulent  and  unlawful:  Stewart  v.  Elliott,  2 
Mackey,  307;  Davis  v.  Calvert,  5  Gill  &  J.  269;  25  Am.  Dec.  282.  Nor  can 
we  understand  how  any  inquiry  can  be  entertained  for  the  purpose  of  deter- 
mining whether  a  will  was  "essentially  contrary  to  the  testator's  duty," 
unless,  perhaps,  when  the  fact  that  the  will  is  an  unnatural  one  is  considered 
in  connection  with  other  circumstances,  tending  to  prove  that  undue  influ- 
«nce  was  exercised  over  him,  and  tiiat  he  was  unable  to  resist  it.  Surely,  if 
the  existence  of  an  influence  wliich  overcame  the  testator's  freedom  of  action 
is  established,  the  will  cannot  be  supi>orted  by  proving  that  the  testator 
wished  and  intended  to  make  a  will  contrary  to  his  duty,  and  that  tlie  influ- 
ence was  imposed  only  for  the  purpose  of  thwarting  his  evil  design,  and  com- 
pelling him  to  do  right,  though  it  was  his  will  to  do  wrong.     If  it  be  true 


676  In  re  Hess's  Will.  [Minn, 

that  an  influence,  to  be  undue,  must,  as  many  of  the  authorities  declare,  "be 
exerted  mala  fide,  to  produce  a  result  which  the  party  as  a  reasonable  person 
was  bound  to  know  was  unreasonable  and  unjust  ":  Redtield  on  Wills.  527; 
Jackman'a  Will,  26  Wis.  114;  Woodward  v.  James,  3  Strob.  552;  51  Am.  Rep, 
649;  then,  though  the  will  in  question  was  never  freely  assented  to  by  the 
testator,  it  must  be  upheld,  if  it  ought  to  have  been  assented  to,  and  the 
fraud,  force,  deception,  or  coercion  practiced  upon  and  against  him  were  em- 
ployed in  a  worthy  cause,  or  in  favor  of  good  or  meritorious  beneficiaries. 

Inflwnces  Which  are  not  Improper.  —  Of  course,  every  intelligent  devise  or 
bequest  is  the  result  of  some  influence  operating  upon  the  mind  and  will  of 
the  testator,  and  in  nearly  every  instance  in  which  a  testamentary  disposi- 
tion differs  from  that  which  the  law  itself  would  make  of  the  testator's  prop- 
erty, such  disposition  is  the  result  of  some  influence  exercised  by  some  otlier 
person  or  persons,  whether  intentionally  or  consciously  or  not,  over  the  tes- 
tator. The  vast  majority  of  these  influences  are  not  undue,  though  but  for 
them  the  testator  would  probably  or  certainly  have  made  a  different  will. 

Influences  of  Kinship  or  Companionship.  — The  most  obvious  and  universal 
influences  are  those  of  kinship,  of  marriage,  and  of  personal  and  social  rela- 
tions, and  the  testator  who  merely  yields  to  them  cannot  be  said  to  be  un- 
duly influenced,  though  he  fails  to  provide  for  some  or  all  of  the  natural 
objects  of  his  bounty.  Thus  it  has  been  said,  without  peril  of  successful 
contradiction,  that  an  influence  obtained  by  a  wife  through  her  fidelity  and 
her  virtue  cannot  possibly  be  undue:  Small  v.  Small,  4  Greenl.  220;  16  Am. 
Dec.  253.  This  must  be  equally  true  of  the  other  members  of  the  testator's 
family,  and  if  their  demeanor  towards  him,  or  even  the  fact  of  their  being 
constantly  in  his  presence,  engenders  affection  upon  his  part  towards  them, 
culminating  in  his  preferring  them  in  his  will  to  others  equally  bound  to  him 
by  the  ties  of  consanguinty,  this  influence,  though  it  has  resulted  to  their 
advantage,  is  not  unUie:  Thompson  v.  Ish,  99  Mo.  >20;  17  Am.  St.  Rep.  552; 
McCulloch  V.  Camphell,  49  Ark.  367;  Elliott's  Will,  2  J.  J.  Marsh.  340;  Dean 
V.  Negley,  41  Pa.  St.  312;  80  Am.  Dec.  620.  Companionship  with  persons 
not  at  all  related  to  the  testator  may  produce  the  same  effect,  and  if  so,  his 
will  in  their  favor  cannot  for  that  reason  be  avoided:  Sechresl  v.  Edv^ards,  4t 
Mot.  (Ky.)  163;  Hirjgins  v.  Carleton,  28  Md.  115;  92  Am.  Dec.  666;  Floyd  v. 
Floyd,  3  Strob.  44;  49  Am.  Dec.  626. 

The  Influences  of  Kind  Offices  or  of  Good  Deeds  are  certainly  legitimate,  and 
a  will  cannot  be  avoided  because  produced  by  them:  TrumhuU  v.  Gibbons,  22 
N.  J.  L.  117;  51  Am.  Dec.  255;  Kerr  v.  Lunsford,  31  W.  Va.  680;  Williams's 
Estate,  13  Phila.  302.  If  a  will  is  but  a  recognition  and  reward  of  kind  offi- 
ces, there  is  no  doubt  that  their  influence  cannot  be  regarded  as  undue.  In 
many  instances  it  may  be  insisted  that  while  these  offices  have  existed,  and 
were  entitled  to  recognition  and  recompense,  yet  that  an  undue  ascendancy 
was,  through  them,  obtained  over  the  testator,  and  was  exercised  to  the  ex- 
tent of  overcoming  his  will,  and  obtaining  a  testamentary  disposition  which, 
under  the  circumstances  in  which  he  was  placed  by  his  benefactors,  he 
was  unable  to  denj\  So,  too,  it  may  be  urged  that  those  offices  were  not 
incited  by  friendship  or  benevolence,  but  were  part  of  a  scheme  devised  for 
the  purpose  of  weaning  the  testator  away  from  his  friends  and  kindred,  and 
procuring  a  will  in  which  their  claims  should  be  sacrificed  in  favor  of  those 
who,  from  selfish  motives,  had  obtained  possession  of  his  person,  and  minis- 
tered to  his  .wants  or  his  whims,  in  his  old  age  or  in  his  last  illness.  Doubt- 
less there  may  be  instances  in  which  the  caring  for  a  person  in  his  declining 
years  may  be  regarded  with  suspicion,  and,  in  connection  with  other  evL- 


March,  1892.]  In  re  Hess's  Will.  677 

dence,  may  justify  a  finding  of  undue  influence,  but  in  the  absence  of  such 
other  evidence,  this  can  rarely  or  never  be  so.  To  hold  otherwise  would  be 
to  discourage  "that  affectionate  care  and  attention  which  the  law  upholds, 
rather  than  condemns  ":  Bush  v.  Lisle,  89  Ky.  393;  White  v.  Starr,  47  N.  J. 
Eq.  244. 

The  Influence  of  Illicit  Relations.  — The  social  ties  and  kind  oflBces  of  which 
we  have  hitherto  spoken  do  not  include  relations  or  offices  of  an  unlawful 
or  immoral  character,  though  it  is  by  no  means  certain  that  the  prinoii.les 
applicable  to  moral  and  praiseworthy  relations  are  not  equally  applical)le  to 
those  of  a  meretricious  nature,  provided  it  be  clear  that  the  testator  retained 
his  self-control,  and  his  bounty  was  the  result  either  of  his  affection  or  hia 
pity.  In  a  case  arising  in  South  Carolina,  a  will  was  sought  to  be  set  aside 
on  the  ground  that  a  beneficiary  was  a  woman  of  African  descent  with  whom 
the  testator  had  lived  in  disgraceful  intimacy,  and  that  she  had  interposed 
her  influence  in  favor  of  another  beneficiary.  There  being,  however,  no 
evidence  that  anything  had  been  done  to  interfere  with  the  free  agency  of 
the  testator,  the  court  said:  "Not  merely  in  the  ordinary  affairs  of  life,  but 
in  the  disposition  of  his  property,  even  the  sternest  man  is  sometimes  in- 
fluenced by  the  wishes  of  a  friend,  a  wife,  or  even  an  unworthy  mistress, 
•who  has  usurped,  both  in  his  affections  and  at  his  table,  the  place  of  his  law- 
ful wife.  It  has  happened,  and  will  happen  again,  that  a  mistress  may  so 
captivate  the  affections  of  her  pnrainour,  that  he  shall  give  her  his  whole  es- 
tate, to  the  exclusion  of  his  lawful  wife  and  children.  Such  an  act  all 
would  condemn,  and  concur  in  tlenouncing  as  immoral  and  improper  the 
influence  which  had  proiluced  it;  but  if  it  be  done  under  the  influ- 
ence of  affection  merely,  however  unworthy  the  object  may  be,  such  wills 
have  been,  and  must  be,  supported,  so  long  as  the  law  allows  a  man  to 
dispose  of  the  property  according  to  his  own  wishes.  It  has  never  been 
supposed  to  be  essential  to  a  will  or  deed  that  the  motive  whicli  led  to  the 
act  should  be  virtuous,  or  that  the  object  of  the  donor's  bounty  should  be 
meritorious,  but  it  is  essential  that  it  should  be  the  free  aud  voluntary  act 
of  a  sane  mind.  If,  in  making  it,  he  has  been  influenced  by  modest  persua- 
sion, by  arguments  addressed  to  his  understanding,  or  by  appeals  to  affec- 
tion merely,  the  act  is  a  valid  one.  If  it  be  in  conformity  to  his  wishes,  it 
is  emphatically  his  will,  and  not  the  will  of  another,  and  we  are  bound  to 
give  it  effect,  without  reference  to  the  motive  of  the  testator,  or  the  un- 
wortliiness  of  the  legatee,  until  the  legislature,  upon  considerations  of  public 
policy,  shall  think  proper  further  to  abriiige  the  right  of  an  owner  to  dis- 
pose of  his  property ":  O'Neall  v.  Farr,  1  Rich.  80,  83;  Farr  v,  Thomp- 
son, 1  Chevea,  37;  Monroe  v.  Barclay,  17  Ohio  St.  302;  93  Am.  Dec.  620. 
As  long  as  the  absolute  power  of  testamentary  disposition  is  conceded,  and 
the  owner  of  property  is  allowed  to  dispose  of  it  to  whomsoever  he  pleases, 
and  for  such  reasons  as  to  him  shaH  seem  adequate,  his  right  to  make  a  be- 
quest to  0!ie  with  whom  his  relations  have  been  meretricious  must  be  ad- 
mitted, even  though  it  be  furtlier  conceded  that  the  bequest  was  made 
because  of  those  relations.  Nor  can  the  existence  of  those  relations  create 
a  presumption  of  undue  influence,  and  impose  upon  the  beneficiary  the  bur- 
den of  disproving  the  exercise  of  such  influence:  In  re  Mondorf,  110  N.  Y. 
450;  Wainwri',iht\  Appeal,  89  Pa.  St.  220;  Roe  v.  Taylor,  45  III.  4S5;  McClure 
v.  McClure,  86  Tenn.  178;  Rudy  v.  Ulrich,  69  Pa.  St.  177;  8  Am.  Rep.  238; 
Porschet  v.  Porschet,  82  Ky.  93;  56  Am.  Rep.  880.  Nevertheless,  it  is  true 
that  when  undue  influence  is  charged,  the  fact  that  the  person  accused  of 
exercising  it  lived  in  illicit  relations  with  the  testator  or  testatrix  may  prop- 


678  In  re  Hess's  Will.  [Minn. 

erly  be  admitted  in  evidence,  to  be  considered  by  the  jury,  in  connection 
with  circumstances  tending  to  prove  undue  influence:  Main  v.  Ryder,  84  Pa. 
St.  217;  Davis  v.  Calvert,  5  Gill  &  J.  269;  25  Am.  Dec.  282;  McClure  v.  Mc- 
Clure,  86  Tenn.  173;  and  it  is  probably  true,  in  some  states  at  least,  that 
acts  and  conduct  of  a  mistress  may  amount  to  undue  influence  when  that 
efiFect  would  not  be  attributed  to  like  acts  or  conduct  on  the  part  of  a  wife: 
McClure  v.  McClure,  86  Tenn.  173;  Dean  v.  Neyley,  41  Pa.  St.  312;  80  Am. 
Dec.  620.  Thus  in  one  case  the  court  said:  "We  are  of  the  opinion  that 
there  is  a  difl'ereace  in  the  two  cases,  and  that  an  influence  when  exercised 
by  a  wife  might  be  lawful  and  legitimate,  l)ut  which,  if  exercised  by  a 
woman  occupying  an  adulterous  relation  to  the  testator,  might  be  undue  and 
illegitimate":  Kessinger  v.  Kessimjer,  37  Ind.  341.  Possibly  this  is  true; 
but  no  court  has  as  yet  pointed  out  any  influence  exercised  by  a  wife  to  the 
extent  of  destroying  the  husband's  free  agency  which  will  not  vitiate  his 
will,  nor  any  influence  of  a  mistress,  leaving  the  testator  free  to  exercise 
such  agency,  which  will  vitiate  such  will.  Perhaps  all  that  can  be  affirmed 
upon  this  subject  with  any  degree  of  confidence  is,  that  in  the  practical  ad- 
ministration of  the  law  both  courts  and  juries,  from  their  aversion  to  a  mis- 
trees  and  their  sympathy  for  a  wife,  will  resolve  all  doubtful  questions 
against  the  former  and  in  favor  of  the  latter,  and  thus  it  will  occur  that  evi- 
dence suSioieiit  to  produce  the  conviction  of  the  undue  influence  of  the  for- 
mer will  not  accomplish  that  result  if  ofifered  against  the  latter. 

Argument,  Persuasion,  Importunity.  — It  is  not  influence  over  the  testator, 
but  undue  influence,  which  may  vitiate  his  will.  It  is  not  essential  that  his 
will  be  suggested  wholly  by  himself,  nor  that,  as  ultimately  executed,  it  be 
of  the  same  purport  as  if  no  one  had  made  any  suggestion  to  him  concerning 
it,  or  used  argument,  persuasion,  or  even  earnest  entreaty,  with  a  view  of 
afi'ecting  its  provisions.  These  are  not  unlawful,  and,  though  often  indeli- 
cate, are  not  improper,  provided  the  testator's  mental  and  physical  condition, 
and  the  circumstances  under  which  he  is  placed,  are  such  that  he  may  delib- 
erate upon  and  either  grant  or  deny  them,  through  the  untrammeled  opera- 
tion of  his  own  mind  and  will.  Thus  a  suggestion  to  a  testator  that 
particular  dispositions  of  hia  property  would  be  just  to  the  natural  objecti 
of  his  bounty:  Elkinton  v.  Brick,  44  N.  J.  Eq.  154;  or  even  a  suggestion  re- 
■ulting  in  a  legacy  which  otherwise  might  not  have  been  made,  do  not  of 
themselves  support  a  charge  of  undue  influence:  Lyons  v.  Campbell,  88  Ala. 
462;  Thornton  v.  Thornton,  39  Vt.  122.  There  can  be  no  doubt  of  the  right 
of  a  wife  not  only  to  counsel  with  her  husband  respecting  his  will,  but  even 
to  employ  argument  and  entreaty  for  the  purpose  of  affecting  its  provisions. 
That  she  urged  upon  him  the  propriety  of  leaving  all  his  property  to  her, 
and  that  ho  acted  accordingly,  does  not  establish  undue  influence:  Hughes  v. 
Murtha,  32  N.  J.  Eq.  288.  In  many  instances,  what  he  is  about  to  dispose 
of  is  the  result  of  the  labors  of  her  lifetime  as  well  as  of  his,  and  while  the 
law,  perhaps  unwisely  as  well  as  unjustly,  may  give  her  no  absolute  right  to 
control  the  disposition,  yet  it  will  not  regard  as  improper  any  influence 
which  she  may  exercise  over  him,  short  of  coercion,  or  the  substitution  of 
her  will  for  his.  "We  do  not  know  of  any  rule  of  law  or  morals  which 
makes  it  unlawful  or  improper  for  a  wife  to  use  her  wifely  influence  for  her 
own  benefit,  or  for  that  of  others,  unless  she  acts  fraudulently  or  extorts 
benefits  from  her  husband  when  he  is  not  in  a  condition  to  exercise  his  fac- 
ulties as  a  free  agent.  A  faithful  wife  ought  to  have  a  very  great  influence 
over  her  husband,  and  it  is  one  of  the  necessary  results  of  proper  marriage 
relations.     It  would  be  monstrous  to  deny  to  a  woman,  who  is  usually  an 


March,  1892.]  In  re  Hess's  Will.  679 

important  agent  in  building  up  domestic  prosperity,  the  right  to  express 
her  wishes  concerning  its  disposal.  And  there  is  no  legal  presumption 
against  the  validity  of  any  provision  which  a  husband  may  make  in  his  wife's 
favor":  Latham  v.  Udell,  38  Mich.  238,  240;  Pierce  v.  Pierc,  38  Mich.  412; 
Moritz  V.  Brough,  16  Serg.  &  R.  403;  Pingree  v.  Jones,  80  111.  177;  Lide  v. 
Lide,  2  Brev.  403.  While  the  right  of  children  may  not  stand  on  the  same 
high  footing  as  that  of  a  wife  to  be  heard  respecting  a  will,  still  there  is  no 
doubt  that  they  have  the  right  to  influence  their  parent  by  fair  argument, 
or  even  by  entreaty,  to  make  disposition  of  his  property  in  their  favor: 
Elliott's  Will,  2  J.  J.  Marsh.  340;  .!////«•  v.  Miller,  3  Serg.  &  R  267;  8  Am. 
Dec.  651;  Oilrenth  v.  Oilreath,  4  Jones  Eq.  142.  In  truth,  as  the  only  ques- 
tion is  whether  or  not  the  testator's  free  agency  was  destroyed,  it  is  not 
material  whence  argument  or  even  entreaty  came,  provided  it  left  such 
agency  untrammeled.  The  appeal  may  be  to  his  afifeotions,  or  his  sense  of 
gratitude  for  past  services,  or  his  sense  of  compassion  for  the  destitution  and 
■want  which  may  overcome  the  applicant  in  the  future,  unless  some  provision 
is  made  for  him  in  the  will:  Oay  v.  Oillilan,  92  Mo.  250;  1  Am.  St.  Rep.  712; 
Hall  V.  Hall,  L.  R.  1  Pro.  &  D.  481;  Hnrrison's  Will,  1  B.  Mon.  351.  So  long 
as  no  fraud  is  practiced  upon  the  testator,  and  no  advantage  taken  of  his 
weakness  and  his  inability  to  resist,  his  bounty  may  be  sought  by  every 
appeal  to  his  intelligence  or  his  emotions,  which  may  lawfully  influence  his 
judgment  or  his  affections.  He  may  be  flattered,  persuailed,  or  entreated: 
McDaniel  v.  Crosby,  19  Ark.  533;  Yoe  v.  McCord,  74  111.  .33;  Srhojield  v. 
Walker,  58  Mich.  96;  Mnynnrd  v.  Vinton,  59  Mich.  139;  60  Am.  Rep.  276; 
Miller  v.  Miller,  3  Serg.  &  R.  266;  8  Am.  Dec.  651;  Hoges  Estate,  2  Brewst. 
450.  The  importunity  may  be  such  as  no  delicate  mind  could  be  guilty  of: 
Tawney  v.  Long,  76  Pa.  St.  10(3;  and  yet  if  he  yield  intelligently,  and  from 
conviction,  the  influence  tiius  operating  is  not  undue:  St.  Legers  Appeal,  34 
€onn.  434;  91  Am.  Dec.  735;  Gilbert  v.  Oilbert,  22  Ala.  529;  58  Am.  Dec.  268. 
"Solicitations,  however  importunate,  cannot  of  themselves  constitute  undue 
influence,  for,  though  these  may  have  a  constraining  effect,  they  do  not  de- 
stroy the  testator's  power  to  freely  dispose  of  his  estate  ":  Trust  v.  Dingier, 
118  Pa.  St.  259;  4  Am.  St.  Rep.  593.  In  other  words,  while  importunity  is 
one  of  the  means  of  obtaining  and  exercising  undue  influence,  j'et  such  influ- 
ence does  not  always  nor  usually  result,  and,  as  already  suggested,  it  is  not 
the  means  employed,  but  the  result  accomplished,  which  vitiates  a  will.  If 
the  condition  of  the  testator  is  such  that  he  cannot  resist  the  importunity, 
then  whatever  is  obtained  by  it  is  the  fruit  of  undue  influence:  Elkinton  v. 
Jirirk,  44  N.  J.  Eq.  154.  "Influence  ol)tained  by  flattery,  importunity, 
threats,  sxiperiority  of  will,  mind,  or  character,  or  by  what  art  soever  that 
human  thouglit,  ingenuity,  or  cunning  may  employ,  which  would  give  do- 
minion over  the  will  of  the  testator  to  such  an  extent  as  to  destroy  free 
agency,  or  constrain  him  to  do  what  is  against  his  will,  what  he  is  unable  to 
resist,  is  such  an  influence  as  the  law  condemns  as  undue,  when  exercised  by 
any  one  immediately  over  the  testamentary  act,  whether  by  direction  or  in- 
<lirection,  or  obtained  at  one  time  or  another":  Wise  v.  Foofe,  81  Ky.  10; 
£chnjield  V.  Walker,  58  Mich.  96;  Habh  v.  Oraham,  43  Ind.  1;  Kinleside  v. 
Hitrri.'ion,  2  Phill.  551 ;  SuUon  v.  Sutton,  5  Harr.  (Del.)  459;  McDanid  v.  Crosby, 
19  Ark.  533.  Whenever  we  have  spoken  of  argument,  persuasion,  or  en- 
treaty as  not  constituting  undue  influence,  provided  the  free  agency  of  the 
testator  was  not  impaired  by  them,  we  have  meant  honest  argument  or  per- 
suasion, and  not  that  which  accom])lished  its  result  by  resorting  to  fraud  or 
falsehood.     The  effect  of  fraud  and  falsehood  has  not  been  so  carefully  con- 


680  In  re  Hess's  Will.  [Minn. 

sidered  by  the  courts  as  its  importance  deserves.  It  is  not  at  all  difficult  to 
imagine  a  case  in  which  a  will  expressed  with  perfect  accuracy  the  wislies  of 
the  testator  at  the  time  it  was  made,  so  that  it  ia  impossible  to  say  of  it  that 
the  testator  did  not,  in  making  it,  act  as  a  free  agent,  and  yet  hia  wishes 
as  80  expressed  were  produced  by  the  artifices  of  another  in  creating  in  the 
mind  of  the  testator  a  false  belief  as  to  the  merits  or  demerits  or  the  neces- 
sities of  the  objects  of  his  bounty;  and  we  apprehend  that  whenever  a  testator 
is  controlled  in  making  his  will  by  a  misrepresentation,  whether  expressed 
or  implied,  provided  it  be  conscious  and  intentional,  then  such  influence  is 
undue,  and  the  party  guilty  of  it,  or  in  whose  behalf  it  was  exercised  by 
another,  will  not  be  permitted  to  take  advantage  of  it:  In  re  Budlom/s  Will, 
126  N.  Y.  423,  432;  Tyler  v.  Gardiner,  35  N.  Y.  559,  576,  593. 

Prejudices  and  Aversions  share  with  affections  and  preferences  ia  produ- 
cing the  convictions  and  impulses  under  which  wills  are  made,  and  the  influ- 
ences of  the  former  are  not  necessarily  undue,  any  more  than  are  those  of  the 
latter,  though  they  more  often  indicate  an  unbalanced  mind  or  want  of  tes- 
tamentary capacitj%  or  the  operation  of  malign  artifices.  The  fact  that  the 
testator  was  prejudiced  against  or  had  an  aversion  for  some  of  the  natural 
objects  of  his  bounty,  and  therefore  disinherited  them  in  favor  of  others, 
whether  related  to  him  or  not,  does  not  establish  undue  influence,  though 
the  will  is  clearly  the  fruit  of  his  resentment  and  dislike:  Nirholrvi  v.  Kerslf 
ner,  20  W.  Va.  256;  Kerr  v.  Lun>'ford,  31  W.  Va.  659;  Carter  v.  Dixon,  69 
Ga.  82.  Nor,  when  family  dissensions  arise,  will  the  fact  that  a  child  not 
only  shared  in  the  feelings  of  his  parent  respecting  the  conduct  of  another 
chdd,  and  perhaps  kept  alive  and  increased  the  parental  resentment,  consti- 
tute undue  influence  vitiating  a  will  in  favor  of  the  former  and  against  the 
latter:  Woodivard  v.  James,  3  Strob.  552;  51  Am.  Dec.  649. 

Improper  Iiiflitenres.  —  All  influences  which  are  undue  are  improper,  if  l)y 
undue  is  meaul  the  domination  of  the  will  of  the  testator  to  the  extent  of 
destroying  his  free  agency;  but  whether  an  improper  influence  is  also  undue 
must  depend  upon  its  effect  upon  the  will  in  question.  We  shall  now  speak 
of  some  influences  of  a  character  so  obviously  improper,  and  so  likely  to  re- 
sult in  undue  influence,  that  we  apprehend  it  must,  in  many  cases,  be  pre- 
sumed from  their  existence,  in  the  absence  of  all  evidence  tending  to  prove 
that  the  testator  successfully  resisted  them.  The  chief  among  these  influ- 
ences is  that  of  fear  generated  in  the  mind  of  an  aged,  feeble,  or  dependent 
person  by  one  in  whose  power  he  is.  Thus  if  it  appears  that  a  son  has 
abused  his  aged  father,  who  resides  with  him,  even  to  the  extent  of  threaten- 
ing him  with  personal  chastisement,  and  that  the  latter  manifestly  lived  in 
fear  that  these  threats  might  be  executed,  but  nevertheless  made  his  will  in 
favor  of  such  son,  contrary  to  his  previously  expressed  intentions,  undue 
influence  should  be  presumed:  Hartnian  v.  StricUer,  82  Va.  225.  Nor  need 
the  fear  be  of  personal  violence;  it  may  result  from  a  threat  that  family  discord 
and  litigation  will  ensue.  "Threats  of  personal  estrangement  and  non-inter- 
course addressed  by  children  to  a  dependent  parent,  or  threats  of  litigation 
between  children  to  influence  a  testamentary  disposition  of  property  by  a 
parent,  constitute  undue  influence  ":  Moore  v.  Blauvelt,  15  N.  J.  Eq.  367. 

Misrepresentation  and  Like  Artifices.  — The  most  potent  influence  which  can 
be  exercised  over  the  testamentary  disposition  of  property  is  to  give  the  testa- 
tor a  false  impression  concerning  persons  in  whose  favor  his  bounty  is  sought, 
or  against  persons  who  may  be  disinherited  by  the  exertion  of  his  testamentary 
powers.  The  necessities  and  the  claims  upon  his  affection  of  different  persons 
who  are  the  natural  objects  of  his  bounty  may  be  expressly  or  impliedly  misrep- 


March,  1892.]  In  re  Hess's  Will.  681 

resented,  so  that  when  he  comes  to  make  his  will  he  acts  upon  unfounded  be- 
liefa,  and  gives  or  withholds  his  bounty  in  a  manner  entirely  dififerent  from  what 
his  action  would  have  been  had  it  not  been  based  upon  beliefs  and  opinions  de- 
liberately instilled  into  his  mind  for  the  purpose  of  influencing  his  will.  We 
have  already  expressed  our  regret  that  the  adjudged  cases  have  not  nmre  dis- 
tinctly considered  the  efl"ect  of  misrepresentation  and  fraud  employed,  not 
for  the  purpose  of  destroying  the  free  agency  of  the  testator,  but  for  the  pur" 
pose  of  causing  such  agency  to  be  exercised  upon  what  may,  for  want  of  a 
better  expression,  be  styled  false  premises.  Of  course,  a  misrepresentation 
that  does  not  influence  a  will  cannot  vitiate  it:  Taylor  v.  Kelly,  31  Ala.  59; 
68  Am.  Dec.  150;  and  the  fact  that  the  beneficiary  of  a  will  has,  in  the  pres- 
ence of  the  testator,  denounced  one  who  is  discriminated  against  by  it  does 
not  establish  undue  influence,  when  the  testator  was  under  no  restraint,  and, 
being  in  the  full  maturity  of  his  powers,  was  competent  to  determine  for  him- 
self whether  the  denunciation  was  merited  or  not:  Dumont  v.  Dumont,  46 
N.  J.  Eq.  223.  But  a  testator  may  not  be  in  a  position  to  judge  for  himself, 
either  because  from  age  or  illness  his  mind  and  will  can  no  longer  deliberate 
or  resist,  or  because  the  true  facts  are  sedulously  concealed.  We  apprehend 
whenever  it  can  be  shown  that  by  intentional  misrepresentation,  expressed 
or  implied,  or  by  a  course  of  treatment  or  concealment,  that  the  testator  has 
been  led  to  disinherit  an  heir,  or  to  revoke  a  devise  or  bequest  because  of  his 
belief  that  such  heir  or  beneficiary  has  become  or  is  unworthy  of  his  bounty, 
or  that  some  other  person  is  more  worthy  of  it,  then  such  misrepresentation, 
if  exercised  by  or  on  behalf  of  the  person  in  whose  favor  the  testamentary 
disposition  is  finally  secured,  is  an  undue  influence,  for  which  the  will  must 
be  set  aside:  Tyler  x.  Gardiner,  35  N.  Y.  559,  576,  593;  hire  Budlong'a  Will,  126 
N.  Y.  423.  Hence  where  a  testator  who  had  contracted  a  second  marriage, 
disinherited  the  children  of  his  first  marriage,  it  was  held  that  evidence  should 
be  received,  giving  an  insiglit  into  the  private  family  life  and  history,  for  the 
purpose  of  disclosing  what  means,  if  any,  his  second  wife  had  employed  to 
alienate  his  affection  from  such  cliiMren:  Newton  v.  Carberry,  5  Cranch  C.  C. 
632;  Reynolds  v.  Adams,  90  111.  134;  32  Am.  Rep.  15. 

Burden  of  Proof,  and  Presurnpiinns.  —  He  who  contests  the  admission  to 
probate  of  a  will,  or  seeks  to  set  aside  such  probate  after  it  has  been  granted, 
on  the  ground  that  the  will  was  procured  by  undue  influence,  must  assume 
the  burden  of  proof,  and  establish  to  the  satisfaction  of  the  court  or  jury  the 
existence  of  such  influence,  and  that  the  will  is  one  of  its  fruits:  Woodward 
V.  James,  3  Strob.  552;  51  Am.  Dec.  G49;  Baldwin  v.  Parker,  99  Mass.  79; 
90  Am.  Dec.  697;  Ri<jj  v.  Wilton,  13  111.  15;  54  Am.  Dec.  419;  Webber  v. 
Sulliran,  5S  Iowa,  260;  Davis  v.  Darts,  12:i  Mass.  590;  Ewen  v.  Perrine,  5 
Redf.  640.  And  when  the  testator  is  shown  to  have  1  -en  of  sound  mind,  no 
presumption  of  the  exercise  of  undue  influence  over  him  can  be  indulged, 
even  though  the  will  is,  in  tlie  opinion  of  the  court  or  jury,  unreasonal)le 
and  unjust,  and  such  as  ought  not  to  have  been  made.  At  least,  .such  is 
the  rule  supported  by  a  majority  of  the  cases  upon  this  subject.  The  evi- 
dence  may,  however,  show  certain  relations  between  the  testator  and  the 
beneficiaries,  well  calculated  to  give  them  an  undue  influence  over  him,  or 
that  his  condition  of  mind  or  body  was  such  as  to  make  it  prol)able  that  he 
was  not  able  to  resist  the  influence  of  others,  or  that  the  provisions  of  the 
will  are  unnatural  and  unreasonable,  and  contrary  alike  to  his  duty  and  his 
previously  expressed  intentions,  and  this  evidence,  without  any  other,  may 
often  create  a  presumption  of  undue  influence,  and  cast  upon  the  proponent 
of  the  will  the  burden  of  removing  such  presumption.     In  the  note  to  Rich- 


682  In  re  Hess's  Will.  [Minn. 

mond'g  Appeal,  21  Am.  St.  Rep.  94-104,  we  so  recently  considered  the  pre- 
sumptions  of  undue  influence  that  we  shall  here  attempt  no  more  than  a 
brief  synopsis  of  the  law  upon  the  subject.  As  to  the  relations  of  the  testa- 
tor and  a  beneficiary  of  his  will,  it  is  sufficient  to  remark  that  the  existence  of 
undue  influence  may  be  presumed  from  them,  —  1.  When  those  relations  are  of 
Buch  special  trust  and  confideiice  as  of  themselves  to  warrant  the  presumption 
that  they  have  an  undue  influence  over  him;  and  2.  When  they  were  such  as 
to  place  him  in  the  power  of  the  beneficiaries  or  their  emissaries  at  a  time 
when  he  was  too  weak,  mentally  or  physically,  to  resist.  Chief  among  the 
relations  of  the  first  class  are  those  of  guardian  and  ward,  attorney  and  client, 
priest,  or  other  spiritual  adviser,  and  persons  looking  to  him  for  advice. 
Thus  if  a  ward  makes  a  testamentary  disposition  in  favor  of  his  guardian  or 
of  members  of  the  guardian's  family,  under  such  circumstances  that  undue 
influence  may  have  been  employed,  the  burden  of  proof  must  be  assumed  by 
those  claiming  under  the  will,  and  they  must  establish  that  it  did  not  result 
from  the  undue  influence  of  the  guardian:  Meek  v.  Perry,  3(5  Miss.  190;  Gar- 
vin V.  Williams,  44  Mo.  465;  100  Am.  Dec.  314;  Bridwell  v.  Swank,  84  Mo. 
455;  Breed  v.  Pratt,  18  Pick.  115,  117;  Seiter  v.  Strand,  I  Demarest,  264.  So 
if  the  beneficiary  was  the  attorney  of  the  testator,  undue  influence  is  pre- 
sumed, and  this  presumption  will  naturally  be  most  potent  when  the  testa- 
tor was  old  and  illiterate,  or  placed  in  such  circumstances  as  not  to  have  the 
advice  of  friends  or  relatives,  and  partly  or  wholly  disinherits  the  natural 
objects  of  his  bounty:  Post  v.  Mason,  26  Hun,  157;  91  N.  Y.  539;  43  Am. 
Rep.  689;  Grove  v.  Spiker,  72  Md.  300;  Riddell  v.  Johnson,  26  Gratt.  152;  St. 
Leijers  Appeal,  34  Conn.  434;  91  Am.  Dec.  735;  Richmond's  Appeal,  59  Conn. 
226;  21  Am.  St.  Rep.  85,  If  the  beneficiary  is  a  priest,  a  spiritual  adviser, 
or  a  spiritualistic  medium,  he  must  also  show  that  he  exercised  no  undue  in- 
fluence: Connor  v.  Stanley,  72  Cal.  556;  1  Am.  St.  Rep.  84;  Leighton  v.  Orr, 
44  Iowa,  679;  Lyon  v.  Home,  L.  R.  6  Eq.  655;  Nottige  v.  Prince,  2  GifiF.  246; 
Greemoood  v,  Cline,  7  Or.  17;  Thompson  v.  Hawks,  14  Fed.  Rep.  902;  Mai-x 
V.  McGlynn,  88  N.  Y.  357.  In  the  cases  to  which  we  have  referred,  the  pre- 
sumption of  undue  influence  arises  from  the  fact  that  the  relations  spoken 
of  are  necessarily  those  of  implicit  trust  and  confidence,  in  which  the 
temptation  and  opportunity  for  abuse  would  be  too  great  if  the  beneficiary 
were  not  required  to  make  affirmative  proof  that  he  did  not  betray  the  con- 
fidence placed  in  him,  nor  so  use  his  influence  as  to  coerce  or  mislead  the 
testator,  or  otherwise  obtain  an  undue  ascendency  over  him.  And  when- 
ever the  reason  of  the  rule  exists,  the  presence  and  applicability  of  the  rule 
itself  may  generally  be  affirmed.  Hence  though  the  relation  is  not  one  of 
those  already  named,  yet  if  it  is  one  of  such  special  trust  and  confidence 
that  the  testator  apparently  trusted  the  beneficiary  as  a  client  trusts  an  at- 
torney, a  patient  his  physician,  or  a  ward  his  guardian,  the  absence  of  undue 
influence  must  be  disproved:  Richmond's  Appeal,  59  Conn.  226;  21  Am.  St. 
Rep.  85;  Moore  v.  Spier,  80  Ala.  129;  Delqfield  v.  Parish,  1  Redf.  1;  In  re 
Wal-<h,  1  Redf.  238;  Daniel  v.  Hill,  52  Ala.  430;  and  this  is  more  especially 
true  when  the  relations  of  the  testator  and  the  confidential  friend  and  ad- 
viser were  such  that  undue  influence  could  have  been  exercised  without  any 
direct  evidence  of  such  influence  being  possible:  Herster  v.  Herster,  116  Pa. 
St.  612;  Waddington  v.  Buz'y,  43  N.  J.  Eq.  154;  or  the  testator  was  feeble 
in  mind  or  body,  or  in  his  dotage:  Waddington  v.  Buzhy,  43  N.  J.  Eq.  154; 
Ray  V.  R<iy,  98  N.  C.  566;  or  the  will  is  in  conflict  with  the  intentions  of  the 
testator,  as  expressed  in  pre-existing  wills  or  otherwise:  Wilson's  Aftpeal,  99 
Pa.  St.  545.     The  relation  of  members  of  the  same  family  is  ordinarily  one 


March,  1892.]  In  re  Hess's  Will.  683 

of  extreme  trust  and  confidence,  and  might  very  naturally  lead  to  the  pre- 
sumption of  undue  influence,  were  it  not  for  the  fact  that  a  testamentary 
disposition  in  favor  of  relatives  hy  consanguinity  is  treated  as  natural  and 
just.  Though  sometimes  the  efTect  of  relationship  has  been  regarded  as  a 
circumstance  to  be  considered  in  connection  with  other  evidence:  OailJtcr  v. 
Oaither,  20  Ga.  709;  yet  there  has  been  no  instance,  so  far  as  we  are  aware, 
in  which  undue  influence  has  been  presumed  merely  from  the  relation  of 
parent  and  child,  husband  and  wife,  or  any  other  relation,  either  of  consan- 
guinity or  affinity:  Ai-matromj  v.  Arinstronij,  6,3  Wis.  162;  In  re  Martin,  98 
N.  Y.  193;  Latham  v.  Udell,  .38  Mich.  238;  Rankin  v.  Rankin,  61  Mo.  295; 
WillofNelmn,  .39  Minn.  204;  Will  of  Andreivs,  33  N.  J.  Eq.  514.  The  fact 
that  illicit  relations  existed  between  the  testator  and  the  beneficiary,  and 
that  they  lived  together  as  liusband  and  wife,  without  being  such,  does  not 
create  any  presumption  of  undue  influence:  Post  v.  Mason,  91  N.  Y.  539;  43 
Am.  Rep.  689;  Sunderland  v.  Hood,  84  Mo.  293;  Riidi/  v.  Ulrick,  69  Pa.  St. 
177;  8  Am.  Rep.  238;  Waimongltfs  Appeal,  89  Pa.  St.  220;  Main  v.  Ryder, 
84  Pa.  St.  217;  Porschet  v.  Porschet,  82  Ky.  93;  56  Am.  Rep.  880;  Monroe  v. 
Barclay,  17  Ohio  St.  .302;  93  Am.  Dec.  620.  If  a  will  is  drafted  by  one  to 
whom,  or  to  whose  family,  or  some  member  thereof,  a  bequest  or  devise  is 
made,  this  is  sometimes  regarded  as  a  suspicious  circumstance:  Edmonds  v. 
Lewer,  II  Jur.,  N.  S.,  911.  Perhaps  it  may  require  more  clear  and  satisfac- 
tory evidence  that  the  contents  of  the  will  were  clearly  disclosed  to  the  tes- 
tator, than  if  it  were  drawn  by  a  disinterested  person:  Beall  v.  Mann,  5  Ga. 
456;  Kelly  v.  Settei/ast,  68  Tex.  13.  However  this  may  be,  there  is  no  jjre- 
sumption  that  it  was  procured  by  the  undue  influence  of  tiie  draughtsman; 
though  if  there  is  other  evidence  of  undue  influence,  then  the  fact  that  the 
will  was  prepared  by  an  interested  party  may  properly  be  considered  by  the 
court  and  jury  as  giving  increased  force  and  probability  to  such  evidence: 
Waddington  v.  Biiz'nj,  45  N.  J.  Eq.  173;  14  Am.  St.  Rep.  706;  Carter  v. 
Dixon,  69  Ga.  82;  Cojfin  v.  Coffin,  23  N.  Y.  9;  80  Am.  Dec.  235;  Cheatham  v. 
Hatcher,  30  Gratt.  56;  32  Am.  Rep.  650;  Post  v.  Masoti,  91  N.  Y.  539;  45 
Am.  Rep.  689;  Montague  v.  Allan,  78  Va.  592;  49  Am.  Rep.  384;  Yardley  v. 
Cuthhertson,  108  Pa.  St.  395;  56  Am.  Rep.  218.  In  some  cases  in  which  it 
appeared  that  the  wills  in  question  had  been  prepared  by  or  at  the  in- 
stance of  persons  interested  in  them,  expressions  were  made  from  which 
an  inference  might  be  drawn  not  in  harmony  with  the  rule  as  we  have  just 
stated  it,  but  on  examination  of  these  cases  we  think  nothing  is  necessarily 
affirmed  by  them,  except  that  "it  should  be  shown  that  the  testator  clearly 
understood  the  contents  of  the  paper  which  he  signed":  Rollwagen  v.  Roll- 
wagen,  63  N.  Y.  504;  Kelly  v.  Settegast,  68  Tex.  13.  "  While  the  mere  fact 
that  a  will  is  written  by  a  party  who  takes  a  benefit  under  it  does  not  inval- 
idate it,  yet  if  the  benefit  is  large,  and  especially  if  the  beneficiary  is  a 
stranger  to  the  testator's  blood,  the  instrument  will  be  scrutinized  with  sus- 
picion, and  clear  proof  that  the  testator  knew  its  contents  will  be  re(juired 
to  admit  it  to  probate.  Proof  of  testamentary  capacity  and  of  formal  exe- 
cution are  insufficient.^  Because  of  its  accui-acy  and  guarded  limitations,  we 
quote  the  statement  of  the  rule  made  by  Baron  Parke:  'If  a  party  writes  or 
prepares  a  will,  under  which  he  takes  a  benefit,  that  is  a  circumstance  which 
ought  generally  to  excite  the  suspicion  of  the  court,  and  calls  upon  it  to  be 
vigilant  and  jealous  in  examining  the  evidence  in  support  of  the  instrument, 
in  favor  of  which  it  ought  not  to  pronounce,  unless  the  suspicion  is  removed, 
and  it  is  judicially  satisfied  that  the  paper  propounded  does  express  the  true 
will  of  the  deceased:  Barry  v.  Bullin,  1  Curt.  637.'     Evidence  in  the  shape 


684  In  re  He^s's  Will.  [Minn. 

of  instructions  for  the  preparation  of  the  will,  or  reading  or  hearing  it  read, 
is  the  most  satisfactory,  but  not  the  only  precise  species  of  evidence  of  the 
testator's  knowledge  of  the  will,  —  circumstantial  evidence  may  be  sufficient; 
but  the  party  claiming  under  the  will,  whatever  mode  of  proof  he  may  adopt, 
must  satisfactorily  establish  that  the  testator  knew  the  contents;  onus  pro^ 
bandi  is  on  him  ":  Lyons  v.  Camphell.  88  Ala.  462. 

The  relations  of  the  second  class,  to  wit,  those  in  which  it  appears  that 
the  testator  was  placed  in  the  power  or  under  the  control  of  the  beneficiary, 
or  of  his  emissaries,  to  an  extent  which  justifies  the  inference,  in  the  absence 
of  countervailing  evidence,  that  he  was  subjected  to  undue  influence,  are  of 
great  variety,  but  all  resemble  in  the  fact  that  the  circumstances  of  the  tes- 
tator were  such  tliat  his  acting  freely  and  intelligently  was  less  probable 
than  his  acting  in  obedience  to  the  will  of  another.  Thus  if  a  will  is  made 
in  favor  of  a  ho-pital  in  which  the  testator  was  at  the  time  lying  in  extreinis, 
and  is  drawn  by  its  chaplain,  and  ignores  the  natural  heir,  slight  circum- 
stances will  justify  the  jury  in  inferring  undue  influence:  Midler  v.  St.  Louis 
Hospital  Ass'n,  5  Mo.  App.  390.  In  truth,  probably  the  majority  of  the 
courts  would  require  additional  evidence  in  support  of  the  will,  especially  if 
it  disregards  the  claims  of  kindred  or  conflicts  with  a  pre-existing  will.  If 
a  testator  is  helpless,  either  from  illness  or  old  age,  and  is  in  the  house  of 
another,  on  whom  he  necessarily  depends  for  care,  comfort,  and  attention, 
the  probability  of  his  being  subjected  to  influences  which  he  cannot  resist  is 
very  great.  "The  rule  to  be  deduced  from  the  decisions  on  the  subject  is 
this:  that  where  a  person,  enfeebled  by  old  age  or  illness,  makes  a  will  in  favor 
of  another  person,  upon  whom  he  is  dependent,  and  that  will  is  at  variance 
with  a  former  will  made  or  intentions  formed  when  his  faculties  were  in  full 
vigor,  and  is  opposed  to  the  dictates  of  natural  justice,  the  presumption  is, 
that  such  a  will  is  the  result  of  undue  influence,  unless  that  presumption  is 
satisfactorily  rebutted  by  other  evidence  in  the  case  ":  Dcvimert  v.  Schnell, 
4  Redf.  409;  Carroll  v.  Hame,  48  N.  J.  Eq.  269;  27  Am.  St.  Rep.  469;  Sioen- 
arlon  v.  Hancock,  22  Hun,  38;  Bichmond's  Appeal,  59  Conn.  226;  21  Am.  St. 
Rep.  85.  Generally,  whenever  it  is  shown  that  when  the  will  was  executed 
the  testator  was  in  extremis,  or  seriously  ill,  or  that  he  was  of  weak  mind, 
either  from  dissipation,  age,  or  natural  infirmity  of  intellect,  it  is  incumbent 
upon  those  claiming  under  the  will  to  show  what  were  the  circumstances 
under  which  it  was  executed,  and  to  rebut  the  presumption  of  undue  influ- 
ence which  must  be  drawn  in  the  absence  of  any  explanatory  testimony: 
Boydv.  Boyd,  66  Pa.  St.  283;  Moore  v.  Moore,  56  Cal.  89;  Allore  v.  Jewell, 
94  U.  S.  506;  Fishhurne  v.  Ferguson,  84  Va.  87;  Harvey  v.  Sullens,  46  Mo. 
147;  2  Am.  Rep.  491. 

Secrecy  in  the  Execution  of  a  Will  is  not  necessarily  a  badge  of  fraud,  nor 
does  it  create  a  presumption  of  undue  influence:  Coffin  v.  Coffin,  23  N.  Y.  9; 
80  Am.  Dec.  235;  Gilbert  v.  Gilbert,  22  Ala.  529;  58  Am.  Dec.  268;  Brick  v. 
Brick,  43  N.  J.  Eq.  167;  nor  can  such  presumption  arise  from  the  fact  that 
when  the  will  was  executed  the  testator  was  surrounded  by  those  of  his 
children  who  were  principally  benefited  by  it,  and  th#  child  who  was  disin- 
herited was  absent:  Bundy  v.  McKni<jht,  48  Ind.  502.  The  fact  that  the  ex- 
ecution of  a  will  was  kept  secret  ironx  some  of  the  children  and  heirs  of  the 
testator  is  often  entitled  to  great  consideration,  in  connection  with  evidence 
tending  to  show  undue  influence.  Thus  where  a  testatrix  was  old  and  feeble, 
with  a  mind  so  impaired  that  she  was  easily  influenced  by  those  possessing 
her  confidence,  and  her  will  was  executed  in  the  presence  of  one  of  her  chil- 
dren, who  was  greatly  benefited  by  it,  the  court  regarded  the  secrecy  of  its 


March,  1892.]  In  re  Hess's  Will.  685 

execution  as  a  circumstance  tending  to  estalilisli  unrlue  influence:  Greenwood 
V.  Cline,  7  Or.  17.  If  it  appears  that  device?  were  resorted  to  for  the  pur- 
pose of  keeping  the  testator's  relatives  away  from  him,  or  for  preventing 
their  being  present  when  the  will  was  made  and  knowinc;  about  its  execution, 
and  those  devices  were  sanctioned  by  t!ie  persons  who  were  made  beneficia- 
ries under  the  will,  to  the  exclusion  of  other  relatives,  undue  influence  may 
be  presumed,  especially  if  the  testator  was  in  a  helpless  condition,  or  his  in- 
tellect was  impaired:  Bynrdv.  Conorer,  39  N.  J.  Eq.  244;  Greenwood  y.  Cline, 
7  Or.  18.  What,  for  want  of  a  better  term,  are  often  styled  unnatural,  ar- 
bitrary, and  unreasonable  provisions  in  a  will  are  frequently  spoken  of  as 
requiring  explanation,  or  as  raising  a  presumption  of  undue  influence.  But 
the  law  accords  testators  the  right  to  make  unnatural  and  unreasonable  pro- 
visions, and  it  does  not  confer  upon  judges  or  juries  authority  to  determine 
for  a  testator  what  will  he  shall  make,  nor  to  disregard  his  preferences  as 
arbitrary  or  unjust.  Nor  has  any  judge  claimed  the  existence  of  this  power, 
or  desired  to  exercise  it.  But  when  it  is  alloiied  that  a  will  has  been  pro- 
cured by  fraud  or  undue  influence,  or  was  executed  while  the  testator  was 
rot  of  a  disposing  mind,  the  fact  that  its  provisions  are  not  in  harmony  with 
the  ordinary  desires  of  a  free  and  rational  mind  must  always  lend  probability 
to  the  allegation.  It  may  happen,  too,  that  the  evidence  discloses  what  were 
the  affections  and  wishes  of  tlie  testator  but  a  short  time  before  the  will  was 
made,  and  if  so,  and  nothing  has  apparently  occurred  to  change  them  or  de- 
stroy their  force,  and  his  testament  is  at  variance  with  them,  such  variance 
is  often  so  unaccountable  that  it  calls  for  explanation,  and  if  such  explana- 
tion is  wanting,  justifies  the  inference  that  what  he  did  was  not  the  act  of 
his  free  and  disposing  mind.  If  the  testator  was  of  sound  mind  and  health, 
and  free  from  all  constraint,  the  mere  preference  of  one  relative  to  another, 
or  the  preference  of  persons  to  whom  he  was  not  in  any  way  related  over 
his  kinsmen,  does  not  necessarily  show  undue  influence:  Kitchell  v.  Beach,  35 
N.  J.  Eq.  446;  Woodward  v.  James,  3  Strob.  552;  51  Am.  Dec.  649;  Coffin  v. 
Coffin,  23  N.  Y.  9;  80  Am.  Dec.  2'i5;  Storer's  Will,  28  Minn.  9;  HiMard  v. 
Hubbard,  7  Or.  42;  Turnure  v.  Tiirnure,  35  N.  J.  Eq.  437;  Jenrkea  v.  Court 
of  Probate,  2  R.  I.  255.  An  eminent  writer  has  said  that  "where  the  will 
is  unreasonable  in  its  provisions,  and  inconsistent  with  the  duties  of  the  tes- 
tator with  reference  to  his  property  and  family,  this,  of  itself,  will  impose 
upon  those  claiming  under  the  instrument  the  necessity  of  giving  some  rea- 
sonable explanation  of  the  unnatural  character  of  the  will,"  and  that  "gross 
inequality  in  the  dispositions  of  the  instrument,  where  no  reason  for  it  is 
suggested,  either  in  the  will  or  otherwise,  may  change  the  burden,  and  require 
explanation,  on  the  part  of  those  who  support  the  will,  to  induce  the  belief 
that  it  was  the  free  and  deliberate  offspring  of  a  rational,  self- poised,  and 
clearly  disposing  mind":  1  Redfield  on  Wills,  516,  537;  and  this  language 
has  been  quoted  with  apparent  approval  in  some  of  the  decisions:  Gay  v. 
V.  Gilldan,  92  Mo.  250;  1  Am.  St.  Rep.  712.  Nevertheless,  we  think  that  it 
does  not  correctly  state  the  law  upon  this  subject,  at  least  when  there  is 
evidence  that  the  testator  was  of  sound  and  disposing  mind.  It  is  rarely 
possible  to  know  what  were  the  reasons  influencing  a  testator,  and  even 
when  they  are  known,  there  is  no  test  by  which  to  determine  whether  they 
are  arbitrary,  unnatural,  or  unjust.  With  some  persons  the  ties  of  kindred 
are  strong,  and  with  others  weak,  and  it  would  be  difficult  to  establish  that 
the  latter  are  less  sane  or  more  subject  to  uiulue  influence  than  the  former. 
In  every  case  coming  within  our  observation  in  which  the  supposed  unnatu- 
ralness  or  unjustness  of  a  devise  or  bequest  has  been  given  any  weight,  there 


686  In  ke  Hess's  Will.  [Minn. 

were  other  circumstances  indicating  either  undue  influence  or  a  defect  in 
testamentary  capacity,  such  as  fear,  dependence,  feeble  health,  old  age,  and 
the  like,  and  whenever  any  of  these  circumstances  is  shown,  then  no  doubt 
the  character  of  the  will  may  be  taken  into  consideration  for  the  purpose  of 
determining  whether  or  not  the  probable  undue  influence  was  not  in  fact 
effective:  Harrel  v.  Harrel,  1  Duvall,  203.  That  the  beneficiariea  had  an 
opportunity  or  a  motive  for  exercising  undue  influence  over  the  testator 
cannot  create  any  presumption  that  they  exercised  it,  and  that  it  was  effect- 
ive in  producing  the  will:  Turnure  v.  Turnure,  35  N.  J.  Eq.  437;  Hubbard 
V.  Hubbard,  7  Or.  42.  The  exceptions  to  this  rule  arise  out  of  cases,  to  which 
we  have  already  referred,  in  which  the  established  relations  of  the  parties 
were  such  that  the  law  presumes  that  the  one  had  an  undue  ascendency  over 
the  other,  or  where  it  is  proved  by  direct  evidence  that  such  ascendency  ex- 
isted, aud  the  will  ia  contrary  to  the  wishes  of  the  testator  as  revealed  whea 
he  was  not  subject  to  such  ascendency:  Clark  v.  FUher,  1  Paige,  171;  19  Am. 
Dec.  402;  Lynch  v.  Clements,  24  N.  J.  Eq.  431;  Banla  v.  Williams,  6  Dem- 
arest,  84. 

Evidence.  —  It  is  not  possible  to  specify  or  describe  all  the  evidence  which 
may  properly  be  received  either  to  prove  or  disprove  the  existence  of  un- 
due influence.  Of  course,  every  fact  from  which  the  inference  might  legiti- 
mately be  drawn  that  such  influence  had  or  had  not  been  exerted,  or  if 
exerted,  that  it  had  or  had  not  been  effective,  is  admissible,  provided  the 
time  of  its  exertion  is  not  so  remote,  either  from  the  making  of  the  will  or 
from  the  death  of  the  testator,  that  no  effect  can  reasonably  be  attributed  to  it. 
On  the  one  hand  it  may  be  conceded  that  it  is  not  essential  that  the  in- 
fluence be  employed  at  the  time  of  the  execution  of  the  will,  and  on  the  other, 
that  it  must  continue  to  be  operative  upon  the  mind  and  will  of  the  testa- 
tor when  he  executed  his  last  testament,  no  matter  when  it  was  first  exer- 
cised: In  re  Shaw's  Will,  11  Phila.  51;  Davis  v.  Calvert,  5  Gill  &  J.  269;  25  Am. 
Dec.  282;  Hartman  v.  Stricldn;  82  Va.  225;  Taylor  v.  Wilburn,  20  Mo.  306; 
64  Am.  Dec.  186.  In  other  words,  if  any  fraud,  coercion,  misrepresentation,  or 
other  means  of  undue  influence  are  exercised  over  the  testator,  it  ia  not  neces- 
sary to  prove  that  they  were  so  exercised  at  the  time  the  will  was  executed, 
but  the  probability  of  their  being  effective  or  influential  must  ordinarily  dimin- 
ish with  the  lapse  of  time,  and  the  time  may  be  so  remote  as  to  justify  the 
exclusion  of  the  evidence,  and  hence  it  was  decided  that  evidence  of  the  re- 
lations, some  eight  or  ten  years  before  the  making  of  the  will,  between  the 
testator  and  the  persons  claimed  to  have  influenced  him  was  too  remote  to 
be  taken  into  consideration:  Bntchelder  v.  Batchelder,  139  Mass.  1;  Horah  v. 
Knox,  87  N.  C.  483.  Though  the  supposed  influence  was  exerted  at  or  about 
the  time  of  the  making  of  the  will,  the  fact  that  the  testator  lived  for  a  long 
period  afterwards,  and  did  not  change  his  will  in  any  respect,  is  entitled 
to  great  consideration.  If  it  be  conceded  that  the  will  was  executed  under 
the  domination  of  undue  influence,  there  is  some  difference  of  opinion  as  to 
whether  it  may  be  ratified  by  mere  lapse  of  time,  or  by  his  retaining  it  in  his 
custody  after  the  influence  has  ceased  to  be  operative,  without  revoking  it,  or 
indicating  in  any  way  his  desire  to  do  so.  If  he  should  execute  a  codicil  to 
it,  attested  in  the  same  manner  as  an  original  will  is  required  to  be  attested, 
there  can  be  no  doubt  that  this  would  be  an  effective  ratification  of  the  will, 
if  the  undre  influence  was  no  longer  controlling:  O'Neall  v.  Farr,  1  Rich. 
80.  In  other  cases  it  has  been  said,  in  general  terms,  that  a  ratification  of  a 
will  after  the  undue  influence  was  withdrawn,  and  when  the  testator  was 
certainly  a  free  agent,  would  destroy  the  vitiating  effect  of  the  influence 


March,  1892.]  In  re  Hess's  Will.  687 

■under  which  the  will  was  originally  executed,  but  the  court  did  not 
explain  whether,  by  ratification,  it  meant  merely  retention  and  acquies- 
cence, or  some  expression  of  desire  made  and  attested  in  the  same  form 
and  with  the  same  solemnity  as  the  original  will:  Taylor  v.  Kelly,  31  Ala. 
59;  6S  Am.  Dec.  150.  On  the  other  hand,  the  position  has  been  taken 
that  if  a  will  was  originally  tainted  with  undue  influence  to  the  extent  that  it 
was  not  then  operative,  it  was,  in  legal  contemplation,  not  the  will  of  the 
testator  at  all,  and  therefore  that  he  still  remained  intestate,  and  must  so 
continue,  either  until  he  executes  another  paper,  and  thereby  ratifies  the 
will  by  some  writing  attested  so  as  to  amount  to  a  new  will:  Lamb  v.  Oirt- 
man,  26  Ga.  6J5;  Chaddich  v.  Hahy,  81  Tex.  617.  Very  rarely  does  it  occur 
that  a  will  is  conceded  to  have  been  the  fruit  of  undue  influence.  Even  if  it 
be  clear  that  there  was  an  attempt  to  exert  such  influence,  yet  there  is 
always  doubt  whether  or  not  it  was  effective;  for  the  will,  though  it  accords 
witii  the  desires  of  those  guilty  of  attempting  to  unduly  influence  the  testa- 
tor, may  nevertheless  correctly  express  his  testamentary  desires,  and  be  the 
result  of  them,  and  not  of  any  extraneous  influence.  If,  after  a  will  is  exe- 
cuted, the  testator  lives  for  a  considerable  time  in  the  possession  of  his  men- 
tal faculties,  and  apparently  free  from  all  undue  influence,  the  presumptioa 
that  the  will  never  was  tainted  by  any  umlue  influence  becomes  very  strong, 
if  not  absolutely  irresistible:  Iriidi  v.  Smith,  8  Serg.  &  R.  573;  11  Am.  Dec. 
648;  Floyd  v.  Floyd,  3  Strob.  44;  49  Am.  Dec.  62G;  Kelly  v.  Thewles,  2  Ir. 
Ch.  510. 

As  to  the  Amount  of  Emdence  required  to  support  the  allegation  of  undue 
influence,  the  decisions  speak  "a  varied  language."  "  In  order  to  set  aside 
the  will  of  a  person  of  sound  mind,  it  is  not  sufficient  to  show  that  the  cir- 
cumstances attending  its  execution  are  consistent  with  the  hypothesis  of  its 
having  been  obtained  by  undue  influence.  It  must  be  shown  that  they  are 
inconsistent  with  the  contrary  hypothesis  ":  Boyie  v.  Rosxborou<jh,  6  tl.  L. 
Caa.  51.  "  Undue  influence  will  not  be  presumed,  but  must  be  proved  either 
by  direct  affirmative  evidence,  or  by  an  array  of  circumstances  making  an 
inference  of  its  exercise  alisolutely  irresistible  ":  Whelpley  v.  Loder,  1  Dem- 
areat,  512.  There  ia  nothing  in  reason  nor  in  the  authorities  to  justify  this 
extreme  and  emphatic  language.  The  existence  of  undue  influence  must  be 
proved  by  the  persons  attacking  the  will.  The  burden  is  on  them,  and  they 
do  not  sufficiently  8upi)ort  it  by  establishing  motive,  or  oytportunity,  or  evea 
the  existence  of  circumstances  which  are  as  consistent  with  undue  influence 
as  with  its  absence:  La  Ban  v.  Vanderhilt,  3  Redf.  384;  Boyse  v.  Rosshorottgh, 
6  H.  L.  Caa.  2.  "  To  invalidate  a  will  on  the  ground  of  undue  influence,  there 
must  be  affirmative  evidence  of  the  facta  from  which  such  influence  is  to  be 
inferred.  It  is  not  sufficient  to  show  that  the  party  benefited  by  the  will 
had  the  motive  or  the  opportunity  to  exert  such  influence;  there  must  be 
evidence  that  he  did  exert  it,  and  so  control  the  actions  of  the  testator,  either 
by  importunities  which  he  could  not  resist,  or  by  deception,  fraud,  or  other 
improper  means,  that  the  instrument  is  not  really  the  will  of  the  testator  ": 
Cudnfy  v.  Cndnry,  68  N.  Y.  J  52;  Woodtmrd  v.  Jnme^,  3  Strob.  552;  51  Am. 
Dec.  649.  This  affirmative  evidence  need  not  exclude  every  other  hypothe- 
sis, nor  satisfy  the  jutlge  or  jury  beyond  a  reasonable  doubt.  It  is  sufficient 
that  it  preponderates  over  the  evidence  offered  to  rebut  it.  "  The  burden 
of  proof  being  on  those  who  attack  a  will  on  the  ground  of  undue  influence, 
it  is  not  sufficient  that  they  barely  show  that  the  circumstances  of  the  wdl 
are  consistent  with  the  hypothesis  of  undue  influence;  for  this  would  be  but 
to  create  an  equipoise  in  the  testimony,  and  the  onus  being  on  the  party  at- 


688  In  re  Hess's  Will.  [Minn. 

tacking  the  will,  he  must  go  a  step  further,  and  show  by  any  suitable  evidence 
the  inconsistency  between  circumstances  of  the  execution  of  the  will,  and 
its  being  executed  without  the  interposition  of  undue  influence  ":  Oay  y. 
Oillilan,  92  Mo.  '250;  1  Am.  St.  Rep.  712.  In  fact,  the  question  of  the  amount 
of  evidence  necessary  to  support  the  charge  of  undue  influence  must  be  de- 
termined by  the  jury,  or  the  court  sitting  as  the  jury.  The  question  is  one 
of  fact,  and  the  jury  may  therefore  properly  reach  the  conclusion  that  the 
will  is  vitiated  by  undue  influence,  if  any  competeut  evidence  is  submitted  to 
them  tending  to  support  that  conclusion:  Monroe  v.  Barday,  17  Ohio  St.  313; 
93  Am.  Dec.  620;  Dean  v.  Neijb-y,  41  Pa.  St.  312;  SO  Am,  Dec.  620.  But 
the  court  ought  not  to  submit  the  question,  where  the  evidence  is  of  so  weak 
and  inconchisive  a  character  that  any  verdict  based  upon  it  must  be  set 
aside:  Hcrster  v.  Herster,  122  Pa.  St.  339;  9  Am.  St.  Rep.  95;  Munly's  Ap- 
peal, 123  Pa.  St.  464. 

In/erred  from  Circumstanr.es.  — Evidence  of  undue  influence  is  more  often 
circumstantial  than  direct,  and  there  is  no  doubt  that  circumstantial  evi- 
dence  is  admissible,  and  that  it  is  sufficient  to  support  the  allegation  of  un- 
due influence:  Marvin  v.  Marvin,  3  Abb.  App.  192.  The  circumstances 
•which  are  relied  upon  for  this  purpose  must  be  such  that  the  inference 
of  undue  influence  may  be  legitimately  and  reasonably  drawn  from  them, 
and  it  is  not  sufficient  that  they  are  consistent  with  the  existence  of 
such  influence.  Thus,  for  the  purpose  of  establishing  undue  influence  on 
the  part  of  the  testator's  wife,  it  is  not  admissible  to  prove  that  in  the  ordi- 
nary aflfairs  of  life  she  exercised  great  control  over  him.  Such  control  is  not 
in  itself  inconsistent  with  her  wifely  position  and  duty;  and  if  the  fact  of 
its  existence  established  that  it  was  undue,  and  was  exercised  over  the  tes- 
tamentary act,  the  presumption  of  undue  influence  would  be  created  from 
those  happy  marital  relations  in  which  there  is  the  greatest  probability  that 
the  testator  was  moved  solely  by  his  aS^ection  and  his  sense  of  justice: 
Storers  Will,  28  Minn.  9.  It  is  generally  proper  to  admit  evidence  tending 
to  show  the  circumstances  under  which  the  will  was  made,  and  the  relations 
of  the  testator  to  the  beneficiary  and  others.  For  this  purpose  evidence 
maybe  received  to  prove  who  were  the  members  of  the  testator's  family,  and 
what  were  the  amount,  situation,  and  character  of  his  property.  At  least, 
such  evidence  must  be  proper  when  the  other  facts  disclosed  make  it  neces- 
sary to  consider  whether  the  will  was  that  of  a  reasonable  man  acting  with- 
out constraint:  Richmond's  Appeal,  59  Conn.  226;  21  Am.  St.  Rep.  85.  If  the 
testator  has  contracted  a  second  marriage,  and  has  disinherited  the  children 
of  his  former  marriage,  and  there  is  evidence  to  establish  the  undue  influ- 
ence  of  his  second  wife,  it  is  competent  to  show  that  there  was  no  reason  for 
the  exclusion  of  the  children  of  his  former  marriage  from  the  benefits  of  the 
will:  Mullen  v.  Helderman,  S7N.  C.  471;  or  that  before  the  second  marriage  his 
relations  with  his  children  were  kind  and  affectionate,  but  afterwards  they 
were  forbidden  to  enter  his  house,  and  that  he  was  for  a  considerable  time  in 
feeble  health,  and  under  the  apparent  domination  of  his  wife:  Reynolds  v. 
Adams,  90  111.  134;  32  Am.  Rep.  15.  "  Upon  the  question  of  undue  influence, 
•we  have  no  doubt  the  general  condition  and  surroundings  of  the  deceased,  and 
his  relations  with  his  wife,  —  who  is  the  only  person  supposed  to  have  exer- 
cised any  influence  over  him,  —  may  be  properly  shown  for  any  period  which 
can  reasonably  be  regarded  as  bearing  on  the  act  of  the  disposal  of  his  prop- 
erty. But  as  the  only  important  inquiry  is  concerning  the  pressure  of  undue 
influence  at  the  very  time  of  the  will,  the  testimony,  to  show  facts  of  an  in- 
ferential nature,  must  be  confined  to  what  would  be  legitimately  regarded  aa 


March,  1892.]  In  re  Hess's  Will.  689 

bia  then  present  relations.  No  technical  nicety  as  to  a  few  days,  or  perhaps 
a  few  weeks,  can  be  demanded.  But  certainly,  so  far  as  domestic  relations 
have  any  pertinency  whatever  on  such  questions,  it  ia  quite  clear  that  if  such 
influence  is  to  be  inferred  from  them,  the  facts  must  be  more  readily  shown  by 
recent  than  by  past  relations,  and  the  testimony  of  fresh  events  is  less  likely 
to  be  manufactured  than  that  of  transactions  long  past ":  Pierce  v.  Pierce, 
38  Mich.  412.  While  in  the  case  of  a  second  marriage  it  ia  undoubtedly 
proper  to  receive  sufficieut  evidence  to  show  the  relations  between  the  testator 
and  his  second  wife,  and  the  other  members  of  his  family,  for  the  purpose 
of  assisting  in  reaching  a  correct  conclusion  as  to  her  influence  over  him, 
and  as  to  whether  it  has  been  exerted,  and  with  success,  for  the  purpose 
of  unduly  aff'ecting  his  will,  yet  it  is  not  proper  to  investigate  old 
scandals  antedating  their  marriage,  with  reference  to  his  and  her  con- 
duct before  the  marriage,  and  during  the  lifetime  of  his  former  spouse: 
Webber  v.  Sullivan,  58  Iowa,  260;  Pierce  v.  Pierce,  .38  Mich.  412.  It  is  said 
that  neither  general  good  nor  general  bad  tieatuient  is  evidence  of  undue 
influence:  McMalian  v.  Ryan,  20  Pa.  St.  329;  Taioaey  v.  Long,  76  Pa.  St.  106. 
The  latter  part  of  the  proposition  seems  unreasonable;  for  if  fraud  and  co- 
ercion are,  as  it  must  be  admitted,  most  potent  means  of  undue  influence,  ia 
it  not  more  reasonable  to  believe  in  their  presence  and  potency  when  the 
conduct  of  the  accused  is  shown  to  have  been  harsh  and  cruel,  than  when  it 
was  characterized  by  kindness  or  even  by  indifference?  If  the  testator  wholly 
or  partly  disinherited  some  of  his  heirs,  the  inference  that  in  doing  so  he 
was  exercising  his  own  free  agency  is  more  reasonable  when  some  estrange- 
ment was  known  to  exist.  Hence,  evidence  of  such  estrangement  is  always 
admissible:  Mooney  v.  Olsen,  22  Kan.  69;  Dale  v.  Dale,  36  N.  J.  Eq.  269. 
Evidence  that  a  recital  in  a  will  is  false,  it  has  been  held,  is  not  admissi- 
ble to  show  undue  influence.  This  cannot  be  true  in  all  cases;  for  it  often 
happens  that  an  undue  influence  is  acquired  by  a  misrepresentation,  and  a 
false  recital  would,  at  least,  be  evidence  of  the  testator's  belief  in,  and  his 
acting  upon,  the  matters  recited.  When  a  beneficiary  or  other  person  al- 
leged to  have  exercised  an  undue  influence  was  present  at  the  execution  of 
the  will,  or  procured  it  to  be  executed,  and  took  possession  of  it,  what  he 
said  and  did  is  generally  admissible  as  part  of  the  res  ge.st(e.  Therefore  it 
may  be  shown  that  he  was  officious;  that  he  intermeddled  with  or  hurried 
the  execution  of  the  will:  Gilbert  v.  OiU'Crt,  22  Ala.  529;  58  Am.  Dec.  268; 
HollinijiiiuortJia  Will,  58  Iowa,  526;  or  after  causing  it  to  be  prepared,  con- 
cealed it  from  the  relatives:  Byard  v.  Conover,  39  N.  J.  Eq.  244.  When  a 
testator  of  great  wealth  contracts  a  marriage  in  old  age,  or  while  seriously 
or  mortally  ill,  and  in  such  circumstances  that  the  object  of  the  other  con- 
tracting person  is  obviously  mercenary,  and  the  will  is  made  in  harmony 
with  that  object,  all  these  facts  are  proper  evidence  for  the  consideration  of 
the  court  or  jury,  and  but  slight  evidence  of  undue  influence  will  justify  the 
denial  of  the  probate  of  the  will:  Primmer  v.  Primmer,  75  Iowa,  415;  Wi<:eiier 
V.  Maiipin,  2  Baxt.  342;  Potter's  Apfieal,  53  Mich.  106.  The  mere  fact  that 
the  will  in  question  differs  materially  from  a  pre-existing  will  is  not  evidence 
of  undue  influence:  Horn  v.  Pullman,  72  N.  Y.  269;  Booth  v.  Kitchen,  3 
Redf.  52;  Wood  v.  Bishop,  1  Demarest,  512;  Rankin  v.  Rankin,  61  Mo.  295; 
Nelsons  Will,  39  Minn.  204.  Such  a  will  is  doubtless  admissible  for  the 
purpose  of  showing  what  the  testator's  feelings  and  intentions  were  at  the 
time  it  was  executed,  and  if  undue  influence  was  attempted  to  be  exercised 
over  him,  might  justly  lead  to  the  conclusion  that  it  had  been  effective.  On 
the  other  hand,  in  so  far  as  a  former  will  agrees  with  a  later  one,  it  tends  to 
Am.  St.  Kep.,  Vol.  XXXL  —44 


690  In  re  Hess's  Will.  [Minn. 

establish  a  fixed  purpose  on  the  part  of  the  testator,  and  to  support  the  in- 
ference that  what  he  did  was  not  the  result  of  undue  influence:  Thompson  v. 
Isk,  99  Mo.  160;  17  Am.  St.  Rep.  552.  The  fact  that  a  will  was  retained  by 
the  testator  for  a  considerable  time  after  its  execution,  while  he  was  under 
no  constraint,  tends  to  rebut  the  claim  that  it  was  the  fruit  of  undue  influ- 
ence; but  this  is  not  true  if,  during  such  time,  he  was  too  ill  and  his  intellect 
was  too  weak  to  consider  the  propriety  of  revoking  the  will:  Irish  v.  Smith, 
8  Serg.  &  R.  573;  1 1  Am.  Dec.  648. 

In  nearly  every  case  in  which  the  allegation  of  undue  influence  is  made,  it 
becomes  necessary  to  consider  the  health  of  the  testator,  mentally  and 
physically,  at  or  about  the  time  his  will  was  executed,  because,  unless  in 
exceptional  circumstances,  it  is  difficult  to  conceive  of  undue  influence  oper- 
ating on  a  person  of  mental  and  physical  vigor  to  the  extent  of  destroying 
free  agency.  Not  only  is  evidence  always  admissible  to  prove  that  the  tes- 
tator was  weak  in  body  or  mind,  or  both,  and  therefore  apparently  not  in  a 
condition  to  resist,  but  where  such  weakness  is  satisfactorily  established, 
evidence  of  undue  influence  may  be  treated  as  sufficient  to  justify  the  setting 
aside  of  the  will,  which,  had  it  been  employed  against  a  person  of  vigorous 
mind  and  body,  would  have  been  scarcely  worthy  of  consideration:  Edge  v. 
Edje,  38  N.  J.  Eq.  211;  Rollwajen  v.  Eolbvagen,  63  N.  Y.  504;  Taylor  v. 
Wilbur n,  20  Mo.  306;  64  Am.  Dec.  186;  3Tartin  v.  Teague,  2  Speers,  268;  Chan- 
dler V.  Fen-is,  1  Harr.  (Del.)  454;  Levei-ett  v.  Carlisle,  19  Ala.  80;  Potts  v. 
House,  6  Ga.  324;  50  Am.  Dec.  329;  Beirherihnch  v.  Reichenhach,  127  Pa.  St. 
564;  Hartman  v.  Strickler,  82  Va.  225.  Helplessness  of  mind  and  body  may 
result  from  intoxication  as  well  as  from  age  and  disease,  and  therefore  it  is 
competent  to  show  that  a  testator  executed  his  will  while  he  was  intoxicated: 
In  re.  Cunningh'im,  52  Cal.  465. 

The  Declarntiois  of  a  Testator  are  generally  admissible  on  the  trial  of  the 
issue  of  undue  influence,  and  yet,  when  received,  their  reception  is  never  for 
the  purpose  of  proving  that  such  influence  was  exercised.  Hence  a  finding 
of  fraud  or  undue  influence  must  be  supported  by  some  other  evidence  than 
the  statements  of  the  testator;  and  if  there  is  no  evidence  of  an  attempt  to 
exercise  such  influence,  his  declarations  should  not  be  received:  Cudney  v. 
Cudney,  68  N.  Y.  148;  La  Bau  v.  VanderUU,  3  Redf.  384;  Griffith  v.  Diffen- 
derffer,  50  Md.  466;  Barker  v.  Barker,  36  N.  J.  Eq.  259;  Barring  v.  Allen, 
25  Mich.  505;  Storers  Will,  28  Minn.  9;  Bush  v.  Bush,  87  Mo.  480;  Rusling  v. 
Ruslimj,  35  N.  J.  Eq.  120;  Kitchellv.  Beach,  35  N.  J.  Eq.  446;  Hayes  v.  West,  37 
Ind.  21.  But  if  there  is  evidence  of  the  exercise  of  undue  influence,  then  the 
subsequent  declarations  of  the  testator  are  admissible  for  the  purpose  of  show- 
ing the  condition  of  his  mind  and  the  efi'ect  which  the  influence  had  upon  him: 
Marx  V.  McOlynn,  88  N.  Y.  358;  Griffith  v.  Diffenderffer,  50  Md.  466;  Par- 
sons V.  Parsons,  66  Iowa,  754;  Barker  v.  Barker,  36  N.  J.  Eq.  259;  Reel  v. 
Reel,  1  Hawks,  248;  9  Am.  Dec.  632;  Bates  v.  Bates,  27  Iowa,  110;  1  Am. 
Rep.  260.  While  the  courts  profess  to  admit  evidence  of  this  character 
solel}'  for  the  purpose  of  ascertaining  the  condition  of  the  testator's  mind, 
and  the  efi'ect  of  the  undue  influence  upon  him,  it  is  manifest  that,  when 
once  admitted,  its  efi'ect  cannot  be  restricted  to  this  purpose.  If  it  be  true, 
as  it  undoubtedly  is,  that  it  is  competent  to  prove  that  a  testator  said,  after 
making  his  will,  that  he  had  not  made  it  as  he  wanted  to,  that  he  had  done 
wrong,  but  could  not  help  it:  Dennis  v.  Weekes,  51  Ga.  24;  or  that,  when  in 
the  presence  of  the  person  charged  with  exercising  the  infiuence,  he  could 
not  resist  her,  and  that  he  did  not  know  but  she  had  deceived  him  into  dis- 
inheriting his  sou:  Potter  v.  Baldwin,  133  Mass.  427;  or  that  he  knew  noth« 


March,  1892.]  Browning  v.  Hinkle.  691 

ing  about  the  will,  and  that  they  had  got  round  him  and  "  confuddled  "  him: 
Stepheiisonv.  Stephenson,  62  Iowa,  163;  then  it  ia  also  equally  true  that  jurori 
will  not  be  able,  if  they  give  credence  to  these  statements,  to  prevent  their 
exercising  a  controlling  influence  upon  the  question  of  whether  or  not  undue 
iufluence  was  exercised.  Declarations  made  by  a  testator  at  the  time  of  ex- 
ecuting his  will  are  admissible  as  parts  of  the  7-es  yestfB:  2f^el.son  v.  McClana- 
han,  55  Cal.  308.  Any  evidence  which  tends  to  show  that  the  disposition  of 
his  property  by  the  testator  was  or  might  have  been  the  result  of  his  own 
desires  or  preferences,  as  well  as  of  undue  influence,  or,  on  the  contrary, 
that  it  must  have  been  the  result  of  undue  iufluence  rather  than  of  his  owu 
desires  or  preferences,  is  admissible.  His  feelings  are  likely  to  find  expres- 
sion in  words.  Hence  his  declarations,  whether  made  before  or  after  the 
execution  of  his  will,  may  be  received  for  the  purpose  of  showing  what  hia 
desires  or  feelings  were  with  respect  to  any  particular  person,  whether  this 
tends  to  support  or  to  overthrow  the  will:  Canada's  Appeal,  47  Conn.  450; 
lioherts  V.  Trawick,  17  Ala.  55;  52  Am.  Dec.  164;  Gilbftrt  v.  Oilhert,  22  Ala. 
529;  58  Am.  Dec.  268;  Stephenson  w.  Stephenson,  &2lo\\i^,  163;  Neel  y.  Potter, 
40  Pa.  St.  483;  Allen  v.  Public  Administrator,  1  Bradf.  378;  Griffith  r. 
Diffmderffer,  50  Md.  466;  Dye  v.   Young.  55  Iowa,  433. 

May  Affect  Part  only  of  the  Will.  —  Though  undue  influence  has  been 
effectively  exerciseil,  it  does  not  always  vitiate  the  whole  will.  It  may  have 
been  restricted  to  procuring  a  devise  or  bequest  in  favor  of  a  particular  per- 
son or  object,  and  the  remainder  of  the  will  may  be  the  result  of  the  free 
agency  of  the  testator,  acting  without  even  a  suggestion  from  any  other  per- 
son. If  a  will  consists  of  separable  parts,  and  it  is  possible  to  affirm  that 
some  of  them  are  not  affected  by  any  undue  influence,  and  thej'  may  be 
permitted  to  stand  alone  without  doing  injustice  to  the  testamentary  inten- 
tions of  the  decedent,  then  those  parts  will  remain  in  full  force,  and  the  will 
will  be  denied  probate  only  as  to  the  part  or  parts  procured  by  the  undue 
influence:  Baker's  Will,  2  Redf.  179;  Harrison's  Appeal,  iS  Conn.  202;  Lyons 
V.  Cainphell,  88  Ala.  462;  Lord  Trimlestown  v.  D' Alton,  1  Dow  &  C.  85;  1 
Bligh,  N.  S.,  427. 


Browning  v.  Hinkle. 

[48  MiNNKSOTA,  544.] 

Corporations. — Declarations  of  the  Offic'er8  of  a  Corporation  bind 
it  only  when  made  in  the  course  of  the  performance  of  their  authorized 
duties,  so  that  such  declarations  constitute  part  of  the  res  ijestce. 

Corporations. — One  Sued  for  the  Prick  of  Stock  Issued  to  Him 
cannot  escape  his  obligation  to  pay  therefor  by  proving  tliat  certain 
officers  of  the  corporation  told  him  that  such  stock  had  been  paid  for  by 
another  person,  unless  he  further  proves  that  in  making  such  declara- 
tion such  officer  was  acting  for  the  corporation  and  clotlied  with  author- 
ity to  speak  for  it. 

Davis  and  Farnam,  for  the  appellant. 

Keith,  Evans,  Thompson,  and  Fairchild,  for  the  respondent. 

Dickinson,  J.     This  is  an  action  by  a  receiver  of  an  insol- 
vent corporation,  the  Price-Condi t  Fence  Company,  to  recover 


742  Altoona  Second  National  Bank  v.  Dunn.      [Penn. 

fendant's  second  point,  nor  do  we  find  substantial  error  in  any 
of  the  other  answers  to  points,  or  in  those  portions  of  the 
charge  embraced  in  the  respective  specifications.  The  case 
was  fairly  submitted  to  the  jury,  and  the  verdict  appears  war- 
ranted by  the  testimony. 

Judgment  affirmed.  

Rewards,  when  Earned:  See  extended  note  to  Hayden  v.  Souger,  26  Am. 
Kep.  7,  8.  The  cases  of  Crawshmo  v.  City  of  Roxbury,  7  Gray,  374,  and  Louis- 
ville etc.  R.  R.  Co.  V.  Goodnight,  10  Bush,  552,  19  Am.  Rep.  80,  there  cited, 
are  ia  accord  with  the  ruling  of  the  principal  case. 


Altoona    Second    National     Bank    v.    Dunn. 
Gardner  v.  Dunn. 

[151  Pknnsylvania  State,  228.] 
Negotiable  Instruments  —  Accommodation   Notes  with  Restrictions. 

—  When  the  payee  of  a  sealed  accommodation  note  receives  it  subject 
to  the  restriction  that  it  is  to  be  used  only  in  obtaining  a  loan,  he  cannot 
pledge  it  for  an  antecedent  debt;  but  if  he  receives  it  without  restriction 
as  to  its  use,  he  may  so  pledge  it. 

Negotiable  Instruments  —  Accommodation  Notes  —  Defenses  against. 

—  Proof  that  an  accommodation  note  was  given  subject  to  the  restric- 
tion that  it  was  only  to  be  used  in  obtaining  a  loan  is  a  perfect  defense 
by  the  maker  against  it  in  the  hands  of  a  pledgee,  to  whom  it  has  been 
given  as  security  for  an  antecedent  debt. 

Rules  to  open  judgments.  Edward  T.  Dunn  and  Ellen 
Dunn,  his  mother,  were  indebted  to  the  appellee  bank,  of 
which  H.  A.  Gardner  was  cashier,  in  the  sum  of  ten  tliousand 
dollars,  and  being  called  upon  for  security,  said  Edward  ob- 
tained judgment  notes  aggregating  ten  thousand  dollars  from 
three  of  his  brothers  and  sisters,  and  presented  them  to  the 
bank.  The  bank  accepted  them  as  security,  and  entered  up 
the  judgments.  The  note  in  suit  was  given  by  Maggie  Dunn 
to  her  brother,  the  said  Edward,  upon  his  representation  that 
it  would  enable  him  to  obtain  a  further  loan  from  the  bank, 
and  it  was  given  for  this  purpose.  Edward  Dunn  seems  to 
have  received  the  other  notes  from  his  brothers  and  sisters 
upon  the  same  representations;  but  after  the  bank  had  re- 
ceived all  the  notes  from  him,  and  entered  up  judgments 
thereon,  it  refused  to  make  any  further  loans  to  him,  and  as 
his  insolvency  followed,  the  makers  of  the  above  notes  were 
Bought  to  be  held  responsible  for  his  debt.     The  rules  to  open 


Oct.  1892.]     Altoona  Second  National  Bank  v.  Dunn.     743 

the  judgments  entered  up  by  the  bank  upon  the  above  notes 
were  discharged,  and  the  makers  thereof  appealed.  Other 
facts  appear  in  the  opinion. 

John  G.  Johnson,  Martin  Belly  and  John  D.  Blair,  for  the 
appellants, 

A.  S.  Landis,  Greevy  and  Patterson,  and  William  S.  Ham- 
mond,  for  the  appellees. 

Heydrick,  J.  Conceding  that  the  learned  court  below  was 
justified  by  the  evidence  in  the  finding  that  "there  was  no 
misrepresentation  on  the  part  of  Gardner  to  obtain  the  notes," 
it  does  not  follow  that  the  appellant  can  be  held  beyond  the 
amount,  if  any,  which  the  bank  advanced  upon  her  credit. 
The  plantiff  does  not  claim  to  have  advanced  more  than  about 
four  hundred  dollars  upon  the  appellant's  credit,  and  there  is 
some  doubt  whether  that  sum  was  not  advanced  before  the 
note  in  controversy  was  made,  and  without  the  knowledge  or 
any  promise  upon  the  part  of  the  appellant.  While  it  is  quite 
clear  that  two  of  the  parties  to  the  note,  Edward  T.  Dunn  and 
Ellen  Dunn,  were  indebted  to  the  bank  in  the  sum  of  ten 
thousand  dollars,  for  which  it  held  the  note  of  the  latter,  in- 
dorsed by  the  former,  and  that  it  was  pressing  for  security  for 
this  indebtedness,  it  is  not  pretented  that  it  accepted  the  note 
in  suit  in  payment,  or  surrendered  the  note  which  it  already 
held.  The  cashier  says  that  when  Edward  handed  it  to  him 
he  told  him  that  it  was  not  what  he  had  promised,  and  was 
not  satisfactory,  and  insisted  that  he  get  the  signatures  of  the 
other  heirs  of  his  father  to  it.  And  when  Edward  brought  in 
three  other  judgment  notes  for  $3,333.33^  each,  signed  by  three 
of  his  brothers  and  sisters,  the  appellants  in  three  other  cases 
argued  herewith,  it  does  not  appear  that  all  together  were  ac- 
cepted in  payment  of  the  original  debt.  On  the  contrary, 
Mr.  Gardner  says:  "  Some  time  after  that  (the  delivery  of  the 
last  three  notes),  Mr.  Dunn  came  in  with  a  receipt  drawn  up, 
I  do  not  remember  the  amount  oft  exactly,  but,  substantially, 
it  was  an  acknowledgment  on  ou  •  part  that  both  these  three 
notes  and  the  one  given  by  him  a  few  days  before  for  ten 
thousand  dollars  were  to  secure  the  note  of  his  mother  held  by 
us,  and  not  for  twenty  thousand  dollars  indebtedness,  as  the 
face  of  them  would  show.  It  appeared  to  me  to  be  fair  and 
right,  and  I  signed  and  delivered  it  to  Mr.  Edward  T.  Dunn." 

The  bank,  then,  upon  its  own  showing,  held  these  notes  as 
collateral  security  for  an  antecedent  debt,  and  it  did  not  even 


744  Altoona  Second  National  Bank  v.  Dunn.      [Penn. 

give  time  upon  the  original  debt,  because  the  notes  were  pay- 
able one  day  after  date,  and  the  evidence  shows  that  that  time 
must  have  elapsed  before  they  were  accepted.  It  was  not, 
therefore,  a  bona  fide  holder  for  value:  Lord  v.  Ocean  Bonk, 
20  Pa.  St.  384;  59  Am.  Dec.  728;  Lenheim  v.  Wilmarding,  55 
Pa.  St.  73;  PraWs  Appeal,  77  Pa.  St.  378;  Royer  v.  Keystone 
National  Bank,  83  Pa.  St.  248;  Carpenter  v.  National  Bank  of 
the  Republic,  106  Pa.  St.  170. 

The  next  question  is  as  to  the  character  of  the  note.  If  it 
were  an  accommodation  note,  —  that  is  to  say,  commercial  paper 
given  without  value  to  enable  the  party  to  whom  it  was  given 
to  use  it  for  his  own  benefit,  without  restriction  as  to  the  man- 
ner in  which  it  should  be  used,  —  there  is  no  question  that  it 
could  have  been  pledged  as  collateral  security  for  an  antece- 
dent debt.  "  He  who  chooses  to  put  himself  in  the  front  of  a 
negotiable  instrument  for  the  benefit  of  his  friend  must  abide 
the  consequence,  and  has  no  more  right  to  complain  if  his 
friend  accommodates  himself  by  pledging  it  for  an  old  debt 
than  if  he  had  used  it  in  any  other  way  " :  Lord  v.  Ocean  Bank, 
20  Pa.  St.  384;  59  Am.  Dec.  728.  And  since  accommodation 
paper,  strictly  so  called,  in  the  hands  of  a  pledgee  for  an  an- 
tecedent debt  is  open  to  any  defense,  except  want  of  considera- 
tion, that  could  be  made  to  it  in  the  hands  of  an  original 
party  (Cummings  v.  Boyd,  83  Pa.  St.  372;  Carpenter  v. 
National  Bank  of  the  Republic,  106  Pa.  St.  170),  it  might  be 
difficult  to  show  why  a  sealed  bill  given  for  accommodation, 
and  without  restriction  as  to  the  manner  of  its  use,  might  not 
be  pledged  in  like  manner  as  a  negotiable  note.  But  it  is  not 
necessary  to  decide  this  point.  The  note  was  not  signed  by 
the  appellant  without  restriction  as  to  the  manner  of  its  use, 
if  she  can  be  believed,  and  if  it  had  been  negotiable,  the 
present  defense  would  have  been  available:  Royer  v.  Keystone 
National  Bank,  83  Pa.  St.  248.  She  testified  that  she  signed 
it  to  enable  her  brother  to  obtain  a  loan;  and  in  this  she  was 
not  contradicted,  nor  did  the  learned  court  below  find  that 
she  was  unworthy  of  belief.  The  expression  of  this  one  pur- 
pose was  the  exclusion  of  every  other,  and  a  restriction  upon 
the  manner  in  which  the  note  should  be  used.  Being  under 
no  obligation  to  either  her  brother  or  the  bank,  she  could  with- 
hold her  signature,  or  give  it  upon  her  own  terms;  and  because 
she  had  the  right  to  impose  terms  arbitrarily,  there  can  be  no 
inquiry  as  to  whether  the  use  that  was  made  of  the  note  was 


Oct.  1892.]     Altoona  Second  National  Bank  v.  Dunn.     745 

more  disadvantageous  to  her  than  that  stipulated  would  have 
been. 

For  these  reasons,  the  decree  of  the  court  below  is  reversed.. 
and  a  'procedendo  is  awarded. 


Accommodation    Paper  —  Kigrhts    and   Iiiabllitiea  of  Makers   and   In- 

dorsera.* 

Nature  of  Contract.  —  An  accoinniodatioa  maker  or  iadorser  is  a  person 
who  has  signed  a  note  without  receiving  value,  and  for  the  purpose  of  lend- 
ing his  name  to  some  other  person  as  a  means  of  credit:  Benjainia's  Chalmers's 
Digest,  art.  90;  Randolph  on  Commercial  Paper,  sec.  472;  Miller  v.  Lamed, 
103  111.  562.  An  accommodation  note,  in  the  strict  sense,  ia  a  loan  of  the 
maker's  credit  without  insts/hotious  as  to  the  manner  of  its  use:  Lenheim  v. 
Wilinardimj,  55  Pa.  St.  73.  The  party  accommodated  impliedly  agrees  to 
take  up  the  note  at  maturity,  and  to  indemnify  the  accommodation  maker  or 
indorser  against  the  consequences  of  non-payment:  Reynolds  v.  Doijle,  1 
Man.  &  O.  753;  Asprey  v.  Levy,  16  Meea.  &  W.  851.  As  to  third  parties, 
the  rights  and  liabilities  of  an  accommodation  party  are,  in  general,  the  same 
as  those  of  a  party  receiving  valuable  consideration  for  his  signature;  but 
between  the  accommodation  party  and  the  person  accommodated,  there  ia 
no  such  liability,  and  one  who  draws  or  indorses  commercial  paper  for  the 
accommodation  of  another  is  not  liable  on  it  to  him,  whatever  their  apparent 
relation  upon  the  paper  may  be:  Miller  v.  Lamed,  103  111.  562. 

Liability  of  Maker  or  Indorser.  —  The  contract  and  liability  of  an  accommo- 
dation party  are,  in  general,  those  of  a  surety  for  the  party  accommodated: 
Noll  V.  Oberltelhnann,  20  Mo.  App.  336;  C/iild  v.  Eureka  Poiuder  Works,  44 
N.  H.  354;  (himmin.js  v.  Little,  45  Me.  183;  Barron  v.  Cady,  40  Mich.  259; 
Blake.slee  v.  I/eirett,  16  Wis.  341.  And  if  he  takes  up  the  paper  at  maturity,  the 
party  accommodated  will  be  liable  for  it  as  a  principal  is  to  a  surety:  Burton 
■V.  SlaiKjhter,  26  Gratt.  914;  Lacy  v.  Lofton,  26  Ind.  324.  In  some  jurisdic- 
tions, however,  an  accommodation  maker  is  held  liable  as  a  principal,  and 
not  aa  a  mere  surety,  as  to  a  bona  fide  holder  for  value,  and  without  notice: 
Stephens  V.  Monomjahela  Nat.  Bank,  88  Pa.  St.  157;  .32  Am.  Rep.  438;  First 
Nat.  Bank  v.  Mor(jan,  6  Hun,  346.  The  maker  of  an  accommodation  note 
delivered  to  the  payee  to  be  discounted  for  his  benefit  cannot  set  up  want 
of  consideration  as  a  defense  against  the  holder  for  value:  Waite  v.  Kal- 
viisky,  22  111.  App.  382;  Miller  v.  Lamed,  103  111.  562;  Orant  v.  Ellicott,  7 
Wend.  227.  The  very  purpo.se  of  making  accommodation  paper  is  that  the 
party  favored  may  dispose  of  it,  and  unless  restricted,  he  may  transfer  it, 
either  before  or  after  maturity,  and  the  maker  or  indorser  will  be  equally 
bound.  The  only  safe  rule  is,  that  when  a  note  ia  given  without  restriction 
as  to  the  time  or  mode  of  using  it  by  the  party  accommodated,  and  it  haa 
been  transferred  in  good  faith  and  in  the  usual  course  of  business,  the  holder, 
if  he  paid  a  valuable  consideration  for  it,  will  be  entitled  to  recover  the  full 
amount,  although  he  may  have  had  full  knowledge  that  it  was  accommoda- 
tion paper:  Winters  v.  Home  Ins.  Co.,  30  Iowa,  172;  Jonea  v.  Berry/till,  25 
Iowa,  289;  Tliompson  v.  Shepherd,  12  Met.  311;  46  Am.  Dec.  676;  Thatcher 
V.  West  River  Nat.  Bank,  19  Mich.  196;  Poicell  v.  Waters,  17  Johns.  176; 
Miller  V.  Lamed,  103  111.  562;  First  Nat.  Bank  v.  Orant,  71  Me.  374;  36  Am, 

•  KBFGRENCK  TO  MONOORAPHIC  NOTB. 

Accommodation  vaper,  defenses  available  to  acceptor  of:  1  Am.  St.  Rep.  136-139 


746     Altoona  Second  National  Bank  v.  Dunn.  [Penn. 

Rep.  334;  Seyfert  v.  Edison,  45  N.  J.  L.  393.  When  a  note  is  made  to  en- 
able  the  maker  to  raise  money  upon  it,  and  it  is  indorsed  by  him  for  that 
purpose,  the  indorsee  may  recover  upon  it,  not  only  as  against  the  payee 
and  indorser,  but  against  all  others  who  may  have  signed  it:  Norfolk  Nat. 
Bank  v.  Griffin,  107  N.  C.  173;  22  Am.  St.  Rep.  868.  A  person  who  makes 
his  negotiable  note,  and  gives  it  to  another  to  raise  money  on,  is  bound 
by  the  note  to  a  third  person,  who  takes  it  for  value;  and  in  this  respect 
there  is  no  difference  between  a  promissory  note  and  a  bill  of  exchange: 
Hawkins  v.  Neal,  60  Miss.  256.  When  such  a  note  is  made  for  the  accom- 
modation of  the  payee,  and  is  left  with  him  to  be  used  in  the  general  trans- 
action of  his  business,  it  has  no  vitality  while  it  remains  in  his  possession; 
but  when  negotiated  by  him,  it  stands  on  an  equality  with  other  commercial 
paper,  and  the  maker  is  bound  primarily  and  unconditionally  for  its  pay- 
ment. When  such  note  is  not  made  for  any  special  purpose,  and  there  is  no 
restriction  on  its  use  by  the  payee,  the  title  and  rights  of  the  holder,  as 
against  the  maker,  are  not  affected  by  the  fact  that  he  acquired  it  of  the 
payee  after  maturity  with  knowledge  of  the  relation  existing  between  the 
payee  and  the  maker:  Connerly  v.  Planters  etc.  Ins.  Co.,  66  Ala.  432. 

An  accommodation  note,  indorsed  by  the  payee,  and  delivered  to  one  of 
the  makers  before  due,  to  be  negotiated,  is  not  presumed  to  have  been  paid, 
and  the  person  purchasing  it  in  good  faith  and  for  value  may  recover 
thereon:  Morris  v.  Morton,  14  Neb.  358.  When  the  assignee  of  accommoda- 
tion paper  again  assigns  it,  before  maturity,  to  an  innocent  purchaser  for 
value,  the  latter  takes  it  free  of  all  equities  between  the  first  assignee 
and  the  payee:  Cook  v.  Norwood,  106  111.  558.  An  accommodation  indorser 
who  signs  a  negotiable  note,  leaving  the  amount  blank,  and  intrusts  it  to 
another  with  authr.rity  to  fill  the  blank  with  an  agreed  sum,  will,  as  to  third 
persons  having  no  knowledge  of  the  limitations  of  such  authority,  be  bound 
by  the  act  of  the  person  to  whom  the  instrument  is  intrusted,  although  he 
fills  the  blank  with  a  larger  sum  than  that  agreed  upon:  Johnson  Harvester 
Co.  V.  McLean,  57  Wis.  258;  46  Am.  Rep.  39.  An  accommodation  indorser 
cannot  set  up,  in  a  suit  against  him  and  his  indorsee,  that  there  was  an 
agreement  between  them,  at  the  time  of  putting  their  names  on  the  paper, 
that  such  indorsement  should  constitute  a  joint,  and  not  a  successive,  lia- 
bility: Johnson  v.  Ramsey,  43  N.  J.  L.  279;  39  Am.  Rep.  580.  An  accom- 
modation indorser  on  a  note  may,  by  agreement  between  himself  and  a 
subsequent  indorser,  render  himself  liable  to  the  latter  as  an  actual  indorser 
for  value:  Leeke  v.  Hancock,  76  Cal.  127. 

Although  there  is  some  conflict  of  authority,  the  general  rule  seems  to  be 
well  settled  that  several  accommodation  indorsers  on  a  note  are  not  co- 
sureties, in  the  absence  of  an  agreement  between  them  to  that  effect:  Moody 
V.  Findley,  43  Ala.  167.  Thus  when  several  persons  indorse  their  names  on 
a  note,  in  order  to  enable  the  maker  to  get  it  discounted,  and  some  of  them 
afterwards,  on  the  failure  of  the  maker,  pay  the  note,  they  cannot  maintain 
an  action  against  the  others  for  contribution,  without  proving  that  the 
relation  between  them  was  really  that  of  co-sureties;  but  parol  evidence 
is  always  admissible  to  show  that  such  indorsers,  by  agreement  between 
themselves,  constituted  themselves  co-sureties:  Clapp  v.  Rice,  13  Gray,  403; 
74  Am.  Dec.  639;  Easterly  v.  Barhn;  66  N.  Y.  433.  In  the  absence  of  such 
special  agreement,  an  accommodation  indorser  who  is  obliged  to  pay  it  to  a 
holder  for  value  may  maintain  an  action  for  the  whole  amount,  as  against 
a  prior  indorser:  Shaw  v.  Knox,  98  Mass.  214;  McCarty  v.  Roots,  21  How. 


Oct.  1892.]     Altoona  Second  National  Bank  v.  Dunn.     747 

432;  McDonald  v.  McOruder,  3  Pet.  470;  McCune  v.  Belt,  45  Mo.  174;  Core 
V.  Wilson,  40  Ind.  204;  Phillips  v.  Plato,  42  Hun,  189. 

A  sul)3eqnent  accommodation  indorser  who  pays  the  note  may  recover  of 
a  prior  indorser  the  whole  amount  paid,  and  not  merely  a  contribution,  as  in 
case  of  sureties.  It  makes  no  difference  that  the  indorsers  both  knew  that 
each  was  an  accommodation  indorser,  so  long  as  there  is  no  actual  agreenient 
between  them  to  share  the  liability,  nor,  in  the  absence  of  such  agreement, 
that  the  object  of  the  indorsements  is  to  enable  the  maker  to  get  a  loan  at  a 
bank  upon  the  note,  and  that  they  were  to  operate  together  as  a  security  to 
the  bank:  Kirschner  v.  Conldin,  40  Conn.  77.  When  one  of  two  accommoda- 
tion signers  executes  a  note  as  a  joint  maker  with  the  principal  debtor,  and 
the  other  as  payee  and  indorser,  and  there  is  no  special  agreement  between 
them,  the  former  cannot,  after  paying  the  note,  call  upon  the  latter  for  con- 
tribution: Hillegas  v.  Stephenson,  75  Mo.  118;  42  Am.  Rep.  .S93.  When  the 
payee  of  an  accommodation  note  indorses  it  in  blank,  after  which  it  is  in- 
dorsed in  blank  by  two  other  persons,  it  will  not  be  presumed  that  they  are 
joint  indorsers  to  the  holder;  but  the  presumption  is,  that  tliey  are  successive 
indorsers,  and  the  second  indorser  may  be  sued  alone,  without  noticing  the 
other  indorser:  Girens  v.  Merchants'  Nat.  Bank,  85  III.  442.  In  some  juris- 
dictions the  rule  prevails  that  indorsers  on  accommodation  paper  for  the 
benefit  of  third  persons,  when  there  is  no  special  agreement  between  them, 
and  when  neither  is  benefited,  are  to  be  considered  as  co-sureties,  and  only 
entitled  to  contribution:  Daniel  v.  McR'e,  2  Hawks,  590;  11  Am.  Dec.  787; 
Dawson  v.  Petiivai/,  4  Dev.  &  B.  396.  So  it  was  decided  in  Douglas  v.  Wad- 
die,  1  Ohio,  413,  13  Am.  Dec.  630,  that  accommodation  indorsers  of  promis- 
sory notes  are  co-sureties,  and  that  the  last  indorser  cannot  recover  more 
than  a  contributive  share  against  a  previous  indorser.  This  case  is  criticised, 
but  adhered  to,  in  Barnet  v.  Young,  29  Ohio  St.  11,  where  the  court  said, 
quoting  from  the  former  case:  "  Where  there  are  two  or  more  upon  an  ac- 
commodation note,  all  of  whom  indorsed  before  the  note  became  operative 
bj  being  transferred  to  some  per.>on  not  a  pirty,  for  value  received,  and  all 
of  whom  are  charged  by  notice  of  demand  and  non-payment,  they  shall  be 
treated  as  co-sureties,  and  contribution  shall  be  made  between  them  as  such. 
Although  the  doctrine  thus  laid  down  and  applied  to  promissory  notes  is  not 
in  accord  with  the  great  weight  of  authority  on  the  subject,  yet  the  length 
of  time  that  has  elapsed  since  the  decision  was  made,  its  having  been  subse- 
quently recognized  by  this  court  without  questioning  its  correctness,  and  the 
fact  that  the  rule  as  this  class  of  commercial  paper  is  and  has  been  long 
understood  in  the  state,  all  unite  in  requiring  the  decision  to  remain  undis- 
turbed." The  rule  maintained  by  these  Ohio  cases  also  prevails  in  Vermont: 
Pitkin  V.  Flawgan,  23  Vt.  160;  56  Am.  Dec.  61. 

Pledge  as  Collateral  Seruritji  or  in  Payment.  — The  rule  is  well  settled  that 
one  not  induced  by  fraud,  who  makes  or  indorses  a  note  or  bill  for  the  ac- 
commodation of  another,  without  restriction  as  to  its  use,  is  liable  to  a 
holder  or  indorsee  who  receives  it  in  good  faith,  before  due,  as  collateral 
security  for  an  antecedent  debt  or  in  payment  of  a  pre-existing  or  concur- 
rent debt  of  such  holder  or  indorsee,  although  there  is  no  other  consideration, 
as  the  existence  of  the  debt  is  sufficient  consideration  for  the  transfer:  Sr/iepp 
V.  Carpenter,  51  N.  Y.  602;  Pitts  v.  Foglesing,  37  Ohio  St.  676;  41  Am.  Rep. 
540;  Washington  Bank  v.  Krum,  15  Iowa,  53;  Fetters  v.  Muncie  Nat.  Bank, 
34  Ind.  251;  7  Am.  Rep.  225;  Grocers'  Bank  v.  Peujield,  69  N.  Y.  502;  25 
Am.  Rep.  231;  Mdler  v.  Lamed,  103  111.  562;  Quinn  v.  Hard,  43  Vt.  .373; 
6  Am.  Rep.  284;  Kimbro  v.  Lytle,  10  Yerg.  417;  31  Am.   Dec.  585;  Dunn 


748  Altoona  Second  National  Bank  v.  Dunn.      [Penn. 

V.  Wesf,on,  71  Me.  270;  36  Am.  Rep.  310;  Dawson  v.  Goodyear,  43  Conn. 
648;  Maitland  v.  Citizens'  Nat.  Bank;  40  Md.  540;  17  Am.  Rep.  620.  Thus 
when  an  accommodation  bill  is  paid  by  one  of  the  indorsers,  and  there  is 
no  special  agreement  that  they  should  be  bound  to  pay  in  equal  proportions 
as  co-sureties,  the  indorser  who  takes  up  the  bill  may  assign  it  as  collat- 
eral security  for  a  pre-existing  debt;  and  the  assignee  may  recover  of  the 
original  payee,  who  is  also  an  indorser:  McCarty  v.  Roots,  21  How.  432. 
One  who  takes  accommodation  paper  as  collateral  for  a  precedent  debt, 
and  surrenders  other  security  for  it,  is  entitled  to  recover  upon  it  as  a 
holder  for  value:  Depeau  v.  Waddiwjton,  6  Whart.  220;  36  Am.  Dec.  216. 
When  a  note  with  an  accommodation  indorsement  is  pledged  to  one  who 
afterwards  becomes  a  purchaser  of  it,  he  is  entitled  to  recover  against  the 
accommodation  indorser,  even  tliough  he  knew  of  the  accommoilation  at 
the  time  he  took  the  note:  Ranson  v.  Tutiey,  50  Ind.  273.  When  such 
paper  has  been  pledged  as  collateral,  only  the  amount  which  is  actually  due 
and  secured  by  it  can  be  recovered  from  the  accommodation  maker  or  in- 
dorser: Atlas  Bank  v.  Doyle,  9  R.  I.  76;  9S  Am.  Dec.  368;  Buchanan  v. 
International  Bank,  78  111.  500.  This  is  also  true  when  it  has  been  trans- 
ferred as  collateral  for  advances  made  at  the  time,  or  afterward:  Gordon 
V.  Boppe,  55  N.  Y.  665.  In  Alabama  and  in  Pennsylvania,  a  creditor  who 
receives  accommodation  paper  as  collateral  security  for  the  payment  of  a 
pre-existing  debt  is  not  regarded  as  having  acquired  it  for  a  valuable  con- 
sideration in  the  due  course  of  business,  and  is  not  entitled  to  protection 
against  equities  or  defenses  on  the  part  of  the  maker  or  indorser,  of  which 
he  has  no  notice.  This,  however,  is  contrary  to  the  great  weight  of  author- 
ity: Boykin  v.  Bank  of  Mobile,  72  Ala.  262;  47  Am.  Rep.  408;  Marks  v. 
First  Nat.  Bank,  79  Ala.  550;  58  Am.  Rep.  620;  Royer  v.  Keystone  Nat. 
Bank,  83  Pa.  St.  248;  Carpenter  v.  National  Bank,  106  Pa.  St.  170.  Even 
here,  however,  it  is  maintained  that  if  a  creditor  takes  the  note  in  payment 
of  a  precedent  debt,  he  becomes  a  purchaser  for  value  in  due  course  of  busi- 
ness, equally  as  if  he  had  advanced  money  on  the  faith  of  the  note:  Mai'ks 
V.  First  Nat.  Bank,  79  Ala.  550;  58  Am.  Rep.  620. 

Misappropriation.  —  When  accommodation  paper  is  made  or  indorsed  for 
a  restricted  or  special  purpose,  and  has  been  fraudulently  diverted  from  the 
purpose  for  which  it  was  intended  by  the  payee  or  indorsee  in  the  payment  of 
a  debt,  or  as  collateral  security  for  a  precedent  debt  or  otherwise,  a  holder 
with  knowledge  of  the  purpose  for  which  the  paper  was  made  is  not  a  pur- 
chaser for  value,  even  if  he  acquires  the  paper  before  maturity,  so  as  to  free 
it  of  all  defenses  and  equities  which  exist  in  favor  of  the  maker  or  indorser. 
When  such  paper  has  effected  the  substantial  purpose  for  which  it  was  de- 
signed by  the  parties,  the  accommodation  maker  or  indorser  cannot  object 
that  it  was  not  effected  in  the  precise  manner  contemplated  at  the  time  of 
its  creation;  but  when  the  paper  is  diverted  from  its  original  destination, 
and  fraudulently  put  in  circulation  by  the  payee  or  his  agent,  the  holder 
cannot  recover  upon  it  against  the  accommodation  maker  or  indorser,  unless 
he  received  it  in  good  faith  in  the  ordinary  course  of  trade,  without  notice 
and  for  value:  Wardell  v.  ffowell,  9  Wend.  170;  Small  v.  Smith,  1  Denio, 
683;  Afoore  v.  Ryder,  65  N.  Y.  438;  Grocers'  Bank  v.  Penjield,  69  N.  Y.  502; 
25  Am.  Rep.  231;  Thompson  v.  Poston,  1  Duvall,  389;  Daggett  v.  Whiting,  35 
Conn.  366;  Duncan  v.  Gilbert,  29  N.  J.  L.  521. 

Fraudulent  Diversion  of  Accommodation  Paper  from  the  purpose  for  which 
it  was  drawn,  by  pledging  it  as  collateral  security  for  a  precedent  debt  or 
otherwise,  ia  no  defense  to  an  action  by  a  honafde  holder  for  value  and  with- 


Oct.  1892.]     Altoona  Second  National  Bank  v.  Dunn.     749 

out  notice,  before  maturity:  First  Nat.  Bank  r.  Hall,  44  N.  Y.  395;  4  Am. 
Rep.  698;  Fetters  v.  Muncie  Nat.  Banl;  34  Iiul.  251;  7  Am.  Rep.  225;  Mail- 
land  V,  Citizens'  Nat.  Bank,  40  Md.  540;  17  Am.  Rep.  620.  Thus  when  ac- 
commodation paper  is  framlulently  diverted  from  the  purpose  for  wliich  it 
was  made,  and  a  banker,  who,  without  notice  of  such  diversion,  takes  it  from 
his  payee  as  collateral  for  a  previous  loan  not  yet  due,  and  in  lieu  and  upon 
surrender  of  collateral  notes  of  other  parties  then  past  due,  and  protested  for 
non-payment,  which  had  previously  been  deposited  as  collateral  to  sucli  loan, 
he  is  a  bona  fide  purehasor,  and  entitled  to  recover  against  the  accommodation 
maker,  notwithstanding  the  diversion,  and  although  the  parties  liable  on  the 
protested  notes,  for  which  this  accommodation  paper  was  substituted,  were 
insolvent  and  the  notes  worthless;  Park  Bank  v.  Watson,  42  N.  Y.  490;  I 
Am.  Rep.  573.  An  accommodation  indorser  of  a  note,  which  is  diverted 
from  the  purpose  for  which  it  was  made  and  indorsed,  and  is  transferred  by 
the  maker  as  security  for  a  precedent  debt,  cannot  avail  himself  of  the  de- 
fense of  the  misappropriation  of  the  note  as  against  one  who  has  received  it 
from  the  original  transferee  in  the  usual  course  of  business,  for  value,  before 
maturity,  without  notice  of  such  defense.  The  latter  is  within  the  protoc 
tion  accorded  by  the  law  merchant  to  all  hnna  fide  holders  for  value;  and 
when,  in  such  case,  the  original  transferee  of  the  note  receives  it  without  any 
knowledge  of  a  restriction  upon  the  rights  of  the  makers  in  its  use,  and 
transfers  it  to  a  bank  of  which  he  is  a  director,  the  fact  that  he  took  it  for  a 
precedent  debt  does  not  affect  the  title  of  the  bank:  Merchants'  Bank  v. 
Comstock,  55  N.  Y.  24;  14  Am.  Rep.  168. 

One  who  takes  a  note  in  good  faith,  for  value,  before  its  maturity,  without 
knowledge  of  the  death  of  the  maker,  or  that  it  is  accommodation  paper, 
may  recover  on  it  against  the  estate  of  the  maker,  even  though  the  indorser, 
for  whose  accommodation  it  was  made,  put  it  in  circulation  fraudulently  as 
against  the  maker:  Clark  v.  Thayer,  105  Mass.  216;  7  Am.  Rep.  511.  When 
a  bill  of  exchange  is  drawn  and  indorsed  for  the  accommodation  of  the  ac- 
ceptors, upon  condition  that  it  shall  be  discounted  at  a  particular  bank,  a 
purchaser  of  the  bill  before  maturity,  without  notice  of  the  secret  agreement, 
is  not  affected  by  it,  though  he  may  liave  taken  the  bill  in  payment  of  a  pre- 
existing debt:  Frank  v.  Quast,  86  Ky.  649.  When  a  note  is  made  or  indorsed 
as  accommodation  paper  with  the  understanding  that  it  is  to  be  discounted 
at  a  certain  bank,  or  that  money  is  to  be  obtained  upon  it  in  a  particular 
manner,  it  is  not  a  fraudulent  misappropriation  to  discount  it  at  a  different 
bank,  or  to  obtain  money  or  credit  upon  it  in  a  different  way  from  what  was 
intended.  If  the  note  effects  the  substantial  purpose  for  which  it  was  de- 
signed, it  is  not  material  that  it  was  not  effected  in  the  precise  manner  con- 
templated, unless  there  is  fraud,  or  the  interest  of  the  maker  or  indorser  is 
prejudiced.  In  such  case  it  is  not  a  misappropriation  to  deposit  the  note  as 
collateral  security  for  letters  of  credit  tluis  obtained,  unless  such  act  is  a 
fraud  upon  the  maker  or  indorser,  or  in  some  way  injuriously  affects  his  in- 
terest: Duncan  v.  Gilhert,  29  N.  .J.  L.  521.  If  an  accommodation  note  is  given 
with  an  agreement  that  the  payee  is  to  deposit  it  temporarily  as  collateral 
security  for  a  loan  to  be  made  to  him,  but  instead  of  obtaining  a  new  loan, 
with  the  note  as  collateral,  he  deposits  it  with  a  bank  as  security  for  money 
already  owing  by  him  to  it,  this  is  not  a  misappropriation,  because  the  paper 
effects  the  substantial  purpose  for  which  it  was  designed,  though  the  result 
is  not  produced  in  the  precise  mode  contemplated;  and  in  order  to  constitute 
a  misappropriation,  the  misuse  must  be  tainted  with  fraud:  Jackson  v.  First 
Nat.  Bank,  42  N.  J.  L.  177.     When  a  note  is  drawn,  payable  at  a  certaia 


750  Altoona  Second  National  Bank  v.  Dunn.     [Penn. 

bank,  and  is  indorsed  for  the  accommodation  of  the  maker,  to  enable  him  to 
raise  money  with  which  to  purchase  barley,  and  he  then  applies  the  note  to 
the  payment  of  a  deht  which  he  and  another  owe  at  a  different  bank,  this  is 
not  such  a  diversion  of  the  paper  as  will  discharge  the  indorser,  it  not  appear- 
ing that  at  the  time  of  indorsing  that  the  use  to  which  it  might  be  applied 
was  at  all  important  to  him:  Mohawk  Bank  v.  Corey,  1  Hill,  513.  When  a 
note  is  indorsed  by  the  payee  to  enable  the  maker  to  discount  it  at  a  bank 
for  his  accommodation,  and  the  maker,  upon  being  refused  by  the  bank, 
discounts  it  to  a  third  person,  with  knowledge  of  the  circumstances,  this 
does  not  amount  to  a  fraud  which  can  affect  tlie  rights  of  the  holder  against 
the  indorser:  Powell  v.  Waters,  17  Johns.  176;  Bauk  of  Chenango  v.  Hyde,  4 
Cow.  567. 

If  an  accommodation  note  is  made  payable  to  the  accommodation  indorser, 
to  be  discounted  at  a  particular  bank,  but  instead  is  sold  to  a  private  person, 
the  indorsers  thereon  are  liable,  although  the  sale  is  made  without  their 
knowledge:  Parker  r.  Mr.Doioell,  95  N.  C.  219;  59  Am.  Rep.  235.  When  a 
note  is  indorsed  for  the  accommodation  of  the  maker,  to  be  discounted  at  a 
certain  bank,  it  is  not  a  fraudulent  misapplication  of  the  note  to  discount  it 
at  another  bank,  or  to  use  it  in  the  payment  of  a  debt,  or  in  any  other  way  for 
the  credit  of  the  maker:  Parker  v.  McDowell,  95  N.  C.  219;  59  Am.  Rep.  235. 
When  an  accommodation  indorser  agrees  with  the  maker  of  a  note  that  it  is 
to  be  used  only  at  a  certain  bank,  and  such  bank,  with  notice  of  the  agree- 
ment, advances  money  upon  the  note,  and  retains  it  as  collateral  security,  it 
may  then  dispose  of  its  claim  against  the  maker,  and  transfer  the  note  as  col- 
lateral security  therefor,  and  such  transfer  will  not  constitute  a  misappro- 
priation as  against  the  accommodation  indorser:  Proctor  V.  Whitcomb,  137 
Mass.  303.  When  the  maker  of  a  note,  indorsed  for  his  accommodation  for 
a  special  purpose,  misapplied  it,  and  transferred  it  before  maturity  as  collat- 
eral security  for  a  debt,  part  of  which  he  afterwards  paid,  it  was  decided 
that  the  holder,  taking  it  without  notice  of  its  misapplication,  might  recover 
of  the  indorser  the  unpaid  balance  of  the  debt  for  which  it  was  pledged  as 
security,  but  no  more:  Stoddard  v.  Kimball,  6  Cush.  469;  Duncan  v.  Gilbert, 
29  N.  J.  L.  521.  The  fact  that  accommodation  paper  is  made  payable  to  a 
particular  person  or  at  a  particular  place  does  not,  without  more,  prevent 
the  person  to  whom  it  is  intrusted,  and  for  whose  accommodation  it  is  made, 
from  obtaining  the  money  from  another.  Unless  the  makers  or  indorsers 
have  some  interest  beyond  the  mere  accommodation  of  their  principal,  any 
person  may  assume  that  it  is  an  accommodation  to  advance  the  amount  of 
money  the  paper  calls  for.  Thus  when  mere  accommodation  makers,  having 
no  interest  beyond  the  accommodation  of  their  principal,  either  in  the  mode 
of  raising  the  money,  or  in  the  manner  in  which  it  is  to  be  applied,  sign  a 
note  made  payable  to  a  named  person,  the  fact  that  without  their  consent 
the  note  is  delivered  to  another  without  any  alteration,  who  advances  the 
money  upon  it,  is  not  such  a  perversion  of  the  paper  as  will  defeat  it  in  the 
hands  of  a  holder  for  value:  Meeker  v.  Shanks,  112  Ind.  207.  It  is  not  a 
good  defense  to  an  action  by  the  payee  against  the  makers  of  a  note  that 
such  makers  are  sureties  for  the  principal  maker,  and  that  after  signing  it 
they  intrusted  it  to  him  upon  the  condition  that  he  procure  the  signature  of 
a  designated  person  as  an  additional  surety,  and  that  he  delivered  the  note 
to  the  payee  without  their  knowledge  or  consent,  and  without  complying 
with  the  condition.  In  such  case  it  must  also  be  averred  and  proved  that 
the  payee,  before  the  delivery  to  him,  had  notice  of  the  condition:  Jordan  v. 
Jordan,  10  Lea,  124;  43  Am.  Rep.  294. 


Oct.  1892.]     Altoona  Second  National  Bank  v.  Dunn.     751 

In  order  that  mis  ippropriation  of  the  paper  may  be  set  up  as  a  defense  by 
the  accominoLlatioii  maker  or  iiidorser,  it  is  generally  necessary  that  the 
party  acquiring  it  have  notice  of  the  restricted  indorsement,  and  that  the 
condition  lias  not  been  complied  with,  and  also  that  the  perversion  of  the  paper 
from  the  purpose  inteniled  by  the  parties  has  injuriously  interfered  with  the 
interest  of  the  naaker  or  indorser.  When  this  condition  exists,  the  holder 
is  not  considered  a  purchaser  for  value,  and  cannot  recover  of  the  maker  or 
indorser  agiinst  whom  the  paper  has  thus  been  fraudulently  diverted.  Thus 
when  a  bill  of  exchange,  indorsed  for  accommoilation,  and  delivered  to  the 
maker  on  the  express  condition  that  if  it  is  not  that  day  discounted  by  a 
particular  bank,  it  is  to  be  returned  to  the  indorser  or  destroyed,  and  after 
the  bank  has  refused  to  discount  the  bill,  it  is  passed  to  another,  with  notice, 
to  pay  an  existing  debt,  this  is  such  a  perversion  and  misappropriation 
of  the  paper  as  releases  the  indorser:  Hickerson  v.  Ra'ujuel,  2  Heisk.  329. 
When  a  note  is  signed  by  a  number  of  persons,  it  having  a  condition  at- 
tached to  it,  in  writing,  that  before  its  delivery  ten  solvent  persons  should 
sign  it,  and  it  is  delivered  after  the  condition  has  been  complie<l  with,  and 
detached  from  the  note,  the  party  taking  it  with  knowledge  of  the  condition 
also  takes  the  risk  of  the  solvency  of  such  signers,  and  cannot  hold  the  in- 
dorser, unless  the  condition  has  been  complied  with:  Camphell  Printing  Press 
etc.  Co.  V.  Poivll,  78  Tex.  53.  When  a  note  is  indorsed  in  blank,  and  left 
with  a  third  person  to  be  signed  by  the  maker  and  used  for  a  particular  pur- 
pose, and  the  maker  takes  it  from  the  depositary  without  his  knowledge, 
fills  it  up,  and  gives  it  to  tliird  parties  with  notice  of  the  condition,  this  is 
such  a  fraud  on  the  indorser  as  will  release  liim:  Lenheim  v.  Wilmardinrj,  55 
Pa.  St.  73.  When  an  accommodation  note  is  designed  to  be  discounted  for 
the  purpose  of  taking  up  other  paper  of  the  person  giving  the  accommoda- 
tion, or  is  otherwise  intended  for  his  benefit,  a  failure  to  have  it  thus  used  is 
a  misappropriation.  Thus  when  a  note  is  indorsed  for  the  accommodation 
of  tiie  maker,  and  delivered  to  him  to  be  used  in  renewal  of  another  note 
indorsed  by  the  same  party,  and  about  to  fall  due,  and  it  is  transferred  by 
the  maker  in  payment  of  another  debt  existing  a.,'ainst  him,  it  cannot  be 
enforced  against  such  indorser  by  the  creditor  taking  it  with  notice  of  the 
condition:  Wanlell  y.  Howell,  9  Wend.  170;  Ka^son  v.  Smith,  8  Wend.  436. 
If  the  holder  of  snch  piper  misappropriates  it  with  notice,  he  will  be  bound 
to  reimburse  the  party  whose  name  is  misused  for  any  resulting  loss:  Com- 
stork  V.  Ilier,  73  N.  Y.  269;  29  Am.  Rep.  142.  When  a  pledgee  of  a  note  is 
made  a  garnishee,  he  cannot  defend  on  the  ground  that  the  note  is  accom- 
modation paper,  pledged  for  a  specific  purpose,  and  not  to  be  enforced  against 
the  maker  for  any  other  purpose,  as  such  defense  can  be  resorted  to  by  the 
drawer  only  when  sued  upon  the  note:  Kirkpatrick  v.  Oldham,  38  La.  Ann. 
653.  When  the  payment  of  accommodation  paper  is  resisted  on  the  ground 
that  it  has  been  misappropriated,  and  diverted  from  the  purpose  for  which  it 
was  intended,  the  burden  of  proof  is  generally  upon  the  maker  or  indorser 
to  show  such  misappropriation,  because  the  holder  is  presumed  to  be  a  bona 
fide  purchaser  for  value:  Maitland  v.  Citizens'  Hut.  Bunk,  40  Md.  540;  17  Am. 
Rep.  620;  Jordan  v.  Jordan,  10  Lea,  124;  43  Am.  Rep.  294;  /l,dl  v.  Thayer, 
105  Mass.  219;  7  Am.  Rep.  513;  Cray  v.  Bank  nj  Kentucky,  29  Pa.  St.  365. 
After  such  diversion  is  shown,  however,  the  burden  of  proof  is  then  upon 
the  holder  to  establish  that  he  is,  or  has  succeeded  to  rights  of,  a  bona  fide 
holder  for  value  and  without  notice:  Farmers'  Nut.  Bank  v,  Nixon,  45  N.  Y, 
762;  Schepp  v.  Carpenter,  51  N.  Y.  602-604. 


752  Altoona  Second  National  Bank  v.  Dunn.      [Penn. 

Rights  of  Accommodation  Makers  and  Indorsers.  —  As  has  been  elsewhere 
stated  in  this  note,  accommodation  indorsers  of  negotiable  instruments  are 
not  co-sureties  as  between  themselves,  nor  liable  to  contribution,  in  the  ab- 
sence of  an  understanding  between  them  to  that  effect  bef<.)re  or  at  the  time 
of  the  indorsements.  A  subsequent  understanding,  in  the  absence  of  a  new 
consideration,  will  not  support  an  action  for  contribution  by  a  prior  against 
a  subsequent  indorser:  Druhe  v.  Christy,  10  Mo.  App.  567;  McOurk  ▼.  Hug- 
gett,  56  Mich.  187.  When  the  last  indorser  has  to  pay  the  note,  he  can  re- 
cover the  whole  amount  from  his  predecessors,  and  from  the  maker:  AlcGurk 
V.  Huggett,  56  Mich.  187.  When  two  indorsers  on  a  note  become  such  for 
the  accommodation  of  the  maker,  the  first  indorser  is  liable  to  the  second, 
and  when  the  latter  pays  and  takes  up  the  note,  he  becomes  a  holder  for 
value,  and  entitled  to  indemnity  from  the  former:  Kelly  v.  Burrouglis,  102  N.  Y. 
93.  An  accommodation  indorser  is  not  a  surety  in  such  sense  as  to  enable  him 
to  discharge  himself  from  liability  on  a  note  by  proving  a  request  to  the  holder 
to  enforce  payment  of  the  maker,  the  neglect  of  the  holder  to  do  so,  the  sol- 
vency of  the  maker  when  such  request  was  made,  and  his  subsequent  insol- 
vency: Converse  v.  Cook,  25  Hun,  44.  One  who  indorses  a  note  before  delivefy, 
with  the  intention  of  assuming  the  liability  of  an  indorser,  in  order  to  give 
the  principal  in  the  note  credit  with  a  bank,  is  liable  as  an  indorser,  and  not 
as  a  surety,  and  the  failure  of  the  bank  to  give  notice  of  the  dishonor  of  the 
note  results  in  the  discharge  of  such  indorser.  In  such  case  it  is  not  mate- 
rial that  the  bank  and  the  maker  of  the  note  intended  that  the  indorser 
should  be  bound  as  surety,  unless  there  was  an  agreement  to  that  effect  with 
the  indorser:  DePauw  v.  Bank  of  Salem,  126  Ind.  553.  When  the  holder  of 
accommodation  paper  has  recovered  judgment  thereon  against  the  maker, 
and  holds  sufficient  of  the  property  of  the  latter  under  levy  to  satisfy  the 
note,  but  releases  the  levy  without  applying  such  property  to  the  satisfaction 
of  his  judgment,  an  accommodation  indorser  on  such  paper  is  thereby 
released  from  liability:  Priest  v.  Watson,  75  Mo.  310;  42  Am.  Rep.  409; 
Capital  Savings  Bank  v.  Reel,  62  Cal.  419.  Indulgence  by  the  holder  of  ac- 
commodation paper  to  the  payee  thereof,  without  the  consent  of  the  indorser, 
granted  for  a  consideration,  will  discharge  the  latter:  Hall  v.  Capital  Bank, 
71  Ga.  715.  One  who  is  liable  on  a  note  cannot,  after  paying  it,  recover  the 
sum  so  paid  from  one  who  has  indorsed  the  note  for  his  accommodation: 
GrcMe  v.  Bosse,  10  Mo.  App.  492.  When  the  payee  of  accommodation 
paper,  or  a  person  discounting  it  with  knowledge  of  the  purpose  for  which  it 
was  made,  has  been  guilty  of  usury,  this  defense  is  open  to  the  accommodation 
maker  or  indorser:  Tufts  v.  Shepherd,  49  Me.  312;  Keim  v.  Bank  of  Penn 
Tozcmship,  1  Pa.  St.  36. 

Accommodation  bills  and  notes  are  subject  to  the  general  rule  that  one  tak- 
ing overdue  negotiable  paper  takes  it  subject  to  all  equities:  Bacon  v.  Harris, 
15  R.  I.  599.  An  accommodation  indorser  of  a  note,  who  takes  it  up  at  matu- 
rity without  notice  of  any  infirmity,  and  in  discharge  of  his  own  debt  to  the 
holder,  or  in  consideration  of  his  own  note  given  therefor,  may  recover  the 
amount  of  the  note  taken  up  from  the  maker  thereof:  Breckinridge  v.  Lewis, 
84  Me.  349;  30  Am.  St.  Rep.  353.  An  accommodation  indorser  may  withdraw 
his  indorsement  at  any  time  before  the  note  is  discounted,  unless  rights  for  a 
valuable  consideration  have  in  the  mean  time  attached  in  others:  Second  Nat. 
Bank  v.  Howe,  40  Minn.  390;  12  Am.  St.  Rep.  744;  and  after  it  has  been  ne- 
gotiated, such  indorser's  liability  is  limited  to  the  amount  advanced  in  good 
faith  by  the  holder:  Berkeley  v.  Tinsley,  88  Va.  1001.  An  accommodation 
indorser  of  a  note,  transferred  to  a  bank  as  collateral  security  for  rent  due 


Oct.  1892.]     Altoona  Second  National  Bank  v.  Dunn.     753 

and  to  become  due,  cannot  be  held  liable  for  rent  subsequently  accruing  un- 
der a  new  lease,  when  the  bank  has  notice  of  the  nature  of  the  transactiou 
and  of  the  intention  of  the  parties:  Continental  N^ai.  Bankv.  Bell,  125  N.  Y.  38. 
An  accommodation  indorser  who  receives  no  benefit  therefrom  may  defend 
against  a  bona  fide  holder  of  the  iiidorsed  note  on  the  ground  that  he  was  non 
CO/npoa  mentis  at  the  time  of  the  indorsement,  although  the  holder  had  no  no- 
tice of  the  indorser's  lunacy  at  the  time  of  the  transfer:  Wirebachv.  FirdNat. 
Bank,  97  Pa.  St.  543;  3'J  Am.  Rep.  821.  One  who  has  discounted  negotiable 
paper  for  the  maker  cannot  be  compelled  by  the  accommodation  indorser  to 
resort  to  collaterals  belonging  to  the  maker  in  his  hands  before  resorting  to 
him,  although  the  indorser  relied  upon  the  collaterals  in  making  such  in- 
dorsement, although  the  holder  knew  of  his  reliance,  and  that  the  indorse- 
ment was  for  accommodation,  and  the  proceeds  were  applied  by  the  holder 
to  payment  of  other  i)aper  of  the  maker,  and  other  parties  are  in  the  same 
situation  with  the  indorser.  The  remedy  of  the  indorser  is  to  pay  the  paper 
and  demand  and  enforce  the  security:  First  Nat.  Bank  v.  Wood,  71  N.  Y. 
405;  27  Am.  Rep.  66.  An  accommodation  indorser  of  a  note  is  entitled  to 
be  subrogated  to  all  the  rights  and  remedies  of  the  maker,  if  the  note  was 
given  in  payment  of  a  machine  warranted  to  accom[)lish  certain  purposes, 
which  warranty  lias  wholly  failed,  if  the  holder  of  the  note  acquired  it  after 
maturity,  with  notice  of  the  warranty  and  of  its  breach,  and  the  maker  is 
insolvent:  McDonald  Mfg.  Co.  v.  Moran,  52  Wis.  203. 

By  Corporations. —  The  indorsement  of  negotiable  paper  for  accommodation 
is  not  a  necessary  incident  to  the  business  of  a  corporation,  and  unless  such 
transaction  is  authorized  by  its  charter,  such  indorsement  is  unlawful  and 
ultra  vires,  and  the  corporation  is  not  liable  thereon:  National  Bank  v.  Wells, 
79  N.  Y.  49S;  Bank  of  Genessee  v.  Patchin  Bank,  13  N.  Y.  308;  Morford  v. 
Farmers'  Bank,  26  Barb.  568;  Bridgeport  City  Bank  v.  Empire  Stone  Dressing 
Co.,  30  Barb.  421;  Savage  Mfg.  Co.  v.  Worth! ngton,  1  Gill,  284.  Unless  ex- 
press power  is  granted,  a  corporation  cannot  execute  accommodation  paper; 
and  such  paper,  if  executed,  is  void  in  the  hands  of  the  assignee:  Stnead 
V.  Indianapolis  etc.  R.  R.  Co.,  11  Iiid.  105;  or  payee;  and  the  corporation 
cannot  ratify  such  note  after  execution  by  its  officers,  so  as  to  create  any 
liability  in  the  hands  of  the  payee  against  the  corporation:  Hall  v.  Au- 
burn Turnpike  Co.,  27  Cal.  256;  87  Am.  Dec.  75.  A  banking  corporation, 
whether  state  or  national,  lias  no  authority  to  make  an  accommodation  in- 
dorsement, in  the  absence  of  express  power  granted  in  its  charter  to  that  ef- 
fect: Bank  of  Genessee  v.  Patchin  Bank,  13  N.  Y.  308;  National  Bank  v.  Wells, 
79  N.  Y.  499.  The  general  powers  of  a  manufacturing  corporation  give  it 
no  autliority  to  indorse  accommodation  paper:  Lafayette  Savings  Bank  v.  St. 
Louis  Stoneware  Co.,  2  Mo.  App.  299.  An  accommodation  indorsement 
made  by  a  corporation  is  not  binding  upon  it,  unless  the  note  has  been  dis- 
counted in  good  faith  by  the  party  holding  it,  in  consequence  of  repre- 
sentations made  by  the  corporation  that  it  was  its  own  note:  Morford  v. 
Farmers'  Bank,  26  Barb.  568;  Bridgeport  City  Bank  v.  Empire  Stone  Dressing 
Co.,  30  Barb.  421.  When  a  corporation  is  authorized  to  make  notes  in  its 
business,  but  exceeds  its  power  in  making  an  accommodation  note,  such  note 
will  bo  good  in  the  hands  of  a  bona  fide  holder,  on  the  principle  that  other- 
wise the  general  power  of  making  and  transferring  notes  thus  abused  would 
leave  a  bona  fide  holder  without  means  of  information  as  to  such  abuse.  Thus 
the  accommodation  note  of  such  corporation,  in  the  hands  of  a  holder  in  good 
faith,  for  value,  who  takes  it  before  maturity,  and  without  knowledge  that 
the  maker  has  not  received  full  consideration,  can  be  enforced  against  the 
Am.  St.  Rep.,  Vol.  XXXI.— 48 


754  Altoona  Second  National  Bank  v.  Dunn.      [Penn. 

corporation:  Monument  Nat.  Banlcy.  Globe  WorTca,  101  Mass.  57;  3  Am.  Rep. 
322;  Bird  v.  Daggett,  97  Mass.  494.  When  the  corporation  has  exceeded  its 
power  by  making  an  accommodation  note,  this  defense  is  admissible  under 
the  general  issue,  and  need  not  be  specially  pleaded:  Hall  v.  Auburn  Turn- 
pike  Co.,  27  Cal.  255;  87  Am.  Dec.  75.  But  the  burden  of  proof  to  show  that 
Buch  paper  was  taken  with  notice  that  the  corporation  had  no  authority  to 
make  or  indorse  it  lies  on  the  defendant  in  a  suit  on  the  note:  Lafayette 
Savings  Bank  v.  St.  Louis  Stoneware  Co.,  2  Mo.  App.  299. 

By  Agent.  —  A  general  power  given  an  agent  to  make  or  indorse  notes  or 
bills  on  behalf  of  his  principal  will  not  warrant  the  agent  in  putting  the 
name  of  his  principal  to  paper  tor  the  accommodation  of  the  agent  or  a  third 
person,  and  the  principal  will  not  be  bound,  in  the  absence  of  express  author- 
ity in  the  agent  to  make  or  indorse  accommodation  paper  in  the  name  of  his 
principal:  German  Nat.  Bank  v.  Studley,  1  Mo.  App.  2G0;  JStna  Nat.  Bank  v. 
Winchester,  43  Conn.  391;  Stainer  v.  Tysen,  3  Hill,  279;  Bank  of  Hamburg 
V.  Johnson,  3  Rich.  42;  Wallace  v.  Branch  Bank  of  Mobile,  1  Ala.  565;  Oulich 
V,  Grover,  33  N.  J.  L.  4G3;  97  Am.  Dec.  728.  In  the  case  last  cited,  Depue, 
J.,  in  delivermg  the  opinion  of  the  court,  said:  "I  take  the  rule  to  be  well 
settled,  that  the  authority  to  sign  accommodation  paper,  or  as  security  for  a 
third  person,  must  be  specially  given,  unless  the  authority  of  the  agent  is 
one  of  universal  agency,  and  will  not  flow  from  any  general  authority  to 
transact  business  for  the  principal.  The  making  of  accommodation  paper, 
or  the  loan  of  one's  name  as  seciirity  for  another,  does  not  fall  within  the 
ordinary  business  in  which  persons  engage.  The  authority  to  use  a  princi- 
pal's name  for  that  purpose  is  not  established  by  proof  of  an  agency,  how- 
ever general,  in  the  transaction  of  the  principal's  business,  even  though  in 
connection  with  such  business  it  be  shown  that  the  agent  was  authorized  to 
make  notes  in  the  name  of  his  principal.  To  validate  such  paper,  it  must  be 
shown  that  the  agent  was  authorized  to  make  use  of  his  principal's  name  for 
that  purpose,  and  his  authority  must  either  be  express,  or  implied  from 
proof  that  he  was  accustomed,  with  the  principal's  consent,  to  use  his  name 
for  the  accommodation  of  others.  An  agent  who  is  authorized  to  draw  and 
indorse  notes,  and  to  draw,  indorse,  and  accept  bills  of  exchange,  can  act 
under  such  authority  only  to  the  extent  of  his  principal's  business,  and  is 
not  authorized  to  draw,  indorse,  or  accept  them  for  the  accommodation  of 
mere  strangers  ":  Gulick  v.  Grover,  33  N.  J.  L.  467;  97  Am.  Dec.  728.  Yet 
when  a  note  or  bill  is  made  or  indorsed  by  an  agent  in  the  name  of  the 
principal  for  the  accommodation  of  such  agent  or  a  third  person,  with  the 
consent  of  the  principal,  or  with  his  subsequent  ratification,  the  principal 
is  liable:  German  Nat.  Bank  v.  Studley,  1  Mo.  App.  260;  Gulick  v.  Grover, 
33  N.  J.  L._467;  97  Am.  Dec.  728.  Thus  when  a  note  is  made  or  indorsed 
by  an  agent  with  the  consent  of  his  principal  for  the  purpose  of  taking  up 
paper  upon  which  the  latter  is  already  liable  as  an  accommodation  indorser 
or  maker,  the  principal  is  bound:  German  Nat.  Bank  v.  Studley,  1  Mo.  App. 
260. 

By  Partners.  — The  power  of  partners  to  bind  one  another  by  commercial 
paper  does  not  extend  to  indorsements  or  other  contracts  for  the  accommo- 
dation of  a  third  person.  Hence  the  rule  is  well  settled  that  when  one 
member  of  a  partnership  becomes  an  accommodation  maker  or  indorser,  for 
the  benefit  of  a  third  person,  in  the  name  of  the  firm,  without  the  assent, 
express  or  implied,  or  the  subsequent  ratification  of  his  copartners,  such 
paper  cannot  be  enforced  against  them  or  the  firm  by  a  holder  who  takes  it 
with  knowledge  of  its  accommodation  character:  Austin  v.   Vandermark,  4 


Oct.  1892,]     Altoona  Second  National  Bank  v.  Dunn.     755 

Hill,  259;  Lavertyv.  Bun;  1  Wend.  529;  Bank  of  Rochester  v.  Boiren,  7  Wend. 
159;  Boyd  v.  Phirnh,  7  Wend.  309;  Tyree  v.  Lyon,  67  Ala.  1;  Foot  v.  Sabin, 
19  Johns.  154;  10  Am.  Dec.  208;  Bank  of  Fort  Madison  v.  Alden,  129  U.  S. 
372,  National  Bank  v.  Law,  127  Mass.  72;  National  Security  Bank  v.  McDon- 
ald, 127  Mass.  82;  Tompkins  v.  Woodyard,  5  W.  Va.  216;  Ileffron  v.  Hana- 
ford,  40  Mich.  305;  Wilson  v.  Williams,  14  Wend.  146;  28  Am.  Dec.  518; 
Stall  V.  Catskill  Bank,  18  Wend.  466;  Lang  v.  Waring,  17  Ala.  145;  Cha- 
zournes  v.  Edwards,  3  Pick.  5;  Vredenhurgh  v.  Lagan,  28  La.  Ann.  941;  5ara/5; 
of  Tennessee  v.  Saffnrrans,  3  Humph.  597;  Z^on(7  v.  Carter,  3  Ired.  238;  IF/ta/ey 
V.  Moody,  2  Humph.  495;  Cheiioirith  v.  Chamherhiin,  6  B.  Mon.  GO;  43  Am. 
Dec.  145;  Rollins  v.  Stevens,  31  Me.  454;  Andrews  v.  Planters'  B  ink,  7  Smedes 
&  M.  192;  45  Am.  Dec.  300.  One  partner  cannot,  by  his  individual  act, 
bind  the  firm  as  a  guarantor  of  the  debt  of  another,  or  as  a  party  to  a  note 
or  bill  made  for  the  accommodation  or  as  the  surety  of  another,  without 
authority  specially  given  him  for  the  purpose,  or  implied  from  the  common 
course  of  the  business  of  the  firm,  or  from  tlie  previous  course  of  dealing 
between  the  parties,  unless  the  act  of  such  partner  is  afterwards  ratified  by 
his  copartners:  Sweetzer  v.  French,  2  Cush.  309;  48  Am.  Dec.  663.  So  an 
accommodation  acceptance  by  one  member  of  a  firm,  in  the  partnership 
name,  without  the  authority  or  consent  of  his  copartner,  is  not  binding  on 
the  latter,  in  the  hands  of  a  holder  who  takes  it  with  notice  that  it  is  purely 
an  accommodation  acceptance,  and  not  given  in  the  course  of  the  business  of 
the  firm,  but  for  the  private  use  of  a  stranger,  the  drawer  of  the  bill:  Bloom 
T.  Helm.,  53  Miss.  21.  The  holder  of  accommodation  paper  made  or  indorsed 
by  one  j)artner  in  the  firm  name  is  generally  chargeable  with  notice  of  its 
accommodation  character,  and  such  paper  carries  with  it  the  presumption 
that  the  partner  making  or  indorsing  it  is  not  authorized  to  do  so:  Tanner 
v.  Ilall,  1  Pa.  St.  417.  Hence  in  an  action  against  a  firm  as  the  guarantor 
of  the  debt  of  another,  or  as  a  party  to  a  bill  or  note  made  or  indorsed  for 
the  accommodation  or  as  the  surety  of  another,  when  the  contract  is  the  act 
of  an  individual,  the  burden  of  proof  is  on  the  holder  to  show  that  such 
partner  was  authorized  so  to  bind  the  firm  by  the  otliers,  tliat  such  act  is 
done  with  their  consent,  or  that  it  was  subsequently  ratified  by  them: 
Sweetser  v.  French,  2  Cush.  309;  48  Am.  Dec.  66i);  Tompkins  v.  Woodyard,  5 
W.  Va.  216;  National  Security  Bank  v.  McDonald,  127  Mass.  82;  Chazournes 
V.  Edwards,  3  Pick.  5;  Foot  v.  Sahin,  19  Johns.  155;  10  Am.  Dec.  208;  Bank 
of  Vergennes  v.  Cameron,  7  Barb.  144. 

The  rule  is  thus  clearly  laid  down  in  Hendrie  v.  Berkowitz,  37  Cal.  113,  99 
Am.  Dec.  251:  When  one  of  two  partners  indorses  a  note  in  the  name  of 
the  firm  for  the  accommodation  of  a  third  person,  without  the  authority  or 
consent  of  the  otlier  partner,  the  latter  is  not  bound  by  the  indorsement  as 
to  any  person  taking  the  note  with  notice  that  the  indorsement  was  made 
in  the  character  of  surety;  and  in  such  case  the  burden  of  proving  the  author- 
ity or  consent  of  the  copartner  rests  on  the  party  holding  the  note;  and  if  he 
takes  it  from  the  hands  of  tlie  maker,  this  is  notice  that  the  firm  indorsement 
was  for  the  accommodation  of  the  maker.  A  third  party  taking  from  a  part- 
ner the  signature  of  his  firm  upon  his  individual  transaction  cannot  hold  the 
firm,  without  proof  of  authority,  adoption,  or  ratification.  The  holder  of  the 
note  under  such  circumstances  must  prove  the  assent  of  the  other  partners, 
for,  prima  facie,  such  transaction  is  a  frauil,  both  on  the  part  of  the  debtor 
and  of  the  creditor:  Tompkins  v.  Woodyard,  5  W.  Va.  216.  If  the  holder 
knows,  at  the  time  that  he  takes  the  paper,  that  one  of  the  partners  has  in- 
dorsed the  partnership  name  on  it  as  security  for  the  maker,  it  is  incumbent 


756  Altoona  Second  National  Bank  v.  Dunn.      [Penn. 

upon  him  to  rebut  the  presumption  that  he  received  the  firm  name  as  surety 
for  another,  in  fraud  of  the  partnership:  Darling  v.  March,  22  Me.  184. 
When  it  is  sought  to  charge  the  firm  with  the  payment  of  a  note  or  bill 
made  or  indorsed  in  the  name  of  the  firm  by  a  copartner  alone  for  the  ac- 
commodation of  himself  or  another,  on  the  ground  of  implied  authority  or 
subsequent  assent  or  ratification  by  the  firm,  tlie  evidence  must  be  strong, 
clear,  and  satisfactory,  and  slight  and  inconclusive  circumstances  will  not  be 
sufficient:  Wilson  v.  Williams,  14  Wend.  146;  28  Am.  Dec.  518.  Such  pre- 
cedent authority  may  be  implied  from  strong  circumstances,  from  the  com- 
mon course  of  the  business  of  the  firm,  or  from  the  previous  course  of  dealings 
between  the  parties,  without  direct  proof:  Sweetser  v.  French,  2  Cush.  309; 
48  Am.  Dec.  666;  Butler  v.  Stocking,  8  N.  Y.  408;  Pooley  v.  Whitmore,  10 
Heisk.  629;  27  Am.  Rep.  733;  Andrews  v.  Planters'  Bank,  7  Smedes  &  M. 
192;  45  Am.  Dec.  300;  Darling  v.  ilarch,  22  Me.  184;  Wait  v.  Thayer,  118 
Mass.  473;  First  Nat.  Bank  v.  Breese,  39  Iowa,  640.  In  Early  v.  Reed,  6 
Hill,  12,  it  was  decided  that  evidence  that  two  partners  had  repeatedly,  with 
the  knowledge  and  consent  of  each  other,  indorsed  accommodation  paper,  was 
not  sufficient  to  show  authority  in  one  of  them  to  sign  the  firm  name  as 
maker  or  surety,  so  as  to  bind  the  firm. 

A  subsequent  ratification  of  such  act  on  the  part  of  an  individual  in  sign- 
ing accommodation  paper  in  tlie  name  of  the  firm  may  be  inferred  from  the 
acts  or  omissions  of  the  other  partners,  after  they  know,  or  have  means  of 
knowing,  of  such  act  on  the  part  of  the  individual  partner:  Svjeetser  v. 
French,  2  Cush.  309;  48  Am.  Dec.  666;  or  it  may  be  proved  by  other  cir- 
cumstantial evidence:  First  Nat.  Bank  v.  Breese,  39  Iowa,  640.  Of  course, 
accommodation  paper  made  or  indorsed  by  one  member  of  the  firm  in  the 
firm  name  is  binding  on  the  firm,  when  it  is  shown  that  the  firm  authorized, 
consented  to,  or  recognized  the  act  of  the  individual  member  in  contracting 
the  liability  and  in  making  the  note:  Bloom  v.  Stern,  23  La.  Ann.  747;  Star 
Wagon  Co.  v.  Swezey,  52  Iowa,  391;  59  Iowa,  609.  And  it  is  also  bound  on 
a  note  given  by  him  in  renewal  of  such  note:  Dundass  v.  Gallagher,  4  Pa.  St. 
205. 

When  accommodation  paper  is  made  or  indorsed  by  an  individual  partner 
in  the  nunc  of  the  firm,  without  the  knowledge  or  consent  of  his  copartners, 
such  paper  is  binding  against  the  firm,  when  in  the  hands  of  a  holder  or  in- 
dorsee, who,  in  good  faith,  for  an  adequate  consideration,  purchases  the  same, 
before  maturity,  in  the  usual  course  of  business,  and  without  knowledge  of 
any  of  the  circumstances  affecting  its  validity.  Hence  all  the  members  of  a 
partnership  are  bound  by  a  note  made  by  one  member  in  the  firm  name,  and 
transferred  for  his  sole  benefit  in  the  partnership  name,  when  it  falls  into  the 
hands  of  a  ho?ia  fide  purchaser  or  indorsee  for  value,  without  notice  and  be- 
fore maturity:  Bank  of  St.  Albans  v.  GilUland,  23  Wend.  311;  35  Am.  Dec. 
566;  Wells  v.  Evans,  20  Wend.  251;  Redlon  v.  Churchill,  73  Me.  146;  40  Am. 
Rep.  345;  Beach  v.  State  Bank,  2  Ind.  488;  Bank  of  Vergennes  v.  Cameron,  7 
Barb.  143;  Austin  v.  Vandermark,  4  Hill,  259;  Chemung  Canal  Bank  v.  Brad- 
ner,  44  N.  Y.  680;  Whaley  v.  Moody,  2  Humph.  495.  When  the  name  of  a 
firm  is  affixed  to  negotiable  paper  by  one  of  the  partners  for  his  individual 
accommodation,  and  the  note  is  discounted  at  a  bank  in  the  usual  manner, 
without  knowledge  of  such  fact,  the  firm  is  bound,  although  the  note  is  made 
out  of  the  course  of  the  partner.ship  business,  and  without  the  knowledge  or 
consent  of  the  other  partners:  Waldo  BanJc  v.  Lumhert,  16  Me.  416;  Gatskill 
Bank  v.  Stall,  15  Wend.  364.  In  such  case  the  form  of  the  paper  is  not  no- 
tice to  the  bank  that  it  was  given  for  the  accommodation  of  the  maker  and 


Oct.  1892.]  Decker  v.  Scranton  City.  757 

in  fraud  of  the  firm:  Redlon  v.  Churchill,  73  Me.   146;  40  Am.  Rep.  345; 

Wait  V.  Thayer,  118  Mass.  474. 

Whether  or  not  a  firm  can  be  held  liable  to  a  bona  fide  holder  without  no- 
tice, upon  a  note  indorsed  in  its  name  by  an  individual  member  for  his  own 
accommodation,  depends  upon  the  nature  of  the  business,  the  usual  course  of 
dealing  of  that  firm,  and  the  circumstances  surrounding  each  particular  case: 
Pooley  V.  Whitmore,  10  Heisk.  629;  27  Am.  Rep.  733;  Roth  v.  Colvin,  32  Vt. 
125.  And  after  proof  of  the  manner  in  which  the  paper  was  created  and  put 
in  circulation,  the  burden  of  proof  is  upon  the  holder  to  show  that  he  received 
it  bona  fide  and  for  a  valuable  consideration:  Bank  of  St.  Albans  v.  Gilliland, 
23  Wend.  311;  35  Am.  Dec.  566;  Bank  of  Venjennes  v.  Cameron,  7  Barb.  143. 

A  member  of  a  partnership,  who,  without  authority  from  the  firm,  signs  the 
firm  name  to  a  note  as  maker  or  indorser,  for  hia  own  accommodation  or  that 
of  a  third  person,  is  liable  upon  the  note  in  the  same  manner  and  to  the  same 
extent  as  if  he  had  signed  his  individual  name  thereto:  Silvers  v.  Foster,  9 
Kan.  56;  Fiist  Nat.  Bank  v.  Carpenter,  34  Iowa,  433. 


704  Griggs  v.  Day.  [New  York, 

be  reversed,  and  the  executors  required  to  account  for  the  in- 
terest of  the  testator  in  the  bond  and  mortgage;  but  as  the 
question  is  new,  and  it  is  apparent  that  the  executors  have 
acted  in  good  faith,  the  costs  of  both  parties  should  be  paid 
out  of  the  estate.  All  concur. 
Judgment  reversed.  

Tenancy  by  Entireties:  See  notes  to  Den  v,  Hardenburgh,  18  Am.  Dec. 
377-389;  Hulett  v.  Inloio,  26  Am.  Rep.  65-68. 

Hu.SBAND    A.Nl)   WiFE  —  WhAT   CoNSTITUTE3    PaRT   OF   THE    WiFe's   SePA- 

BATE  Estate.  — The  point  raised  by  the  circumstances  of  the  principal  case 
may  be  illustrated  by  the  decisions  regarding  community  property,  which 
have  established  the  rule  that  property  exchanged  for  or  purchased  with  the 
separate  estate  of  the  wife  belongs  to  her  separate  estate:  See  cases  cited 
in  the  monographic  note  to  Cooke  v.  Bremond,  86  Am.  Dec.  633,  634.  Under 
the  provisions  of  the  constitution  of  North  Carolina  relating  to  the  prop- 
erty of  married  women,  it  has  been  held  that  the  title  of  the  wife  to  the 
purchase-money  of  her  land  is  not  divested  where  the  lionds  and  mortgages 
have  been  executed  to  the  husband  without  the  knowledge  or  consent  of  the 
wife  by  the  mistake  and  ignorance  of  the  husband:  Rodman  v.  Harvey,  102 
N.  0.  1. 


Griggs  v.  Day. 

[136  New  York,  152.] 

Collateral  SECURiTiEa — Surrender  of  —  Liability  for.  —  If  a  holder 
of  collateral  securities  surrenders  them  to  the  makers  thereof  without  the 
previous  consent  or  subsequent  ratification  of  his  debtor,  the  latter  does 
not  thereupon  become  entitled  to  a  credit  of  the  face  value  of  such  secu- 
rities. His  credit  cannot  exceed  their  actual  value,  and  if  they  are 
■worthless  he  is  entitled  to  no  credit  at  all. 

Novation  is  a  Transaction  Whereby  a  debtor  is  discharged  from  liability 
to  his  original  creditor  by  contracting  a  new  obligation  in  favor  of  a  new 
creditor  by  order  of  the  original  creditor. 

Collateral  SEcaRiTiES.  —  If  a  Holder  of  Collateral  Securities 
Wrongfully  Surrenders  them  without  the  consent  of  his  debtor,  he 
makes  himself  liable  for  their  conversion. 

Measure  of  Damages  for  the  Conversion  of  Collateral  Securities  by 
the  holder  thereof  cannot  exceed  the  value  of  the  property  so  converted. 

Melville  C.  Day  and  Esek  Cowen,  for  the  appellants. 

John  H.  Post,  for  the  respondent. 

Earl,  C.  J.  This  action  was  brought  against  Cornelius  K. 
Garrison,  since  deceased,  for  an  accounting.  It  was  referred 
to  a  referee  and  he  ordered  judgment  in  favor  of  the  plaintiff 
for  upwards  of  one  hundred  and  eighty-eight  thousand  dollars. 


AMERICAN  STATE  REPORTS. 

Vol.  XXXII,   Pages  704-731. 

GRIGGS  .'.  DAY. 

[136  New  York,  152.] 

Collateral  Securities. 


Nov.  1892.]  Griggs  v.  Day.  705 

The  record  is  very  voluminous,  and  in  the  briefs  submitted 
and  the  arguments  of  counsel  many  questions  of  law  and  fact 
were  presented  for  our  consideration.  A  careful  study  of  the 
record  has  satisfied  me  that  the  judgment  appealed  from  i8 
both  illegal  and  unjust. 

In  September,  1879,  the  plaintiff  entered  into  a  contract 
with  the  Wheeling  and  Lake  Erie  Railroad  Company,  an  Ohio 
corporation,  for  the  construction  and  equipment  of  its  line  of 
railroad  in  that  state,  according  to  the  specifications  and  upon 
the  terms  and  conditions  mentioned  in  the  contract.     By  one 
of  the  provisions  of  the  contract  the  railroad  company  was 
"to  furnish  the  contractor  available  subscriptions  or  proceeds 
thereof  and  aid  to  the  amount  of  four  thousand   dollars  per 
mile  of  main  track,  branches  and  sidings,  or  so  much  as  may 
be  necessary  to  furnish  right  of  way,  grade,  bridge,  and  tie  said 
railroad  between  Hudson  and  Martins  Ferry,"  a  distance  of 
143  miles,  and  "to  use  its  best  endeavors  to  secure  for  the  con- 
tractor available  subscriptions  and  to  aid  to  the  extent  of  four 
thousand  dollars  per  mile,  or  so  much  as  may  be  necessary," 
for  a  similar  purpose  as  to  the  balance  of  the  road,  a  distance 
of  fifty-eight  miles.     For  the  performance  of  this  contract,  be- 
sides the  aid  to  be  furnished  as  above  stated,  the  plaintiff  was 
to  receive  bonds  and  stock  of  the  company.     He  was  without 
financial  ability,  and  he  applied  to  Garrison  for  financial  aid 
to  eivible  him  to  perform  his  contract;  and  upon  his  applica- 
tion Garrison,  from  time  to  time,  advanced  him  large  sums  of 
money,  amounting  in  all,  besides  interest,  to  nearly  $4,500,000. 
For  the  money  so  advanced  the  plaintiff  assigned  and  deliv- 
ered to  Garrison  as  collateral  security  his  construction  con- 
tract and  bonds  and  stock  of  the  company,  and  some  of  it  was 
repaid  by  the  sales  to  him  of  bonds  and  stock.     In  1882  the 
plaintiff  received  from  the  company  for  extra  work  claimed 
to  have  been  done  by  him,  and  on  account  of  its  failure  to  per- 
form the  portions  of  the  contract  above  quoted,  its  promissory 
notes,  amounting  to  $1,940,710.72,  and  they  were  delivered 
by  him  to  Garrison  for  moneys  advanced  and  to  be  advanced 
by  him  for  the  construction  of  the  road.     Garrison  held  these 
notes  until  May,  1888,  whon  there  was  due  to  him  for  moneys 
advanced  to  the  plaintiff  for  the  construction  of  the  road  nearly 
two  million  five  hundred  thousand  dollars.     He  then  received 
from  the  company  2,280  of  its  second-mortgage  bonds  of  the 
denomination  of  one  thousand  dollars,  at  seventy -five  cents  on 
the  dollar,  amounting,  with  some  interest,  to  $1,736,600,  to 

Am.  St.  Kkp..  Vou  XXXII.  —  45 


706  Griggs  v.  Day.  [Nevr  York, 

apply  upon  his  claims,  and  he  then  surrendered  to  it  all  of 
the  above-mentioned  promissory  notes,  and  they  were  can- 
celed. On  the  same  day  he  caused  an  original  entry  to  be 
made  in  his  journal,  one  of  his  acr^ount-books,  as  follows: 
"This  amount  of  notes  and  interest,  $2,062,643.13,  taken  from 
contractor  at  75  per  cent,  $1,546,982.35."  He  then  charged 
the  company  in  his  books  of  account  with  the  whole  amount 
of  the  notes  and  interest,  and  gave  it  credit  for  $1,736,600,  the 
price,  inclifding  interest,  at  which  he  took  the  second-mort- 
gage bonds,  and  he  credited  the  plaintiff  with  the  sum  of 
$1,546,982.35.  The  difference  between  the  total  amount  due 
upon  the  notes  and  the  amount  allowed  by  him  for  the  sec- 
ond-mortgage bonds  was  $326,043.13;  and  thus  he  had  in  his 
hands  not  used  for  the  payment  of  the  bonds  the  notes  to  that 
amount,  which  he  then  surrendered  to  the  company  without 
any  consideration  whatever;  and,  as  the  referee  found,  he 
elected  to  look  to  the  company  as  his  debtor  on  open  account 
for  that  amount.  The  referee  also  found  that  by  reason  of  the 
surrender  of  the  notes  in  consideration  of  the  purchase  of  the 
bonds,  and  by  reason  of  the  surrender  of  the  balance  of  the 
notes,  and  by  reason  of  the  election  before  mentioned,  Garri- 
son discharged  the  indebtedness  of  the  plaintiff  to  him  to  the 
amount  of  the  face  value  of  the  notes  at  the  time  of  the  sur- 
render. He  also  found  that  the  plaintiff's  rights  as  pledgor 
in  the  construction  contract  and  in  the  bonds,  stock,  and  other 
property  transferred  to  Garrison  as  collateral  security  were 
never  cut  off  by  foreclosure  of  his  rights,  or  in  any  other 
way. 

These  facts  having  been  found  by  the  referee,  he  found, 
among  other  conclusions  of  law,  that  the  legal  effect  of  the 
surrender  by  Garrison  to  the  railroad  company  of  the  promis- 
sory notes  held  by  him  as  collateral  security  for  moneys  ad- 
vanced to  the  plaintiff,  and  of  the  charge  by  him  against  the 
railroad  company  of  the  full  amount  of  the  notes  and  interest, 
was  to  relieve  the  plaintiff  from  any  liability  to  him  for  the 
amount  thereof;  and  in  the  accounting  he  charged  Garrison 
with  the  full  amount  of  the  notes,  with  interest.  The  only 
question  which  I  deem  it  important  now  to  consider,  is  whether 
the  learned  referee  was  right  in  making  that  charge. 

The  further  fact  must  be  taken  into  consideration  that  the 
notes  surrendered  wers  of  no  value  as  against  the  company. 
It  was  utterly  insolvent,  with  property  no  more  than  suffi- 
cient to  pay  its  first  mortgage  bonds.     The  second  mortgage 


Nov.  1892.]  Griggs  v.  Day.  707 

bonds  were  absolutely  of  no  intrinsic  value.  The  referee  held 
these  facts  to  be  immaterial,  and  that  under  the  circumstances, 
Garrison  had  made  himself  chargeable  with  the  full  amount 
of  the  notes,  without  reference  to  their  value.  Such  a  con- 
clusion is  somewhat  startling,  and  should  not  be  sanctioned, 
unless  it  has  supi)ort  in  well  recognized  principles  of  law,  or 
authorities  which  we  feel  constrained  to  follow. 

The  entries  in  Garrison's  books  of  account  in  reference  to 
these  notes,  have  very  little  bearing  upon  the  controversy  be- 
tween these  parties.     They   were    private'  entries    made    by 
Garrison,  undisclosed  to  the  plaintiff,  and  without  his  author- 
ity.    They  were  important  simply  as  evidence,  and  are  en- 
titled to  no  more  weight  than  would  have  been  the  oral  dec- 
larations or  admissions  of  Garrison  made  to  any  third  party. 
They  show  what  use  he  made  of  the  notes,  and  about  that 
there  is  no  dispute.     They  did  not  bind  the  plaintiff,  and  he 
has  never,  so  far  as  appears,  assented  to  them.     They  show 
that  Garrison  intended  to  take  the  notes  at  seventy-five  cents 
on  the  dollar,  and  that  he  was  willing  to  allow  the  plaintiff 
that  sum    for  them;    but  there  was  no   actual   purchase  of 
them.     If  that  entry  had  come  to  the  knowledge  of  the  plain- 
tiff, and  he  had  adopted  it,  and  so  notified  Garrison,  he  could 
probably  have  held   him  to  a  purchase  of  the  notes  for  that 
sum;  but  he  repudiates  that  entry,  and  refuses  to  let  Gar- 
rison have  the  notes  for  that  sum.     He  cannot  use  that  entry 
to  fasten  upon  him  a  purchase  of  the  notes  at  their  face  value. 
Tlie   minds  of  the  parties  never  met  upon  such  a  contract. 
Garrison  either  purchased  tlie  notes  used  in  exchange  for  the 
bonds  at  seventy- five  per  cent  of  their  face  value,  or  he  did 
not  purchase  them  at  all.     Therefore,  as  the  plaintiff  repudi- 
ates the  purchase  at  the  price  named,  there  was  no  contract 
of  purchase,  and  as  to  these  notes,  pledged  for  collateral  se- 
curity, Garrison  must  be  held  to  have  wrongfully  converted 
them  to  his  own  use.     It  would  make  no  difference  whether 
we  consider  these  notes  as  having   been  exchanged  for  the 
bonds,  or  as  having  been  used  in  payment  for  the  bonds.     In 
either  view  Garrison  was  at  most  guilty  of  a  conversion  of 
them. 

As  to  the  balance  of  the  notes  which  were  surrendered  to 
the  company  without  any  consideration,  there  was  simply  a 
Avrongful  conversion  of  them.  They  had  no  value  as  obliga- 
tions against  the  company  and  it  is  i)reposterous  to  suppose 
that  Garrison  intended,  by  the  surrender,  to  charge  himself 


708  Griggs  v.  Day.  [New  York, 

for  their  full  face  value  against  an  indebtedness  of  the  plain- 
tiff to  him  for  money  actually  loaned.  By  the  surrender  he 
did  not  intend  to  release  the  company  from  its  indebtedness 
evidenced  by  the  notes;  but  he  intended  and  elected  still  to 
hold  the  indebtedness  evidenced  by  his  charge  in  open  account 
upon  his  books.  The  obligation  of  the  company  was  not 
impaired  or  lessened  by  the  transaction,  and  it  owed  just  as 
much  after  it  as  before.  Even  if  he  made  the  notes  his  own 
by  surrendering  them,  there  was  simply  a  conversion  of  them. 
It  is  true  that  he  elected  to  hold  the  company  as  his  debtor 
upon  open  account,  just  as  it  was  his  debtor  before  for  the 
same  amount  evidenced  by  the  notes.  He  did  not  take  a  new 
debtor,  but  he  retained,  and  intended  to  retain,  the  same 
debtor.  Here  there  was  no  novation,  and  nothing  resembling 
it.  It  usually,  if  not  always,  takes  three  parties  to  make  a 
novation,  and  they  must  all  concur  upon  sufKcient  considera- 
tion in  making  a  new  contract  to  take  the  place  of  another 
contract,  and  in  substituting  a  new  debtor  in  the  place  of 
another  debtor.  Novation  is  thus  briefly  defined:  A  transac- 
tion whereby  a  debtor  is  discharged  from  his  liability  to  his 
original  creditor  by  contracting  a  new  obligation  in  favor  of  a 
new  creditor  by  the  order  of  the  original  creditor:  1  Parsons 
on  Contracts,  217.  Here  there  was  no  element  answering  to 
this  definition.  There  was  no  intention  to  make  a  novation, 
no  consideration  for  a  new  contract,  no  concurrence  of  the 
three  or  even  of  the  two  parties. 

So  we  reach  the  conclusion,  as  to  all  the  notes,  that  Garrison, 
by  their  surrender,  made  himself  liable  for  a  wrongful  conver- 
sion of  them  to  his  own  use,  and  thus  became  responsible  to 
the  plaintiff  for  the  damages  caused  by  the  wrong;  and  the 
question  is,  what  were  such  damages  ?  The  answer  must  be, 
the  value  of  the  notes  converted.  There  can  be  no  other 
measure,  as  that  measures  the  entire  damage  of  the  plaintiff 
absolutely. 

As  to  the  notes  surrendered  for  the  bonds,  the  plaintiff 
could  have  elected  to  take  the  bonds  or  their  value,  but  this 
he  refuses  to  do,  as  the  bonds  have  no  value,  and  thus  he  is 
confined  absolutely  to  the  value  of  the  notes. 

Now  how  does  the  case  stand  upon  authority  ?  In  Garliclc 
V.  James,  12  Johns.  146,  7  Am.  Dec.  294,  the  plaintiff  depos- 
ited with  the  defendant  a  promissory  note  of  a  third  person 
as  collateral  security  for  a  debt,  and  the  defendant  without 
the  knowledge  or  consent  of  the  plaintiff  compromised  with 


Nov.  1892.]  Griggs  v.  Day.  709 

the  maker  of  the  note  and  surrendered  the  note  to  him  upon 
payment  of  one  half  of  the  face  thereof     It  was  found  that 
the  maker  was  at  the  time  of  the  compromise  abundantly  able 
to  pay  the  full  amount  of  the  note;  and  under  such  circum- 
stances it  was  properly  held  that  the  pledgee  was  liable  for 
the  balance  unpaid  upon  the  note.     In  Hawks  y.  Hinchcliff,  17 
Barb.  492,  the  plaintiff  sued  the  defendant  upon  an  account 
for  merchandise  delivered,  and  the  defendant  showed  that  the 
plaintiff  took  two  notes   for  the  amount  of   the  account  as 
collateral    security  for  the  payment  thereof;    that  he  trans- 
ferred one  of  the  notes  to  a  person  who  recovered  judgment 
thereon  against  the  makers,  and  afterward  assigned  the  judg- 
ment to  one  Prindle;  that  he  recovered  judgment  upon  the 
other  note  and  assigned  that  to  Prindle;  and  it  appeared  that 
the  defendants  in  those  judgments  had  never  paid  the  notes 
or  the  judgments.     It  was  held  that  the  plaintiff,  the  pledgee, 
could  not  recover  upon  his  account.     It  was  not  shown  upon 
what  consideration  the  notes  and  the  judgments  were  trans- 
ferred by  the  pledgee,  or  that  at  the  time  of  the  transfer  the 
makers  of  the  notes  were  not  perfectly  solvent.     The  plaintiff 
there  relied  upon  the  simple  fact  that  the  notes  and  judg- 
ments were  not  paid.     Upon  this  state  of  the  facts  the  court 
held  that  the  presumption,  nothing  appearing  to  the  contrary, 
was  that  the  note  and  judgments  were  transferred  by  tlie 
plaintiff  for  the  full  amount  appearing  to  be  due  upon  them, 
and  hence  he  was  charged  with  the  full  amount.     There  are 
some  broad  expressions  contained  in  the  opinion  which  when 
isolated  from  the  facts  of  the  case  tend  to  give  some  counte- 
nance to  the  plaintiff's  contention  here.     In  Vose  v.  Florida 
R.  R.  Co.,  50  N.  Y.  369,  it  was  held  that  a  wrongful  sale  by  a 
creditor  of  collateral  securities  placed  in  his  hands  by  the 
principal  debtor,  does  not  per  se,  discharge  even  a  surety  for 
the  debt  (much  less  the  principal  debtor),  in  toto,  but  that  by 
such  sale  the  creditor  makes  the  securities  his  own  to  the  ex- 
tent of  discharging  the  surety  only  to  an  amount  equal  to  their 
actual  value.     In  Potter  v.  Merchants'  Bank,  28  N.  Y.  641 ;  86 
Am.  Dec.  273;  Booth  v.  Powers,  56  N.  Y.  22;  and   Thayer  v. 
Manley,  73  N.  Y.  305,  it  was  held  that  in  an  action  to  recover 
damages  for  the  conversion  of  a  promissory  note,  the  amount 
appearing  to  be  unpaid  thereon  at  the  time  of  the  conversion 
with  interest,  is  prima  facie   the   measure  of  damages,  but 
that  the  defendant  has  the  right  to  show  in  reduction  of  dam- 


710  Gkiggs  v.  Day.  [New  York, 

ages  the  insolvency  or  inability  of  the  maker,  or  any  other 
fiict  iujpugning  the  value  of  the  note. 

In  the  Exeter  Bank  v.  Gordon,  8  N.  H.  66,  where  the  bank 
had  received  a  note  as  collateral  security  and  had  subse- 
quently, without  the  consent  of  the  pledgor,  compromised  it 
by  receiving  the  one  half  thereof  from  the  maker,  it  wasjield 
that  tlie  bank  was  bound  to  credit  the  pledgor  with  only  the 
amount  received  upon  compromise  upon  proof  that  the  com- 
promise was  advantageous  and  that  the  maker  was  insolvent 
and  unable  to  pay  the  balance,  and  the  general  rule  was  laid 
down  which  was  announced  in  the  cases  last  a-bove  cited. 

If  the  pledgee  of  the  note  of  an  insolvent  maker  may  sur- 
render it  upon  a  compromise  for  one  dollar  without  being 
made  liable  for  more  than  he  receives,  upon  what  conceivable 
principle  can  a  pledgee  be  held  for  the  face  value  of  a  worth- 
Jess  note  by  surrendering  it  without  any  consideration  what- 
ever ?  If  one  intrusted  with  a  note  as  agent,  or  holding  it  as 
pledgee,  loses  it  by  his  carelessness,  or  even  willfully  destroys 
it,  he  can,  in  an  action  against  him  by  the  principal  or  pledgor, 
be  held  liable  only  for  the  value  of  the  note.  If  Garrison  had 
broken  into  the  plaintiff's  safe  and  taken  these  notes  with- 
out any  right  whatever,  in  an  action  for  their  conversion  the 
plaintiflf  could  have  recovered  against  him  as  damages  only 
the  actual,  not  the  face  value  of  the  notes. 

I  need  go  no  further.  Other  illustrations  are  not  needed. 
Our  attention  has  been  called  to  no  case  in  law  or  equity 
which  upholds  the  plaintiff's  contention  as  to  these  notes.  I 
should  be  greatly  surprised  to  find  any  and  do  not  believe 
there  are  any. 

I  have  assumed,  without  a  careful  examination  of  the  de- 
fendants' objections  to  the  notes,  that  they  were  valid  and 
properly  issue  1  by  the  company  for  their  full  amount.  I  have 
also  assumed  without  examining  the  matter  that  upon  this 
record  we  must  hold  against  the  contention  of  the  defendants 
that  the  second  mortgage  bonds  took  the  place  of  the  notes 
given  for  them  and  were  held  in  their  stead  as  collateral 
security. 

Statements  made  upon  the  argument  by  the  counsel  for  the 
appellants  rendered  it  unnecessary  for  us  to  consider  any  other 
objections  to  the  judgment,  and  for  the  reasons  stated  the 
judgment  should  be  reversed  and  a  new  trial  granted,  costs 
to  abide  the  event. 

All  concur;  Gray,  J.,  in  result. 


Nov.  1892.]  Griggs  v.  Day.  711 

Debtor  and  Creditor.  — Novation,  Definition  of:  See  note  to  Hob.^on 
V.  Davidsons  Syndic,  13  Am.  Dec.  294.  To  entitle  the  creditor  to  recover 
against  the  substituted  debtor,  it  must  appear  that  the  creditor  assented  to 
the  arrangement,  and  that  the  original  debt  was  extinguished:  BuUerfield  v. 
Hartshorn,  7  N.  H.  345;  26  Am.  Dec.  741;  Bonnemer  v.  Neqrete,  16  La.  474; 
35  Am.  Dec.  217.  Whether  a  transaction  amounts  to  a  novation  is  a  ques- 
tion of  intention,  to  be  decided  from  all  the  circumstances  of  the  case:  Fidel- 
ity Ins.  etc.  Co.  v.  Shenandoah  etc.  R.  R.  Co.,  86  Va.  1;  19  Am.  St.  Rep.  858. 
For  cases  in  which  there  was  held  to  be  a  novation,  see  Heaton  v.  Amjier,  7 
N.  H.  397;  28  Am.  Dec.  353;  Sterling  v.  Ryan,  72  Wis.  3C;  7  Am.  St.  Rep. 
818. 

Collateral  Securitiea. 

Definition.  —  "The  use  of  the  term  'collateral  security,'  when  the  debtor 
transfers  to  his  creditor  an  article  of  value  or  an  evidence  of  debt,  is  intended 
to  express  that  it  is  not  received  in  payment  of  the  principal  debt,  and  that 
it  is  not  an  additional  right  to  which  the  creditor  is  absolutely  entitled.  It 
is  merely  a  concurrent  security  for  another  debt,  whether  antecedent  or  newly 
created,  and  is  designed  to  increase  the  means  of  the  creditor  to  realize  the 
the  principal  which  it  is  given  to  secure.  It  is  subsidiary  to  the  principal 
debt;  running  parallel  with  it,  collateral  to  it;  and  when  collected  is  to  go  to 
the  credit  of  the  principal  debt,  or  if  the  principal  debt  be  paid  off,  the 
debtor  is  entitled  to  the  restoration  of  the  collateral  security  ":  J\Iunn  v.  Mc- 
Donald, 10  Watta,  270,  273;  Chamhersburg  Ins.  Co.  v.  Smith,  11  Pa.  St.  120, 
127.  Though  perhaps  it  is  true,  as  indicated  in  the  definition  just  quoted, 
that  every  transfer  of  an  article  of  value  for  the  purpose  of  securing  the 
payment  of  an  obligation  due  to  the  transferee  may  entitle  such  article  to 
be  called  a  collateral  security,  yet  the  term  as  generally  used,  and  as  used 
in  this  note,  is  much  more  limited  in  its  signification. 

The  Usual  Suhjects  of  Transfer  as  Collateral  Securities  are  choses  in  action, 
whether  negotial)le  or  not,  certificates  of  stock  in  private  corporations,  bills 
of  lading,  and  warehouse  receipts.  These,  even  when  not  in  all  respects 
negotiable,  are  transferrable  by  indorsement  and  delivery,  and  when  in- 
dorsed and  delivered  vest  in  the  indorsee  all  the  rights  in  the  property  pos- 
sessed by  the  transferer,  so  far  at  least  as  may  be  necessary  to  accomplish 
the  purposes  of  the  transfer,  and  constitute  the  most  convenient  as  well  as 
the  most  usual  form  of  collateral  security:  First  Nat.  Bank  v.  Kelly,  57 
N.  Y.  34;  Dowjlas  v.  People's  Bank,  86  Ky.  176;  9  Am.  St.  Rep.  276.  Our 
inquiries  will  therefore  be  limited  to  collateral  securities  belonging  to  the 
classes  just  mentioned. 

The  Means  by  Which  a  Security  may  be  Made  Collateral  to  the  satisfaction 
of  an  obligation  will  not  be  considered  here  for  want  of  adequate  time  and 
apace.  We  shall  assume  in  what  we  shall  hereafter  state  that  the  alleged 
collateral  security  in  question  has  been  indorsed  aud  delivered,  or  otherwise 
transferred  as  completely  as  it  was  possible  for  the  holder  or  transferer  to 
transfer  it,  and  shall  then  proceed  to  inquire  what  are  the  rights,  duties,  lia- 
bilities, and  remedies  of  the  transferee  thereof. 

The  Title  of  the  I/older.  —  In  considering  the  rights  of  the  holder  of  collat- 
eral securities  we  shall  treat:  1.  Of  his  title,  for  the  purpose  of  showing  to 
what  extent  it  is  subject  to  attack;  2.  What  he  may  lawfully  do  by  virtue 
of  his  qualified  ownership;  and  3.  Of  the  purposes  for  which  he  may  hold  the 
property  or  to  which  he  may  apply  its  proceeds.  It  may  be  that  the  person 
who  transferred  the  security  as  collateral  did  not  have  the  title  thereto,  or 
having  title  held  it  iu  trust,  or  for  some  special  purpose  not  authorizing  him 


712 


Griggs  v.  Day. 


[New  York, 


to  transfer  it  as  he  did.  If  auch  be  the  case,  the  validity  of  his  transfer  as 
collateral  securitj'  must  be  determined  by  the  rules  applicable  to  absolute 
transfers.  If  the  title  to  the  property  was  so  apparently  vested  in  him  that 
he  had  transferred  it  to  an  absolute  purchaser  in  good  faith  such  transfer 
must  have  been  sustained,  then  also  must  the  transfer  as  collateral  security 
be  upheld.  Hence,  if  a  holder  of  securities  payable  to  bearer,  or  otherwise 
transferable  by  mere  delivery,  or  of  securities  transferable  by  indorsement 
to  whom  they  have  been  indorsed,  transfers  them  as  collateral  security  to  a 
person  acting  in  good  faith,  such  transfer  must  be  held  good,  though  the 
person  making  it  had  no  title  to  the  property  whatever,  or  held  it  as  a  bailee 
merely,  or  in  trust  for  some  special  purpose:  Bealle  v.  Southern  Bank,  SI  Ga. 
274;  Thoni'pson  v.  St.  Nicholas  Nat.  Bank,  113  N.  Y.  325;  Coit  v.  Humbert,  6 
Cal.  2G0;  63  Am.  Dec.  128;  Gottberg  v.  United  States  Nat.  Bank,  131  N.  Y. 
595;  Ambrose  v.  Evans,  66  Cal.  74;  Arnold  v.  Johnson,  66  Cal.  402;  Texa» 
Banking  etc.  Co,  v.  Turnley,  61  Tex.  365;  Wood's  Appeal,  92  Pa.  St.  379;  37 
Am.  Rep.  694;  Burton's  Appeal,  93  Pa.  St.  214.  On  the  other  hand,  if  the 
circumstances  were  such  as  to  put  the  purchaser  upon  inquiry  or  charge  him 
with  notice  of  the  true  title  of  the  owner,  then  they  are  potent  to  the  same 
extent  as  against  a  transferree  for  collateral  security:  Leiper's  Appeal,  108 
Pa.  St.  877.  So  if  a  paper  was  non-negotiable  or  dishonored,  a  transferee 
for  collateral  security  cannot  enforce  it  under  circumstances  precluding  its 
enforcement  by  an  absolute  purchaser:  Jenness  v.  Bean,  10  N.  H.  266;  34 
Am.  Dec.  152;  In  re  Sime,  3  Saw.  305.  If  acts  are  required  in  order  to 
protect  an  absolute  purchaser  against  the  claims  of  creditors  or  others,  they 
are  equally  necessary  for  the  protection  of  a  transferee  as  collateral  security, 
and  his  rights  may  be  lost  through  his  nou-observauce  of  those  acts:  Atkinson 
V.  Foster,  134  111,  472. 

Holder  is  Banked  as  a  Purchaser.  — The  holder  of  collateral  security  is,  at 
least  to  the  extent  to  which  he  has  a  right  to  its  proceeds,  to  be  regarded  as 
a  purchaser  entitled  to  the  same  immunity  against  secret  equities  and  un- 
known defenses  as  a  purchaser  would  be,  who  acquired  absolute  title  to  the 
property  under  like  circumstances.  Therefore,  if  he  acquires  a  note  or  other 
security  in  good  faith  and  for  value,  before  its  maturity,  no  defense  can  be 
asserted  against  him  arising  out  of  want  of  consideration:  Stoddard  v.  Kim- 
ball,  6  Cush.  469;  Pitts  v.  Foglesong,  37  Ohio  St.  676;  41  Am.  Rep.  540; 
Fisher  v.  Fisher,  98  Mass.  303;  or  out  of  any  other  matter  or  equity  of  which 
he  had  no  notice  when  he  acquired  the  security:  McNeil  v.  Tenth  Nat.  Bank, 
46  N.  Y.  325;  7  Am.  Rep.  3-tl;  Chicopee  Bank  v.  Chapin,  8  Met.  40;  Lehman 
v.  Tallahassee  M.  Co.,  64  Ala.  567;  Stotts  v.  Byers,  17  Iowa,  303;  State  Sav. 
Inst.  T.  Hunt,  17  Kan.  532;  Logan  v.  Smith,  62  Mo.  455;  Nciu  Orleans  Bank- 
ing Assn.  v.  IViUz,  4  Wood,  43;  Kisterhock's  Appeal,  127  Pa.  St.  601;  14  Am, 
St.  Rep.  868.  The  title  of  the  holder  of  a  collateral  security  is,  on  the  other 
hand,  no  better  than  if  he  were  an  absolute  purchaser,  and  he  is  aflfected  with 
notice  of  any  conditions  or  infirmities  attached  to  the  paper  to  the  same  ex- 
tent that  an  absolute  purchaser  would  be,  and  hence  he  must  take  notice  of 
by-laws  printed  upon  certificates  of  stock  transferred  to  him  as  collateral: 
State  Saving  Assn.  v.  Nixon- Jones  Printing  Co.,  25  Mo.  App.  642. 

Taken  to  Secure  Pre-existing  Debt.  —  Whether  one  who  acquires  property 
in  payment  of  a  pre-existing  indebtedness  should  be  treated  and  protected 
as  a  purchaser  thereof  in  good  faith  and  for  value,  so  as  to  protect  him  against 
defects  in  his  title  of  which  he  had  no  notice,  and  against  secret  defenses  and 
equities,  is  a  question  wliich  has  been  nmch  discussed  and  over  which  great 
diversity  of  judicial  opinion  still  exists.     On  the  one  side  it  is  claimed  that 


Nov.  1S92.]  Griggs  v.  Day.  713 

only  when  some  new  consideration  is  advanced  on  the  faith  of  a  transfer,  can 
the  transferee  properly  be  deemed  a  purchaser,  and  therefore  if  he  merely  ac- 
cepts property  in  payment  of  his  pre-existing  obligation,  he  is  not  entitled  to 
the  same  consideration  as  if  he  had  paid  out  moneys  at  the  time  of  the  trans- 
fer.    The  leading  case  maintaining  this  view  is  Bay  v.  Coddington,  5  Johns. 
Ch.  54;  9  Am.  Dec.  268,  which  has  been  followed  by  many  subsequent  decis- 
ions in  the  same  state  and  in  others:  St'dlcer  v.  McDowdd,  6  Hdl,  93;  40  Am. 
Dec.  389;  Com^tock  v.  Hier,  73  N.  Y.  269;  29  Am.  Rep.    142;  Lawrence  r. 
Clark,  3(3  N.  Y.  128;   Weaver  v.  Barden,  49  N.  Y.  286;  Brawkall  v.  Beckett, 
31  Me.  205;  Bowman  v.   Van  Kuren,  29  Wis.  209;  9  Am.  llrp.  554;  liui/er  v. 
Keystone  Bank,  S3  Pa.  St.  248;  Fenouillir.  Ha)idlton,  35  Ala.  319;  Lee's  A  dm' r 
V.  Smead,  1  Met.  (Ky.)  62S;  71  Am.  Dec.  494;  Prentice  v.  Zare,  2  Gratt.  262; 
First  Nat.  Bank  v.  Strauss,  66  iMis.s.  479;  14  Am.  St.  llep.  579;  Loebv.  Peters, 
63  Ala.  243;  3.')  Am.  Rep.  17.     It  did  not,  however,  meet  with  the  approval 
of  the  supreme  court  of  tlie  United  Stales,  and  is,  in  our  judgment,  now  in  con- 
flict with  the  decided  weight  of  authority  uiioii  the  sul>jt;ct:  Sir/l  v.  Tyson, 
16  Pet.  1;  Skilling  t.  Bellman,  73  Mo.  GG5;  39  A.n.  Rep.  537;  M  ullandv.  Citi- 
zen'g  Nat.    Bank,  40  Md.  540;  17  Am.   Rep.  6:20;  Mix  v.  National  Bank,  91 
111.  20;  83  Am.  Rep.  44;  Herman  r.  Gtcnter,  83  Tex.  66;  29  Am.  St.  Rep. 
632;  Tabor  v.  Merchani't  Nat.  Bank,  48  Ark.  454;  3  Am.  St.  Rep.  241;  Fitz- 
gerald V.  Barker,  96  Mo,  661;  9  Am.  St.  Rsp.  375.     A  corresponding  differ- 
ence of  opinion  has  arisen  with  lespoct  to  collateral  securities  when  the  debt 
secured  by  them  was  not  created  in  reliance  upon  them,  but  was  a  pre-ex- 
isting debt.     There  are  authorities  which  hold  that  when  the  collateral  is 
taken  to  secure  such  pre-existing  debt,  the  holder  is  not  entitled  to  protection 
as  a  holder  bowt  Jide  and  that  tliere  may  be  asserted  against  him  all  defenses 
existing  against  tlie  transi'trrer  at  the  time  the  transfer  was  made:  Smith  v. 
Bibber,  82  Me.  34;  17  Am.  St.  Rep.  4(54;  Puddlck  v.  Lloyd,  15  Iowa,  441;  83 
Am.  Dec.  423;   Dtpeau  v.    Waddnigton,  6  Wliart.  220;  36  Am.  Dec.  216;  Cul- 
lum  V.  Branch  Bank  4  Ala.  2);  37  Am.  Dec.  725;  Ricliardson  v.  Rice,  9  Baxt. 
290;  40  Am.  Rep.  92;  Craighead  v.    Wells,  8  Baxt.  38;  35  Am.   Rep.  6S5; 
Coddington  v.  Buy,  20  Johns.  637;  11  Am.  Dec.  342;  but  these  decisions  are 
also  contrary  to  the  weight  of  autliority  upon  the  subject,  and  the  holder  of 
a  collattral  security  taken  to  secure  a  pre-existing  debt  is  now  generally  en- 
titled to  be  treated  as  a  purchaser  to  the  same  extent  as  if  the  taking  of  the 
security  had  been  coincident  with  tlie  creation  of  the  debt  it  was  given  to 
secure:  Skiiung  v,   Bollman,  73  Mo.  6()5;  39  Am.   Rep.  537;  Siyiith  v.  Jen- 
nings,  74  Ga.  551;  Koehler  v.  Dodgr,  31  Neb.  328;  28  Am.  St.  Rep.  518;  St. 
Paul  Nat.  Bank  v.  Cannon,  46  Minn.  95;  24  Am.  St.  Rep,  189;  Atkinson  v. 
Brooks,  26  Vt.  5C9;  62  Am.  Dec.  592;  Pills  v.  Foglesong,  37  Ohio  St.  676;  41 
Am.  Rep.  5 10;  Railroad  Co.  v.  National  Bank,  102  U.  S.  14;  Fair  v.  Howard, 
6  Nev.  310;  Spencer  v.  Sloan,  108  Iiul.  183;  i'S  Am.  Rep.  35;  Strauglian  v. 
Fairchild,  SO  Ind.  598;  Citizens'  Bank  v.  Payne,  18  La   Ann.  222;  89  Am.  Dec. 
650;  Saylor  v.  Daniels,  37   111.   331;  87  Am.   Dec.   250;  Fisher  v.   Fisher,  98 
Mass.  303;  Allaire  v.  Hartshorne,  21  N.  J.  L.  665;  47  Am.   Dec.  175;  Bank 
of  Republic  V.  Carrington,  5  R.  I.  515;  73  Am.  Dec.  83;  Payne  v.  Bensley,  8 
Cal.  260;  68  Am.  Dec.  318.     Even  in  those  states  in  which  one  taking  a  col- 
lateral for  an  antecedent  debt  is  not  protected  as  a  purchaser  for  value,  there 
is,  to  some  extent,  an  exception  in  the  case  of  accommodation  paper,  for  the 
maker  of  such  paper  cannot,  as  against  one  to  whom  it  has  been  transferred 
as  collateral  security,  successfully  resist  its  enforcement  because  of  its  want 
of  consideration.      "  He  wliu  cliooses  to  put  himself  in  the  front  of  a  negoti- 
able instrumc-ut  for  the  bonetit  of  his  friend  must  abide  the  cousccjuuuces; 


714  Griggs  v.  Day.  [New  York, 

Walker  v.  Bank  of  Montgomery,  12  Serg.  &  R.  382;  and  has  no  more  right 
to  complain  if  his  friend  accomnioilates  himself  by  pledging  it  for  an  old  debt 
than  if  he  had  used  it  in  any  other  way  ":  Lord  v.  Ocean  Bank,  20  Pa.  St. 
3S4;  59  Am.  Dec.  728;  Grocers  Bank  v.  Penjield,  69  N.  Y.  502;  25  Am.  Rep. 
231;  Kimhro  v.  Lytle,  10  Yerg.  417;  31  Am.  Dec.  585;  Appleton  v.  Donald- 
son, 3  Pa.  St,  381;  note  to  Altoona  S.  Nat.  Bank  t.  Dunn,  31  Am.  St.  Rep. 
747,  748.  He  may,  however,  in  those  states  interpose  as  against  such  paper 
every  defense  except  want  of  consideration:  Cummings  v.  Boyd,  83  Pa.  St. 
372;  Carpenter  r.  National  Bank,  106  Pa.  St.  170;  as  that  the  note  was  given 
subject  to  the  restriction  that  it  should  be  uoed  for  a  specified  purpose  only, 
which  purpose  did  not  include  the  right  to  pledge  it  except  for  a  subsequent 
loan:  Altoona  S.  Nat.  Bank  v.  Du7in,  151  Pa.  St.  228;  31  Am.  St.  Rep.  742. 

Rights  of  Holder  are  Rentricted  to  his  Interests. —  A  holder  of  collateral  se- 
curity is  in  no  instance  entitled  to  be  protected  as  a  purchaser  thereof  except 
in  so  far  as  may  be  necessary  to  enforce  payment  of  the  obligation  to  secure 
which  it  was  given.  If  the  title  of  the  transferrer  was  imperfect  or  fraudu- 
lent and  his  transfer  was  in  derogation  of  the  title  or  interest  of  some  other 
person,  the  latter,  though  he  may  be  required  to  recognize  the  transfer  and 
permit  it  to  stand  for  the  purpose  for  which  it  was  given,  may,  in  all  other 
respects,  assert  his  rights  and  compel  payment  to  himself  of  any  surplus  re- 
maining after  the  satisfaction  of  the  obligation  for  which  his  property  stood 
as  collateral  security:  Merchants'  Bank  v.  Livingston,  74  N.  Y.  223;  Kellogg  v. 
Thompson,  142  Mass.  76;  In  re  Bonner,  8  Daly,  75.  So  where  the  maker  has 
a  defense  as  against  theorigiaal  payee  of  a  negotiable  instrument  transferred 
as  collateral  security,  the  holder  is  in  no  event  entitled  to  enforce  such  in- 
strument, except  to  the  amount  of  the  debt  which  it  was  pledged  to  secure, 
as  where  the  instrument  was  an  accomodation  paper:  Atlas  Bank  v.  Doyle,  9 
R.  I.  76;  98  Am.  Dec.  368;  11  Am.  Rep.  219;  Chicopee  Bank  v.  Chapin,  8  Met. 
40;  Farwell  v.  Importers'  Nat.  Bank,  90  N.  Y.  483;  Stoddard  v.  Kimball,  6 
Cush.  469;  or  defenses.  Farmers'  etc.  Bank  v.  Blevins,  46  Kan.  536,  or  oflFsetts, 
Second  Nat.  Bank  v.  Hemingray,  34  Ohio  St.  381,  exist  in  favor  of  the  maker. 

The  Rights  of  the  Holder  of  a  Collateral  Security  must  necessarily  be  com- 
mensurate with  his  title.  In  other  words,  he  must  be  allowed  to  possess, 
enforce,  and  enjoy  the  security  and  the  profits  and  accumulations  thereof, 
so  far  as  may  be  necessary  to  the  discharge  of  his  debt.  "A  bond  or  chose 
which  is  transferred  as  collateral  security  is  put  under  the  dominion  of  the 
creditor  to  make  his  claim  out  of  it":  Cliamhersburg  Ins.  Co.  v.  Smith,  11  Pa. 
St.  120.  "A  creditor  who  holds  collateral  security  for  the  protection  of  his 
debt  stands  in  a  different  relation  to  the  assignor  of  the  collateral,  though 
the  latter  be  his  debtor.  By  the  assignment  a  privity  is  created  or  estab- 
lished which  invests  the  assignee  with  the  ownership  of  the  collateral  for  all 
purposes  of  dominion  over  the  debt  assigned.  He  is  alone  empowered  to  re- 
ceive the  money  to  be  paid  upon  it  and  to  control  it  in  order  to  protect  his  right 
under  the  assignment."  Hanna  v.  Holton,  78  Pa.  St.  334;  21  Am.  Rep.  20. 
The  assignor,  therefore,  loses  all  control  over  the  paper,  his  dominion,  if  not 
entirely  and  finally  extinguished,  is  at  least  suspended  until  by  the  payment 
of  the  obligation  the  title  and  rights  of  the  holder  of  the  collateral  are  ter- 
minated; and  therefore,  the  assignor,  if  the  collateral  be  a  note  or  other  in- 
strument for  the  payment  of  money,  has  no  power  to  forbid  or  excuse  such 
payment  nor  to  attach  conditions  thereto:  Johnston  v.  Allen,  22  Fla.  224;  1 
Am.  St.  Rep.  180;  and  no  payments  made  to  him  can  discharge  the  obli- 
gation to  the  prejudice  of  one  holding  it  as  collateral  security:  Blake  v. 
Buchanan,  22  Vt.  548. 


Nov.  1892.]  Griggs  v.  Day.  715 

Bights  0/  Holder  of  Stocks.  —  If  the  property  held  as  collateral  security  con- 
■ists  of  the  stock  of  a  corporation,  the  holder  is,  for  the  time  being,  entitled 
to  all  the  rights  and  privileges  of  a  stockholder.  His  right  to  any  dividenda 
which  may  be  declared  is  paramount  to  that  of  his  pledgor,  and  he  may  re- 
cover them  of  the  corporation  if  they  remain  unpaid,  or  of  the  pledgor  if 
they  have  been  wrongfully  received  by  him:  Merchants'  Nat.  Bank  v.  Richards, 
6  Mo.  App.  454;  Oaty  y.  Holliday,  8  Mo.  App.  118;  Oemmell  v,  Davis,  75 
Md.  546:  32  Am.  St.  Rep.  412,  416.  There  is  certainly  a  want  of  harmony 
in  the  views  expressed  by  text  writers  and  in  some  of  the  decisions  respect- 
ing the  riglit  of  the  holder  of  stock  for  collateral  security  to  vote  it  at  those 
elections  of  the  corporation  in  which  its  stockholders  are  entitled  to  par- 
ticipate. Sometimes  it  is  said  that  the  pledgee  has  no  right  to  vote, 
although  the  stock  stands  in  his  name  on  the  books  of  the  corporation,  and 
at  other  times  the  view  has  been  expresse<l  that  equity  may,  at  the  in- 
stance of  the  pledgor,  compel  the  re-assignment  of  the  stock  to  him  for  the 
purpose  of  voting,  or  may  otherwise  prevent  its  being  used  or  voted  to  hii 
injury  by  the  pledgee.  VVe  doubt  the  correctness  of  either  of  these  views. 
The  title  or  interest  of  the  holder  of  stock  for  collateral  security  is  certainly 
paramount  to  that  of  the  pledgor  thereof.  Therefore,  there  is  no  reason 
why  the  latter,  rather  than  the  former,  should  be  permitted  to  participate 
in  corporate  elections.  At  all  events,  we  think  it  well  settled  now  that  if 
the  stock,  though  in  fact  held  as  security,  has  been  so  transferred  upon  the 
books  of  the  corporation  that  its  holder  as  collateral  there  appears  to  be  the 
owner  thereof,  he  has  the  same  right  to  vote  as  if  his  ownership  were 
absolute  instead  of  conditional  or  qualified:  Hopphi  v.  Bitffum,  9  R.  I.  513; 
11  Am.  Rep.  291;  Franklin  Bank  v.  Commercial  Bank,  36  Ohio  St,  350;  38 
Am.  Rep.  594;  Vail  v.  Hamilton,  85  N.  Y.  453;  and  it  may  be  said  gener- 
ally that  the  holder  of  stock  as  collateral  security  has  the  same  rights  as 
an  absolute  owner  thereof,  including  the  right  to  protect  it  from  waste  and 
diminution:  Baldwin  v.  Canjield,  26  Minn.  43;  to  hold  it  free  from  all  liens 
and  claims  of  the  corporation  not  assertable  against  it  were  he  its  absolute 
owner:  New  Orleans  etc.  Co.  v.  Wiltz,  10  Fed.  Rep.  330;  Bank  of  Holly 
Springs  V.  Piiison,  58  Miss.  421;  38  Am.  Rep.  330;  and  also  against  the 
claims  of  all  creditors  of  the  pledgor,  whetiier  by  attachment  or  otherwise, 
whose  liens  do  not  antedate  the  transfer  to  him:  Mcjchants'  etc.  Bank  v. 
Richards,  6  Mo.  App.  454;  74  Mo.  77;  31oore  v.  Bank,  52  Mo.  379;  Continental 
Nat.  Bank  v.  Eliot  Nat.  Bank,  7  Fed.  Rep.  369;  Nabringv.  Bimk  of  Mobile, 
58  Ala.  204;  Broadway  Bank  v.  McElrath,  13  N.  J.  Eq.  24;  Early  s  Appeal, 
89  Pa.  St.  411;  Eby  v.  Guest,  94  Pa.  St.  160;  Fra-'ier  v.  Charleston,  11  S.  C. 
487-519;  Cornick  v.  Richards,  3  Lea,  1;  Beckwith  v.  Burrough,  13  R.  I.  294; 
Cheever  v.  Meyer,  52  Vt.  66;  Colt  v.  Ives,  31  Conn.  25;  81  Am.  Dec.  161. 
These  rules  are  equally  applicable  to  the  transfer  of  warehouse  receipts  or 
of  bills  of  lading  as  collateral  security.  The  transferree  becomes  to  the  ex- 
tent of  his  debt  the  owner  of  the  property  represented  by  such  receipt  or 
bill,  and  entitled  to  protect  and  vindicate  his  rights  in  the  same  manner  and 
to  the  same  extent  as  if  the  transfer  to  him  were  absolute:  Davis  v.  Russell, 
52Cal.  611;  28  Am.  Rep.  647;  Carlwrighl  v.  Wilinerding,  24  N.  Y.  521;  Si. 
Louis  Nat.  Bank  v.  Ros.%  9  Mo.  App.  399,  411;  Fourth  Nat.  Bank  v.  St.  Louis 
Cotton  Co.,  11  Mo.  App.  333,  341;  Stewart  v.  Pluenix  Ins.  Co.,  9  Lea,  104; 
Whitney  v.  Tihhits,  17  Wis.  359;  Gibson  v.  Stevens,  8  How.  384;  First  Nat. 
Bank  V.  Bates,  1  Fed.  Rep.  702. 

The  Creditors  of  the  Pledgor  have  no  legal  right  to  object  to  the  pledge  where 
the  circumstances  attending  it  are  not  such  as  to  make  it  fraudulent  as 


716  Griggs  v.  Day.  [New  York, 

against  them  if  it  were  an  absolute  transfer:  La7ie  v.  Sleeper,  18  N.  H.  209; 
nor  after  it  is  made,  have  they  any  rif^ht  to  insist  upon  its  retention  by  the 
pledgee.  He  may,  therefore,  if  he  sees  proper,  return  it  to  his  debtor,  re- 
linquishing all  rights  thereunder  and  electing  to  proceed  upon  the  principal 
obligation  alone,  without  giving  the  otlier  creditors  any  just  cause  of  com- 
plaint or  interference:  In  re  Dyolt,  2  Watts  &  S.  4lJ3. 

As  the  pledgee  has  the  right  to  retain  possession  of  the  property  pledged 
nntil  his  debt  is  paid,  such  possession  should  certainly  be  deemed  to  be  held 
in  subordination  to  the  rights  of  the  pledgor,  and  perhaps  it  is  impossible 
for  it  to  be  adverse  so  as  to  confer  upon  the  pledgee  any  prescriptive  title  to 
it,  as  against  tlie  pledgor  or  his  successors  in  interest:  Cross  v.  Eureka  etc. 
Canal  Co.,  73  Cal.  302;  2  Am.  St.  Rep.  808.  There  is,  however,  no  objection 
to  the  pledgee's  acquiring  the  title  of  the  pledgor  in  any  manner  not  incon- 
sistent with  the  pledge,  and  therefore  the  former  may  purchase  and  actiuire 
the  title  of  the  latter  at  an  execution  sale:  Clark  v.  Holland,  72  Iowa,  34;  2 
Am.  St.  Rep.  230. 

Where  a  collateral  security  is  in  the  hands  of  a  creditor,  the  right  to  pros- 
ecute an  action  upon  his  original  debt  may  terminate  throiigh  the  operation 
of  the  statute  of  limitations.  Two  strange  and  equally  incorrect  views  re- 
specting his  rights  have  been  expressed,  one  being  that  his  right  to  the  col- 
lateral security  thereupon  becomes  absolute,  and  that  he  is  exonerated  from 
accounting  to  liis  debtor  for  it  or  its  proceeds,  and  the  other,  that  he  loses 
all  right  to  it,  and  can  no  longer  enforce  it  for  any  purpose  whatever:  Bussell 
V.  La  Rouqe  13  Ala.  149;  Van  Eaton,  v.  Napier,  63  Miss.  220.  In  one  state, 
on  the  other  hand,  the  continued  existence  of  the  collateral  security  has 
been  held  to  suspend  therunninc;  of  the  statute  of  limitations  and  to  prevent 
its  .operating  against  the  maintenance  of  any  action  on  the  original  debt: 
Blanc  V.  Hertzog,  23  La.  Ann.  199;  Police  Junj  v.  Duralde,  22  La.  Ann.  107; 
Citizens  Bank  v.  Knapp,  22  La,  Ann.  117.  But  assuming  the  statute  to  run 
against  the  original  debt,  this  certainly  has  no  effect  on  the  collateral.  The 
operation  of  this  statute,  in  the  absence  of  any  statute  giving  it  a  dififerent 
effect,  is  merely  to  destroy  the  remedy  without  affecting  the  right.  It  does 
not  cancel  the  debt  nor  bar  any  proceeding  other  than  the  action,  the  right 
to  maintain  which  has  been  lost  by  the  statute:  Belknap  v.  Gleason,  11  Conn. 
160;  27  Am.  Dec.  721;  Ludlow  v.  Van  Camp,  7  N.  J.  L.  113;  11  Am.  Dec. 
529;  Pittsburjh  etc.  R.  R.  Co.  v.  Biters,  32  Pa.  St.  22;  72  Am.  Dec.  770.  There- 
fore, if  the  creditor  held  the  collateral  security  before  the  statutory  bar 
against  the  original  debt  was  perfected,  he  may  continue  to  hold  it  after- 
wardsi,  and  may  bring  any  appropriate  action  thereon  as  long  as  such  colla- 
teral itself  is  not  barred;  and  has  the  right  to  apply  the  proceeds  of  such 
action,  or  of  any  proper  disposition  he  may  make  of  his  collateral,  to  the 
satisfaction  of  the  original  debt:  Hancock  v.  Franklin  Ins.  Co:,  114  Mass.  155; 
Chateau  v.  Allen,  70  Mo.  290,  341;  Roots  v.  Mason  City  etc.  Co.,  27  W.  Va. 
483. 

Purpose  for  which  Collateral  Maybe  Held.  — We  have  already  had  occasion 
to  state  incidentally  that  the  title  and  rights  of  the  holder  of  collateral  se- 
curities were  restricted  to  the  principal  debt.  It  follows  from  this  that 
when  such  debt  is  paid  the  pledgor  of  the  collateral  security  becomes  en- 
titled to  it,  or  so  much  of  it  as  remains  after  such  payment.  Whenever  the 
collateral  was  given  for  any  specific  purpose,  the  holder  has  no  right  to  re- 
tain it,  or  any  of  its  proceeds,  after  that  purpose  has  been  accomplished. 
Though  the  pledgor  may  be  indebted  to  the  holder  of  the  security  upon 
other  obligations,  the  latter  has  no  right  to  retain  it  or  its  proceeds  for  the 


Nov.  1892.]  Griggs  r.  Day.  717 

purpose  of  securing  or  satisfying  such  other  liabilities:  Phillips  v.  Thowpson, 
2  Johns.  Ch.  418;  7  Am.  Dec.  535;  Masonic  Savings  Bank  v.  Bangs,  84  Ky. 
135;  4  Am,  St.  Rep.  197;  Schiffer  v.  Feagin,  51  Ala.  H35;  Tetitonia  Nat.  Bank 
V.  Loeb,  27  La.  Ann.  110;  Talmage  v.  Third  Nat.  Bank,  91  N.  Y.  531; 
Wyclcnff  V.  Anthony,  9  Daly,  417;  Dvncan  v.  Brennan,  83  N.  Y.  487;  Loyd 
V.  Lynchburg  Nat.  Bank,  86  Va.  690;  San  Antonio  Nat.  Bank  v.  Blocker,  77 
Tex.  73.  If  the  purpose  for  which  the  collateral  security  was  given  is  ex- 
pressed in  writing,  such  writing  is  not  subject  to  be  varied  or  contradicted 
by  parol  evidence  for  the  purpose  of  showing  that  the  collateral  may  be  held 
to  secure  some  other  indebtedness  not  mentioned  in  the  writing:  Hardie  v. 
Wright,  83  Tex.  345;  Roosevelt  v.  Mark,  6  Johns.  Ch.  266.  If  the  purpose  of 
giving  the  security  does  not  clearly  appear  but  there  is  no  doubt  that  but 
one  indebtedness  existed  against  the  pledgor  and  in  favor  of  the  pledgee  at 
the  time  the  security  was  given,  it  will  be  presumed  to  have  been  made  for 
the  pur[tose  of  securing  that  indebtedness  onlj',  and  its  application  to  subse- 
quently accruing  indebtedness  will  not  be  permitted  without  the  assent  of 
the  pledgor:    Buckley  v,  Garrett,  60  Pa.  St.  333;  100  Am.  Dec.  564. 

The  rule  that  a  collateral  security  can  be  held  or  applied  only  upon  the 
obligation  which  it  was  given  to  secure  does  not  prevent  its  retention  for 
and  application  to  the  satisfaction  of  that  obligation  in  any  changed  form. 
Thus  though  the.  principal  debt  is  prosecuted  to,  and  merged  in,  a  judg- 
ment, the  right  to  hold  the  security  is  not  lost.  It  may  be  held  for  and  ap- 
plied to  the  satisfaction  of  the  judgment:  Smith  v.  Strout,  63  Me.  205;  Charleji 
V.  Coker,  2  S.  C.  122;  King  v.  Hutchins,  28  N.  H.  561;  Fisher  v,  Fisher,  98 
Mass.  303.  The  renewal  of  a  note  is  not  as  between  the  parties  presumed 
to  discharge  or  satisfy  the  pre-existing  debt  but  merely  to  extend  the  time 
for  its  payment.  It  is  at  most  a  change  in  the  evidence  of  the  debt  and  not 
in  the  debt  itself.  Therefore  every  collateral  security  given  for  the  original 
evidence  of  the  debt  stands  equally  good  for  the  new  evidence.  Hence  such 
collateral  may  be  held  for  the  satisfaction  of  a  note  given  as  a  mere  renewal 
of  a  pre-existing  note  for  the  pa3'7nent  of  wiiich  such  collateral  was  originally 
pledged:  Shreivshiiry  Sarungs  Institution's  Appeal,  94  Pa,  St.  309;  Mcrhants' 
Bank  v.  Hall,  83  N,  Y.  338;  38  Am.  Rep.  434;  Collins  v.  Dawley,  4  Col.  138; 
34  Am.  Rep.  72;  Pinney  v.  Kinton,  46  Vt.  83;  Williams  v.  National  Bank,  72 
Md.  441 ;  Dayton  Nat.  Bank  v.  Merchants'  Nat.  Bank,  37  Ohio  St.  208;  F.an- 
caster  Nat.  Bank's  Appeal,  122  Pa.  St.  31.  If,  however,  the  collateral  se- 
curity does  not  belong  to  the  maker  of  the  principal  debt,  and  its  owner 
stands  therefore  in  the  position  of  a  guarantor  rather  than  in  that  of  a  prin- 
cipal debtor,  then  there  is  no  presumed  power  of  the  del)tor  to  extend  the 
time  of  payment  or  to  give  renewals  which  will  bind  his  guarantor,  and  the 
collateral  security  given  by  the  latter  cannot  be  held  for  a  renewal  given 
without  his  assent:  Bitmap  v,  Potsdam  Bank,  96  N,  Y,  125;  Talmage  v. 
Third  Nat.  Bank,  91  N.  Y,  531. 

What  we  have  said  about  the  right  of  the  holder  of  a  collateral  security 
being  limited  to  the  obligation  to  secure  which  it  was  taken  should  not  be 
understood  as  implying  tliat  it  may  not  be  given  as  security  for  several 
obligations  or  for  all  obligitions  existing,  or  to  exist  in  the  future,  against 
the  pledgor  and  in  favor  of  the  pledgee.  The  terms  of  the  agreement  un- 
der which  the  collateral  is  taken  may  authorize  it  to  be  held  for  the  satis- 
faction of  all  debts  which  may  accrue  against  the  pledgor,  and  if  so,  it  may 
be  applied  to  the  satisfaction  of  any  debt  upon  which  he  at  any  time  be- 
comes liable  to  the  pledgee,  whether  as  an  inilividual:  Moon  v.  Washhtaii, 
147  Mass.  344;  EicheLberger  v.  Murdock,  10  Md.  373;  69  Am.  Dec,  140;  or  as 


718  Griggs  v.  Day.  [New  York, 

a  member  of  a  partnership:  Ilalloivell  v.  Blachstone  Nat.  Bank,  154  Mass. 
359. 

Duties  of  Holder  of  Collateral.  —  As  the  holder  of  collateral  security  is  en- 
titled to  its  possession  and  to  the  extent  of  his  interest  is  substantially  the 
owner  thereof,  he  must,  to  a  certain  extent  at  least,  assume  the  duties  of 
ownership,  and  furthermore  must  protect  the  interests  of  his  pledgor  as 
well  as  his  own,  because  the  latter,  by  giving  the  collateral  security,  has 
parted  with  the  power  to  protect  himself.  "The  contract  carries  vih  it 
the  implication  that  the  security  shall  be  made  available  to  discharge  the 
obligation":  Wheeler  v.  Newhould,  16  N,  Y.  396.  We  apprehend  that  it 
carries  with  it  the  further  implication  that  the  property,  no  matter  what 
its  character,  shall  not  be  lost  through  the  negligence  or  inattention  of 
the  pledgee.  The  duty  of  a  pledgee  to  his  pledgor  has  been  called  into 
question  with  respect  to  choses  in  action  more  frequently  than  to  any  other 
form  of  collateral  security.  In  a  case  arising  in  Minnesota  it  appeared  tliat 
one  to  whom  a  note  had  been  trans  erred  as  collateral  security  failed  to 
take  any  measures  for  its  collection,  tliough  requested  to  lo  so  by  the 
pledgor,  who  also  offered  to  indemnify  the  pledgee  for  the  costs  of  proceed- 
ing to  such  collection,  and  that  through  the  inaction  of  the  pledgee  the  debt 
had  been  lost.  In  discussing  the  lav\-  applicable  to  this  subject,  the  court 
said:  "In  this  case  there  is  no  express  agreement  with  reference  to  the  pledge; 
the  rights  and  obligations  of  the  parties,  therefore,  are  such  only  as  arise 
from  the  indorsement  and  delivery  of  a  negotiable  promissory  note  of  a  third 
person  by  the  principal  debtor  as  security  for  his  debt,  ^lo  question  as  to 
the  rights  or  obligations  of  a  surety  is  involved,  the  question  presented  being 
between  the  immediate  parties  to  the  contract,  —  the  principal  debtor  as 
pledgor,  and  the  creditor  as  pledgee.  So  far  as  the  authorities  upon  this 
subject  are  concerned,  there  is  no  doubt  that  the  pledgee  of  negotiable  paper 
as  collateral  security  is  bound  to  ordinary  diligence  in  preserving  the  legal 
validity  of  the  pledge,  and  answerable  for  a  loss  through  a  corresponding 
degree  of  negligence  to  the  extent  of  such  loss:  2  Parsons  on  Contracts,  5tb 
ed.,  511;  Jennison  v.  Parker,!  Mich.  355;  and  we  think,  as  between  the 
principal  debtor  and  the  creditor  in  a  pledge  of  a  similar  character  of  nego- 
tiable promissory  notes,  for  the  payment  of  which  third  parties  are  respon- 
sible, the  authorities  both  in  England  and  in  this  country  impose  upon  the 
pledgee  ordinary  diligence  to  preserve  the  pecuniary  value  of  the  pledge,  re- 
quiring, when  necessary,  active  measures  to  prevent  a  loss  by  the  insolvency 
of  third  parties  who  are  liable  for  their  payment:  Ex -parte  More,  2  Cox,  63; 
WilUamsv.  Price,  2  Sim.  &  St.  582;  Parsons  on  Contracts,  5th  ed.,  110,  note 
citing  Noland  v.  Clark,  10  B.  Mon.  239;  Beale  v.  Farmers  etc.  Bank,  5  Watts, 
529;  3  Lead.  Cas.  Eq.,  3d  Am.  ed.  552,  556;  Lyon  v.  Huntingdon  Bank,  12 
Serg.  &  R.  61.  The  same  doctrine  is  recognized  in  Bank  of  United  States  v. 
Peabody,  20  Pa.  St.  457;  Bitner  v.  Broti'jh,  11  Pa.  St.  127";  Lamherton  v. 
Windom,  12  Minn.  232;  90  Am.  Dec.  301.  So  where  it  was  alleged  that  the 
holder  of  a  judgment  as  collateral  failed  to  renew  it  and  allowed  the  lien 
thereof  to  expire,  and  the  debt  to  be  lost  through  his  supineness,  the  court 
said,  "  Where  a  debtor  assigns  a  judgment  as  collateral  security  to  his 
creditor,  he  parts  with  his  authority  over  it,  and  the  assignee  has  the  right 
and  power  to  let  the  lien  die  or  keep  it  alive,  and  must  abide  the  conse- 
quences of  his  own  will  or  negligence:  Collingwood  v.  Trivin,  3  Watts,  306. 
The  debtor  is  entitled  to  a  credit  for  a  loss  upon  a  judgment  assigned  as  col- 
lateral to  his  creditor,  when  the  loss  is  occasioned  by  the  supine  negligence 
of  the  assignee:  Beale  v.  Farmers'  etc.  Bank,  5  Watts,  529.     A  bond  or  chose 


Nov.  1S92.]  Griggs  v.  Day.  719 

which  13  transferred  as  collateral  security  is  put  under  the  dominion  of  the 
creditor  to  make  his  claim  out  of  it.  His  duties  in  respect  to  it  are  active. 
He  is  to  employ  reasonable  diligence  in  collecting  the  money  on  the  security 
and  applying  it  to  the  principal  debt,  and  a  conversion  of  it  into  a  less  secur- 
ity is  such  misuse  as  makes  him  accountable  to  the  debtor:  Miiirhe'id  v.  Kirk- 
Patrick,  21  Pa.  St.  2.37.  A  creditor  who  holds  a  collateral  security  for  his 
del>t  atanils  in  a  different  relation  to  the  assignor  from  that  of  a  creditor  to 
the  surety  for  his  debtor.  By  the  contract  the  asignee  is  invested  with  the 
ownership  of  the  collateral  for  all  purposes  of  dominion  over  it.  When  the 
collateral  is  lost  by  the  supihe  negligence  of  the  assignee,  he  must  account 
for  the  loss  to  his  own  debtor:  Haiina  v.  Hollon,  78  Pa.  St.  3.34;  21  Am. 
Rt'p.  20.  Tlic  plaintiff  parted  with  all  his  right  of  control  over  the  collaterals, 
and  the  appellant  was  bound  to  employ  reasonalde  diligence  in  their  collec- 
tion ":  McQiwens  Aj'peal,  104  Pa.  St.  595;  49  Am.  Rep.  592. 

If  the  collateral  security  is   a  negotiable  instrument,   and  measures  are 
necessary  to  charge  any  party  thereon,  then  there  is  no  doubt  that  the  holder 
of  such  security  owes  to  the  pledgor  the  duty  of  taking  the  measures  neces- 
sary to  preserve  the  liability  of  all  the  parties  to  the  instrument:  Boheris  v. 
T/iompmn,  14  Ohio  St.  1;  82  Am.  Dec.  465;  Hanna  v.  HoUod,  78  Pa.  St.  334; 
21  Am.  Rep.  20;   P/cAc/is  v.   Yarhorowjh,  26  Ala.  417;  62  Am.  Dec.  728;  May 
v.  Sharp,  49  Ala;  140;  Doiujla-ia  v.  Muiidine,  57  Tex.  344;   Lee  v.  Btddwin,  10 
Oa.  208;  Barrow  v.    Nhi/teUinder,  3  Johns.  Ch,  614.      If  a  demand  for  pay- 
ment and  notice  of  dishonor  are  required  to  charge  any  party  to  the  instru- 
ment, and  the  holder  neglects  to  make  such  demand  or  to  give  such  notice, 
whereby  the  debt  is  lost,  he  is  liable  to  the  pledgor  for  the  damages  resulting 
to  him:  Note  to  Miller  v.  Gettysburg  Bank,  34  Am.  Dec.  451,  452;  Peacock  v. 
Pursell,  14  Com.  B.,  N.  S.,  728;  Hayma  v.  Holton,  78  Pa.  St.   334;  21   Am. 
Rep.  20;  BiUterton  v.  Roope,  3  Lea,  215;  31  Am.  Rep.  633;  Smith  v.  Miller, 
43  N.  Y.  171;  3  Am.  Rep.  690;  Jennison  v.  Parker,  7  Mich.  355;  Kennedy  v. 
^o.s/>;-,  71  Iowa,  671;    Whitten  v.  Wriijht,  3i  Mich.  92;  Pickens  v.   Yarborough, 
26  Ala.  417;  62  Am.  Dec.  728;  Ru.'^sell  v.  Hester,  10  Ala.  535.     Where  it  is 
appxreut  that  the  omission  to  do  an  act  must  release  a  party  liable  on  the 
instrument,  such  omission  is  so  clearly  negligent,  and  so  likely  to  result  in 
injury  to  the  pledgor,  that  there  can  be  no  doubt  that  the  pledgee  has  failed 
in  his  duty,  and  ought  to  be  held  answerable  for  the  consequences.     So,  if 
through  the  supineness  of  the  pledgee  a  litn  is  lost  or  property  within  his 
reach  is  allowed  to  be  removed  or  applied  to  other  demands,  his  want  of 
diligence  and  its  injurious  results  are  equally  apparent.      Hence  holders  of 
collateral  security  must  be  held  remiss  in  their  duties,  and  therefore  liable 
to  tlie  pledgors  when  it  appears  that  having  judgments  as  collateral  tiiey 
failed  to  cause  execution  to  issue  and  to  be  levied  when  they  might  have 
done  so:  Harper  v.  Second  Hat.  Bank,  12  Lea,  678;    Wood  v.  Morgan,  5  Sneed, 
78;  or  they  allowed  the  lien  of  the  ju<lgment  to  expire  when  they  might  by 
proper  measures  have  revived  it  and  kept  it  alive:   Hanna  v.  Holton,  78  Pa, 
St.  334;  21   Am.  Rep.  20.     So  if  collateral  is  secured  by  a  lien  whicii  is  lost 
through  the  pledgee's  failure  to  prosecute  proper  proceediogs  to  foreclose  it: 
Hazard  v.    Wells,  2  Abb.  X.  C.  444;  Russell  v.    Weinberg,  2  Abb.  N.  C.  422; 
Northern  Ins.  Co.  v.  Wright,  20  N.  Y.  Sup.  Ct.  168;  Plymouth  Co.  Bank  v. 
Oilman,  6  Dak.  304;  or  the  right  to  bring  action  on  the  collateral,  whether 
secured  by  a  liei*  or  not,  becomes  barred  by  the  statute  of  limitations  be- 
cause of  the  pledgee's  inaction,  there  can  be  no  doubt  that  he  has  not  done 
his  duty  to  the  pledgor:  Semple  etc.  Mfg.  Co.  v.  Detwiler,  30  Kan.  386.     lu 
all  these  cases  the  want  of  diligence  is  so  unquestionable,  that  the  presump- 


720  Griggs  v.  Day.  [New  York, 

tion  of  negligence  can  scarcely  be  rebutted,  though  it  ia  always  open  to  tho 
pledgee  to  show  that  no  injury  was  suffered  by  the  pledgor  from  the  apparent 
want  of  diligence:  Steger  v.  Bush,  Smedes  &  M.  Ch.  172.  No  extraordinary 
diligence  is  exacted  of  a  pledgee  in  any  event.  All  that  the  law  requires  is 
ordinary  diligence,  and  whenever  it  is  exercised,  he  is  not  liable,  though  it 
may  appear  that  by  greater  diligence  the  collateral  might  have  been  col- 
lected and  the  pledgor  saved  from  loss:  Miller  v.  Oettyshurg  Bank,  8  Watts, 
192;  34  Am.  Dec.  449,  and  note;  Chaffe  v.  Purdy,  4.3  La.  Ann.  389;  Cardin 
V.  Jones,  23  Ga.  175;  Lamberton  v.  Windom,  18  Minn.  506;  Slevin  v.  Morrow, 
4  Ind.  425;  Wells  v.  Wells,  53  Vt.  1;  Reeves  v.  Plough,  41  Ind.  204.  Where 
promissory  notes  secured  by  mortgages  were  transferred  as  collateral,  and 
the  mortgages  contained  powers  of  sale  under  which  the  holder  of  the  notes 
might,  at  any  time  when  interest  was  due  and  unpaid,  have  had  the  mort- 
gaged property  sold,  and  thus  compelled  payment,  the  (ailure  to  exercise 
such  powers  resulting  in  loss  of  interest  through  depreciation  in  the  prop- 
erty, the  holder  of  the  collateral  was  held  liable  for  such  loss.  The  court  in 
its  opinion  said:  "It  is  undoubtedly  the  law  that  the  pledgee  of  a  chose  m 
action  who  receives  it  as  collateral  security  is  bound  to  use,  not  extraordi- 
nary care,  as  the  master  seems  to  have  supposed,  but  ordinary  or  reasonable 
care  or  diligence  to  secure  its  payment  when  due:  1  An*.  Lead.  Cas.  402, 
403;  Lawrence  v.  McCalmonf,  2  How.  426;  Kiser  v.  Ruddick,  8  Black f.  382. 
The  law  implies  on  the  part  of  the  pledgee,  from  the  nature  of  the  transac- 
tion, an  agreement  to  use  such  care  to  protect  the  pledgor's  interest  and 
make  the  pledge  available.  Accordingly,  if  the  pledge  consists  of  indorsed 
negotiable  paper,  the  pledgee  must  present  it  for  payment  at  maturity,  and, 
if  it  is  not  paid,  must  give  notice  to  charge  the  indorser,  or,  if  loss  ensues, 
he  will  be  liable  to  make  it  good:  1  Am.  Lead.  Cas.  123,  124;  McLaughan  v. 
Bovard,  4  Witts,  308;  Ormnhy  v.  Fortune,  16  Serg.  &  R  302;  and  there  are 
cases  which  go  so  far  as  to  hold  that  the  pledgee  will  be  liable  for  neglecting 
to  put  the  collateral  in  suit,  when  a  prudent  man  would  do  it,  if  any  loss  re- 
sults from  the  neglect:  Lamberlonv.  Windom,  ]2  Minn.  232;  90  Am.  Dec.  301; 
Wakxman  v.  Oowdy,  10  Bosw.  208;  Slevin  v.  Morrow,  4  Ind.  425;  Ex  parte 
Mure,  2  Cox,  63;  Williams  v.  Price,  1  Sim.  &  St.  581;  Lyon  v,  Huntingdon 
Bank,  12  Serg.  &  R.  61;  Hoard  y.  Garner,  10  N.  Y.  261;  but  see  1  Am.  Lead. 
Cas.  404.  This  being  the  law,  we  do  not  see  how  defendant  can  justify  her 
neglect  to  collect  the  installments  of  interest  as  they  accrued,  especially  when 
we  consider  how  cheap  and  expeditious  a  means  she  had  of  enforcing  pay- 
ment in  the  powers  of  sale  contained  in  the  mortgages.  We  have  no  hesi- 
tation, therefore,  in  holding  that,  havmg  neglected  to  enforce  the  payment  of 
the  interest  when  she  could  so  easily  have  done  so,  she  must  herself  be  held 
responsible  for  it":  Whitin  v.  Paul,  J 3  R.  I.  42.  The  cases  in  which  the 
bolder  of  collateral  has  been  held  answerable  for  loss  of  the  debt,  through 
his  failure  to  prosecute  an  action  thereon,  where  the  statute  of  limitation 
has  not  interposed  through  his  inaction,  are  very  infrequent,  and  we  do  not 
know  of  any  in  which  his  lial)ility  has  been  enforced,  except  when  he  was 
asked  by  the  pledgor  to  take  action  and  refused,  or  circumstances  were  called 
to  his  attention  making  it  manifest  to  a  man  of  ordinary  intelligence  that 
inaction  must  almost  certainly  result  in  loss.  If  it  appears  that  the  maker 
of  the  collateral  was  insolvent  when  it  was  transferred  to  the  pledgee,  and 
BO  continued,  no  laches  will  be  imputed  to  the  latter:  Powell  v.  Henry,  27 
Ala.  612.  When  the  principal  debt  is  paid,  then  the  only  duty  of  the  holder 
of  the  collateral  is  to  keep  it  safely  until  he  can  return  it  to  the  pledgor,  and 


Nov.  1892.]  Griggs  v.  Day.  721 

he  does  not  owe  any  duty  to  the  latter,  after  such  payment,  to  take  steps 
for  the  collection  of  the  collateral:  Overlock  v.  Hilli,  8  Me.  383. 

The  holder  of  negotiable  securities,  whether  they  consist  of  negotiable  in- 
struments or  not,  must  exercise  at  least  ordinary  care  in  keeping  them  safely 
and  thus  preserving  them  from  loss:  Petty  r.  Overall,  42  Ala.  145;  94  Am. 
Dec.  634;  Jones  on  Pledges,  sec.  403-405,  410,  and  this  duty  does  not  ter- 
minate on  the  payment  of  the  principal  debt  if  the  securities  have  not  been 
surrendered  to  the  pledgor.  Thus  where  a  bank  received  as  collateral  secu- 
rity certain  bonds,  coupons,  and  stocks,  the  title  to  which  was  transferable 
by  delivery,  and  which,  after  the  payment  of  the  principal  debt,  were  stolen 
from  the  custody  of  the  bank  through  its  failure  to  exercise  ordinary  care,  it 
■was  held  to  be  answerable  for  the  loss:  T/iird  Nat.  Bank  of  Baltimore  v. 
Boyd,  44  Md.  47;  22  Am.  Rep.  35;  but  something  more  than  the  loss  of  the 
securities  is  required  to  make  the  holder  answerable.  Such  loss  must  have 
resulted  from  his  failure  to  exercise  ordinary  care:  Mills  v.  Gilhrelh,  47  Me. 
;-<20;  74  Am.  Dec.  787;  Jones  on  Pledges,  sees.  510,  511.  Therefore  if  they 
are  lost  by  burglary  or  larceny  without  there  being  any  want  of  ordinary 
care  on  the  part  of  the  holder,  he  is  not  answerable:  Winthrop  Sav.  Bank 
^.  Jackson,  67  Me.  590;  24  Am.  Rep.  56;  Jenkins  v.  National  etc.  Bank, 
58  Me.  275;  Dearborn  v  Union  Nat.  Bank,  51  Me.  369.  The  duty  of  the 
pledgee  is  not  to  be  measured,  or  necessarily  to  be  judged,  by_  the  man- 
ner in  which  he  takes  care  of  his  own  property.  It  is  merely  to  exercise 
ordinary  care,  and  is  not  increased  by  the  fact  that  he  exercises  unusual 
care  and  diligence  in  his  own  afiairs  and  in  the  protection  ot  his  own  inter- 
ests, nor  is  it  diminished  by  the  fact  tha.  he  is  negligent  and  inattentive 
to  his  own  interests  as  well  as  to  those  of  others  committed  to  his  care.  In 
all  instances  there  must  be  exercised  such  care  and  diligence  in  the  custody 
of  collaterals  as  persons  of  common  prudence  would  exercise  under  like 
circumstances  in  keeping  similar  property:  Third  Nat.  Bank  of  Baltimore  v. 
Boyd,  44  Md.  47;  22  Am.  Rep.  35;  Scott  v.  Crews,  2  S.  C.  522,  •'iSS. 

If  the  property  taken  does  not  consist  of  choses  in  action  to  be  collected 
by  suit,  but  of  stocks  or  other  property  which  the  creditor  is  given  power  to 
sell  and  to  ajiply  the  proceeds  to  the  payment  of  his  debt,  he  may,  by  not 
acting  promptly  sufiFer  the  property  to  remain  in  his  hands  unsold  until  it  is 
wholly  or  partly  lost  or  destroyed,  or  has  depreciated  in  value,  so  that  it 
clearly  appears  that  it  would  have  been  better  for  the  pledgor  if  the  pledgee 
had  promptly  exercised  his  power  to  sell;  and  then  the  question  presenting 
itself  for  decision  is,  which  of  the  parties  naist  bear  the  loss  of  the  creditor's 
inaction.  If  the  pledgor  has  not  demanded  that  the  power  to  sell  be  exer- 
cised and  the  property  disposed  of,  the  authorities  agree  that  the  pledgee  does 
not  owe  to  him  the  duty  of  selling  upon  default  in  the  payment  of  the  princi- 
pal  debt,  nor  at  any  other  particular  time-  Colijuitl  v.  StuUz,  65  Ga.  305;  Roh- 
ijison  v.  Hurley,  1 1  Iowa.  410;  79  Am.  Dec.  497;  Richardson  v.  Insurance  Co.,  27 
Gratt.  749;  Rozet  v.  MrClelkm,  48  III.  345;  95  Am.  Dec.  551;  Howard  v.  Brig. 
ham,  98  Mass.  13.'?;  O'Neill  v.  Whhjhman,  87  Pa.  St.  394;  Granite  Bank  v.  Rich- 
ardson, 7  Met.  407.  Whether  the  pledgor  may,  by  notice  to  tlie  pledgee,  re- 
quire him  to  sell  and  hold  him  answerable  for  such  loss  as  may  result  from 
a  delay  in  selling,  is  by  no  means  well  settled.  It  appears  clear  that  he 
cannot  insist  upon  a  sale  immediately.  Some  of  the  decisions  proceed  upon 
the  theory  that  it  is  the  duty  of  the  pledgee  not  to  be  negligent  in  respect 
to  the  making  of  the  sale,  and  that  the  fact  that  the  pledgor  had  in  vain 
requested  a  sale,  may  at  least  tend  to  prove  negligence  on  the  part  of  the 
pledgee  in  not  making  it:  Gooilall  v.  Richardson,  14  N.  H.  572;  Franklin 
AM.  fcT.  Kep.,  Vol.  XXXII.  —  16 


722  Griggs  v.  Day.  [New  York, 

Sav.  Inst.  V.  Preetorms,  6  Mo.  App.  473.  In  one  case  it  was  proved  that  the 
pledgor  of  stocks  as  collateral  told  the  pledgee  that  he  wanted  tliem  sold  if 
the  principal  debt  was  not  paid  when  it  fell  due;  that  the  debt  became  due 
in  December,  1875;  that  the  stocks  about  three  months  after  that  date  were 
worth  thirty  dollars  per  share,  and  the  pledgee  sold  them  two  years  later  for 
twenty-eight  dollars  per  share.  The  trial  court  instructed  the  jury  that  if 
the  pledgor  gave  notice  of  his  wish  that  the  stock  be  sold  at  the  maturity  of 
the  note,  then  that  it  was  the  pledgee's  duty  to  make  such  sale  within  a  rea- 
sonable time,  and  that  if  he  did  not  ao  sell,  he  was  lialiie  for  the  subsequent 
depreciation  of  the  stock.  This  instruction  was  held  to  be  erroneous.  "  The 
property,"  said  the  court,  "  as  such,  is  still  that  of  the  pledgor,  and  of  this 
the  pledgee  assumes  the  custody  and  care.  The  pledgee  has  jus  in  re  aliena, 
a  special  right  in  the  pledgee's  property  for  the  purpose  of  compelling  the 
pledgor  to  pay  the  debt.  The  pledgee  stands  to  a  certain  extent  in  a  fiduci- 
ary relation,  and  therefore  cannot  ordinarily  purchase  the  property  when 
sold.  The  pledgor  retains  a  double  interest  in  having  his  debt  paid  and  in 
the  possible  surplus;  but  as  the  pledgee  has  taken  possession  the  pledgor 
can  make  the  sale  only  through  the  pledgee;  but  if  the  pledgee  has  the 
right  to  make  his  claim  out  of  the  property  and  it  has  been  put  into  his 
hands  for  this  purpose,  how  can  it  be  said  there  is  a  right  in  the  pledgor  to 
require  the  sale  at  a  given  time?  This  virtually  asserts  in  him  a  right  he 
has  surrendered  with  the  pledge.  To  say  that  the  debtor  has  an  absolute 
right  to  require  the  sale  at  a  given  time  is  to  say  that  the  creditor  is  not 
to  exercise  his  judgment  and  skill  in  the  management  of  his  own  special 
property.  On  the  other  hand,  so  far  as  the  pledgor's  interest  is  involved, 
the  pledgee  ought  only  to  be  responsible  for  negligence,  not  for  failure  which 
may  be  consistent  with  diligence,  and  even  indicate  vigilance  and  skill  in 
calculating  the  chances  of  the  market.  Refusal  to  sell  upon  the  request  of 
the  debtor  may,  on  the  other  hand,  tend  to  show  negligence  or  want  of 
reasonable  care,  it  being  merely  a  fact  to  be  considered  with  other  facta  ": 
Franklin  Sav.  Inst.  v.  Preetorious,  6  Mo.  App.  473. 

In  a  case  in  which  it  was  claimed  that  the  mode  of  selling  property  had 
not  been  such  as  was  for  the  best  interest  of  the  pledgor,  and  had  resulted 
in  his  loss,  the  trial  court  instructed  the  jury  that  the  pledgee  "was  bound 
to  use  due  diligence  and  care  in  the  sale  of  the  stock  to  protect  the  rights 
of  the  plaintiff;  that  he  must  use  the  same  care,  diligence,  and  prudence  in 
the  sale  that  a  prudent  man  would  in  the  sale  of  his  own  property,"  The 
course  which  the  plaintifif  contended  had  been  injurious  to  him  was  the  sell- 
ing of  a  certificate  of  stock  without  dividing  it  into  small  lots.  The  in- 
struction given  by  the  trial  court  was  pronounced  erroneous,  because  by  it 
"the  jury  may  have  been  misled  into  the  belief  that  the  duty  of  the  defend- 
ant was  to  exercise  the  same  prudence  and  diligence  which  a  prudent  owner 
would  exercise  in  determining  the  time  when  he  would  sell  his  own  stock, 
and  whether  he  would  sell  each  certificate  as  a  whole  or  in  parcels  ";  and 
because  the  only  duty  of  the  defendant  after  he  had  determined  to  sell  the 
stock  "was  to  exercise  reasonable  care  and  diligence  to  obtain  whatever  the 
stocks  were  worth  at  the  time  he  sold  them":  Newsonie  v.  Duvis,  133  Mass. 
3-13  There  i'i  no  doubt  that  it  is  the  duty  of  the  holder  of  collateral  not  to 
act  under  the  influence  of  motives  injurious  to  the  pledgor,  and  the  latter 
m  ly  recover  damages  for  an  injury  resulting  in  a  delay  to  make  a  sale  of  stock 
pledged  as  collateral,  if  the  purpose  of  such  delay  was  to  enable  the  pledgee 
to  perfect  a  scheme  which  it  and  its  oflBcera  then  entertained  of  depreciating 


Nov.  1892.]  Griggs  v.  Day.  723 

the  stocks  before  oflfering  them  for  sale:  Napier  v.  Central  etc.  Bank,  68  Ga. 
637. 

The  Liabilities  of  the  holder  of  collateral  securities  may  best  be  understood 
by  considering  his  rights  and  duties,  of  which  we  have  already  treated;  be- 
cause he  is  for  some  purposes  at  least  regarded  as  the  owner  of  the  prop- 
erty, he  must  be  subject  te  some  extent  to  the  liabilities  of  an  absolute 
owner.  Thus,  if  stock  has  been  transferred  to  him  as  collateral,  so  that  he 
appears  on  the  books  of  the  corporation  as  a  stockholder,  he  is  liable 
to  the  same  extent  as  an  absolute  stockholder  in  an  action  by  creditors 
of  the  corporation  to  compel  the  payment  of  unpaid  subscriptions:  Pull- 
man V.  Upton,  96  U.  S.  328;  and  also  to  actions  to  enforce  the  personal  lia- 
bility of  stockholders  in  those  states  whose  statutes  or  constitution  impose  a 
personal  liability  upon  stockholders  for  the  corporate  debts  or  some  portion 
thereof:  Bowden  v.  Farmers'  Bank,  1  Hughes,  307;  Wheelock  v.  Kost,  77  111. 
296;  Hale  v.  Walker,  31  Iowa,  344;  7  Am.  Rep.  137;  Magriider  v.  Colston, 
44  Md.  349;  22  Am.  Rep.  47;  Crease  v.  Bahcork,  10  Met.  524,  545;  First 
Nat.  Bank  v.  Higham  Mfg.  Co.,  127  Mass.  563;  Rosevelt  v.  Brown,  11  N.  Y, 
148;  Aultinan's  Appeal,  98  Pa.  St.  505;  Erskine  v.  Lowenstein,  82  Mo.  301. 
In  several  of  the  states  statutes  have  been  enacted  relieving  holders  of  stock 
as  collateral  of  this  liability;  and  where  such  statutes  are  in  force,  it  }a  com- 
petent to  prove  by  parol  evidence  that  though  stock  stood  on  the  books  of  a 
corporation  in  the  name  of  a  person,  yet  that  he  in  fact  merely  held  them  as 
collateral,  and  such  proof  being  made,  he  is  not  answerable  for  the  debts  of 
the  corporation:  McMahon  v.  Macy,  51  N.  Y.  155;  Burgess  v.  Sellgman,  107 
U.  S.  20;  Union  Savings  Ass'n  v.  Seligman,  92  Mo.  635;  1  Am.  St.  Rep.  776. 
The  decisions  maintaining  the  liabdity  of  the  holders  of  stock  as  coliatera- 
for  the  debts  of  the  corporation  or  for  unpaid  subscriptions  proceed,  we  apl 
prehend,  upon  the  ground  that  the  statutes  imposing  personal  lia1)ility  upon 
stockholders  had  intended  to  make  answerable  all  persons  who  on  the  books 
of  the  corporation  appear  to  be  the  owners  of  stock,  and  on  whose  financial 
responsibility  the  creditors  have  therefore  probably  relied.  Hence,  if  a 
holder  of  stock  as  collateral  does  not  appear  on  the  books  to  be  the  owner  of 
the  stock,  he  is  not  personally  answerable  to  the  creditors  of  the  corporation: 
Henkle  v.  Salem  Mfg.  Co.,  39  Ohio  St.  547.  Except  in  the  case  of  corporate 
stocks,  we  have  not  met  with  any  decision  holding  the  owner  of  collateral 
security  liable  for  anything  except  his  violation  of  his  duties  to  his  pledgor. 
We  have  already  referred  to  the  duties  of  the  pledgee  to  exercise  ordinary 
care  in  the  custody  and  preservation  of  the  property,  and  his  consequent 
liabilty  for  the  non-observance  of  such  duty.  The  interest  which  the  pledgee 
has  in  the  pledged  property  does  not  ordinarily  entitle  him  to  use  it  for  his 
own  purposes,  if  such  use  can  diminish  its  value,  or  otherwise  injure  the 
pledgor:  McArthur  v.  Hoivett,  72  111.  358;  Thompson  \.  Patrick,  4  Watts, 
414;  Lawrence  v.  Maxwell,  53  N.  Y.  19;  note  to  Lvrketts  v.  Totonsend,  49 
Am.  Dec.  736.  "  Where  a  pledge  is  made  by  a  debtor  to  his  creditor  to 
aecure  his  debt  for  a  certain  term,  the  law  requires  that  the  latter  shall 
safely  keep  it  without  using  it,  so  as  to  cause  any  detriment  thereto;  but 
if  detriment  happens  within  the  term  appointed,  it  must  be  set  over 
against  the  debt  according  to  the  damage  sustained  ":  Stearns  v.  Marsh,  4 
Denio,  227;  47  Am.  Dec.  248.  For  a  misuse  or  abuse  of  the  property 
pledged,  the  pledgee  is  answerable  to  the  pledgor,  and  the  latter  may,  at  his 
election,  treat  it  as  a  conversion  of  the  property,  and  recover  damages  ac- 
-cordingly:  Crorker  v.  Gullifcr,  44  Me.  491;  69  Am.  Dec.  118;  De  Tollenere 
•V.  Fuller,  I  Mill.  Const.  117;  12  Am.  Dec.  616,  and  note.     If  the  property 


724  Griggs  v.  Day.  [New  York, 

pledged  is  of  such  a  character  that  use  will  not  injure  it,  nor  expose  it  to 
peril  of  loss,  the  pledgee  does  not  incur  liability  by  using  it;  and  if  it  is  of 
stich  a  character  that  use  is  necessary  in  properly  caring  for  it,  then  it  be- 
comes his  duty  to  so  use  it  that  it  will  not  sufifer  from  its  disuse:  Jones  on 
Pledges,  sec.  394.  If  from  the  use  of  the  property  pledged  profits  are  derived, 
the  pledgee  must  account  therefor  to  the  pledgor,  and  apply  the  net  pro- 
ceeds of  such  use  to  the  extinction  of  the  debt:  Geron  v.  Oeron,  15  Ala.  558; 
50  Am.  Dec.  143;  Houton  v.  Holliday,  2  Murph.  Ill;  5  Am.  Dec.  522;  Wood- 
ard  V.  Fitzpatrick,  9  Dana,  117.  So  if  any  profits  accrue  from  property  held 
as  collateral,  such  profits,  while  they  may  be  collected  aad  retained  by  tlie 
pledgee,  must  be  credited  to  the  pledgor,  or  applied  to  the  sum  due  from 
hiin,  as  where  dividends  accrue  on  pledged  stock,  or  interest  is  collected  on 
a  security  held  as  collateral:  Jones  on  Pledges,  sees.  398,  399.  If  property 
held  as  collateral  consists  of  negotiable  iustruments,  demand  for  and  notice 
of  non-payment  of  which  is  essential  to  preserve  the  liability  of  parties 
thereto,  or  of  some  of  them,  or  action  upon  which  is  necessary  to  preserve 
some  lien,  or  to  prevent  the  operation  of  the  statute  of  limitations,  it  is,  as 
we  have  already  shown,  the  duty  of  the  holder  to  make  such  demand  or 
give  such  notice,  or  to  take  such  action  as  will  prevent  the  loss  of  the  lien 
or  the  right  of  action  on  the  debt,  and  the  failure  to  discharge  either  of  these 
duties  renders  him  liable  to  the  extent  of  the  loss  sustained  by  the  pledgor. 
A  holder  of  collateral  also  becomes  liable  to  the  pledgor  for  any  violation  on 
the  part  of  the  former  of  the  express  or  implied  contract  between  them,  ami 
for  the  doing  of  acts  inconsistent  with  such  contract.  On  the  payment  of 
the  debt  and  demand  for  a  return  of  the  property,  the  holder  beco:ne.i  liable 
for  all  damages  re.suiting  from  his  refusal  to  restore  it:  Otiss  v.  Hiji'nhot.am, 
100  N.  Y.  248;  Faywdl  v.  Importers  etc.  Bank,  90  N.  Y.  483;  Merchants'  etc. 
Bank  v.  Masonic  Hall  Trustees,  62  Ga.  271.  The  pledgee  is  also  answerable 
for  any  misappropriation  of  the  collateral,  whether  made  by  himself  or  his 
agent:  Reynolds  v.  WUte,  13  cJ.  C  5;  36  Am.  Rep.  678;  as  well  as  for  any 
surplus  which  may  remain  in  his  hands  after  the  satisfaction  of  the  princi- 
pal debt:  Hunt  v.  Never.s,  15  Pick.  500;  26  Am.  Dec.  616;  Union  Nat.  Bank  v. 
Roberts,  45  Wis.  373;  or  such  part  of  the  principal  debt  as  the  collateral  was 
given  to  secure:  Fridley  v.  Bowen,  103  III.  633. 

For  an  Unlawful  or  Unauthorized  Use  of  Collateral  the  holder  is  generally, 
at  the  election  of  the  pledgoe,  liable  as  for  its  conversion,  as  where  the  pledgee 
transfers  or  pledges  the  property  without  authority  to  do  so:  Fay  v.  Oray, 
124  Mass.  500;  Bryson  v.  Rayner,  25  Md.  424;  90  Am.  Dec.  69.  If,  however, 
the  pledge  or  transfer  is  not  such  as  could  injure  the  pledgor,  nor  in  any  way 
or  to  any  t.xtent  inconsistent  with  his  rights,  and  his  property  remains  in 
Buch  a  condition  that  it  could  be  delivered  to  him  at  any  time  when  he  should 
become  entitled  thereto,  there  is  no  cons'ersion  and  therefore  no  liability: 
Day  V.  Holmes,  103  Mass.  306;  Heath  v.  Griswold,  5  Fed.  Rep.  573.  So  if 
the  property  held  as  collateral  consists  of  a  certificate  of  stock  in  a  private 
corporation,  the  fact  that  it  is  sold  or  pledged  without  the  consent  of  the 
pledgor,  does  not  constitute  a  conversion  if  the  pledgee  retains  in  his  posses- 
sion ready  for  delivery  an  amount  of  stock  equal  to  that  held  by  him  as  col- 
lateral: Atkins  y.  Oamhle,  42  Cal.  86;  10  Am.  Rep.  282;  Horton  v.  Monjan, 
19  N.  Y.  170;  75  Am.  Dec.  311,  and  note.  This  rule  is  probably  equally 
applicable  to  municipal  and  governmental  bonds:  Stuart  v.  Bigler,  98  Pa. 
St.  80.  If,  through  the  payment  of  the  principal  debt  or  otherwise,  the  right 
to  hold  the  collateral  terminates,  and  the  pledgee  refuses  to  deliver  it  on 
demand  to  the  pledgor,  the  latter  may  sustain  an  action  for  its  conversion: 


Nov.  1892.]  Griggs  v.  Day.  725 

Flowers  V.  Sproxile,  2  A.  K.  Warsh,  54;  Lawrence  r.  MaorwrU,  5.*?  N.  Y.  19; 
Decker  v.  Mathews,  12  N.  Y.  313;  McCalla  v.  Clarlc,  55  Ga.  53;  Kullmnn  v. 
Oreenebaum,  92  Cal.  403;  27  Am.  St.  Rep.  150,  The  same  result  follows 
when  the  pledgee,  though  he  does  not  refuse  to  return  the  property  fails  to 
do  so  because  he  has  wrongfully  sold  or  used  it,  or  has  otherwise  rendered 
himself  without  power  to  comply  with  his  duty:  Gay  v.  Muss,  34  Cal.  125; 
Wheeler  v.  Newbonld,  16  N.  Y.  392;  note  to  Lucketts  v.  Toivn.send,  49  Am. 
Dec.  735.  If  the  holder  of  collateral  sells  it  without  authority  to  do  so,  or, 
having  authority  to  sell,  does  not  pursue  such  authority  so  as  to  make  the 
sale  valid,  the  sale,  at  the  election  of  the  pledgor,  may  be  regarded  as  a  con- 
version of  the  collateral  and  the  pledgee  held  liaVde  therefor  in  an  action  of 
trover:  Nahrlng  v.  Bank  of  Mohile,  58  Ala.  204;  Rotoizweigy.  Fruzer,  82  Lid. 
342;  Maryland  F.  Ins.  Co.  v.  Dalrymjtle,  25  Md.  242;  89  Am.  Dec.  779,  or 
in  any  other  appropriate  proceeding:  Fowle  v.  Ward,  113  Mass.  548;  18  Am. 
Rep.  534.  If  the  sale  was  to  the  pledgee  liimself  when  he  was  not  author- 
ized to  purchase,  it  may  be  treated  as  valid  or  not  as  the  pledgor  may  elect. 
If  he  elects  to  affirm  the  sale,  then  it  is  valid  for  all  purposes,  and  the  only 
liability  of  the  pledgee  is  to  credit  the  pledgor  with  the  proceeds  of  the  sale 
or  10  otherwise  account  to  him  therefor:  Killain  v.  Hoffman,  6  111.  App.  200. 
If  On  the  other  hand,  the  pledgee  elects  to  disaffirm  the  sale,  then  it  niu.st  be 
treated  as  never  having  taken  place,  and  therefore  as  creating  no  liability 
against  the  pledgee.  He  holds  the  property  as  before  the  sale  with  the  duty 
to  keep  it  safely,  and  the  right  to  apply  it  to  the  satisfaction  of  his  debt: 
Bryan  v.  Baldwin,  52  N.  Y.  2.32.  Though  the  holder  of  collateral  has  at- 
tenii)ted  to  sell  it  and  the  form  of  bidding  it  in  has  been  gone  through  with, 
yet  if  the  sale  was  unauthorized  and  the  stock  never  went  out  of  the  posses- 
sion of  the  pledgee,  and  he  at  all  times  had  it  on  hand  so  that  it  could  be  de- 
livered to  the  owner,  no  liability  for  its  conversion  exists:  Terry  v.  Binning- 
ham  Nat.  Bank,  93  Ala.  599;  30  Am.  St.  Rep.  87. 

The  Measure  of  Damages  for  the  Conversion  of  a  collateral  security  by  the 
holder  thereof  nmst,  upon  principle,  extend  to  and  be  limited  by  the  actual 
injury  suffered  by  the  pledgor.  If  an  unauthorized  or  invalid  sale  is  made, 
the  pledgee  cannot  relieve  himself  from  liability  merely  by  accounting  for 
the  proceeds  of  the  sale.  He  must  account  for  and  pay  the  actual  value  of  the 
property  at  the  time  of  the  conversion:  Jefferson  Bank  v.  Ohio  Falls  etc.  Works, 
20  Fed.  Rep.  65;  note  to  Bohinson  v.  Hurley,  79  Am.  Dec.  505;  Huzzard  v. 
Duke,  64  Ind.  220;  Succssion  of  Liles,  24  La.  Ann.  550;  Kiser  v.  Ruddick,  8 
Blackf.  382;  Noland  v.  Clark,  10  B.  Mon.  239;  Word  v.  Morgan,  5  Sneed,  79; 
Newcomh  v.  Baskett,  14  Bush,  658;  First  Nat.  Bank  v.  Boycc,  78  Ky.  42;  .39  Am. 
Rep.  198;  Cuslnng  v.  Seymour,  30  Minn.  301;  Daggett  v.  Davis,  53  Mich.  35;  51 
Am.  Rep.  91;  Bumsey  v.  Laldley,  34  VV.  Va.  721;  26  Am.  St.  Rep.  935;  and 
in  some  instances  the  highest  market  value  up  to  the  time  of  the  trial:  Fowle 
V.  Ward,  113  Mass.  548;  18  Am.  Rep.  534;  Sturgis  v.  Krith,  57  111.  451; 
Markham  v.  Jawhn,  51  N.  Y.  235;  Romaine  v.  Van  Allen,  26  N.  Y.  309.  If 
the  collateral  consists  of  promissory  notes  or  instruments  for  the  payment 
of  money,  doubtless  the  amount  recoverable  thereon  by  their  terms  is  pre- 
sumed to  be  the  measure  of  damages  for  their  conversion:  Hazzard  v.  Duke, 
64  Ind.  220.  Sometimes,  as  in  the  principal  case,  the  holder  of  collateral 
has  surrendered  it  to  the  maker  without  having  any  right  to  do  so,  or  has 
transferred  it  without  authority,  and  with  respect  to  cases  of  this  class  it 
has  been  insisted  that  the  pledgee  should  be  treated  as  electing  to  accept  the 
security  so  transferred  or  surrendered  at  its  face  value,  to  be  applied  in 
satisfaction    of   his  debt,  irrespective  of  its  actual  value  or  of  the  injury 


726  Griggs  v.  Day.  [New  York, 

Buffered  by  the  pledgor  from  the  improper  transfer  or  surrender:  Wood  v. 
Matthews,  73  Mo.  481;  Cocke  v.  Chaney,  14  Ala.  65;  Hawks  v.  Hinchcliff,  17 
Barb.  492.  There  is  no  doubt  that  a  holder  of  collateral  securities  has  no 
right  to  make  a  compromise  by  which  they  are  surrendered  on  the  payment 
of  a  sum  less  than  that  actually  due  thereon,  and  that  he  must  respond  for 
any  damages  actually  sustained  by  the  pledgor  from  so  doing:  Union  Trust 
Co.  V.  Rigdon,  93  111.  458,  470,  which,  if  the  makers  were  solvent,  is  necessarily 
the  face  value  of  the  instrument  surrendered:  Depuy  v.  Clark,  12  Ind.  427;  Gar- 
lick  V.  James,  12  Johns.  146;  7  Am.  Dec.  294;  but  undoubtedly,  upon  prin- 
ciple, there  is  no  reason  why  a  holder  of  collateral  making  a  compromise  or 
any  other  unauthorized  disposition  thereof  should  be  required  to  respond  for 
damages  which  the  pledgor  has  not  suffered.  If  the  compromise  was  advan- 
tageous and  the  amount  realized  all  that  could  have  been  obtained,  the 
pledgor  is  not  entitled  to  any  credit  beyond  the  amount  resulting  from  the 
compromise:  Exeter  Bank  v.  Gordon,  8  N.  H.  66;  and  so  where  a  security  is 
improperly  surrendered  or  otherwise  converted,  the  measure  of  damages  is 
not  necessarily  the  amount  due  but  is  the  actual  value  of  the  property  con- 
verted, which  in  the  event  of  the  maker  being  insolvent,  is  nothing:  Potter 
V.  Merchants'  Bank,  28  N.  Y.  641;  86  Am.  Dec.  273;  Vose  v.  Florida  R.  R. 
Co.,  50  N.  Y.  309;  Gri.jgs  v.  Day,  136  N.  Y.  152;  32  Am.  St.  Rep.  704. 

Remedies  against  Third  Persons.  —  Every  bailee  may  maintain  an  action 
against  a  third  person,  who  while  such  bailee  is  in  possession  or  entitled  to 
possession  of  the  subject  of  the  bailment,  seizes  or  converts  it  or  otherwise 
injures  it  or  interferes  with  the  rights  of  the  bailee  to  his  damage:  E  kins  v. 
Boston  M.  R.  R.  Co.,  19  N.  H.  337;  51  Am.  Dec.  184;  Little  v.  Fossett,  34  Me. 
545;  56  Am.  Dec.  671;  Brewster  v.  Warner,  136  Mass.  57;  49  Am.  Rep.  5; 
American  Dist.  Tel.  Co.  v.  Walker,  72  Md.  454;  20  Am.  St.  Rep.  479.  If  a 
collateral  security,  as  in  the  case  of  a  warehouse  receipt  or  bill  of  lading, 
entitles  the  holder  to  the  possession  of  the  property,  he  may  maintain  an 
action  against  any  third  person  who  interferes  with  such  possession  or  does 
any  other  act  prejudicial  to  the  holder  of  the  security.  If  the  collateral 
consists  of  promissory  notes  or  other  evidence  of  indebtedness,  the  holder 
may  maintain  an  action  of  trover  or  replevin  against  any  one  who  unlaw- 
fully seizes,  retains,  or  converts  them.  The  object  of  taking  security  of  this 
class  of  collateral  is  to  obtain  the  proceeds  thereof  either  through  the  vol- 
untary action  of  the  makers  or  by  compulsory  proceedings  against  them. 
The  holder  of  the  collateral  may  therefore  sue  thereon  with  like  effect  as  if 
he  were  the  absolute  owner  and  he  need  not  make  his  pledgor  a,  party  to 
the  action  nor  otherwise  take  any  notice  of  the  pledge.  He  is  at  all  times 
entitled  to  demand  and  receive  the  money  due  upon  such  securities,  and 
whenever  they  are  not  paid  when  due  to  enforce  payment  by  proper  action: 
Dix  V.  Tally,  14  La,  Ann.  460;  Joiies  v.  Hawkins,  17  Ind.  550;  Rozve  v.  Haines, 
15  Ind.  445;  77  Am.  Dec.  101;  Lambertonv.  Windom,  12  Minn.  232;  90  Am. 
Dec.  301;  Hunt  v.  Nevers,  15  Pick.  500;  26  Am.  Dec.  616;  Van  Riper  v, 
Baldwin,  85  N.  Y.  618;  Kinney  v.  Kruse,  28  Wis.  183;  Tarbell  v.  Sturtevant, 
26  Vt.  513;  Haydon  v.  Nicoletti,  18  Nev.  290;  Houser  v.  Houser,  43  Ga.  415; 
Hilton  V.  Waring,  7  Wis.  492.  His  right  of  action  cannot  be  lost  by  the 
death  of  his  debtor:  Huyler  v.  Dahoney,  48  Tex.  234;  Bennett  v.  Stoddard,  58 
Iowa,  654,  nor  is  it  dependent  upon  the  principal  debt  being  due:  Jones  v. 
Hawkins,  17  Ind.  550.  The  amount  of  his  recovery  is  in  ordinary  cases  the 
full  amount  due  on  the  collateral:  Atlas  Bank  v.  Doyle,  9  R.  I.  76;  11  Am. 
Rep.  219;  98  Am.  Dec.  368;  but  if  there  exists  any  defense  which  might  be 
asserted  against  the  pledgor  were  he  the  plaintiff  in  the  action,  then  the 


Nov.  1892.]  Griggs  v.  Day.  727 

recovery  of  the  holder  of  the  collateral  may  be  limited  to  the  amonnt  due 
him  upoa  the  principal  debt:  Atlas  Bank  v.  Doyle,  9  R.  I.  76;  11  Am.  Rep. 
219;  98  Am.  Dec.  368;  Steere  v.  Bemoii,  2  Hi.  App.  500;  Union  Nat.  Bank  v. 
Roberts,  45  Wis.  373;  Valette  v.  Mason,  1  Ind.  288;  Mayo  v.  Mocrre,  28  111. 
428. 

If  several  securities  are  held  as  collateral  for'one  debt,  the  holder  cannot 
be  compelled  to  surrender  either  until  his  debt  is  fully  paid,  and  he  may 
maintain  actions  upon  any  or  all  of  the  securities  either  at  the  same  time  or 
at  different  times,  and  the  recovery  upon  one  cannot  impair  the  right  to  re- 
cover upon  another,  unless  it  has  produced  the  satisfaction  of  the  principal 
debt  in  wliole  or  in  part:  Andrews  v.  Scotten,  2  Bland.  029;  Union  Bank  v. 
Laird,  2  Wheat.  390;  Ebler  v.  Ronse,  15  Wend.  218. 

Remedy  by  Suit  on  the  Principal  Debt.  —  The  holding  of  collateral  securities 
does  not  3usi)end  the  right  of  action  upon  the  principal  debt.  Whenever  it 
is  due,  the  creditor  may  enforce  its  payment  by  action  without  taking  any 
notice  of  the  collateral:  Rogers  v.  Ward,  8  Allen,  387;  85  Am.  Dec.  710; 
Marsclmetz  v.  Wright,  50  Wis.  175;  Dugan  v.  Sprague,  2  Ind.  600;  Wallace  v. 
Finnegan,  14  Mich.  170;  90  Am.  Dec.  243;  Bank  of  United  States  v.  Peabody, 
20  Pa.  8t.  454.  Nor  will  the  recovery  of  judgment  upon  the  collateral  afifect 
the  right  to  recover  upon  the  principal  debt:  Burnheiiner  v.  Hart,  27  Iowa, 
19;  99  Am.  Dec.  041;  1  Am.  Rep.  209.  Such  judgment  merely  takes  the 
place  of  the  securities  on  which  it  was  recovered,  and  stands,  as  they  stood, 
as  collateral  security  for  the  payment  of  the  principal  debt:  Harding  v. 
Hawkins,  141  111.  579.  No  agreement  is  implied  from  the  acceptance  of 
collateral  that  the  creditor  will  first  seek  to  satisfy  his  demand  by  enforc- 
ing the  collateral.  Hence  the  giving  of  a  collateral  cannot  suspend  the 
cause  of  action  upon  the  principal  debt  in  the  absence  of  an  express  agree- 
ment for  such  suspension:  Mills  v.  Qould,  14  Ind.  278;  Dugan  v.  Sprague, 
2  Ind.  000;  De  Cardova  v.  Barnum,  ISO  N.  Y.  015;  27  Am.  St.  Rep.  538; 
Wallace  v.  Finnegan,  14  Mich.  170;  90  Am.  Dec.  243;  Gary  v.  White,  52 
N.  Y.  138.  In  truth,  even  though  there  is  an  express  agreement  not  to 
sue  until  the  securities  are  collected  and  accounted  for,  unless  they  should 
first  be  returned,  the  right  of  action  on  the  principal  debt  does  not  appear 
to  be  suspended.  The  only  remedy  in  the  event  of  the  creditor  bringing 
action  thereon  is  to  sue  him  for  the  damages  resulting  from  the  breach  of 
his  agreement:  Foster  v.  Purdy,  5  Met.  442. 

If  the  maker  of  paper  transferred  as  collateral  should  wrongfully  obtain 
possession  of  it,  or  wrongfully  detain  it  after  having  rightfully  been  in  his 
possession,  the  pledgee  may  maintain  an  action  against  him  for  the  conver- 
sion thereof:    Way  v.  Davidson,  12  Gray,  465;  74  Am.  Dec.  604. 

While  the  mere  giving  of  a  collateral  does  not  suspend  the  right  of  action 
upon  the  principal  debt,  it  may  often  become  a  material  subject  of  inquiry 
in  such  action,  because  if  it  lias  been  disposed  of,  or  proceeds  from  it  have 
otherwise  been  realized,  they  should  be  credited  on  the  principal  debt,  and 
an  issue  respecting  them  may  be  tendered  by  the  answer,  and  the  plaintiff 
required  to  account  for  the  proceeds  of  the  collateral.  So,  though  nothing 
has  been  realized  from  the  collateral,  yet  if  the  failure  to  realize  has  arisen 
from  such  want  of  diligence  that  the  holder  is  answerable  for  the  face  value 
of  the  collateral,  or  to  any  other  extent,  he  can  recover  on  the  principal 
debt  only  so  much  thereof  as  remains  unpaid  after  charging  him  with  the 
amonnt  of  the  collateral  for  which  he  has  become  answerable  through  his 
negligence  or  want  of  diligence:  Reeres  v.  Plough,  41  Ind.  204.  If  the  prin- 
cipal debt  is  secured  by  an  indorsement,  or  guaranty,  or  other  contract  of 


728  Griggs  v.  Day.  [New  York, 

Buretyship,  tlie  creditoi-'s  ri^'ht  of  action  against  the  inrlorser,  guarantor,  or 
surety  is  not  suspencled  by  reason  of  the  existence  of  the  coUaier<il  security, 
nor  can  any  of  them,  ia  the  absence  of  an  agreement  to  the  contrary,  insiit 
that  tlie  collaieral  security  shall  bo  first  exhausted  or  pursued  before  main- 
taining an  action  against  him:  First  Nat.  Bank  v.  Wood,  71  N.  Y.  405;  27 
Am.  Rep.  66;  Rosa  v.  Jones,  22  Wall.  576,  592.  One  whose  liability  is  in  the 
nature  of  surety  is,  however,  interested  in  the  collateral  securities;  he  has  a 
right  to  be  subrogated  to  them  upon  his  payment  of  the  principal  debt:  Jones 
V.  Tincher,  15  Ind.  308;  77  Am.  Dec.  92;  Pott  v.  Nathans,  1  Watts  &  S.  155; 
37  Am.  Dec.  456;  and  tlierefore  any  release  or  surrender  of  such  collaterals 
may  prejudicially  affect  his  interests,  and  wholly  or  partly  release  him  from 
liability  under  his  contract  of  suretyship:  Baker  v.  Briygs,  8  Pick.  121; 
19  Am.  Dec.  311;  Hayes  v.  Ward,  4  Johns.  Ch.  129;  8  Am.  Dec.  554;  New 
Hampshire  Sav.  Bank  v.  Colcord,  15  N.  H.  119;  41  Am.  Dec.  685;  Springer  v. 
Toothaker,  43  Me.  3S1;  69  Am.  Dec.  66;  Fitchburg  Bank  v.  Torrey,  134  Mass. 
239.  So  if  the  surety  has  taken  collateral  securities  for  the  payment  of  the 
principal  debt,  the  creditor  is  interested  in  them,  and  may  insist  upon  their 
application  to  the  payment  of  his  debt:  Maure  v.  Harrison,  1  Eq.  Cas.  Abr. ; 
Jones  on  Pledges,  sees.  523,  525,  .526;  Taylor  v.  Farmers  Bank,  87  Ky.  398; 
Klapworth  v.  Dressier,  13  N.  J.  Eq.  62;  78  Am.  Dec.  69;  Oreen  v.  Dodge,  6 
Ohio,  80;  25  Am.  Dec.  736;  King  v.  Harmans  Heirs,  6  La.  607;  26  Am.  Dec. 
485;  Morrill  v.  Morrill,  53  Vt.  74;  38  Am.  Rep.  659. 

Remedies  on  Choses  in  Action.  —  If  the  collateral  consists  of  choses  in  action 
collectible  by  suit,  the  holder's  remedy  upon  them  is  generally  restricted  to 
such  suit.  He  is  not,  unless  express  authority  to  that  effect  has  been  con- 
ferred upon  him  by  the  pledgor,  entitled  to  sell  them:  Diller  v.  Bruhnh'r,  52 
Pa.  St.  498;  91  Am.  Dec.  177;  Union  T.  Co.  v.  Rigdon,  93  111.  458;  WMtteker 
V.  Charleston  O.  Co.,  16  W.  Va.  717;  Fletcher  v.  Dl-kinson,  7  Allen,  23;  White 
V.  Phelps.  14  Minn.  27;  100  Am.  Dec.  190;  Wheeler  v.  Newhould,  16  N.  Y. 
392  :  "The  pledge  of  commercial  paper  as  collateral  security  for  the  payment 
of  a  debt  does  not,  in  the  absence  of  a  special  power  for  that  purpose,  author- 
ize the  party  to  whom  such  paper  is  so  pledged  to  sell  the  securities  so 
pledged,  upon  default  in  payment,  either  at  public  or  private  sale.  He  is 
bound  to  hold,  and  collect  the  same  as  it  becomes  due,  and  apply  the  net 
proceeds  to  the  payment  of  the  debt  so  secured.  A  person  holding  property 
or  securities  in  pledge  occupies  the  relation  of  trustee  for  the  owner,  and, 
as  such,  in  the  absence  of  special  power  to  do  otherwise,  is  bound  to  proceed 
as  a  prudent  owner  would  with  his  own.  From  the  very  nature  of  the  case, 
property  can  only  be  applied  as  security  through  the  process  of  sale.'  Not  so 
with  bonds,  mortgages,  or  promissory  notes:  Wheeler  v.  Newbould,  16  N.  Y. 
392";  Joliet  Iron  Co.  v.  Scioto  Fire  Brick  Co.,  82  111.  584;  25  Am.  Rep.  341. 

The  reason  why  a  holder  of  choses  in  action  as  collateral  is  ordinarily  not 
allowed  to  sell  them  but  is  required  to  proceed  to  collect  them  by  suit,  if 
necessary,  is  that  they  are  not  presumed  to  be  readily  marketable  or  to 
have  a  market  value,  and  their  sale  would  probably  expose  the  pledgor  to 
needless  loss,  and  for  want  of  their  ascertainable  market  value,  it  would 
rarely  be  possible  to  know  whether  they  had  sold  for  a  fair  price  or  not. 
With  respect  to  choses  in  action  having  an  ascertainable  market  value,  the 
.reason  for  the  rule  does  not  exist  and  the  rule  is  therefore  inapplicable.  In 
New  .Te.r.sey  coupons  and  bonds  of  a  private  corporation  having  been  trans- 
ferred as  collateral,  the  question  arose  as  to  whether  they  could  be  sold 
by  the  pledgee,  or  whether  it  was  hia  duty  to  retain  them  until  they 
could  be  collected  by  suit,  and  the  court  of  errors  and  appeals  in  deciding 


Nov.  1S92.]  Griggs  v.  Day.  729 

the  question,  said:  "When  honcls  of  such  a  character,  having  several  years 
to  run  before  they  become  due,  are  deposited  as  collateral  security  for  the 
payuieut  of  promissory  notes  soon  to  mature,  the  fair  presumption  is  that 
they  were  designed  to  be  held  as  a  pledge,  and  were  expected  to  be  sold 
after  demand  and  due  notice  like  goods,  chattels,  and  public  securities,  in 
case  the  debt  for  which  they  were  pleilged  should  not  be  punctually  paid. 
Such  a  deposit  differs  entirely  from  a  deposit  of  ordinary  bonds,  mortgages, 
promissory  notes,  and  the  like  choses  in  action,  which  in  the  absence  of  an 
agreement  to  that  effect,  the  creditor  cannot  expose  for  sale  because  they 
have  no  market  value,  and  it  cannot  be  presumed  it  was  the  intention  of  the 
parties  thus  to  deal  with  them  ":  Morris  Canal  etc.  Co.  v.  Lewi%  12  N.  J.  Eq. 
329.  The  fact  that  a  bond  or  coupon  will  not  fall  due  for  a  long  period  of 
time,  and  therefore  cannot  be  collected  by  suit  within  the  time  in  which  the 
parties  apparently  contemplated  that  the  principal  debt  should  be  paid,  con- 
stitutes an  unanswerable  reason  for  ileciding  that  the  holder  of  it  as  collateral 
should  be  allowed  to  sell  it  where  it  has  a  market  value,  at  any  time  after 
the  maturity  of  the  principal  debt,  and  apply  the  proceeds  to  the  extinction 
of  that  debt.  We  apprehend,  however,  that  the  existence  of  this  reason  is 
not  indispensable  to  the  authority  to  sell,  and  that  if  the  security  held  aa 
collateral  is  one  of  a  class  having  a  market  value,  and  being  sold  from  time 
to  time  in  the  market  as  the  stoL'ks  of  corporations  are,  then  that  the  pledgee 
haa  an  implied  authority  to  sell  it  under  the  same  circumstances  as  would 
authorize  a  sale  of  such  stocks  had  they  been  pledged  as  collateral  for  the 
same  debt:  Water  Power  Co.  v.  Brown,  23  Kan.  676;  Alexander  etc.  R.  R. 
Co.  V.  Buike,  22  Gratt.  254. 

Remedy  by  Foreclosure.  —  If  the  collateral  is  not  made  available  by  volun- 
tary payment  or  by  suit  thereon,  then  the  only  mode  which  can  be  lawfully 
pursued  by  the  holder  is  to  sell  either  by  judicial  sale  or  by  a  sale  which, 
though  not  judicial,  is  authorized  either  by  an  express  agreement  or  by  the 
agreement  which  is  implied  from  the  contract  of  pledge.  Whether  in  the 
case  of  ordinary  choses  in  action,  collectible  by  suit,  a  court  of  chancery  will 
at  the  instance  of  a  holder  as  collateral,  direct  them  to  be  sold,  is  a  doubtful 
question,  but  upon  principle,  relief  must  be  denied  where  the  holder  has  aa 
adequate  remedy  by  action  at  law  against  the  makers  of  the  collateral: 
Whltteker  v.  Charleston  G an  Co.,  16  W.  Va.  717.  If,  however,  for  some  cause 
not  attributable  to  the  holder  of  the  collateral,  he  cannot  pursue  his  action 
thereon  without  great  difficulty,  chancery  may  grant  him  relief  by  directing 
a  sale,  as  where  the  maker  of  the  collateral  is  not  within  the  state,  and  has 
no  property  therein,  so  that  no  action  against  him  could  be  effective  unless 
prosecuted  in  the  courts  of  another  state  or  nation:  Donohoe  v.  Gatnhle,  33 
Cal.  340;  99  Am.  Dec.  399;  Carter  v.  Wake,  L.  R.  4  Ch.  Div.  605.  Unless 
an  exception  exists  in  the  case  of  choses  in  action  having  no  readily  ascer- 
tainable market  value  and  collectible  by  suit  against  the  makers  thereof, 
there  is  no  doubt  that  in  every  case  a  holder  of  collateral  may  resort  to 
equity  and  there  obtain  a  decree  fixing  the  amount  for  which  the  property 
is  liable  to  be  sold,  and  directing  a  sale  to  be  made  by  an  officer  of  the  court 
and  the  proceeds  to  be  applied  to  the  payment  of  the  principal  debt:  Sharpe 
V.  National  Bank,  87  Ala.  645;  Stearns  v.  Marsh,  4  Denio,  227;  47  Am.  Dec. 
248;  Robinson  v.  Hurley,  11  Iowa,  410;  79  Am.  Dec.  497,  and  note,  p.  503. 
The  advantages  of  procee<ling  in  chancer}'  are  that  the  amount  of  the  debt 
and  the  right  to  sell  the  property  for  its  payment  are  established  beyond 
any  further  controversy,  and  the  holder  of  the  collateral  has  the  right  to  bid 
at  the  sale,  and  may  thus  prevent  any  sacrifice  of  his  interest  for  want  of 


730  Griggs  v.  Day.  [New  York, 

bidders:  Kcwport  etc.  Co.  v.  Douglass,  12  Bush,  673;  Quincy  v.  White,  63 
N.  Y.  376. 

The  parties  may  by  their  contract  declare  the  circumstances  under  which 
the  holder  of  the  collateral  is  authorized  to  sell  it,  and  provide  what  steps- 
shall  be  taken  by  him  before  such  sale,  and  such  agreement,  unless  fraudu- 
lent or  contrary  to  public  policy,  is  binding  upon  both  parties,  and  a  sale 
pursuant  to  it  is  valid:  McDowell  w.  Chicaijo  etc,  Co.  124  111.  491;  7  Am.  St. 
Rep.  381;  Jeanes's  Appeal,  116  Pa.  St.  573;  2  Am.  St.  Rep.  6-24;  Union  T. 
Co.  V.  Rvjdon,  93  111.  458;  Baker  v.  Drake,  66  N.  Y.  518;  23  Am.  Rep.  80; 
Carson  v.  loioa  City  etc.  Co.,  80  Iowa,  638,  If  by  the  contract,  the  loan  for 
which  collateral  is  given,  is  made  payable  on  one  day's  notice,  and  the  holder 
of  the  collateral  is  authorized  to  sell  with6ut  further  notice,  all  notice  of  the 
time  and  place  of  sale  is  dispensed  with,  and  the  only  obligation  of  the 
holder  of  the  collateral  is  to  sell  it  publicly  and  fairly  for  the  best  price  he 
can  obtain:  Maryland  etc.  Ins.  Co.  v.  Dalrymple,  25  Md.  242;  89  Am.  Dec. 
779.  So  where  stocks  were  pledged,  and  the  pledgee,  in  the  event  that  they 
were  not  redeemed  before  a  day  specified,  was  "  authorized  to  give  the  stock 
to  any  broker  to  sell  on  such  day,"  it  was  held  that  this  authorized  a  sale  by 
any  broker  by  private  sale  or  in  any  other  way:  Bryson  v.  Rayner,  25  Md. 
424;  90  Am.  Dec.  69. 

Pledgee's  Remedy  by  Sale.  —  If  the  parties  do  not  make  any  express  agree- 
ment concerning  the  power  of  the  pledgee  to  sell  and  the  time  and  manner 
in  which  it  may  be  exercised,  then  one  is  implied  and  is  to  the  effect  that  at 
any  time  after  default  in  the  payment  of  the  principal  debt,  the  holder  of  the 
collateral  may  demand  that  it  be  paid,  or,  in  other  words,  that  the  pledged 
property  be  redeemed,  and  such  demand  not  being  complied  with,  may  sell 
the  property  at  public  auction  after  first  giving  the  debtor  reasonable  notice 
of  the  time  and  place  of  the  sale,  and  a  sale  in  the  absence  of  such  demand 
and  notice  is  invalid:  McDoioell  v.  Chicago  etc.  Co.,  124  111.  491;  7  Am.  St. 
Rep.  381;  Jeaness  Appeal,  116  Pa.  St.  573;  2  Am.  St.  Rep.  624;  King  v.  Jn- 
suranceCo.,  58  Tex.  669;  Wilson  v.  Brannan,  27Cal.  258;  Merchants'  Nat.  Bank 
v.  Thompson,  133  Mass.  482;  Stearns  v.  Marsh,  4  Denio,  227;  47  Am.  Dec. 
248;  Lticketts  v.  Townsend,  3  Tex.  119;  49  Am.  Dec.  723;  Gay  v.  Moss,  34 
Cal.  125;  Robinson  v.  Hurley,  11  Iowa,  410;  79  Am.  Dec.  497;  Diller  v.  Bru- 
baker,  52  Pa.  St.  498;  91  Am.  Dec.  177;  Brightman  v.  Reeves,  21  Tex.  70; 
Conyngharns  Appeal,  57  Pa.  St.  474.  While  there  are  many  decisions  declar- 
ing that  the  pledgor  must  have  reasonable  notice  of  the  time  and  place  of  the 
sale  in  order  that  he  may  know  when  his  opportunity  to  redeem  will  termi- 
nate, and  may,  if  he  can,  procure  persons  to  attend  the  sale  and  bid  thereat, 
the  authorities  are  singularly  silent  with  respect  to  the  giving  of  notice  of 
the  sale  to  the  general  public.  Without  some  such  notice  it  is  clear  that  the 
property  must  ordinarily  be  sacrificed  for  want  of  bidders;  for  to  bring  out 
bidders  persons  interested  in  the  class  of  property  to  be  sold  must  in  some 
way  have  their  attention  called  to  the  sale.  The  authorities  do,  however, 
make  it  clear  that  in  the  absence  of  any  controlling  agreement  to  the  contrary 
the  sale  shall  be  at  public  auction,  and  we  infer  from  this  that  it  must  be 
preceded  with  such  public  notice  as  is  ordinarily  given  for  auction  sales  of 
like  property  in  the  same  locality.  If  the  agreement  between  the  pledgor 
and  the  pledgee  purports  to  authorize  the  latter,  on  default  of  the  payment 
of  the  principal  debt  to  make  the  money  out  of  the  pledged  property  in  the 
best  way  he  can  and  to  sell  the  same  for  that  purpose,  it  was  held  that  the 
power  should  be  construed  to  be  such  a  power  as  exists  in  respect  to  pledges 
generally,  and  that  it  must  be  pursued  in  the  same  way,  and  therefore  can 


Dec.  1892.]  Sopeb  v.  Brown.  731- 

be  exercised  only  upon  reasonable  notice  to  the  debtor  to  redeem  and  of  the 
time  and  place  of  sale:  Ooldsmidt  v.  First  M.  E.  Cliurch  Trustees,  25  Minn. 
202.  In  one  instance  in  which  the  contract  expressly  stipulated  for  notice  to 
the  debtor,  it  was  held  that  a  sale  without  such  notice  should  be  sustained 
where  it  liad  become  impossible  te  give  it:  City  Bank  v.  Bahcork,  1  Holmes, 
181.  The  better  opinion  appears  to  be,  that  in  the  event  of  the  making  de- 
mand for  payment  and  the  giving  notice  of  the  sale  to  the  debtor  becoming 
impossible,  the  credit. )r  cannot  proceed  without  them,  but  must  resort  to  a  suit 
in  equity  to  foreclose  the  pledge:  Strong  v.  National  etc.  Anin,  45  N.  Y.  718; 
Stearns  v.  Mamh,  4  Denio,  227;  47  Am.  Dec.  248;  Oarlick  v.  James,  12  Johns. 
150;  7  Am.  Dec.  294.  There  is  no  doubt  that  a  debtor  may  waive  the  de- 
mand to  redeem  and  the  notice  of  the  time  and  place  of  the  sale:  Fitzgerald 
V.  Blocher,  32  Ark.  742;  Hamilton  v.  State  Bank,  22  ],owa,  30(5;  and  that  ac- 
tual notice  of  such  time  and  place  may  render  unnecessary  formal  notice  from 
the  pledgee:  Alexandria  etc.  R.  R.  Co.  v.  Barke,  22  Gratt.  254.  It  appears  to 
be  possible  by  agreement  between  tlie  parties  to  authorize  the  pledgee  to  pur- 
chase the  pledged  property  at  a  sale  made  by  himself:  Cliouleau  v.  Allen,  70 
Mo.  290;  Appleton  v.  TiinJiull,  84  Me.  72.  In  the  absence  of  such  an  agree- 
ment, a  sale  of  the  pledgee  to  himself,  wliether  his  name  is  used  or  the  prop- 
erty is  bid  off  in  the  name  of  another  for  iiis  benetit,  is  void,  and  leaves 
him  the  o-.vner  of  the  pledge  as  before  such  sale:  Canjield  v.  Minneapolis  etc. 
Ass'7i,  14  Fed.  Rep.  801;  Bryson  v.  Rnyner,  25  Md.  424;  90  Am.  Dec.  69; 
Chicago  Artesian  Well  Co.  v.  Corey,  60  111.  73;  Maryland  F.  Ins.  Co.  v.  Dai- 
ry mple,  25  Md.  242;  89  Am.  Dec.  779;  Bank  of  Old  Dominion  v.  Dubuque  etc. 
R.  R.  Co.,  8  Iowa.  277;  74  Am.  Dec.  302;  Stokes  v.  Frazier,  72  111.  428.  If 
the  sale  as  made  was  not  authorized,  the  debtor  may* regard  it  as  a  conver- 
sion, and  recover  damages  therefor:  Davis  v.  Funk,  39  Pa.  St.  243;  80  Am. 
Dec.  519;  or  as  having  no  effect  upon  his  rights  and  as  leaving  him  still  the 
owner  of  the  property  subject  to  the  pledge.  The  sale  even  when  to  the 
pledgee  himself  is  not  absolutely  void,  howeverir  regular  and  unauthorized  it 
may  be.  The  debtor  may  elect  to  affirm  it,  and  his  election  should  be  pre- 
sumed and  held  to  be  irrevocable  if  he,  with  full  knowledge  of  the  facts  ren- 
dering the  sale  invalid,  delays  for  an  unreasonable  time  to  proceed  against 
it,  or  to  take  any  measures  to  set  it  aside  and  to  recover  the  property:  Hill 
v.  Finigi'n,  77  Cal.  267;  11  Am.  St.  Rep.  279;  Gilmer  v.  Morris,  80  Ala.  78; 
60  Am.  R(!p.  85;  Hay  ward  v.  National  Bank,  9(5  U.  S.  611;  Lacomhe  v.  For- 
stall,  123  U.  S.  562;  McDowell  v.  Chicago  Steel  Works,  22  111.  App.  405. 


SoPER  V.  Brown. 

[136  Nkw  York,  244.] 
Wills  —  Tssur,  who  Are.  —  The  word  "issue,"  when  used  in  a  will,  with- 
out any  qualifying  words  or  circumstances,  comprehends  all  persons  in 
the  line  of  descent  from  the  ancestor,  and  has  the  same  meanin"-  as 
"descendants."  Hence,  if  a  testator  devises  proj)erty  to  his  daughter 
E.  for  life,  and  declares  that  upon  iier  death  it  sliall  go,  in  fee-simple,  as 
ten;\nts  in  common,  to  her  issue  if  more  than  one,  and  in  default  of  such 
issue,  to  all  the  testator's  grandchildren  who  may  be  then  living,  and 
when  the  daughter  E.  dies  her  children  are  all  deail,  but  children  of 
theirs  are  living,  such  children  are  comprehended  in  the  term  "issue' 
and  take  tiie  property  in  preference  to  the  grandchildren  of  tlie  testator. 


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